EXHIBIT 10.2
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AMENDED AND RESTATED
CREDIT AGREEMENT
$75,000,000
among
PERRY GRAPHIC COMMUNICATIONS, INC.,
SHENANDOAH VALLEY PRESS, INC.,
AND PORT CITY PRESS, INC.,
as Borrowers,
EACH OF THE FINANCIAL INSTITUTIONS
INITIALLY A SIGNATORY HERETO,
TOGETHER WITH THOSE ASSIGNEES
PURSUANT TO SECTION 11.8 HEREOF,
as Lenders,
and
BT COMMERCIAL CORPORATION,
as Agent.
DATED AS OF DECEMBER 16, 1997
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TABLE OF CONTENTS
Section Page
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ARTICLE 1. DEFINITIONS......................................................2
1.1. General Definitions..............................................2
1.2. Accounting Terms and Determinations.............................21
1.3. Other Terms; Headings...........................................22
ARTICLE 2. LOANS...........................................................22
2.1. Term Loan Facility..............................................22
2.2. Revolving Credit Commitments....................................23
2.3. Borrowing of Revolving Loans....................................24
2.4. Disbursement of Revolving Loans.................................25
2.5. Notices of Borrowing............................................25
2.6. Same Day Settlement of Lender Advances..........................25
2.7. Periodic Settlement of Agent Advances and Repayments............26
2.8. Sharing of Payments.............................................26
2.9. Defaulting Lenders..............................................26
2.10. Extension of Expiration Date....................................27
ARTICLE 3. LETTERS OF CREDIT...............................................27
3.1. Issuance of Letters of Credit...................................27
3.2. Terms of Letters of Credit......................................28
3.3. Request for Issuance............................................28
3.4. Lenders' Participation..........................................28
3.5. Payment of Amounts Drawn Under Letters of Credit................28
3.6. Payment by Lenders..............................................29
3.7. Nature of Issuing Bank's Duties.................................29
3.8. Obligations Absolute............................................29
3.9. Agent's Execution of Applications and Other Issuing Bank
Documentation; Reliance on Credit Agreement by Issuing Bank....29
3.10. Additional Payments.............................................29
ARTICLE 4. COMPENSATION, REPAYMENT AND REDUCTION OF COMMITMENTS............30
4.1. Interest on Prime Rate Loans....................................30
4.2. Interest on Eurodollar Rate Loans...............................30
4.3. Unused Line Fee.................................................31
4.4. Letter of Credit Fees...........................................31
4.5. Interest After Event of Default.................................31
4.6. Expenses; Fees..................................................31
4.7. Mandatory Payment; Reduction of Commitments.....................31
4.8. Maintenance of Loan Account; Statements of Account..............33
4.9. Payment Procedures..............................................33
4.10. Collection of Accounts..........................................33
4.11. Application of Payments.........................................33
4.12. Calculations....................................................34
4.13. Special Provisions Relating to Eurodollar Rate Loans............34
4.14. Indemnification in Certain Events...............................36
4.15. Taxes...........................................................37
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4.16. Affected Lenders................................................39
ARTICLE 5. CONDITIONS PRECEDENT............................................40
5.1. Conditions to Initial Loans and Letters of Credit...............40
5.2. Conditions Precedent to All Loans and Letters of Credit.........44
ARTICLE 6. REPRESENTATIONS AND WARRANTIES..................................45
6.1. Organization and Qualification..................................45
6.2. Authority.......................................................45
6.3. Enforceability..................................................45
6.4. No Conflict.....................................................45
6.5. Consents and Filings............................................45
6.6. Government Regulation...........................................45
6.7. Solvency........................................................46
6.8. Rights in Collateral; Priority of Liens.........................46
6.9. Financial Data..................................................46
6.10. Locations of Offices, Records and Inventory.....................46
6.11. Subsidiaries; Ownership of Stock................................47
6.12. No Judgments or Litigation......................................47
6.13. No Defaults.....................................................47
6.14. Labor Matters...................................................47
6.15. Compliance with Law.............................................47
6.16. ERISA...........................................................47
6.17. Compliance with Environmental Laws..............................47
6.18. Intellectual Property...........................................48
6.19. Licenses and Permits; Business Restrictions.....................48
6.20. Taxes and Tax Returns...........................................48
6.21. Material Contracts..............................................48
6.22. No Other Indebtedness...........................................48
6.23. Title to Property...............................................49
6.24. Affiliate Transactions..........................................49
6.25. Accuracy and Completeness of Information........................49
6.26. No Change.......................................................49
6.27. Special Purpose Corporation.....................................49
ARTICLE 7. AFFIRMATIVE COVENANTS...........................................49
7.1. Financial Reporting.............................................49
7.2. Collateral Reporting............................................51
7.3. Notification Requirements.......................................51
7.4. Corporate Existence.............................................52
7.5. Books and Records; Inspections..................................53
7.6. Insurance.......................................................53
7.7. Casualty Loss...................................................53
7.8. Taxes...........................................................54
7.9. Compliance With Laws............................................54
7.10. Use of Proceeds.................................................54
7.11. Fiscal Year.....................................................54
7.12. Maintenance of Property.........................................54
7.13. ERISA Documents.................................................54
7.14. Further Assurances..............................................54
7.15. Environmental and Other Matters.................................55
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7.16. Security Interests..............................................56
7.17. Trademarks......................................................56
7.18. Dividends on Preferred Stock....................................56
ARTICLE 8. NEGATIVE COVENANTS..............................................56
8.1. Minimum EBITDA..................................................56
8.2. Consolidated Fixed Charge Coverage Ratio........................58
8.3. Interest Coverage Ratio.........................................58
8.4. Current Ratio...................................................59
8.5. Debt Ratio......................................................59
8.6. Capital Expenditures............................................60
8.7. Additional Indebtedness.........................................60
8.8. Liens...........................................................61
8.9. Contingent Obligations..........................................62
8.10. Sale of Assets..................................................62
8.11. Restricted Payments.............................................62
8.12. Investments.....................................................63
8.13. Affiliate Transactions..........................................64
8.14. Additional Bank Accounts........................................64
8.15. Excess Cash.....................................................64
8.16. No Corporate Changes............................................64
8.17. No Prohibited Transactions Under ERISA..........................65
8.18. Material Amendments of Material Contracts; Etc..................65
8.19. Additional Negative Pledges.....................................65
8.20. Additional Subsidiaries; Partnerships, Joint Ventures...........66
ARTICLE 9. EVENTS OF DEFAULT AND REMEDIES..................................66
9.1. Events of Default...............................................66
9.2. Acceleration and Cash Collateralization.........................67
9.3. Rescission of Acceleration......................................67
9.4. Remedies........................................................68
9.5. Right of Setoff.................................................68
9.6. License for Use of Software and Other Intellectual Property.....68
9.7. No Marshalling; Deficiencies; Remedies Cumulative...............68
ARTICLE 10. THE AGENT.......................................................69
10.1. Appointment of Agent............................................69
10.2. Nature of Duties of Agent.......................................69
10.3. Lack of Reliance on Agent.......................................69
10.4. Certain Rights of the Agent.....................................69
10.5. Reliance by Agent...............................................69
10.6. Indemnification of Agent........................................69
10.7. The Agent in its Individual Capacity............................70
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10.8. Successor Agent.................................................70
10.9. Collateral Matters..............................................70
10.10. Actions with Respect to Defaults................................71
ARTICLE 11. MISCELLANEOUS...................................................71
11.1. GOVERNING LAW...................................................71
11.2. SUBMISSION TO JURISDICTION......................................71
11.3. SERVICE OF PROCESS..............................................71
11.4. JURY TRIAL......................................................72
11.5. LIMITATION OF LIABILITY.........................................72
11.6. Delays..........................................................72
11.7. Notices.........................................................72
11.8. Assignments and Participations..................................73
11.9. Confidentiality.................................................74
11.10. Indemnification; Reimbursement of Expenses of Collection........74
11.11. Amendments and Waivers..........................................74
11.12. Counterparts; Inconsistencies and Effectiveness.................75
11.13. Severability....................................................75
11.14. Independence of Covenants.......................................75
11.15. Survival........................................................75
11.16. Maximum Rate....................................................76
11.17. Entire Agreement; Successors and Assigns........................76
iv
ANNEXES
Annex I - List of Lenders and Commitment Amounts
EXHIBITS
Exhibit-A-1 - Form of Revolving Note
Exhibit A-2 - Form of Term Note
Exhibit-B - Form of Amended and Restated Security Agreement
Exhibit C - Form of Amended and Restated Pledge Agreement
Exhibit D - Form of Amended and Restated Holdings Guarantee
Exhibit E - Form of Cross Guarantee
Exhibit F - Form of ▇▇▇▇'▇ Guarantee
Exhibit G - Form of Lockbox Agreement
Exhibit H - Form of Compliance Certificate
Exhibit I - Form of Borrowing Base Certificate
Exhibit J - Form of Notice of Borrowing
Exhibit K - Form of Notice of Continuation
Exhibit L - Form of Notice of Conversion
Exhibit M - Form of Letter of Credit Request
Exhibit N - Form of Assignment and Assumption Agreement
Exhibit O - Form of Collateral Access Agreement
Exhibit-P - Form of Mortgage
Exhibit Q - Form of Opinion of ▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇
Exhibit R - Form of Opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇
Exhibit S - Form of Opinion of Borrowers' Maryland, Virginia, D.C.
Counsel
Exhibit T - Form of ▇▇▇▇'▇ Merger Certificate
Exhibit U - Form of Intercompany Note
SCHEDULES
Schedule A - Closing Document List
Schedule B - Disclosure Schedule
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THIS AMENDED AND RESTATED CREDIT AGREEMENT is dated for identification
purposes as of December 16, 1997, and is among PERRY GRAPHIC COMMUNICATIONS,
INC. (formerly known as "Perry Printing Corporation" and "PPC Acquisitions,
Inc."), a Delaware corporation ("Perry"), SHENANDOAH VALLEY PRESS, INC., a
Virginia corporation ("Shenandoah"), PORT CITY PRESS, INC., a Maryland
corporation ("Port City" and, together with Perry and Shenandoah, each a
"Borrower" and, collectively, the "Borrowers"), each financial institution
identified on Annex I (together with its successors and assigns, a "Lender"),
and BT COMMERCIAL CORPORATION acting as agent for the Lenders (in such
capacity, together with any successors in such capacity, the "Agent").
W I T N E S S E T H
WHEREAS, Perry is party to that certain Credit Agreement dated as of
April 28, 1995 with the Lenders party thereto (the "Existing Lenders") and BT
Commercial Corporation as agent for such Lenders (in such capacity, the
"Existing Agent") (as amended to the date hereof, the "Existing Credit
Agreement"), under which the Existing Lenders have made Term Loans (as
defined in the Existing Credit Agreement, hereinafter the "Existing Term
Loans") evidenced by the Term Notes (as defined in the Existing Credit
Agreement, hereinafter the "Existing Term Notes") and have made Revolving
Loans (as defined in the Existing Credit Agreement, hereinafter the "Existing
Revolving Loans", and together with the Existing Term Loans collectively the
"Existing Loans") evidenced by the Revolving Notes (as defined in the
Existing Credit Agreement, hereinafter the "Existing Revolving Notes" and
together with the Existing Term Notes collectively the "Existing Notes" and
individually an "Existing Note");
WHEREAS, the Obligations (as defined in the Existing Credit Agreement,
hereinafter the "Existing Obligations") of Perry under the Existing Notes and
the other Credit Documents (as defined in the Existing Credit Agreement,
hereinafter the "Existing Credit Documents") are secured by the Collateral
(as defined in the Existing Credit Agreement, hereinafter the "Existing
Collateral") and are guaranteed or supported or otherwise benefited by the
Existing Credit Documents;
WHEREAS, Perry is a wholly owned subsidiary of PPC Holdings, Inc., a
Delaware corporation ("Holdings"), and immediately prior to the effectiveness
hereof (i) ▇▇▇▇▇ Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Holdings, will merge with and into ▇▇▇▇'▇, Incorporated, a
Maryland corporation ("▇▇▇▇'▇"), with ▇▇▇▇'▇ being the surviving corporation,
pursuant to the Merger Agreement (as hereinafter defined), and (ii) Holdings
will change its name to "▇▇▇▇▇-▇▇▇▇'▇ Incorporated";
WHEREAS, Shenandoah and Port City are wholly owned subsidiaries of
▇▇▇▇'▇;
WHEREAS, the Borrowers have requested that the Lenders amend and restate
the Existing Credit Agreement to make loans and other financial
accommodations available to the Borrowers for purposes of refinancing certain
existing indebtedness and for other general corporate purposes permitted
hereunder, including future acquisitions, and that, in connection therewith,
the Agent act as agent for the Lenders;
WHEREAS, the Lenders are willing to make loans and other financial
accommodations available to the Borrowers, and the Agent is willing to act as
agent in connection therewith, in each case on the terms and subject to the
conditions set forth herein; and
WHEREAS, The parties hereto intend that (a) the Existing Obligations
shall continue to exist under, and to be evidenced by, this Agreement and the
Notes (as hereinafter defined) issued hereunder, (b) the Existing Advances
shall be Advances under and as defined in this Agreement and the Notes and
1
(c) the Existing Collateral shall continue to secure the Existing Obligations
as well as the other Obligations of the Borrowers under this Agreement and
the Notes and other Credit Documents hereunder.
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1. DEFINITIONS
1.1. GENERAL DEFINITIONS
ACCOUNTS is defined in the Security Agreement (SEE Exhibit B).
ADJUSTED EURODOLLAR RATE means, with respect to each Interest Period for any
Eurodollar Rate Loan, the rate obtained by dividing (i) the Eurodollar Rate
for such Interest Period by (ii) a percentage equal to 1 minus the stated
maximum rate (stated as a decimal) of all reserves, if any, required to be
maintained against "Eurocurrency liabilities" as specified in Regulation D of
the Board of Governors of the Federal Reserve System (or against any other
category of liabilities which includes deposits by reference to which the
interest rate on Eurodollar Rate Loans is determined or any category of
extensions of credit or other assets which includes loans by a non-United
States office of any Lender to United States residents).
AFFILIATE of a Person means another Person who directly or indirectly
controls, is controlled by, is under common control with or is a director or
officer of such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to vote ten percent (10%) or
more of the securities having ordinary voting power for the election of
directors or the direct or indirect power to direct the management and
policies of a business.
AGENT is defined in the preamble and shall include any successor appointed
pursuant to Section 10.8.
AGENT ADVANCE is defined in Section 2.3.
ANNUALIZED EBITDA means (i) as of the end of each of the first three Test
Periods, EBITDA for the number of Test Periods then ended multiplied by the
quotient of four divided by such number of Test Periods, and (ii) as of the
end of each Test Period thereafter, EBITDA for the period of four consecutive
Fiscal Quarters then ended.
APPLICABLE EURODOLLAR RATE MARGIN means with respect to Revolving Loans,
2.25% per annum, and with respect to Term Loans, 2.50% per annum; PROVIDED
that if the Debt Ratio for the applicable period ending with the then most
recently ended Fiscal Quarter (as shown on the quarterly Compliance
Certificate delivered pursuant to Section 7.1) is within the ranges set out
below and no Default or Event
2
of Default exists as of the end of such Fiscal Quarter (as shown on such
Compliance Certificate or otherwise), the Applicable Eurodollar Rate Margin
shall be the per annum rate set out beneath the applicable type of Loan and
opposite the applicable range below:
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Debt Ratio Term Loans Revolving Loans
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LESS THAN OR EQUAL TO 3.75 : 1.0
but GREATER THAN 3.25 : 1.0 2.25% 2.00%
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LESS THAN OR EQUAL TO 3.25 : 1.0
but GREATHER THAN 2.75 : 1.0 2.00% 1.75%
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LESS THAN OR EQUAL TO 2.75 : 1.0 1.75% 1.50%
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In the event of the delivery of a Compliance Certificate showing an increase
or decrease in the Debt Ratio which requires a change in the Applicable
Eurodollar Rate Margin, the change in the Applicable Eurodollar Rate Margin
shall be effective from the first day of the calendar month immediately
following receipt of the Compliance Certificate (PROVIDED that the Compliance
Certificate is received by the Agent no later than 3:00 P.M. New York City
time at least one (1) Business Day prior to the first day of such calendar
month) until the next such date on which the Applicable Eurodollar Margin
Rate is subject to change following the delivery of (or failure to deliver) a
Compliance Certificate showing an increase or decrease in the Debt Ratio
which requires a change in the Applicable Eurodollar Rate Margin. The
failure to deliver any Compliance Certificate by the date required hereunder
(after giving effect to any applicable grace period) shall automatically
cause the Applicable Eurodollar Rate Margin to be the maximum per annum rate
described above, effective as of the first day of the calendar month
immediately following the date on which the delivery of the Compliance
Certificate was otherwise required.
APPLICABLE LENDING OFFICE means, with respect to each Lender, such Lender's
Eurodollar Lending Office in the case of a Eurodollar Rate Loan, and such
Lender's Domestic Lending Office in the case of a Prime Rate Loan.
APPLICABLE PRIME RATE MARGIN means with respect to Revolving Loans, 0.75% per
annum, and with respect to Term Loans, 1.0% per annum; PROVIDED that if the
Debt Ratio for the applicable period ending with the then most recently ended
Fiscal Quarter (as shown on the quarterly Compliance Certificate delivered
pursuant to Section 7.1) is within the ranges set out below and no Default or
Event of Default exists as of the end of such Fiscal Quarter (as shown on
such Compliance Certificate or otherwise), the Applicable Prime Rate Margin
shall be the per annum rate set out beneath the applicable type of Loan and
opposite the applicable range below:
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Debt Ratio Term Loans Revolving Loans
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LESS THAN OR EQUAL TO 3.75 : 1.0
but GREATER THAN 3.25 : 1.0 0.75% 0.50%
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LESS THAN OR EQUAL TO 3.25 : 1.0
but GREATER THAN 2.75 : 1.0 0.50% 0.25%
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LESS THAN OR EQUAL TO 2.75 : 1.0 0.25% 0%
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3
In the event of the delivery of a Compliance Certificate showing an increase
or decrease in the Debt Ratio which requires a change in the Applicable Prime
Rate Margin, the change in the Applicable Prime Rate Margin shall be
effective from the first day of the calendar month immediately following
receipt of the Compliance Certificate (PROVIDED that the Compliance
Certificate is received by the Agent no later than 3:00 P.M. New York City
time at least one (1) Business Day prior to the first day of such calendar
month) until the next such date on which the Applicable Prime Rate Margin is
subject to change following the delivery of (or failure to deliver) a
Compliance Certificate showing an increase or decrease in the Debt Ratio
which requires a change in the Applicable Prime Rate Margin. The failure to
deliver any Compliance Certificate by the date required hereunder (after
giving effect to any applicable grace period) shall automatically cause the
Applicable Prime Rate Margin to be the maximum per annum rate described
above, effective as of the first day of the calendar month immediately
following the date on which the delivery of the Compliance Certificate was
otherwise required.
ASSIGNMENT AND ASSUMPTION AGREEMENT is defined in Section 11.8.
AUDITORS means a nationally recognized firm of independent public accountants
selected by the Borrowers and satisfactory to the Agent in its sole
discretion. For purposes of this Credit Agreement, the firm of Deloitte &
Touche LLP shall be deemed to be satisfactory to the Agent.
BANKRUPTCY CODE means Title 11 of the U.S. Code (11 U.S.C. Sections 101 et
seq.), as amended from time to time, and any successor statute.
BENEFIT PLAN means a "defined benefit plan" (as defined in Section 3(35) of
ERISA) for which any Borrower, any Subsidiary of any Borrower or any ERISA
Affiliate has been an "employer" (as defined in Section 3(5) of ERISA) within
the past six years.
BORROWER and BORROWERS are defined in the preamble.
BORROWING means (i) each Borrowing (as defined in the Existing Credit
Agreement) outstanding on the Closing Date and (ii) a borrowing of Revolving
Loans or Term Loans of the same type on the same day.
BORROWING BASE means, with respect to any Borrower, the sum of:
(A) eighty-five percent (85%) (or such lesser percentage as the
Agent may determine from time to time in the exercise of its Permitted
Discretion) of Eligible Accounts Receivable of such Borrower, PLUS
(B) sixty percent (60%) (or such lesser percentage as the Agent may
determine from time to time in the exercise of its Permitted Discretion)
of Eligible Inventory of such Borrower (PROVIDED that the aggregate
amount added to the Borrowing Base for all Borrowers pursuant to this
clause (B) may not exceed $20,000,000), MINUS
(C) the aggregate amount of any reserves established by the Agent
under Section 2.2(b).
BORROWING BASE CERTIFICATE means, with respect to any Borrower, a certificate
of such Borrower concerning the Borrowing Base of such Borrower provided
under Section 7.2 and substantially in the form of Exhibit I.
BUSINESS DAY means any day that is not a Saturday, Sunday or a day on which
commercial banks in New York City are required or permitted by law to be
closed. When used in connection with Eurodollar
4
Rate Loans, this definition will also exclude any day on which commercial
banks are not open for dealing in U.S. dollar deposits in the London
(England, U.K.) interbank market.
CAPITAL EXPENDITURES for a period means, the sum of all expenditures
capitalized for financial statement purposes in accordance with GAAP (whether
payable in cash or other property or accrued as a liability), including the
capitalized portion of capital leases and that portion of Investments
allocable to property, plant or equipment (but excluding any cash
expenditures subsequently financed during such period or any cash
expenditures for which firm financing commitments or firm commitments for
operating leases have been received during such period to the extent such
cash expenditures are actually financed). Capital Expenditures shall exclude
proceeds of a Casualty Loss applied to the repair or replacement of the
property affected by the Casualty Loss.
CASH EQUIVALENTS means any of the following, so long as the Agent has a
perfected security interest therein: (i) securities issued, guarantied or
insured by the United States or any of its agencies and having maturities of
not more than one year; (ii) certificates of deposit or bankers' acceptances
having maturities of not more than one year issued by (a) the Agent, (b) any
Lender or (c) a U.S. federal or state chartered commercial bank of recognized
standing whose capital and unimpaired surplus is in excess of $200,000,000
and whose short-term commercial paper rating, or that of its parent holding
company, is at least A-1 or the equivalent by Standard & Poor's Corporation
("S&P") and at least P-1 or the equivalent by ▇▇▇▇▇'▇ Investors Services,
Inc. ("Moody's"); (iii) marketable direct obligations issued by any state of
the United States of America or any political subdivision of any such state
or any public instrumentality thereof maturing within one year from the date
of acquisition thereof and, at the time of acquisition, having the highest
rating from either S&P or Moody's; (iv) certificates of deposit maturing
within one year of the date of acquisition thereof in an amount less than or
equal to $100,000 in the aggregate issued by any bank insured by the Federal
Deposit Insurance Corporation; (v) eurodollar time deposits having a maturity
of less than one year purchased directly from any Lender (whether such
deposit is with such Lender (or its Affiliates) or any other Lender (or its
Affiliates)); (vi) commercial paper rated at least A-1 by S&P or P-1 by
Moody's and, in either case, having a tenor of not more than one year; and
(vii) money market funds invested in one or more of the foregoing.
CASUALTY LOSS is defined in Section 7.7.
CHANGE OF CONTROL means the occurrence of one or more of the following events
(whether or not approved by the Board of Directors of any Borrower or
Holdings): (i) any direct or indirect sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all or
substantially all of the assets of any Borrower, ▇▇▇▇'▇ or Holdings to any
person or entity or group of persons or entities acting in concert (a
"Group") for purposes of Section 13(d) of the Exchange Act, together with any
Affiliates thereof; (ii) the approval by the holders of the capital stock of
any Borrower, ▇▇▇▇'▇ or Holdings of any plan of liquidation; (iii) the
acquisition in one or more transactions of "beneficial ownership" (within the
meaning of Rule 13d-3 and Rule 13d-5 under the Exchange Act whether or not
applicable), by any Person (other than any Permitted Holder) or Group
(excluding Permitted Holders) together with its or their Affiliates, in
either case, of any securities of any Borrower, ▇▇▇▇'▇ or Holdings such that,
as a result of such acquisition, such Person or Group either; (A)
beneficially owns (as set forth above), directly or indirectly, at least
thirty-five percent (35%) or more of the combined voting power of any
Borrower's, ▇▇▇▇'▇' or Holdings' then outstanding Voting Stock or (B)
otherwise has the ability to elect, directly or indirectly, a majority of the
members of the Board of Directors of any Borrower, ▇▇▇▇'▇ or Holdings; (iv)
the ▇▇▇▇▇▇▇ Parties, together, cease (A) to own sufficient shares of the
capital stock of Holdings to elect a majority of the Board of Directors or
(B) to control a majority of the Board of Directors of Holdings; (v) (A)
Holdings shall fail to own (directly or through a wholly owned Subsidiary)
less than one hundred percent (100%) of the combined voting power of any
Borrower's then outstanding Voting Stock (other than as a result of the sale
of Voting Stock of any Borrower pursuant to
5
an initial public offering), or (B) Holdings shall fail to own (directly or
through a wholly owned Subsidiary) sufficient shares of the capital stock of
any Borrower to elect a majority of the Board of Directors of such Borrower,
or (C) Holdings shall fail to control a majority of the Board of Directors of
any Borrower; (vi) the ▇▇▇▇▇▇▇ Parties, together, cease to beneficially own
(as set forth above), directly or indirectly, at least fifty-one percent
(51%) of the combined voting power of Holdings' then outstanding Voting
Stock; or (vii) any "Change of Control" as defined in the Senior Subordinated
Note Indenture. VOTING STOCK means any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock of any class or kind ordinarily (without regard to the occurrence of
any contingency) having the power to vote for the election of directors.
CLOSING DATE means the date, if any, prior to January 31, 1998 on which the
conditions set forth in Sections 5.1 and 5.2 have been satisfied or waived
and the initial Loans are made.
CLOSING DOCUMENT LIST is defined in Section 5.1.
CODE is defined in Section 1.3.
COLLATERAL means the Accounts, Inventory, Equipment (as defined in the
Security Agreement), Intangibles (as defined in the Security Agreement),
Mortgaged Properties and other property identified as security for any of the
Obligations under the Collateral Documents. The foregoing to the contrary
notwithstanding, the Collateral shall not include any Excluded Property.
COLLATERAL ACCESS AGREEMENT means any landlord waiver, mortgagee waiver,
bailee letter or any similar acknowledgment agreement of any warehouseman or
processor in possession of Inventory, substantially in the form of Exhibit O.
COLLATERAL DOCUMENTS means the Security Agreement, the Pledge Agreement, the
Mortgages and all other contracts, instruments and other documents pursuant
to which Liens are now or hereafter granted to the Agent to secure the
Obligations.
COLLECTION ACCOUNT is defined in Section 4.10.
COLLECTIONS means all cash, funds, checks, notes, instruments and any other
form of remittance tendered by account debtors in payment of Accounts.
COMMITMENT of a Lender means its Term Commitment and Revolving Credit
Commitment, in each case then in effect.
COMPLIANCE DATE means any of the following: (i) the date of any Notice of
Borrowing, Notice of Conversion, Notice of Continuance, Letter of Credit
Request or Compliance Certificate; (ii) the date of any Borrowing,
continuation or conversion of any Borrowing or issuance of any Letter of
Credit; and (iii) any other date on which any Borrower certifies or is deemed
to certify compliance with this Credit Agreement.
CONCENTRATION ACCOUNT is defined in Section 4.10.
CONSOLIDATED FIXED CHARGES means for any period the sum of (i) Interest
Expense for such period, (ii) all expenditures after December 31, 1996 paid
in cash by all Credit Parties for Capital Expenditures for such period, (iii)
the scheduled principal amounts (including the principal portion of rentals
payable under capital leases) of all Indebtedness (but excluding repayments
of Revolving Loans which do not permanently reduce the Commitments) of all
Credit Parties payable for such period and (iv) dividends of all Credit
Parties that are paid in cash for such period.
6
CONTINGENT OBLIGATION means any direct, indirect, contingent or
non-contingent guaranty or obligation for the Indebtedness of another, except
endorsements in the ordinary course of business.
COVERED TAXES is defined in Section 4.15.
CREDIT AGREEMENT means this Credit Agreement, as the same may be modified,
amended, extended, restated, amended and restated and supplemented from time
to time.
CREDIT DOCUMENTS means, collectively, this Credit Agreement, the Term Notes,
the Revolving Notes, the Letters of Credit, the Guarantees, each of the
Collateral Documents and all other documents, agreements, instruments,
opinions and certificates now or hereafter executed and delivered in
connection herewith or therewith, as modified, amended, extended, restated or
supplemented from time to time.
CREDIT PARTIES means, collectively, Holdings, ▇▇▇▇'▇, each Borrower, ▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, Mount ▇▇▇▇▇▇▇ and any other parties to the Credit Documents
(except the Lenders, the Agent and issuers of opinions).
CROSS GUARANTEE means the Guarantee executed in favor of the Agent pursuant
to Section 5.1(a), substantially in the form of Exhibit E.
DEBT RATIO means the ratio determined pursuant to Section 8.5.
DEFAULT means an event, condition or default which with the giving of notice,
the passage of time or both would be an Event of Default.
DEFAULTING LENDER is defined in Section 2.9.
DISBURSEMENT ACCOUNT means, with respect to each Borrower, the operating
account of such Borrower maintained with the Disbursement Account Bank or,
with respect to Port City and Shenandoah, such other bank or other financial
institution as may be acceptable to the Agent.
DISBURSEMENT ACCOUNT BANK means Bankers Trust Company.
DOLLARS OR $ means United States dollars.
DOMESTIC LENDING OFFICE means, with respect to any Lender, the office of such
Lender specified as its "Domestic Lending Office" opposite its name on Annex
I hereto, as such annex may be amended from time to time.
EBITDA for a period means the consolidated net income of the Credit Parties
(excluding extraordinary items) for the period (a) PLUS all Interest Expense,
Tax Expense, depreciation and amortization (including amortization of any
goodwill or other intangibles) for the period, (b) LESS gains or PLUS losses
attributable to any fixed asset sales in the period and (c) PLUS OR MINUS any
other non-cash charges which have been subtracted or added in calculating
consolidated net income for the period.
ELIGIBLE ACCOUNTS RECEIVABLE means, with respect to each Borrower, Accounts
of such Borrower deemed by the Agent in the exercise of its Permitted
Discretion to be eligible for inclusion in the calculation of the Borrowing
Base for such Borrower. In determining the amount to be so included, the
face amount of such Accounts shall be reduced by the amount of all returns,
discounts, deductions, claims, credits, charges, or other allowances. Unless
otherwise approved in writing by the Agent, an Account shall not be an
Eligible Account Receivable if:
(a) it arises out of a sale made by a Borrower to an Affiliate; or
7
(b) its payment terms are longer than 30 days from date of invoice,
except that up to $5,000,000 of Accounts with payment terms in excess of 30
days but not more than 90 days may be included in Eligible Accounts
Receivable to the extent otherwise constituting an Eligible Account
Receivable; or
(c) it is unpaid (i) more than 60 days after the original payment due
date or (ii) more than 120 days after date of invoice; or
(d) it is owed by an account debtor with respect to which fifty percent
(50%) or more of the Accounts owed by that account debtor and its Affiliates
are ineligible under clause (c) above; or
(e) when aggregated with all other Accounts of an account debtor due to
any Borrower, the Account exceeds: (1) ten percent (10%); or (2) in the case
of Accounts with respect to which ▇.▇. ▇▇▇▇▇▇ Corporation is the account
debtor, twenty percent (20%); or (3) in the case of Accounts with respect to
which Time Inc. (including its Affiliates) is the account debtor, twenty-five
percent (25%); or (4) in the case of Accounts with respect to which The
▇▇▇▇▇▇-▇▇▇▇ Companies (including its Affiliates) is the account debtor,
fifteen percent (15%), in each case in face value of all Accounts of the
Borrowers then outstanding, to the extent of such excess, unless supported by
an irrevocable letter of credit satisfactory to the Agent (as to form,
substance and issuer) and which, after the occurrence and during the
continuance of an Event of Default, has been assigned to and is directly
drawable by the Agent; or
(f) the account debtor for the Account is a creditor of any Borrower,
has or has asserted a right of setoff, has disputed its liability or made any
claim with respect to the Account or any other Account which has not been
resolved, to the extent of the amount owed by any Borrower to the account
debtor, the amount of such actual or asserted right of setoff, or the amount
of such dispute or claim, as the case may be; or
(g) the account debtor has commenced a voluntary case under the federal
bankruptcy laws, as now constituted or hereafter amended, or made an
assignment for the benefit of creditors, or if a decree or order for relief
has been entered by a court having jurisdiction in the premises in respect to
the account debtor in an involuntary case under the federal bankruptcy laws,
as now constituted or hereafter amended, or if any other petition or other
application for relief under the federal bankruptcy laws has been filed by or
against the account debtor, or if the account debtor has filed a certificate
of dissolution under applicable state law or shall be liquidated, dissolved
or wound-up, or shall authorize or commence any action or proceeding for
dissolution, winding-up or liquidation, or if the account debtor has failed,
suspended business, declared itself to be insolvent, or consented to or
suffered a receiver, trustee, liquidator or custodian to be appointed for it
or for all or a significant portion of its assets or affairs; or
(h) it is not payable in Dollars or the account debtor for the Account
is located outside the continental United States, unless the Account is
supported by an irrevocable letter of credit satisfactory to the Agent (as to
form, substance and issuer) and which, after the occurrence and during the
continuance of an Event of Default, has been assigned to and is directly
drawable by the Agent; or
(i) other than with respect to sales to the Boy Scouts of America, the
sale to the account debtor is on a ▇▇▇▇-and-hold, guarantied sale,
sale-and-return, sale on approval or consignment basis or made pursuant to
any other written agreement providing for repurchase or return; or
(j) the Agent determines by its own credit analysis that collection of
the Account is uncertain or the Account may not be paid; or
8
(k) the account debtor is the United States of America or any
department, agency or instrumentality thereof, unless the applicable Borrower
duly assigns its rights to payment of such Account to the Agent pursuant to
the Assignment of Claims Act of 1940, as amended (31 U.S.C. Sections 3727 et
seq.); or
(l) other than with respect to sales to the Boy Scouts of America, the
goods giving rise to such Account have not been shipped and delivered to and
accepted by the account debtor, the services giving rise to such Account have
not been performed and accepted, or the Account otherwise does not represent
a final sale or earned amounts, or an invoice with respect to the sale has
not been issued to the account debtor within 10 days of the sale; or
(m) it does not comply with all Requirements of Law, including without
limitation the Federal Consumer Credit Protection Act, the Federal Truth in
Lending Act and Regulation Z of the Board of Governors of the Federal Reserve
System; or
(n) it is subject to any adverse security deposit, progress payment or
other similar advance made by or for the benefit of the applicable account
debtor; or
(o) it is not subject to a valid and perfected first priority Lien in
favor of the Agent or does not otherwise conform to the representations and
warranties contained in the Credit Documents.
ELIGIBLE INVENTORY means, with respect to any Borrower, the aggregate amount
of Inventory of such Borrower deemed by the Agent in the exercise of its
Permitted Discretion to be eligible for inclusion in the calculation of the
Borrowing Base for such Borrower. In determining the amount to be so
included, Inventory shall be valued at the lower of cost or market on a basis
consistent with Perry's current and historical accounting practices. Unless
otherwise approved in writing by the Agent, an item of Inventory shall not be
included in Eligible Inventory of any Borrower if:
(a) it is not owned solely by such Borrower or such Borrower does not
have good and marketable title thereto; or
(b) it is not located in the United States; or
(c) it is not located on property owned or leased by such Borrower or
in a contract warehouse, subject to a Collateral Access Agreement executed by
the mortgagee, lessor or the contract warehouseman, as the case may be, and
segregated or otherwise separately identifiable from goods of others, if any,
stored on the premises or prepaid and in-transit to one or more of such
locations from such Borrower's vendor pursuant to purchase documents that
vest title in such Borrower upon shipment of the goods at point of shipment;
or
(d) it is not subject to a valid and perfected first priority Lien in
favor of the Agent except, with respect to Inventory stored at sites
described in clause (c) above, for Liens for unpaid rent or normal and
customary warehousing charges; or
(e) it consists of goods returned or rejected by such Borrower's
customers or goods in transit to third parties (other than to warehouse sites
covered by a Collateral Access Agreement); or
(f) it is not first-quality finished goods or work-in-process or raw
materials consisting solely of paper, is obsolete or slow moving, or does not
otherwise conform to the representations and warranties contained in the
Credit Documents; or
9
(g) it is prepaid Inventory in transit otherwise eligible for inclusion
in Eligible Inventory which, when aggregated with all other Inventory in
transit included in Eligible Inventory, would cause the total value of
Inventory in transit included in Eligible Inventory to exceed $1,000,000.
EMPLOYMENT AGREEMENTS is defined in Section 5.1(h).
ENVIRONMENTAL LAWS means all federal, state, local laws, statutes,
ordinances, regulations, rules, judgments, orders, notice requirements,
decrees, guidelines, policies or Requirements of Law relating to pollution or
protection of human health or the environment (including, without limitation,
ambient air, surface water, ground water, land surface, flora, fauna or
subsurface strata), including, without limitation, those relating to
emissions, discharges, releases or threatened releases of Hazardous
Materials, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Material.
ENVIRONMENTAL REPORTS means (i) the Phase I Environmental Site Assessment
Reports prepared by Dames & ▇▇▇▇▇ relating to real property at ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ and
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ and (ii) the reports of ▇▇▇▇▇▇▇
▇▇▇▇▇▇ relating to the Mortgaged Properties.
EQUITY ISSUANCE DOCUMENTS means and includes the documents and agreements
(including, without limitation, any certificates of designation) related to
the Holdings Equity Issuance.
ERISA means the Employee Retirement Income Security Act of 1974, 29 U.S.C.
Sections 1000 et seq., amendments thereto, successor statutes, and
regulations or guidance promulgated thereunder.
ERISA AFFILIATE means any entity required to be aggregated with any Borrower
or any of its Subsidiaries under Sections 414(b), (c), (m) or (o) of the
Internal Revenue Code.
EURODOLLAR LENDING OFFICE means, with respect to any Lender, the office of
such Lender specified as its "Eurodollar Lending Office" opposite its name on
Annex I, as such annex may be amended from time to time (or, if no such
office is specified, its Domestic Lending Office), or such other office or
Affiliate of such Lender as such Lender may from time to time specify in
writing to the Borrowers and the Agent.
EURODOLLAR RATE means, with respect to the Interest Period for each
Eurodollar Rate Loan comprising part of the same Borrowing, an interest rate
per annum equal to the rate (rounded upward to the nearest whole multiple of
one-sixteenth (1/16) of one percent (1%) per annum, if such rate is not such
a multiple) of the offered quotation, if any, to first class banks in the
Eurodollar market by Bankers Trust Company for U.S. dollar deposits of
amounts in immediately available funds comparable to the principal amount of
the Eurodollar Rate Loan for which the Eurodollar Rate is being determined
with maturities comparable to the Interest Period for which such Eurodollar
Rate will apply as of approximately 10:00 A.M. New York City time two (2)
Business Days prior to the commencement of such Interest Period.
EURODOLLAR RATE LOAN means a Revolving Loan or Term Loan that bears interest
as provided in Section 4.2.
EVENT OF DEFAULT is defined in Article 9.
"EXCHANGE NOTE INDENTURE" means an indenture among Holdings, the Senior
Subordinated Note Guarantors, and the trustee under the Holdings Senior
Subordinated Note Indenture, the terms, conditions and other provisions of
which (other than the date thereof) are identical to the Holdings
10
Senior Subordinated Note Indenture, subject to any changes therein which are
approved by the Majority Lenders.
"EXCHANGE NOTES" means notes issued by Holdings pursuant to the Exchange Note
Indenture in exchange for the Holdings Senior Subordinated Notes, in an
aggregate principal amount not to exceed the aggregate principal amount of
the Holdings Senior Subordinated Notes for which such notes are exchanged,
and the terms, conditions and other provisions of which notes (other than the
date thereof and the transfer restrictions contained therein) are identical
to the Holdings Senior Subordinated Notes issued on the Closing Date, subject
to any changes therein which are approved by the Majority Lenders.
EXCESS CASH FLOW for any Fiscal Year means EBITDA for that year MINUS (or
PLUS) any increases (or decreases) in Working Capital MINUS the sum of the
following items for that year: (i) Interest Expense, (ii) income taxes paid
in cash by the Credit Parties, (iii) permitted principal payments on or
mandatory redemptions of Indebtedness (other than repayments of Revolving
Loans in the ordinary course of business which do not permanently reduce the
Commitments), (iv) permitted Capital Expenditures by the Credit Parties paid
in cash, and (v) the aggregate amount of cash dividends paid by the Borrowers
pursuant to Sections 8.11(a)(iii), (iv) and (v).
EXCLUDED PROPERTY means (a) that portion of each Borrower's governmental
licenses or permits that if included in the Collateral, would violate, in any
material respect, any mandatory requirements of applicable law prohibiting
the creation of a security interest therein, and (b) if subject to Liens
pursuant to the Sale\Leaseback Documents, the interest of any Borrower in and
to equipment leased pursuant to such Sale\Leaseback Documents, together with
related accessions and attachments.
EXCLUDED SUBSIDIARY means a Subsidiary of Holdings that is acquired (or
formed to acquire assets) after the Closing Date pursuant to a transaction
that constitutes a Permitted Acquisition of Excluded Subsidiary (as defined
in the Holdings Guarantee).
EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.
EXISTING AGENT is defined in the Recitals.
EXISTING CREDIT AGREEMENT is defined in the Recitals.
EXISTING CREDIT DOCUMENTS is defined in the Recitals.
EXISTING COLLATERAL is defined in the Recitals.
EXISTING LENDERS is defined in the Recitals.
EXISTING LOANS is defined in the Recitals.
EXISTING NOTES is defined in the Recitals.
EXISTING OBLIGATIONS is defined in the Recitals.
EXISTING REVOLVING LOANS is defined in the Recitals.
EXISTING REVOLVING NOTES is defined in the Recitals.
EXISTING TERM LOANS is defined in the Recitals.
EXISTING TERM NOTES is defined in the Recitals.
11
EXPENSES means all reasonable costs and expenses of the Agent (exclusive of
general overhead including compensation of its employees other than
reimbursement of collateral examination expenses) incurred in connection with
the Credit Documents and the transactions contemplated therein, including,
without limitation, (i) the reasonable costs of conducting record searches,
examining collateral, opening bank accounts and lockboxes, depositing checks,
receiving and transferring funds (including charges for checks for which
there are insufficient funds), and other out-of-pocket costs of
administration and enforcement of the rights of the Lenders under the Credit
Documents, (ii) the reasonable fees and expenses of legal counsel and
paralegals (including the allocated cost of internal counsel and paralegals),
accountants, appraisers and other consultants, experts or advisors retained
by the Agent, (iii) reasonable fees and expenses (exclusive of the processing
and recordation fee) incurred in connection with the assignments of or sales
of participations in the Loans, (iv) the actual cost of title insurance
premiums, real estate survey costs, fees and taxes in connection with the
filing of financing statements, and (v) the reasonable costs of preparing and
recording Collateral Documents, releases of Collateral, and waivers,
amendments, and terminations of any of the Credit Documents.
EXPIRATION DATE means December 15, 2002.
FEDERAL FUNDS RATE means, for any period, a fluctuating interest rate per
annum equal, for each day during such period, to the weighted average of the
rates on overnight Federal Funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers, as published for such day
(or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day that is a Business Day, the average of the quotations for such
day on such transactions received by the Agent from three Federal Funds
brokers of recognized standing selected by it.
FEE LETTER means the letter dated October 16, 1997 between the Borrowers and
BT Commercial Corporation providing for the payment of certain fees in
connection with this Credit Agreement.
FEES means, collectively, the Unused Line Fee, the Letter of Credit Fees, the
Issuing Bank Fees and the other fees provided in the Fee Letter.
FINANCIAL STATEMENTS means the consolidated and consolidating balance sheets,
statements of operations, statements of cash flows and statements of changes
in shareholder's equity of Holdings and the other Credit Parties for the
period specified (including any footnotes thereto), prepared in accordance
with GAAP and consistently with prior practices, except to the extent of
changes required by GAAP occurring after the Closing Date, and except, in the
case of unaudited financial statements, for the lack of footnotes and that
they are subject to normal audit adjustments.
FISCAL PERIOD means any of the monthly periods used by the Borrowers in the
financial reports prepared for use by their respective Boards of Directors
and senior management.
FISCAL QUARTER means any of the four periods consisting of three consecutive
Fiscal Periods which make up a Fiscal Year.
FISCAL YEAR means the fiscal year of the Borrowers ending on December 31 of
each calendar year.
FOREIGN LENDER means any Lender organized under the laws of a jurisdiction
outside of the United States.
FUNDED DEBT means any obligation payable more than one year from the date of
determination thereof, which under GAAP is shown on the balance sheet as a
liability, including Revolving Loans and
12
obligations under capital leases, but excluding items customarily reflected
below current liabilities, such as deferred federal taxes on income and other
reserves.
FUNDING BANK is defined in Section 4.14.
GAAP means generally accepted accounting principles in the United States as
in effect from time to time.
GOVERNING DOCUMENTS means the certificates or articles of incorporation,
by-laws and other organizational or governing documents of any Person.
GOVERNMENTAL AUTHORITY means 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.
GUARANTEES means the Holdings Guarantee, the Cross Guarantee and the ▇▇▇▇'▇
Guarantee.
HAZARDOUS MATERIALS means (i) any chemical, material or substance (whether
solid, liquid or gas) at any time defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials," "extremely
hazardous waste," "restricted hazardous waste," "infectious waste," "toxic
substances" or any other formulations intended to define, list or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity,
"TCLP toxicity" or "EP toxicity" or words of similar import under any
applicable Environmental Laws; (ii) any oil, petroleum, petroleum fraction or
petroleum derived substance; (iii) any drilling fluids, produced waters and
other wastes associated with the exploration, development or production of
crude oil, natural gas or geothermal resources; (iv) any flammable substances
or explosives; (v) any radioactive materials; (vi) asbestos in any form;
(vii) urea formaldehyde foam insulation; (viii) electrical equipment which
contains any oil or dielectric fluid containing levels of polychlorinated
biphenyls in excess of fifty parts per million; (ix) pesticides; and (x)
radon.
HIGHEST LAWFUL RATE means, at any given time during which any Obligations
shall be outstanding hereunder, the maximum nonusurious interest rate that at
any time or from time to time may be contracted for, taken, reserved, charged
or received on the Obligations, under the laws of the State of California (or
the law of any other jurisdiction whose laws may be mandatorily applicable
notwithstanding other provisions of this Credit Agreement and the other
Credit Documents), or under applicable federal laws which may presently or
hereafter be in effect and which allow a higher maximum nonusurious interest
rate than under California (or such other jurisdiction's) law, in any case
after taking into account, to the extent permitted by applicable law, any and
all relevant payments or charges under this Credit Agreement and any other
Credit Documents executed in connection herewith, and any available
exemptions, exceptions and exclusions.
HOLDINGS means ▇▇▇▇▇-▇▇▇▇'▇ Incorporated (formerly known as PPC Holdings,
Inc.), a Delaware corporation.
HOLDINGS EQUITY ISSUANCE means the issuance by Holdings of common stock in
connection with the ▇▇▇▇'▇ Merger.
HOLDINGS GUARANTEE means the Amended and Restated Guarantee executed by
Holdings in favor of the Agent pursuant to Section 5.1(a), substantially in
the form of Exhibit D.
HOLDINGS SENIOR SUBORDINATED NOTES means Holdings' 10 5/8% Senior
Subordinated Notes due 2007 issued on or prior to the Closing Date in the
aggregate principal amount of $115,000,000 and any
13
Exchange Notes issued in exchange therefor pursuant to the Exchange Note
Indenture, in each case, as the same may be amended, supplemented or
otherwise modified from time to time.
HOLDINGS SENIOR SUBORDINATED NOTE DOCUMENTS means the Holdings Senior
Subordinated Note Indenture, the Holdings Senior Subordinated Notes, the
Subsidiary Subordinated Note Guaranties and the Senior Subordinated Note
Registration Rights Agreement.
HOLDINGS SENIOR SUBORDINATED NOTE INDENTURE means (i) the Indenture dated as
of December 16, 1997 among Holdings, the Senior Subordinated Note Guarantors
and U.S. Trust Company of California, N.A., as Trustee, pursuant to which the
Holdings Senior Subordinated Notes were issued, and (ii) if any Exchange
Notes are issued, the Exchange Note Indenture, in each case, as the same may
be amended, supplemented or otherwise modified from time to time.
HOLDINGS SERIES A PREFERRED STOCK means Series A Preferred Stock of Holdings,
par value $.001 per share, the dividends with respect to which are payable
solely in additional shares of such Series A Preferred Stock.
INDEBTEDNESS of a Person means (a) indebtedness for borrowed money or for the
deferred purchase price of property or services (other than current
liabilities incurred in connection with the purchase of goods or services in
the ordinary course of business and payable in accordance with customary
practices, provided all or any portion of the liabilities are not (i) due
more than twelve months after the incurrence thereof or (ii) evidenced by a
note, bond, debenture or similar instrument), whether on open account or
evidenced by a note, bond, debenture or similar instrument, (b) obligations
under capital leases, (c) reimbursement obligations for letters of credit,
banker's acceptances or other credit accommodations, (d) liabilities, as
determined by the Agent, under any Interest Rate Agreement, (e) Contingent
Obligations and (f) obligations secured by any Lien on that Person's
property, even if that Person has not assumed such obligations, except such
obligations that are secured by involuntary Liens.
INSOLVENCY EVENT means, with respect to any Person, the occurrence of any of
the following: (a) such Person shall be adjudicated insolvent or bankrupt, or
shall generally fail to pay or admit in writing its inability to pay its
debts as they become due, (b) such Person shall seek dissolution or
reorganization or the appointment of a receiver, trustee, custodian or
liquidator for it or a substantial portion of its property, assets or
business or to effect a plan or other arrangement with its creditors, (c)
such Person shall make a general assignment for the benefit of its creditors,
or consent to or acquiesce in the appointment of a receiver, trustee,
custodian or liquidator for a substantial portion of its property, assets or
business, (d) such Person shall file a voluntary petition under any
bankruptcy, insolvency or similar law, or (e) such Person, or a substantial
portion of its property, assets or business shall become the subject of an
involuntary proceeding or petition for its dissolution, reorganization, or
the appointment of a receiver, trustee, custodian or liquidator or shall
become subject to any writ, judgment, warrant of attachment, execution or
similar process involving $500,000, or more, and any such proceeding,
petition, writ, judgment, warrant of attachment, execution or similar process
shall not be released, vacated or fully bonded within 45 days after
commencement, filing or levy, as the case may be, or any order for relief
shall be entered in any such proceeding.
INTEREST EXPENSE means the consolidated expense of the Credit Parties for
interest on Indebtedness, including, without limitation, amortization of
original issue discount, incurrence fees (to the extent included in interest
expense), the interest portion of any deferred payment obligation and the
interest component of any capital lease obligation.
INTEREST PERIOD means for any Eurodollar Rate Loan the period commencing on
the date of such Borrowing and ending on the last day of the period selected
by the Borrower thereof pursuant to the provisions below. The duration of
each such Interest Period shall be one, two, three or, subject to
14
availability by all Lenders, six months, in each case as the applicable
Borrower may, in an appropriate Notice of Borrowing, Notice of Continuation
or Notice of Conversion, select; PROVIDED, HOWEVER, that no Borrower may
select any Interest Period that ends after the Expiration Date. Whenever the
last day of any Interest Period would otherwise occur on a day other than a
Business Day, the last day of such Interest Period shall be extended to occur
on the next succeeding Business Day, PROVIDED that if such extension would
cause the last day of such Interest Period to occur in the next following
calendar month, the last day of such Interest Period shall occur on the next
preceding Business Day.
INTEREST RATE AGREEMENT means any interest rate protection or hedge
agreement, including, without limitation, interest rate future, option, swap,
and cap agreements.
INTERNAL REVENUE CODE means the Internal Revenue Code of 1986, amendments
thereto, successor statutes, and regulations or guidance promulgated
thereunder.
INTERNAL REVENUE SERVICE or IRS means the United States Internal Revenue
Service and any successor agency.
INVENTORY is defined in the Security Agreement (SEE Exhibit B).
INVESTMENT means all expenditures made and all liabilities incurred
(including Contingent Obligations) for or in connection with the acquisition
of stock, other equity interests or Indebtedness of a Person, loans,
advances, or capital contributions of cash, assets or other property to a
Person, or acquisition of substantially all the assets of a Person. In
determining the aggregate amount of Investments outstanding at any particular
time, (i) a guaranty shall be valued at not less than the principal amount
guaranteed and outstanding; (ii) returns of capital (but only by repurchase,
redemption, retirement, repayment, liquidating dividend or liquidating
distribution) shall be deducted; (iii) earnings, whether as dividends,
interest or otherwise, shall NOT be deducted; and (iv) decreases in the
market value shall NOT be deducted and increases in the market value shall
NOT be included.
ISSUING BANK means Bankers Trust Company or any Lender, Affiliate of any
Lender or, if none of the foregoing are capable of issuing Letters of Credit,
such other financial institution acceptable to the Agent and the Borrowers
which may at any time issue or be requested to issue a Letter of Credit for
the account of any Borrower (or for the joint account of any Borrower and the
Agent or any Lender) under this Credit Agreement. If there is more than one
Issuing Bank, all references to "the Issuing Bank" shall be deemed to refer
to each Issuing Bank or to all Issuing Banks, as the context requires.
ISSUING BANK FEES is defined in Section 4.4.
▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ means ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, Inc., a District of Columbia
corporation.
▇▇▇▇'▇ means ▇▇▇▇'▇, Incorporated, a Maryland corporation.
▇▇▇▇'▇ CERTIFICATE OF MERGER means the Certificate of Merger, in
substantially the form of Exhibit T, to be filed with the Secretary of State
of the State of Maryland.
▇▇▇▇'▇ GUARANTEE means the Guarantee executed by ▇▇▇▇'▇ in favor of the Agent
pursuant to Section 5.1(a), substantially in the form of Exhibit ▇.
▇▇▇▇'▇ MERGER means the merger of ▇▇▇▇▇ with and into ▇▇▇▇'▇ pursuant to the
▇▇▇▇'▇ Merger Agreement and the ▇▇▇▇'▇ Certificate of Merger, with ▇▇▇▇'▇
being the surviving corporation.
▇▇▇▇'▇ MERGER AGREEMENT means the Plan and Agreement of Merger dated as of
October 17, 1997 by and among Holdings, ▇▇▇▇▇ and ▇▇▇▇'▇.
15
LETTER OF CREDIT FEES is defined in Section 4.4.
LETTER OF CREDIT OBLIGATIONS means the sum of (i) the aggregate undrawn
amount of all Letters of Credit outstanding, PLUS (ii) the aggregate amount
of all drawings under Letters of Credit for which the applicable Borrower has
not reimbursed the Issuing Bank, PLUS (iii) without duplication of amounts
included in clause (ii), the aggregate amount of all payments made by the
Lenders to the Issuing Bank for participations in Letters of Credit for which
the applicable Borrower has not reimbursed the Lenders.
LETTER OF CREDIT REQUEST is defined in Section 3.3.
LETTERS OF CREDIT means all letters of credit issued for the account of any
Borrower under Article 3 and all amendments, renewals, extensions or
replacements thereof.
LIEN means any lien, claim, charge, pledge, security interest, assignment,
hypothecation, deed of trust, mortgage, lease, conditional sale, retention of
title, or other preferential arrangement having substantially the same
economic effect as any of the foregoing, whether voluntary or imposed by law.
LOAN or LOANS means one or more of the Revolving Loans or Term Loans or any
combination thereof.
LOAN ACCOUNT is defined in Section 4.8.
LOCKBOXES, LOCKBOX AGREEMENTS, and LOCKBOX BANK are defined in Section 4.10.
MAJORITY LENDERS means those Lenders owed or holding in the aggregate more
than fifty percent (50%) of the total Commitments or if the Commitments are
terminated, more than fifty percent (50%) of the Loans and Letter of Credit
Obligations then outstanding.
MANAGEMENT AGREEMENT means the Management Agreement dated as of April 28,
1995 between PPC Acquisitions, Inc. and Novamil Corporation, as amended from
time to time to the extent permitted hereunder.
MATERIAL ADVERSE EFFECT means (i) a material adverse effect on the business,
prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of any Borrower and its Subsidiaries,
taken as a whole, (ii) a material impairment of any Credit Party's ability to
perform its obligations under the Credit Documents to which it is a party or
of the Agent or the Lenders to enforce the Obligations or realize upon the
Collateral, or (iii) a material adverse effect on the value of the Collateral
or the amount which the Agent or the Lenders would be likely to receive
(after giving consideration to delays in payment and costs of enforcement) in
the liquidation of such Collateral.
MATERIAL CONTRACT means any contract or other arrangement to which any Credit
Party is a party (other than the Credit Documents) the breach,
nonperformance, cancellation of which, or failure to renew would or
reasonably could be expected to have a Material Adverse Effect, and shall
include, without limitation, the Related Documents and the Sale\Leaseback
Documents.
▇▇▇▇▇▇▇ PARTY means ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Trust and the ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Trust or any of them.
MORTGAGED PROPERTIES means (i) the Real Property comprising the premises
commonly known as: (a) ▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇.▇.,
▇▇▇▇▇-▇▇▇▇; (b) ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇; (c)
Greenwood Road, Baltimore, MD; and (d) ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇; and (ii)
any other Real Property now or hereafter subject to a Mortgage.
16
MORTGAGES means the mortgages and/or deeds of trust executed pursuant to
Section 5.1(a), substantially in the form of Exhibit P, and any other
mortgage, leasehold mortgage, deed of trust or leasehold deed of trust
securing the obligations hereunder, in each case as amended, supplemented or
otherwise modified from time to time.
MOUNT ▇▇▇▇▇▇▇ means Mount ▇▇▇▇▇▇▇ Press, Inc., a Virginia corporation.
MULTIEMPLOYER PLAN means a "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) to which any Borrower, any of its Subsidiaries or any
ERISA Affiliate has contributed within the past six years or with respect to
which any Borrower or any of its Subsidiaries may incur any liability.
▇▇▇▇▇ means ▇▇▇▇▇ Acquisition Corp., a Maryland corporation.
NON-COMPETITION AGREEMENT means the Non-Competition Agreement dated August 5,
1993 by and among ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and TCA Holdings Corp.
NORTHSTAR means Northstar Print Group, Inc., a Wisconsin corporation.
NOTE CONVERSION means the conversion of that certain promissory note
(including accrued and unpaid interest) of Holdings dated May 2, 1995 and
issued in favor of Ropamil Limited Partnership in the original principal
amount of $6,500,000 into 95,000 shares of Holdings Series A Preferred Stock.
NOTE CONVERSION DOCUMENTS means the Exchange Agreement dated as of December
16, 1997 between Holdings and Ropamil Limited Partnership.
NOTES means one or more of the Revolving Notes or Term Notes or any
combination thereof.
NOTICE OF BORROWING is defined in Section 2.3.
NOTICE OF CONTINUATION is defined in Section 4.13(a).
NOTICE OF CONVERSION is defined in Section 4.13(b).
OBLIGATIONS means the unpaid principal and interest hereunder (including
interest accruing on or after the occurrence of an Insolvency Event, whether
or not an allowed claim), reimbursement obligations under Letters of Credit,
Fees, Expenses and all other obligations and liabilities of any Credit Party
to the Agent, the Issuing Bank or to the Lenders under this Credit Agreement,
the Revolving Notes, the Term Notes or any other Credit Document.
OLD PERRY means Perry Printing Corporation, a Wisconsin corporation.
OTHER TAXES is defined in Section 4.15(b).
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ TRUST means the Amendment and Restatement in total of the
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust dated September 24, 1982, as amended.
PERMITTED DISCRETION means the Agent's good faith judgment based upon any
factor that is reasonable from the perspective of a secured lender and which
it believes in good faith: (i) will or reasonably could be expected to
adversely affect the value of the Collateral, the enforceability or priority
of the Agent's Liens thereon or the amount which the Agent and the Lenders
would be likely to receive (after giving consideration to delays in payment
and costs of enforcement) in the liquidation of such Collateral; (ii)
suggests that any collateral report or financial information delivered to the
Agent by any Person on behalf of any Borrower is incomplete, inaccurate or
misleading in any material respect; (iii) materially
17
increases the likelihood of a bankruptcy, reorganization or other insolvency
proceeding involving any Borrower or any of the Borrowers' Subsidiaries or
any of the Collateral, or (iv) creates or reasonably could be expected to
create a Default or Event of Default. In exercising such judgment, the Agent
may consider such factors already included in or tested by the definition of
Eligible Accounts Receivable or Eligible Inventory, as well as any of the
following: (i) the financial and business climate of the Borrowers' industry
and general macroeconomic conditions, (ii) changes in collection history and
dilution with respect to the Accounts, (iii) changes in demand for, and
pricing of, Inventory, (iv) changes in any concentration of risk with respect
to Accounts or Inventory, and (v) any other factors that adversely change the
credit risk of lending to any Borrower on the security of the Accounts or the
Inventory. The burden of establishing lack of good faith shall be on the
Borrowers.
PERMITTED HOLDER means any ▇▇▇▇▇▇▇ Party, and any individual who is an
executive officer of any Borrower on the Closing Date or any Person
controlled by a Permitted Holder.
PERMITTED MORTGAGE ENCUMBRANCE shall mean, with respect to any property
constituting a Mortgaged Property, such exceptions to title as are set forth
in the title insurance policy or title commitment delivered with respect
thereto, all of which exceptions must be reasonably acceptable to the Agent.
PERRY ACQUISITION means the acquisition by Perry and its Subsidiaries of
substantially all the assets of Old Perry and certain real property and
related assets owned by Northstar and used by Old Perry in its business.
PERSON means any individual, sole proprietorship, partnership, joint venture,
trust, unincorporated organization, association, corporation, institution,
entity, party or government (including any division, agency or department
thereof), and its successors, heirs and assigns. PLAN means any employee
benefit plan, program or arrangement maintained or contributed to by any
Borrower or any of its Subsidiaries, or with respect to which any of them may
incur liability.
PLEDGE AGREEMENT means the Amended and Restated Pledge Agreement executed in
favor of the Agent pursuant to Section 5.1(a), substantially in the form of
Exhibit C.
PRIME LENDING RATE means the rate which Bankers Trust Company announces as
its prime lending rate from time to time. The Prime Lending Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. Bankers Trust Company and each of the
Lenders may make commercial loans or other loans at rates of interest at,
above or below the Prime Lending Rate.
PRIME RATE LOAN means a Revolving Loan or Term Loan that bears interest as
provided in Section 4.1.
PROPORTIONATE SHARE of a Lender means a fraction, expressed as a decimal,
obtained by dividing its Commitment by the total Commitments of all the
Lenders or, if the Commitments are terminated, by dividing its then
outstanding Loans and/or Letter of Credit participations by the aggregate
Loans and/or Letter of Credit Obligations then outstanding.
PURCHASE MONEY LIENS is defined in Section 8.7.
REAL PROPERTY means all real property owned or leased by any Borrower or any
of their Subsidiaries, together with all fixtures, improvements and other
structures thereon.
REAL PROPERTY LEASES is defined in Section 5.1(h).
REAL PROPERTY SALE\LEASEBACK DOCUMENTS is defined in Section 5.1(g).
18
REDUCED RATE is defined in Section 4.15(e).
REGISTER is defined in Section 11.8.
RELATED DOCUMENTS means the ▇▇▇▇'▇ Merger Agreement, the Holdings Senior
Subordinated Note Documents, the Note Conversion Documents and the Real
Property Sale\Leaseback Documents.
REPORTABLE EVENT means any of the events described in Section 4043(b) of
ERISA or the regulations thereunder other than a Reportable Event as to which
the provision of thirty (30) days notice to the Pension Benefit Guaranty
Corporation is waived under applicable regulations. REQUIREMENT OF LAW means
(a) the Governing Documents of a Person, (b) any applicable law, treaty, rule
or regulation or determination of an arbitrator, court or other Governmental
Authority, or (c) any franchise, license, lease, permit, certificate,
authorization, qualification, easement, right of way, right or approval
binding on a Person or any of its property.
RETIREE HEALTH PLAN means an "employee welfare benefit plan" within the
meaning of Section 3(1) of ERISA that provides benefits to persons after
termination of employment, other than as required by Section 601 of ERISA.
REVOLVING CREDIT COMMITMENT of a Lender means its commitment to make
Revolving Loans and to participate in Letters of Credit, up to the amount set
forth opposite its name on Annex I, as such annex may be amended from time to
time, under the heading "Revolving Credit Commitment," as such amount may be
reduced from time to time.
REVOLVING LOANS means (i) each Existing Revolving Loan converted to a
Revolving Loan pursuant to Section 2.2 and (ii) each loan by a Lender to a
Borrower pursuant to Section 2.2.
REVOLVING NOTE means a promissory note of a Borrower payable to the order of
any Lender, substantially in the form of Exhibit A-1, as amended,
supplemented or otherwise modified from time to time.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ TRUST means the Third Amendment and Restatement in total of
the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Trust dated March 11, 1988, as amended.
SALE\LEASEBACK DOCUMENTS means the Real Property Sale\Leaseback Documents and
the documents and agreements relating to any other sale\leaseback of real or
personal property to which any Credit Party is a party.
SCHEDULED TERM LOAN INSTALLMENT is defined in Section 2.1.
SECURITY AGREEMENT means the Amended and Restated Security Agreement executed
in favor of the Agent pursuant to Section 5.1(a), substantially in the form
of Exhibit B.
SENIOR SUBORDINATED NOTE GUARANTORS means Perry, Judd's, Shenandoah Valley,
Port City, ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ and Mount ▇▇▇▇▇▇▇.
SENIOR SUBORDINATED NOTE REGISTRATION RIGHTS AGREEMENT means the Registration
Rights Agreement as defined in the Holdings Senior Subordinated Note
Indenture.
SERIES A PREFERRED STOCK means the Series A Preferred Stock of Perry, par
value $0.001 per share.
SERIES B PREFERRED STOCK means the Series B Preferred Stock of Perry, par
value $0.001 per share.
19
SERIES C PREFERRED STOCK means the Series C Preferred Stock of Perry, par
value $0.001 per share.
SERIES D PREFERRED STOCK means the Series D Preferred Stock of Perry, par
value $0.001 per share.
SETTLEMENT DATE is defined in Section 2.7.
SHAREHOLDER AGREEMENTS is defined in Section 5.1(h).
SUBSIDIARY of a Person means a corporation, partnership or other entity in
which that Person directly or indirectly owns or controls the shares of stock
or other ownership interests having ordinary voting power to elect a majority
of the board of directors or appoint other managers of such corporation,
partnership or other entity.
SUBSIDIARY SUBORDINATED NOTE GUARANTY means a guaranty on substantially the
terms as set forth in Articles Eleven and Twelve of the Holdings Senior
Subordinated Note Indenture.
SYNDICATION DATE means the earlier of (x) the date which is ninety (90) days
after the Closing Date and (y) the date on which the Agent notifies the
Borrowers that the primary syndication of the Commitments and Loans has been
completed, as determined by the Agent in its sole discretion, which notice
shall be promptly given.
TAX EXPENSE means, for any period, charges for taxes accrued during such
period by the Credit Parties on a consolidated basis, determined in
conformity with GAAP.
TAX SHARING AGREEMENT is defined in Section 5.1(h).
TAX TRANSFEREE is defined in Section 4.15(a).
TAXES is defined in Section 4.15(a).
TERM COMMITMENT is defined in Section 2.1.
TERM LOAN REPAYMENT DATE means each of the 60 dates on which an installment
of the Term Loans is scheduled to be made, the first of which is to occur on
January 30, 1998 and each subsequent one of which is to occur on the last
Business Day of each calendar month thereafter; PROVIDED that the last one
shall occur on the Expiration Date.
TERM LOANS means (i) each Existing Term Loan converted to a Term Loan
pursuant to Section 2.1 and (ii) each loan by a Lender to a Borrower pursuant
to Section 2.1.
TERM NOTE means a promissory note of a Borrower payable to the order of any
Lender, substantially in the form of Exhibit A-2.
TERMINATION EVENT means (i) a Reportable Event with respect to any Benefit
Plan or Multiemployer Plan; (ii) the withdrawal of any Borrower, any of the
Borrowers' Subsidiaries or any ERISA Affiliate from a Benefit Plan during a
plan year in which it was a "substantial employer" (as defined in Section
4001(a)(2) of ERISA); (iii) the providing of notice of intent to terminate a
Benefit Plan in a distress termination (as described in Section 4041(c) of
ERISA); (iv) the institution by the Pension Benefit Guaranty Corporation of
proceedings to terminate a Benefit Plan or Multiemployer Plan; (v) any event
or condition (a) which might constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Benefit Plan or Multiemployer Plan, or (b) that may result in termination of
a Multiemployer Plan pursuant to Section 4041A of ERISA; or
20
(vi) the partial or complete withdrawal within the meaning of Sections 4203
and 4205 of ERISA, of any Borrower, any of the Borrowers' Subsidiaries or any
ERISA Affiliate from a Multiemployer Plan.
TEST PERIOD means for any determination made under Section 8.2, 8.3 or 8.5
the four consecutive Fiscal Quarters of the Borrowers then last ended;
PROVIDED, HOWEVER, that for the first Fiscal Year following the Closing Date,
the Test Period shall be (i) for the last day of the first Fiscal Quarter
following the Closing Date, the Fiscal Quarter of the Borrowers then ended,
(ii) for the last day of the second Fiscal Quarter following the Closing
Date, the two consecutive Fiscal Quarters of the Borrowers then ended, and
(iii) for the last day of the third Fiscal Quarter following the Closing
Date, the three consecutive Fiscal Quarters of the Borrowers then ended.
TYPE means, in reference to a Revolving Loan or Term Loan, that it is a
Eurodollar Rate Loan or a Prime Rate Loan.
UNUSED LINE FEE is defined in Section 4.3.
WORKING CAPITAL means, with respect to Credit Parties on a consolidated
basis, consolidated current assets MINUS consolidated current liabilities
(which for purposes of this definition shall exclude all Funded Debt of the
Credit Parties).
1.2. ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise defined or
specified herein, all accounting terms used in this Credit Agreement shall be
construed in accordance with GAAP, applied on a basis consistent in all
material respects with the Financial Statements delivered to the Agent on or
before the Closing Date. All accounting determinations for purposes of
determining compliance with Sections 8.1 through 8.6 shall be made in
accordance with GAAP as in effect on the Closing Date and applied on a basis
consistent in all material respects with the audited Financial Statements
delivered to the Agent on or before the Closing Date. If any changes in
accounting principles from those used in the preparation of the Financial
Statements referred to in this Credit Agreement are hereafter occasioned by
the promulgation of rules, regulations, pronouncements, or opinions of, or
required by, the Financial Accounting Standards Board or the American
Institute of Certified Public Accountants (or successors thereto or agencies
with similar functions), or there shall occur any change in the Borrower's or
any of its Subsidiaries' fiscal periods permitted hereunder and, as a result
of any such changes, there shall result a change in the method of calculating
any of the financial covenants, negative covenants, standards, or other terms
or conditions found in this Agreement, then the parties hereto agree to enter
into negotiations in order to amend such provisions and the definition of
"GAAP" set forth in SECTION 1.1 so as to equitably reflect such changes with
the desired result that the criteria for evaluating the financial condition
of the Borrowers and their Subsidiaries shall be the same after such changes
as if such changes had not been made.
1.3. OTHER TERMS; HEADINGS. Terms used herein that are defined in the
Uniform Commercial Code in effect in the State of California (the "Code")
shall have the meanings given in the Code. Each of the words "hereof,"
"herein," and "hereunder" refer to this Credit Agreement as a whole. An
Event of Default shall "continue" or be "continuing" until such Event of
Default has been waived in accordance with Section 11.11. References to
Articles, Sections, Annexes, Schedules, and Exhibits are internal references
to this Credit Agreement, and to its attachments, unless otherwise specified.
The headings and the Table of Contents are for convenience only and shall
not affect the meaning or construction of any provision of this Credit
Agreement. References herein to "Holdings and its Subsidiaries" shall
exclude any Excluded Subsidiary.
21
ARTICLE 2. LOANS
2.1. TERM LOAN FACILITY
(a) AMOUNTS OF TERM LOANS. (i) Subject to the terms and conditions
set forth in this Credit Agreement, (A) each Lender severally agrees to make
(1) to Perry on the Closing Date (but not thereafter) a term loan in an
amount not to exceed such Lender's Proportionate Share of $20,000,000 (less,
in the case of each Existing Lender, the aggregate principal amount of
Existing Term Loans of such Lender converted to Term Loans pursuant to clause
(B) below), (2) to Shenandoah on the Closing Date (but not thereafter) a term
loan in an amount not to exceed such Lender's Proportionate Share of
$8,000,000, and (3) to Port City on the Closing Date (but not thereafter) a
term loan in an amount not to exceed such Lender's Proportionate Share of
$2,000,000, and (B) each Existing Lender agrees that all Existing Term Loans
of such Existing Lender (up to an amount not to exceed such Existing Lender's
Proportionate Share of $20,000,000, with the principal amount of any excess
being referred to herein as "Excess Existing Term Loans") shall be converted
for all purposes hereof and of the other Credit Documents to a Term Loan made
to Perry hereunder on the Closing Date (each Lender's obligation to make Term
Loans (and, if applicable, to convert Existing Term Loans) in such amounts
being referred to herein as its "Term Commitment," which obligation (and Term
Commitment) shall be zero after the making of the Term Loans on the Closing
Date). The Term Loans made (or converted) on the Closing Date shall be made
as Prime Rate Loans.
(ii) All Term Loans shall be made by the Lenders simultaneously
and proportionately to their respective Proportionate Shares, it being
understood that the Lenders' respective Term Commitments are several and not
joint and that no Lender shall be responsible for any failure by any other
Lender to perform its obligation to make any Term Loan hereunder nor shall
the Term Commitment of any Lender be increased or decreased as a result of
the failure by any other Lender to perform its obligation to make any Term
Loan hereunder.
(iii) The Term Loans, when repaid or prepaid, whether by voluntary
or mandatory prepayment, in accordance with the terms hereof, may not be
reborrowed.
(b) TERM NOTES AND SCHEDULED TERM LOAN INSTALLMENTS. (i) Each
Borrower shall execute and deliver to each Lender on the Closing Date a Term
Note, in the principal amount of that Lender's Term Loan to such Borrower.
(ii) Each Borrower shall repay the principal amount of the Term
Loans made to such Borrower on the Closing Date in installments (each a
"Scheduled Term Loan Installment" and collectively, the "Scheduled Term Loan
Installments") on each Term Loan Repayment Date in an installment amount set
forth below for such Borrower with respect to such Term Loan Repayment Date:
Term Loan Perry Shenandoah Port City
Repayment Dates Installment Amount Installment Amount Installment Amount
--------------- ------------------ ------------------ ------------------
First to Twelfth.............. $ 111,111.11 $ 44,444.44 $ 11,111.11
Thirteenth to Twenty-Fourth... $ 222,222.22 $ 88,888.89 $ 22,222.22
Twenty-Fifth to Sixtieth...... $ 333,333.33 $ 133,333.33 $ 33,333.33
22
The Terms Loans shall be repaid in full on the Expiration Date and,
notwithstanding the foregoing, the Scheduled Term Loan Installments due on
the Expiration Date shall be in the amount necessary to repay the Term Loans
in full.
2.2. REVOLVING CREDIT COMMITMENTS
(a) Subject to the terms and conditions set forth in this Credit
Agreement, on and after the Closing Date and to and excluding the Expiration
Date, (A) each Lender severally agrees to make loans to the Borrowers in an
aggregate principal amount outstanding not to exceed at any time such
Lender's Proportionate Share of THE LESSER OF (x) the total Revolving Credit
Commitments (which shall not exceed $45,000,000) and (y) the sum of the
Borrowing Bases of the Borrowers, minus, in each case, the then outstanding
Letter of Credit Obligations (PROVIDED that the aggregate amount of Revolving
Loans outstanding to any Borrower at any time shall not exceed the Borrowing
Base for such Borrower at such time, MINUS, the then outstanding Letter of
Credit Obligations of such Borrower), and (B) each Existing Lender and the
Borrowers agree that the sum of all Existing Revolving Loans of such Lender
PLUS the aggregate principal amount, if any, of all Excess Existing Term
Loans of such Lender shall be converted for all purposes hereof and of the
other Credit Documents to a Revolving Loan made by such Lender to Perry
hereunder on the Closing Date (all Loans so converted under this Section
2.2(a) being referred to in this Section 2.2(a) as "Converted Revolving
Loans"). In addition to the foregoing, each Lender and the Borrowers agree
that on the Closing Date each Lender that is not an Existing Lender (a "New
Lender") shall pay to the Agent for the account of the Existing Lenders an
amount equal to such New Lender's Proportionate Share of such Converted
Revolving Loans (and such amounts shall be Revolving Loans made by such New
Lender to Perry on the Closing Date) and the Agent shall distribute such
amounts to the Existing Lenders as payments in respect of Converted Revolving
Loans, or permit Existing Lenders to deduct such amounts from Revolving Loans
to be made to Perry on the Closing Date, in each case so that after giving
effect to all such distributions and deductions each Lender hereunder has
made Revolving Loans to Perry in an amount equal to such Lender's
Proportionate Share of the aggregate principal amount of all Revolving Loans
outstanding to Perry hereunder. The Revolving Loans made (or converted) on
the Closing Date shall be made as Prime Rate Loans.
(b) The Agent may, but shall not be obligated to, rely on each
Borrowing Base Certificate and any other schedules or reports in determining
the eligibility of Accounts and Inventory. The Agent, in the exercise of its
Permitted Discretion, may (i) establish and increase or decrease reserves
against Eligible Accounts Receivable and Eligible Inventory, (ii) reduce the
advance rates provided for in the definition of "Borrowing Base," or restore
such advance rates to any level equal to or below the advance rates in effect
as of the date of this Credit Agreement, and (iii) impose additional
restrictions (or eliminate the same) to the standards of eligibility set
forth in the definitions of "Eligible Accounts Receivable" and "Eligible
Inventory."
2.3. BORROWING OF REVOLVING LOANS. It is contemplated that Revolving
Loans will be made available to each Borrower directly by the Lenders
("Lender Advances") and, in the circumstances described in Section 2.3(b),
from the Agent acting on behalf of the Lenders ("Agent Advances").
(a) LENDER ADVANCES OF REVOLVING LOANS. Subject to the determination
by the Agent and the Lenders that the conditions for borrowing contained in
Section 5.2 are satisfied, upon notice, in accordance with Section 2.5, from
any Borrower to the Agent ("Notice of Borrowing") received by the Agent
before 1:00 P.M. New York City time on a Business Day, Lender Advances of
Revolving Loans shall be made to the extent of each Lender's Proportionate
Share of the requested Borrowing. The Notice of Borrowing shall specify
whether the requested Borrowing is of Prime Rate Loans or Eurodollar Rate
Loans.
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(b) AGENT ADVANCES OF REVOLVING LOANS. In addition to the provisions
of clause (a) above, the Agent is authorized by the Lenders, but is not
obligated, to make Agent Advances (i) upon a Notice of Borrowing received by
the Agent before 2:00 P.M. New York City time on a Business Day, or (ii) upon
advice received by the Agent on a Business Day from the Disbursement Account
Bank of the face amount of checks drawn on the Disbursement Account of a
Borrower, which have been or will be presented for payment on that day, MINUS
the amount of funds then available in the Disbursement Account of such
Borrower. All Agent Advances shall be Prime Rate Loans. Except during the
period provided in Section 2.3(b)(y), Agent Advances to or for the account of
any Borrower will not at any time exceed the amount available for borrowing
by such Borrower under Section 2.2(a). Agent Advances will be subject to
periodic settlement with the Lenders under Section 2.7. Agent Advances may
be made only in the following circumstances:
(x) For administrative convenience, the Agent may, but is not obligated
to, make Agent Advances in reliance upon a Borrower's actual or deemed
representations under Section 5.2 that the conditions for borrowing are
satisfied.
(y) If the conditions for borrowing under Section 5.2 cannot be
fulfilled, a Borrower shall in its Notice of Borrowing or otherwise give
immediate notice thereof to the Agent, with a copy to each of the Lenders,
and the Agent may, but is not obligated to, continue to make Agent Advances
for twenty (20) Business Days from the date the Agent first receives such
notice, or until sooner instructed by the Majority Lenders to cease. Once
notice is given with respect to an event causing the conditions not to be
fulfilled, no additional notice with respect to that event will be
effective to commence a new period under this Section 2.3(b)(y). All Agent
Advances made pursuant to this clause (y) shall be due and payable within
one Business Day of demand.
2.4. DISBURSEMENT OF REVOLVING LOANS. The proceeds of Revolving
Loans shall be transmitted by the Agent (x) upon advice received by the
Agent from the Disbursement Account Bank, as described in Section 2.3(b),
directly to the Disbursement Account indicated in such advice, (y) in the
circumstances described in Section 3.5, directly to the Issuing Bank and (z)
in all other circumstances, as requested by the applicable Borrower in its
Notice of Borrowing.
2.5. NOTICES OF BORROWING. Notices of Borrowing may be given under
this Section by telephone or facsimile transmission, and, if by telephone,
promptly confirmed in writing substantially in the form of Exhibit J. Each
Borrower shall specify in each Notice of Borrowing given by it whether the
conditions for the requested borrowing are satisfied. A Borrower may request
one or more borrowings of Prime Rate Loans by a Notice of Borrowing given not
later than 1:00 P.M. New York City time on the same Business Day as the
proposed Borrowing. Notice of Borrowing for Eurodollar Rate Loans shall be
given not later than 1:00 P.M. New York City time on the third Business Day
prior to the proposed Borrowing. Each Notice of Borrowing shall, unless
otherwise specifically provided herein, consist entirely of Revolving Loans
of the same Type and, if such Borrowing is to consist of Eurodollar Rate
Loans, shall be in an aggregate amount for all Lenders of not less than
$1,000,000 or an integral multiple of $100,000 in excess thereof. The right
of any Borrower to choose Eurodollar Rate Loans is subject to the provisions
of Section 4.13. Once given, a Notice of Borrowing that requests a Lender
Advance is irrevocable by and binding on the Borrower giving such Notice of
Borrowing. Each Borrower shall provide, from time to time, to the Agent a
list, with specimen signatures, of officers of such Borrower authorized to
request Revolving Loans and the Agent is entitled to rely upon such list
until it is replaced by such Borrower.
2.6. SAME DAY SETTLEMENT OF LENDER ADVANCES. The Agent shall give
each Lender prompt notice by telephone or facsimile transmission of a Notice of
Borrowing that requests Lender Advances of Revolving Loans. No later than
3:00 P.M. New York City time on the date of the proposed
24
Borrowing, each Lender shall make available to the Agent at the Agent's
address its Proportionate Share of such Borrowing in immediately available
funds. Unless the Agent receives contrary written notice prior to the date
of any such Borrowing of Revolving Loans, it is entitled to assume that each
Lender will make available its Proportionate Share of the Borrowing and in
reliance upon that assumption, but without any obligation to do so, may
advance such Proportionate Share on behalf of the Lender.
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2.7. PERIODIC SETTLEMENT OF AGENT ADVANCES AND REPAYMENTS
(a) THE SETTLEMENT DATE. The amount of each Lender's Proportionate
Share of Loans shall be computed weekly (or more frequently in the Agent's
discretion) and shall be adjusted upward or downward based on all Loans
(including Agent Advances) and repayments received by the Agent as of 5:00
P.M. New York City time on the last Business Day of the period specified by
the Agent (such date, the "Settlement Date").
(b) SUMMARY STATEMENTS; SETTLEMENTS OF PRINCIPAL. The Agent shall
deliver to each of the Lenders promptly after the Settlement Date a summary
statement of the amount of outstanding Revolving Loans (including Agent
Advances) for the period and the amount of repayments received for the
period. As reflected on the summary statement: (i) the Agent shall transfer
to each Lender its Proportionate Share of repayments; and (ii) each Lender
shall transfer to the Agent, or the Agent shall transfer to each Lender, such
amounts as are necessary to insure that, after giving effect to all such
transfers, the amount of Loans made by each Lender shall be equal to such
Lender's Proportionate Share of the aggregate amount of Loans outstanding as
of such Settlement Date. If the summary statement requires transfers to be
made to the Agent by the Lenders and is received prior to 12:00 Noon New York
City time on a Business Day, such transfers shall be made in immediately
available funds no later than 3:00 P.M. New York City time that day; and, if
received after 12:00 Noon New York City time, then no later than 3:00 P.M.
New York City time on the next Business Day. The obligation of each Lender to
transfer such funds is irrevocable, unconditional and without recourse to or
warranty by the Agent.
(c) DISTRIBUTION OF INTEREST AND UNUSED LINE FEES. Interest on the
Loans (including Agent Advances) together with the amount of the Unused Line
Fee, shall be allocated by the Agent to each Lender in accordance with the
Proportionate Share of Loans actually advanced by and repaid to each Lender,
and shall accrue from and including the date such Loans are so advanced and
to but excluding the date such Loans are either repaid by the applicable
Borrower or actually settled under this Section. Promptly after the end of
each month, the Agent shall distribute to each Lender its Proportionate Share
of the interest and Unused Line Fee accrued during and paid with respect to
that month. The Agent shall distribute interest on Eurodollar Rate Loans
promptly after it is received.
2.8. SHARING OF PAYMENTS. If any Lender obtains any payment in
excess of its Proportionate Share of payments on account of the Loans or
Letter of Credit Obligations, it will immediately purchase from the other
Lenders portions of their Loans and Letter of Credit participations
sufficient to cause that Lender to share the excess payment ratably with all
the other Lenders.
2.9. DEFAULTING LENDERS
(a) A Lender who fails to pay the Agent its Proportionate Share of any
Revolving Loans (including Agent Advances) made available by the Agent on such
Lender's behalf, or who fails to pay any other amount owing by it to the Agent,
is a "Defaulting Lender." The Agent may recover all such amounts owing by a
Defaulting Lender on demand. If the Defaulting Lender does not pay such amounts
on the Agent's demand, the Agent shall promptly notify the Borrower for whose
account such Revolving Loans were made and such Borrower shall pay such amounts
within five Business Days. In addition, the Defaulting Lender or such Borrower,
as the case may be, shall pay the Agent interest on such amount for each day
from the date it was made available by the Agent to such Borrower to the date it
is recovered by the Agent at a rate PER ANNUM equal to (x) the Federal Funds
Rate, if paid by the Defaulting Lender, or (y) the then applicable rate of
interest calculated under Section 4.1, if paid by such Borrower; PLUS, in each
case, the Expenses and losses, if any, incurred as a result of the Defaulting
Lender's failure to perform its obligations. Any payment by a Borrower to repay
an advance made by the Agent on behalf of a Defaulting Lender shall, as between
such Borrower and the Agent, serve to
26
repay the applicable advance to the extent of the amount paid, but as between
such Borrower and the Defaulting Lender shall not serve to relieve the
Defaulting Lender of the consequences of such breach.
(b) The failure of any Lender to fund its Proportionate Share of any
Revolving Loan (including Agent Advances) shall not relieve any other Lender
of its obligation to fund its Proportionate Share of such Revolving Loan.
Conversely, no Lender shall be responsible for the failure of another Lender
to fund its Proportionate Share of a Revolving Loan.
(c) The Agent shall not be obligated to transfer to a Defaulting Lender
any payments made by a Borrower to the Agent for the Defaulting Lender's
benefit; nor shall a Defaulting Lender be entitled to the sharing of any
payments hereunder. Amounts payable to a Defaulting Lender shall instead be
paid to or retained by the Agent and no Event of Default or Default shall
result from, and no Borrower shall be considered not to be in compliance with
this Agreement, the Notes, the Loan Documents, or any other document as a
result of, the non-payment of such amounts. The Agent may hold and, in its
discretion, re-lend to the Borrowers the amount of all such payments received
or retained by it for the account of such Defaulting Lender. For purposes of
voting or consenting to matters with respect to the Credit Documents and
determining Proportionate Shares (and only for such purposes), such
Defaulting Lender shall be deemed not to be a "Lender" and such Lender's
Commitment (and, if applicable, such Lender's outstanding Loans and Letter of
Credit participations) shall be deemed to be zero (-0-). This section shall
remain effective with respect to such Lender until (x) the Obligations under
this Credit Agreement shall have been declared or shall have become
immediately due and payable or (y) the Majority Lenders, the Agent and the
Borrowers shall have waived such Lender's default in writing. The operation
of this Section shall not be construed to increase or otherwise affect the
Commitment of any Lender, or relieve or excuse the performance by any
Borrower of its duties and obligations hereunder.
(d) The Agent shall, upon written request of any Borrower, notify the
Lenders of the failure by a Defaulting Lender to perform its obligation to
make a Loan required to be made by such Defaulting Lender hereunder and any
Lender (other than such Defaulting Lender) may, if it desires, assume, in
such proportion as the Majority Lenders (calculated without inclusion of the
Defaulting Lender) may agree, the obligation of the Defaulting Lender or
Lenders to make Loans, but no Lender shall be obligated to do so.
2.10. EXTENSION OF EXPIRATION DATE. The Expiration Date may be
extended (if so extended, the "Extended Expiration Date"), upon the mutual
agreement of the Borrowers, the Agent and the Lenders, in their respective
sole discretion, for successive additional one-year periods, subject to
satisfaction of the following conditions: (i) the Borrowers shall have
delivered a written request to the Agent and the Lenders not later than 90
days prior to the Expiration Date, in the case of the initial extension
request, or the then current Extended Expiration Date, in the case of any
subsequent extension request, and (ii) not later than the Expiration Date, in
the case of an initial extension request, or the then current Extended
Expiration Date, in the case of any subsequent extension request, the
Borrowers, the Agent and the Lenders shall have entered into a written
agreement evidencing the agreement of all parties to such extension upon
terms and conditions then satisfactory to the Borrowers, the Agent and the
Lenders in their respective sole discretion.
ARTICLE 3. LETTERS OF CREDIT
3.1. ISSUANCE OF LETTERS OF CREDIT. Subject to the terms and
conditions set forth in this Credit Agreement, the Agent may from time to
time cause the Issuing Bank to issue Letters of Credit hereunder at the
request of any Borrower and for such Borrower's account, as more specifically
described below. The Agent shall not be obligated to cause the Issuing Bank
to issue any Letter of Credit for the account of any Borrower if:
27
(a) Issuance of the requested Letter of Credit (i) would cause the
Letter of Credit Obligations then outstanding to exceed $5,000,000 or (ii)
would cause the sum of all Revolving Loans PLUS the Letter of Credit
Obligations then outstanding hereunder to exceed the total Revolving Credit
Commitments then in effect or (iii) would cause the sum of the Revolving
Loans PLUS the Letter of Credit Obligations then outstanding to such Borrower
to exceed the Borrowing Base then in effect for such Borrower or (iv) would
cause the Letter of Credit Obligations then outstanding with respect to
documentary Letters of Credit to exceed $3,000,000 or (v) would cause the
Letter of Credit Obligations then outstanding with respect to standby Letters
of Credit to exceed $2,000,000; or
(b) Issuance of the Letter of Credit is enjoined, restrained or
prohibited by any Governmental Authority, Requirement of Law or any request
or directive of any Governmental Authority (whether or not having the force
of law) or would impose upon the Agent or the Issuing Bank any material
restriction, reserve, capital requirement, loss, cost or expense (for which
the Agent or the Issuing Bank is not otherwise compensated) not in effect or
known as of the Closing Date; or
(c) A default of any Lender's obligations to fund under Section 3.6
exists, or such Lender is a Defaulting Lender, unless the Agent and the
Issuing Bank have entered into satisfactory arrangements with the Borrowers
to eliminate the Issuing Bank's risk with respect to such Lender, including
cash collateralization of such Lender's Proportionate Share of the Letter of
Credit Obligations.
3.2. TERMS OF LETTERS OF CREDIT. The proposed amount, terms and
conditions, and form of each Letter of Credit (and of any drafts or
acceptances thereunder) shall be subject to approval by the Agent and the
Issuing Bank. The term of each standby Letter of Credit shall not exceed 360
days, but may be subject to annual renewal. The term of each documentary
Letter of Credit shall not exceed 120 days. No standby Letter of Credit
shall have an expiry date later than five (5) Business Days prior to the
Expiration Date and no documentary Letter of Credit shall have an expiry date
later than 60 days prior to the Expiration Date.
3.3. REQUEST FOR ISSUANCE. A request for issuance of a Letter of
Credit in the form of Exhibit M (a "Letter of Credit Request") may be given
in writing or electronically and, if requested by the Agent, promptly
confirmed in writing. A Letter of Credit Request must be received by the
Agent no later than 1:00 P.M. New York City time at least five (5) Business
Days (or such shorter period as may be agreed to by the Issuing Bank) in
advance of the proposed date of issuance.
3.4. LENDERS' PARTICIPATION. Immediately upon issuance or amendment
of any Letter of Credit, each Lender shall be deemed to have irrevocably and
unconditionally purchased and received from the Issuing Bank, without
recourse or warranty, an undivided interest and participation in all rights
and obligations under such Letter of Credit (other than fees and other
amounts owing to the Issuing Bank) in accordance with such Lender's
Proportionate Share.
3.5. PAYMENT OF AMOUNTS DRAWN UNDER LETTERS OF CREDIT. Upon
notice from the Issuing Bank of any drawing under any Letter of Credit, the
Agent which shall notify the Borrower for whose account such Letter of Credit
was issued of such drawing not later than 11:00 A.M. New York City time on
the Business Day immediately prior to the date on which the Issuing Bank
intends to honor such drawing. Such Borrower will be deemed to have
concurrently given a Notice of Borrowing to the Agent for Revolving Loans to
be made as Prime Rate Loans in the amount of and at the time of such drawing.
The proceeds of such Revolving Loans shall be applied directly by the Agent
to reimburse the Issuing Bank for the amount of such drawing.
3.6. PAYMENT BY LENDERS. If Revolving Loans are not made in an
amount sufficient to reimburse the Issuing Bank in full for the amount of any
draw, the Agent shall promptly notify each Lender of the unreimbursed amount of
such drawing and of such Lender's respective participation
28
therein. Each Lender shall make available to the Agent, for the account of
the Issuing Bank, the amount of its participation in immediately available
funds not later than 1:00 P.M. New York City time on the next Business Day.
If any Lender fails to make available to the Agent the amount of such
Lender's participation, the Issuing Bank shall be entitled to recover such
amount on demand from such Lender together with interest at the Federal Funds
Rate for the first three Business Days and thereafter at the Prime Lending
Rate. For each Letter of Credit, the Agent shall promptly distribute to each
Lender which has funded the amount of its participation its Proportionate
Share of all payments subsequently received by the Agent from the applicable
Borrower in reimbursement of honored drawings thereunder.
3.7. NATURE OF ISSUING BANK'S DUTIES. In determining whether to pay
under any Letter of Credit, the Issuing Bank shall be responsible only to
determine that the documents and certificates required to be delivered under
that Letter of Credit have been delivered and that they comply on their face
with the requirements of that Letter of Credit. As among the Borrowers, the
Issuing Bank and each other Lender, the Borrowers assume all risks of the
acts and omissions of the Issuing Bank, or misuse of the Letters of Credit by
the respective beneficiaries of such Letters of Credit. Any action taken or
omitted to be taken by the Issuing Bank under or in connection with any
Letter of Credit, if taken or omitted in the absence of gross negligence or
willful misconduct, shall not create for the Issuing Bank any liability to
any Borrower, the Agent or any Lender.
3.8. OBLIGATIONS ABSOLUTE. The obligations of each Borrower to
reimburse the Issuing Bank for drawings honored under the Letters of Credit
issued for the account of such Borrower and the obligations of the Lenders
under Section 3.6 shall be unconditional and irrevocable and shall be paid
strictly in accordance with the terms of this Credit Agreement under all
circumstances including, without limitation, the fact that a Default or an
Event of Default shall have occurred and be continuing.
3.9. AGENT'S EXECUTION OF APPLICATIONS AND OTHER ISSUING BANK
DOCUMENTATION; RELIANCE ON CREDIT AGREEMENT BY ISSUING BANK. The Agent
shall be authorized to execute, deliver and perform on behalf of the Lenders
such letter of credit applications, shipping indemnities, letter of credit
modifications and consents and other undertakings for the benefit of the
Issuing Bank as may be reasonably necessary or appropriate in connection with
the issuance or modification of Letters of Credit requested by any Borrower
hereunder. The Lenders, the Agent and each Borrower all expressly agree that
the terms of this Article 3 and various other provisions of this Credit
Agreement identifying the Issuing Bank are also intended to benefit the
Issuing Bank and the Issuing Bank shall be entitled to enforce the provisions
hereof which are for its benefit.
3.10. ADDITIONAL PAYMENTS. If by reason of (a) any change in any
Requirement of Law or any change in the interpretation or application by any
Governmental Authority of any Requirement of Law or (b) compliance by the
Issuing Bank or any Lender with any direction, request or requirement
(whether or not having the force of law) of any Governmental Authority or
monetary authority including, without limitation, Regulation D of the Board
of Governors of the Federal Reserve System as from time to time in effect
(and any successor thereto):
(i) any reserve, deposit or similar requirement is or shall be
applicable, imposed or modified in respect of any Letters of Credit issued by
the Issuing Bank or participations therein purchased by any Lender; or
(ii) there shall be imposed on the Issuing Bank or any Lender any other
condition regarding this subsection 3.10, any Letter of Credit or any
participation therein;
and the result of the foregoing is to directly or indirectly increase the cost
to the Issuing Bank or any Lender of issuing, making or maintaining any Letter
of Credit or of purchasing or maintaining any participation therein, or to
reduce the amount receivable in respect thereof by such Issuing Bank or any
29
Lender, then, and in any such case, the Issuing Bank or such Lender may, at
any time within a reasonable period after the additional cost is incurred or
the amount received is reduced, notify the Borrowers, and each Borrower shall
pay on demand such amounts as the Issuing Bank or such Lender may specify to
be necessary to compensate the Issuing Bank or such Lender for such
additional cost or reduced receipt, together with interest on such amount
from 10 days after the date of such demand until payment in full thereof at a
rate equal at all times to the Prime Lending Rate PER ANNUM. The
determination by the Issuing Bank or any Lender, as the case may be, of any
amount due pursuant to this Section, as set forth in a certificate setting
forth the calculation thereof in reasonable detail, shall, in the absence of
manifest or demonstrable error, be final and conclusive and binding on all of
the parties hereto.
ARTICLE 4. COMPENSATION, REPAYMENT AND REDUCTION OF COMMITMENTS
4.1. INTEREST ON PRIME RATE LOANS. Each Borrower shall pay to the
Lenders on the first Business Day of each month interest on Prime Rate Loans
outstanding to such Borrower, calculated monthly in arrears at an interest
rate PER ANNUM equal to the Prime Lending Rate PLUS (i) with respect to
Revolving Loans consisting of Prime Rate Loans, and with respect to Letter of
Credit Obligations described in clause (ii) of the definition thereof, the
Applicable Prime Rate Margin for Revolving Loans and (ii) with respect to
Term Loans consisting of Prime Rate Loans, the Applicable Prime Rate Margin
for Term Loans on the average net balances owing to the Agent and the Lenders
at the close of business each day during such month for Revolving Loans and
Term Loans, as the case may be. The rate hereunder shall change each day the
Prime Lending Rate or the Applicable Prime Rate Margin changes.
4.2. INTEREST ON EURODOLLAR RATE LOANS. Interest on Eurodollar
Rate Loans shall be payable on the last day of each Interest Period with
respect to such Eurodollar Rate Loans (and, in the case of any Eurodollar
Rate Loan with an Interest Period of longer than three months, on each
three-month anniversary of the commencement of that Interest Period), at the
date of conversion of such Eurodollar Rate Loans (or a portion thereof) to a
Prime Rate Loan and at maturity of such Eurodollar Rate Loans at an interest
rate per annum equal during the Interest Period for such Eurodollar Rate
Loans to the Adjusted Eurodollar Rate for the Interest Period in effect for
such Eurodollar Rate Loans PLUS (i) with respect to Revolving Loans
consisting of Eurodollar Rate Loans, the Applicable Eurodollar Rate Margin
for Revolving Loans and (ii) with respect to Term Loans consisting of
Eurodollar Rate Loans, the Applicable Eurodollar Rate Margin for Term Loans.
The rate applicable pursuant to this Section 4.02 shall change each day the
Applicable Eurodollar Rate Margin changes. After maturity of such Eurodollar
Rate Loans (whether by acceleration or otherwise), interest shall be payable
upon demand. The Agent upon determining the Adjusted Eurodollar Rate for any
Interest Period shall promptly notify the applicable Borrower and the Lenders
by telephone (confirmed promptly in writing) or in writing thereof. Each
determination by the Agent of an interest rate hereunder shall be conclusive
and binding for all purposes, absent manifest or demonstrable error.
4.3. UNUSED LINE FEE. The Borrowers shall pay to the Lenders on the
first Business Day of each month and on the Expiration Date a fee equal to
0.5% PER ANNUM calculated monthly in arrears on the average unused portion of
the total Revolving Credit Commitments at the close of business each day
during such month or occurring prior to the Expiration Date (the "Unused Line
Fee").
4.4. LETTER OF CREDIT FEES
(a) Each Borrower shall pay to the Lenders on the first Business Day of
each month a fee (the "Letter of Credit Fees"), in an amount equal to (i) the
rate PER ANNUM equal to the Applicable Eurodollar Rate Margin of the daily
weighted average amount of Letter of Credit Obligations relating to standby
Letters of Credit outstanding for the account of such Borrower during the
immediately preceding month, (ii) an opening fee equal to 0.125% of the initial
face amount of each documentary Letter of
30
Credit issued for the account of such Borrower during the immediately
preceding month, (iii) a negotiation fee equal to 0.125% of the amount drawn
under each documentary Letter of Credit issued for the account of such
Borrower during the immediately preceding month and (iv) a guaranty fee equal
to 0.125% of the daily weighted average of the maximum amount available to be
drawn under each documentary Letter of Credit guaranteed for the account of
such Borrower hereunder and outstanding during the immediately preceding
month. The rate applicable pursuant to this Section 4.4(a) shall change each
day the Applicable Eurodollar Rate Margin changes. Notwithstanding the
foregoing, Letter of Credit Fees on Letter of Credit Obligations outstanding
after the occurrence and during the continuance of an Event of Default shall
be payable on demand at a rate equal to the rate at which the Letter of
Credit Fees are charged pursuant to the first sentence of this Section
4.4(a), PLUS 2% PER ANNUM.
(b) Each Borrower shall also pay the customary charges, fees and
expenses of the Issuing Bank for the issuance, administration and negotiation
of each Letter of Credit for the account of such Borrower and the Agent shall
be entitled to charge to the Loan Account such fees, charges and expenses of
the Issuing Bank (in each case, the "Issuing Bank Fees"). Each determination
by the Agent of Letter of Credit Fees, Issuing Bank Fees and other fees,
charges and expenses under this Section shall be conclusive and binding for
all purposes, absent manifest or demonstrable error.
4.5. INTEREST AFTER EVENT OF DEFAULT. From the date of occurrence of
an Event of Default until the earlier of (i) the date all Obligations (other
than non-contingent Obligations for which no demand has been made) have been
paid and satisfied in full or (ii) the date such Event of Default is waived,
the Borrowers shall be obligated to pay to the Lenders interest on the Loans
and on the Letter of Credit Obligations calculated at rates PER ANNUM equal
to the rates in effect under Section 4.1 PLUS in each case 2% PER ANNUM.
4.6. EXPENSES; FEES. The Borrowers shall reimburse the Agent's
Expenses promptly upon demand and pay the fees provided in the Fee Letter in
accordance therewith.
4.7. MANDATORY PAYMENT; REDUCTION OF COMMITMENTS.
(a) MANDATORY PAYMENT. (i) Except during the period described in
Section 2.3(b)(y) (but at no other time unless consented to by all
Lenders), the aggregate balance of Revolving Loans and all Letter of Credit
Obligations outstanding at any time to any Borrower in excess of the
Borrowing Base then in effect for such Borrower shall be immediately due
and payable without the necessity of any demand.
(ii) On March 31 of each year commencing March 31, 1999, the
Borrowers shall make a mandatory prepayment of Term Loans in an aggregate
amount equal to the lesser of (i) 75% of Excess Cash Flow determined for
the then most recently ended Fiscal Year and (ii) $10,000,000.
(iii) If Holdings or any of its Subsidiaries shall receive the
proceeds of any payment pursuant to Section 3.4(c) of the ▇▇▇▇'▇ Merger
Agreement, one hundred percent (100%) of such amount shall be immediately
paid to the Agent to be applied to prepay the Revolving Loans outstanding
to each Borrower ratably.
(iv) (A) If any Borrower, ▇▇▇▇'▇ or Holdings shall receive proceeds
from the issuance of any debt securities (exclusive of Indebtedness
permitted to be incurred pursuant to Section 8.7 of this Agreement,
Indebtedness of Holdings incurred to refinance or replace Indebtedness of
Holdings existing as of the Closing Date to the extent not prohibited under
the Credit Documents and Indebtedness of Holdings permitted by Section
4(b)(5) of the Holdings Guarantee), the Borrowers immediately shall pay an
amount equal to one hundred percent (100%) of the net cash proceeds
31
therefrom to the Agent to be applied first to prepay the Term Loans until
paid in full and then to repay the outstanding Revolving Loans; and (B) if
any Borrower, ▇▇▇▇'▇ or Holdings shall receive proceeds from the issuance
of any equity securities (exclusive of the Holdings Equity Issuance, equity
issuances of Holdings made to refinance or replace Indebtedness or equity
of Holdings existing as of the Closing Date to the extent so used, and
equity issuances made to employees of any Borrower or its Subsidiaries),
the Borrowers immediately shall pay an amount equal to fifty percent (50%)
of the net cash proceeds therefrom to the Agent to be applied first to
prepay the Term Loans until paid in full and then to repay the outstanding
Revolving Loans.
(v) If any Borrower or any Subsidiary of any Borrower shall receive
proceeds from the consummation of any asset sales permitted under Section
8.10(iv) or not permitted under this Credit Agreement, the Borrowers
immediately shall pay an amount equal to one hundred percent (100%) of the
net cash proceeds (including any net cash proceeds received from any
Investment made in connection with such sale) therefrom to the Agent to be
applied first to prepay the Term Loans until paid in full and then to repay
the outstanding Revolving Loans.
All prepayments of Term Loans pursuant to this Section shall be applied,
without premium or penalty (other than applicable costs under Section 4.13),
to the Scheduled Term Loan Installments in inverse order of maturity. All
repayments of Revolving Loans pursuant to this Section may (subject to the
terms and conditions of this Credit Agreement) be reborrowed. All
prepayments and repayments pursuant to this Section 4.7 shall be made by each
Borrower ratably based on the aggregate principal amount of the Term Loans or
Revolving Loans, as the case may be, outstanding to such Borrower in relation
to the aggregate principal amount of the Term Loans or Revolving Loans, as
the case may be, outstanding to all Borrowers.
(b) VOLUNTARY REDUCTION OF COMMITMENTS; PREPAYMENTS. (i) On the
Expiration Date, any Commitment of each Lender shall automatically reduce
to zero and may not be reinstated. Any Borrower may reduce or terminate
the Revolving Credit Commitments ratably among the Lenders at any time and
from time to time in whole or in part. Each such reduction must be in an
aggregate amount for all the Lenders of not less than $5,000,000 (and in
increments of $1,000,000 thereafter). If the Term Loans have been paid in
full and any Borrower seeks to reduce Revolving Credit Commitments to an
aggregate amount less than $5,000,000, then the Commitments shall be
reduced to zero and this Credit Agreement shall be terminated. Once
reduced, no portion of the Commitments may be reinstated.
(ii) Any Borrower may, upon two Business Days notice to Agent stating
the proposed date and aggregate principal amount of the prepayment, and if
such notice is given such Borrower shall, prepay the outstanding principal
amounts of the Term Loan owing by such Borrower comprising part of the same
Borrowing in whole or ratably in part, in an amount not less than $500,000
and incremental multiples of $100,000 in excess thereof, together with
accrued interest to the date of such prepayment on the principal amount
prepaid. Such voluntary repayments will be applied to Scheduled Term Loan
Installments of such Borrower in inverse order of maturity.
4.8. MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF ACCOUNT. The Agent
shall maintain an account on its books in the name of each Borrower (each a
"Loan Account") in which such Borrower will be charged with all loans and
advances made by the Lenders to such Borrower or for such Borrower's account,
including the Term Loans, the Revolving Loans, and all Letter of Credit
Obligations, the Fees, the Expenses and any other Obligations of such
Borrower. The Loan Account of each Borrower will be credited with all
payments received by the Agent from such Borrower or for such Borrower's
account, including all amounts received in the Concentration Account from any
Lockbox Bank. The Agent shall send each Borrower a monthly statement
reflecting the activity in the Loan
32
Account of such Borrower. Absent manifest or demonstrable error, each
monthly statement shall be an account stated and shall be final, conclusive
and binding on each Borrower.
4.9. PAYMENT PROCEDURES. Each Borrower hereby authorizes the
Agent to charge the Loan Account of such Borrower with the amount of all
interest, Fees and Expenses and other payments to be made hereunder and under
the other Credit Documents. Each Borrower's obligations to the Agent and the
Lenders with respect to such payments shall be discharged by the Agent's
charging the Loan Account of such Borrower as provided herein (but only to
the extent of funds actually received by the Agent).
4.10. COLLECTION OF ACCOUNTS. Each Borrower shall at all times
maintain lockboxes (the "Lockboxes") and shall instruct all account debtors
on the Accounts of such Borrower to remit all Collections to such Lockboxes.
Each Borrower, the Agent and financial institutions selected by such Borrower
and acceptable to the Agent (the "Lockbox Banks") shall enter into agreements
substantially in the form of Exhibit G (the "Lockbox Agreements"), which
among other things shall provide for the opening of an account for the
deposit of Collections (a "Collection Account") at a Lockbox Bank. All
Collections and other amounts received by any Borrower from any account
debtor, in addition to all other cash received from any other source, shall
upon receipt be deposited into a Collection Account. Termination of such
arrangements shall also be subject to approval by the Agent. Upon the terms
and subject to the conditions set forth in the Lockbox Agreements, all
available amounts held in each Collection Account of a Borrower shall be
wired each Business Day into an account (the "Concentration Account")
maintained by the Agent at Bankers Trust Company for such Borrower.
4.11. APPLICATION OF PAYMENTS. All amounts received in the
Concentration Account of a Borrower from the Lockbox Banks shall be credited
to the Loan Account of such Borrower. Except as provided in Section 9.5,
after the occurrence of an Event of Default, and until it is waived, all
amounts received by the Agent from the Lockbox Banks, from liquidation of
Collateral or otherwise, shall be applied in the following order: FIRST, to
the payment of any Fees, Expenses or other Obligations due and payable to the
Agent under any of the Credit Documents, including Agent Advances and any
other amounts advanced by the Agent on behalf of the Lenders; SECOND, to the
payment of any Fees, expenses or other Obligations due and payable to the
Issuing Bank under any of the Credit Documents; THIRD, to the ratable payment
of any Fees, expenses or other Obligations due and payable to the Lenders
under any of the Credit Documents other than those Obligations specifically
referred to in this Section; FOURTH, to the ratable payment of interest due
on the Loans; and, FIFTH, to the ratable payment of principal due on the
Loans.
4.12. CALCULATIONS. All calculations of (i) interest hereunder
and (ii) Fees, including, without limitation, Unused Line Fees and Letter of
Credit Fees, shall be made by the Agent, on the basis of a year of 360 days
for the actual number of days elapsed (including the first day but excluding
the last day) occurring in the period for which such interest or Fees are
payable. Each determination by the Agent of an interest rate, Fee or other
payment hereunder shall be conclusive and binding for all purposes, absent
manifest or demonstrable error.
4.13. SPECIAL PROVISIONS RELATING TO EURODOLLAR RATE LOANS.
(a) CONTINUATION. With respect to any Borrowing by a Borrower consisting
of Eurodollar Rate Loans, such Borrower may (so long as no Default under Section
9.1(a) or Event of Default has occurred and is continuing), subject to the
provisions of Section 4.13(c), elect to maintain such Borrowing or any portion
thereof as consisting of Eurodollar Rate Loans by selecting a new Interest
Period for such Borrowing, which new Interest Period shall commence on the last
day of the immediately preceding Interest Period. Each selection of a new
Interest Period shall be made by notice given not later than 1:00 P.M. New York
City time on the third Business Day prior to the date of any such continuation
33
relating to Eurodollar Rate Loans, by such Borrower to the Agent. Such
notice by such Borrower of a continuation (a "Notice of Continuation") shall
be by telephone or facsimile transmission, and if by telephone, promptly
confirmed in writing substantially in the form of Exhibit K, in each case
specifying (i) the date of such continuation, (ii) the Type of Loans
(including whether Revolving Loans or Term Loans) subject to such
continuation, (iii) the aggregate amount of Loans subject to such
continuation and (iv) the duration of the selected Interest Period. Such
Borrower may elect to maintain more than one Borrowing consisting of
Eurodollar Rate Loans by combining such Borrowings into one Borrowing and
selecting a new Interest Period pursuant to this Section 4.13(a); PROVIDED,
HOWEVER, that each of the Borrowings so combined shall consist of Revolving
Loans or Term Loans having Interest Periods ending on the same date. If any
Borrower shall fail to select a new Interest Period for any Borrowing
consisting of Eurodollar Rate Loans in accordance with this Section 4.13(a),
such Loans will automatically, on the last day of the then existing Interest
Period therefore, convert into Prime Rate Loans. The Agent shall give each
Lender prompt notice by telephone or facsimile transmission of each Notice of
Continuation. In the event any Borrowing is continued by a Borrower as a
Eurodollar Rate Loan while a Default exists and such Default matures into an
Event of Default, then, at such time, such Borrowing, at the option of the
Agent, shall convert into a Prime Rate Loan and such Borrower shall be
obligated to pay all amounts required under this Section 4.13 resulting from
such conversion.
(b) CONVERSION. Each Borrower may on any Business Day (so long as no
Default under Section 9.1(a) or Event of Default has occurred and is
continuing), upon notice (each such notice, a "Notice of Conversion") given
to the Agent, and subject to the provisions of Section 4.13(c), convert the
entire amount of or a portion of all Loans of one Type owing by such Borrower
and comprising the same Borrowing into Loans of another Type; PROVIDED,
HOWEVER, that any conversion of any Eurodollar Rate Loans into Loans of
another Type shall be made on, and only on, the last day of an Interest
Period for such Eurodollar Rate Loans and, upon conversion of any Prime Rate
Loans owing by such Borrower into Loans of another Type, such Borrower shall
pay accrued interest to the date of conversion on the principal amount
converted. Each such Notice of Conversion shall be given not later than 1:00
P.M. New York City time on the Business Day prior to the date of any proposed
conversion into Prime Rate Loans and on the third Business Day prior to the
date of any proposed conversion into Eurodollar Rate Loans. Subject to the
restrictions specified above, each Notice of Conversion shall be by telephone
or facsimile transmission, and if by telephone, promptly confirmed in writing
substantially in the form of Exhibit L, in each case specifying (i) the
requested date of such conversion, (ii) the Type of Loans (including whether
Revolving Loans or Term Loans) to be converted, (iii) the portion of such
Type of Loan to be converted, (iv) the Type of Loan such Loans are to be
converted into and (v) if such conversion is into Eurodollar Rate Loans, the
duration of the Interest Period of such Loan. Each conversion shall be in an
aggregate amount for the Loans of all Lenders of not less than $1,000,000 or
an integral multiple of $100,000 in excess thereof. Each Borrower may elect
to convert the entire amount of or a portion of all Loans of one Type owing
by such Borrower and comprising more than one Borrowing into Loans of another
Type by combining such Borrowings into one Borrowing consisting of Revolving
Loans or Term Loans of another Type; PROVIDED, HOWEVER, that if the
Borrowings so combined consist of Eurodollar Rate Loans, such Loans, once
combined, shall have Interest Periods ending on the same date. In the event
any Borrowing is converted by a Borrower into a Eurodollar Rate Loan while a
Default exists and such Default matures into an Event of Default, then, at
such time, such Borrowing, at the option of the Agent, shall immediately
convert into a Prime Rate Loan and such Borrower shall be obligated to pay
all amounts required under this Section 4.13 resulting from such conversion.
(c) CERTAIN LIMITATIONS ON EURODOLLAR RATE LOANS. The right of each
Borrower to maintain, select, continue or convert Eurodollar Rate Loans shall
be limited as follows:
34
(i) If the Agent is advised by Bankers Trust Company that it is
not offering U.S. dollar deposits (in the applicable amounts) in the London
interbank market, or the Agent determines that adequate and fair means do
not otherwise exist for ascertaining the Eurodollar Rate for Eurodollar
Rate Loans comprising any requested Borrowing, continuation or conversion,
the right of each Borrower to select or maintain Eurodollar Rate Loans for
such Borrowing or any subsequent Borrowing shall be suspended until the
Agent shall notify the Borrowers and the Lenders that the circumstances
causing such suspension no longer exists, and each Loan comprising such
Borrowing shall be made as a Prime Rate Loan.
(ii) If the Lenders holding 67% or more of the total Commitments
shall, at least one Business Day before the date of any requested
Borrowing, continuation or conversion, notify the Agent that the Eurodollar
Rate for Loans comprising such Borrowing will not adequately reflect the
cost to such Lenders of making or funding their respective Loans for such
Borrowing, the right of the Borrowers to select Eurodollar Rate Loans for
such Borrowing shall be suspended until the Agent shall notify the
Borrowers and the Lenders that the circumstances causing such suspension no
longer exist, and each Loan comprising such Borrowing shall be made as a
Prime Rate Loan.
(iii) If at any time any Lender determines (which determination
shall, absent manifest error, be conclusive and binding on all parties)
that the making, continuation or conversion of any Loan as a Eurodollar
Rate Loan has become unlawful or impermissible by reason of compliance by
that Lender with any new, or change in the interpretation of any existing,
law, governmental rule, regulation or order of any Governmental Authority
(whether or not having the force of law or resulting in costs or
penalties), then, and in any such event, such Lender may give notice of
that determination in writing, to the Borrowers and the Agent and the Agent
shall promptly transmit the notice to each other Lender. Until such Lender
gives notice otherwise, the right of the Borrowers to select Eurodollar
Rate Loans from that Lender shall be suspended and each Eurodollar Rate
Loan outstanding from that Lender shall automatically and immediately
convert to a Prime Rate Loan.
(iv) The right of each Borrower to select Eurodollar Rate Loans
for any Borrowing is suspended until the fifth Business Day following the
Syndication Date.
(v) There shall not be outstanding at any one time more than an
aggregate of nine (9) Borrowings of Loans which consist of Eurodollar Rate
Loans.
(vi) No Agent Advance shall be made as a Eurodollar Rate Loan.
(d) COMPENSATION. (i) Each Notice of Continuation and Notice of
Conversion given by any Borrower shall be irrevocable by and binding on
such Borrower. In the case of any Borrowing, continuation or conversion
that the related Notice of Borrowing, Notice of Continuation or Notice of
Conversion specifies is to be comprised of Eurodollar Rate Loans, the
Borrower giving such notice shall indemnify each Lender against any loss,
cost or expense incurred by such Lender as a result of any failure to
fulfill, on or before the date for such Borrowing, continuation or
conversion specified in such Notice of Borrowing, Notice of Continuation or
Notice of Conversion, the applicable conditions set forth in Article 5,
including, without limitation, any loss, cost or expense incurred by reason
of the liquidation or re-employment of deposits or other funds acquired by
such Lender to fund the Loan to be made by such Lender as part of such
Borrowing, continuation or conversion.
(ii) If any payment of principal of, or conversion or continuation
of, any Eurodollar Rate Loan is made other than on the last day of the
Interest Period for such Loan as a result of a payment, prepayment
(including as a result of an assignment by one Lender to a new Lender
occurring prior to the Syndication Date, but not as a result of any such
assignment occurring thereafter), conversion
35
or continuation of such Loan or acceleration of the maturity of the
Revolving Notes or Term Notes pursuant to Article 9 or for any other
reason, the Borrower owing such Loan shall, upon demand by any Lender
(with a copy of such demand to the Agent), pay to the Agent for the
account of such Lender any amounts required to compensate such Lender
for any additional losses, costs or expenses which it incurs as a result
of such payment, including, without limitation, any loss, cost or
expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by any Lender to fund or maintain such
Loan.
(iii) Calculation of all amounts payable to a Lender under this
Section 4.13(d) shall be made as though such Lender elected to fund all
Eurodollar Rate Loans by purchasing U.S. dollar deposits in its Eurodollar
Lending Office's interbank eurodollar market.
4.14. INDEMNIFICATION IN CERTAIN EVENTS. If after the Closing
Date, either (i) any change in or in the interpretation of any law or
regulation is introduced, including, without limitation, with respect to
reserve requirements, applicable to the Agent, to any of the Lenders, or to
Bankers Trust Company, BT Delaware or any other banking or financial
institution from whom any of the Lenders borrows funds or obtains credit (a
"Funding Bank"), or (ii) the Agent, a Funding Bank or any of the Lenders
complies with any future guideline or request from any central bank or other
Governmental Authority or (iii) the Agent, a Funding Bank or any of the
Lenders determines that the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change
in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation
or administration thereof has or would have the effect described below, or
the Agent, a Funding Bank or any of the Lenders complies with any request or
directive regarding capital adequacy (whether or not having the force of law)
of any such authority, central bank or comparable agency, and in the case of
any event set forth in this clause (iii), such adoption, change or compliance
has or would have the direct or indirect effect of reducing the rate of
return on any of the Lenders' capital as a consequence of its obligations
hereunder to a level below that which such Lender could have achieved but for
such adoption, change or compliance (taking into consideration the Agent's or
such Funding Bank's or Lender's policies as the case may be with respect to
capital adequacy) by an amount deemed by such Lender to be material, and any
of the foregoing events described in clauses (i), (ii) or (iii) increases the
cost to the Agent, the Issuing Bank or any of the Lenders of (A) funding or
maintaining the total Commitments or (B) issuing, making or maintaining any
Letter of Credit or of purchasing or maintaining any participation therein,
or reduces the amount receivable in respect thereof by the Agent, the Issuing
Bank or any Lender, then the Borrowers shall upon demand by the Agent, pay to
the Agent, for the account of each applicable Lender or, as applicable, the
Issuing Bank or a Funding Bank, additional amounts sufficient to indemnify
the Lenders against such increase in cost or reduction in amount receivable.
A certificate as to the amount of such increased cost and setting forth in
reasonable detail the calculation thereof shall be submitted to the Borrowers
by the Agent, or the applicable Lender, Issuing Bank or Funding Bank, and
shall be conclusive absent manifest or demonstrable error.
4.15. TAXES. (a) Any and all payments by any Borrower hereunder, under
the Term Loans, the Revolving Loans or under the Letters of Credit to or for the
benefit of any Lender, the Issuing Bank or the Agent shall be made free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings and penalties, interests and all
other liabilities with respect thereto ("Taxes"), excluding, (i) in the case of
each such Lender, the Issuing Bank or the Agent, taxes imposed on its net income
(including, without limitation, any taxes imposed on branch profits) and
franchise taxes imposed on it by the jurisdiction under the laws of which such
Lender, the Issuing Bank or the Agent (as the case may be) is organized or any
political subdivision thereof, (ii) in the case of each Lender, taxes imposed on
its net income (including, without limitation, any taxes imposed on branch
profits), and franchise taxes imposed on it, by the jurisdiction of such
Lender's Applicable
36
Lending Office or any political subdivision thereof, (iii) in the case of
each such Lender, the Issuing Bank and the Agent, any Taxes that are in
effect and that would apply to a payment to such Lender, the Issuing Bank or
Agent, as applicable, as of the Closing Date, and (iv) if any Person acquires
any interest in this Credit Agreement, any Loan or Letter of Credit pursuant
to the provisions hereof, or a Foreign Lender or the Agent changes the office
in which the Borrowing is made, accounted for or booked (any such person, or
such Foreign Lender or the Agent in that event, being referred to as a "Tax
Transferee"), any Taxes to the extent that they are in effect and would apply
to a payment to such Tax Transferee as of the date of the acquisition of such
interest or change in office, as the case may be (all such nonexcluded Taxes
being hereinafter referred to as "Covered Taxes"). If any Borrower shall be
required by law to deduct any Covered Taxes from or in respect of any sum
payable hereunder, under any Loan or under any Letter of Credit to or for the
benefit of any Lender, the Issuing Bank or the Agent or any Tax Transferee,
(A) the sum payable shall be increased as may be necessary so that after
making all required deductions of Covered Taxes (including deductions of
Covered Taxes applicable to additional sums payable under this Section 4.15)
such Lender, the Issuing Bank, the Agent or such Tax Transferee, as the case
may be, receives an amount equal to the sum it would have received had no
such deductions been made, (B) such Borrower shall make such deductions and
(C) such Borrower shall pay the full amount so deducted to the relevant
taxation authority or other authority in accordance with applicable law.
(b) In addition, each Borrower agrees to pay any present or future
stamp, documentary, excise, privilege, intangible or similar levies that
arise at any time or from time to time (i) from any payment made under any
and all Credit Documents, (ii) from the transfer of the rights of the Lender
under any Credit Documents to any transferee, or (iii) from the execution or
delivery by any Borrower of, or from the filing or recording or maintenance
of, or otherwise with respect to the exercise by the Agent or the Lenders of
their rights under, any and all Credit Documents (hereinafter referred to as
"Other Taxes").
(c) Each Borrower will indemnify each Lender, the Issuing Bank, the
Agent, and any Tax Transferee for the full amount of (i) Covered Taxes
imposed on or with respect to amounts payable hereunder, (ii) Other Taxes,
and (iii) any Taxes (other than Covered Taxes imposed by any jurisdiction on
amounts payable under this Section 4.15) paid by such Lender, the Issuing
Bank or the Agent or such Tax Transferee, as the case may be, and any
liability (including penalties, interest and reasonable expenses) arising
solely therefrom or with respect thereto. Payment of this indemnification
shall be made by a Borrower within 15 days from the date such Lender, the
Issuing Bank or the Agent or Tax Transferee makes written demand therefor to
such Borrower certifying and setting forth in reasonable detail the
calculation thereof as to the amount and type of such Taxes. Any such
certificate submitted by the Lender, the Issuing Bank or Agent or Tax
Transferee in good faith to any Borrower shall, absent manifest or
demonstrable error, be final, conclusive and binding on all parties.
(d) Within 30 days after the date of any payment of Covered Taxes or
Other Taxes, the Borrower making such payment will furnish to the Agent the
original or a certified copy of a receipt evidencing payment thereof.
(e) On or before the Closing Date, each Foreign Lender shall deliver to
the Agent and the Borrowers (i) two valid, duly completed copies of IRS Form
1001 or 4224 or successor applicable form, as the case may be, and any other
required form, certifying in each case that such Foreign Lender is entitled to
receive payments under this Credit Agreement or the Loans payable to it without
deduction or withholding of any United States federal income taxes or with such
withholding imposed at a reduced rate (the "Reduced Rate"), and (ii) a valid,
duly completed IRS Form W-8 or W-9 or successor applicable form, as the case may
be, to establish an exemption from United States backup withholding tax. Each
such Foreign Lender shall also deliver to the Agent and the Borrowers two
further copies of said Form 1001 or 4224 and W-8 or W-9, or successor applicable
forms, or other manner of required
37
certification, as the case may be, on or before the date that any such form
expires or becomes obsolete or otherwise is required to be resubmitted as a
condition to obtaining an exemption from a required withholding of United
States federal income tax or entitlement to having such withholding imposed
at the Reduced Rate or after the occurrence of any event requiring a change
in the most recent form previously delivered by it to the Borrowers and the
Agent, and such extensions or renewals thereof as may reasonably be requested
by any Borrower and the Agent, certifying (i) in the case of a Form 1001 or
4224 that such Foreign Lender is entitled to receive payments under this
Credit Agreement or the Notes payable to it without deduction or withholding
of any United States federal income taxes, unless in any such case any change
in a tax treaty to which the United States is a party, or any change in law
or regulation of the United States or official interpretation thereof has
occurred after the Closing Date and prior to the date on which any such
delivery would otherwise be required that renders all such forms inapplicable
or that would prevent such Foreign Lender from duly completing and delivering
any such form with respect to it, and such Foreign Lender advises the
Borrowers and the Agent that it is not capable of receiving payments without
any deduction or withholding at the Reduced Rate, or (ii) in the case of a
Form W-8 or W-9, establishing an exemption from United States backup
withholding tax.
(f) If a Tax Transferee that is organized under the laws of a
jurisdiction outside of the United States acquires an interest in this Credit
Agreement or any Loan or a Foreign Lender changes the office through which
Loans are made, accounted for or booked, the transferor, or the applicable
Foreign Lender, in the case of a change of office, shall cause such Tax
Transferee to agree that, on or prior to the effective date of such
acquisition or change, as the case may be, it will deliver to the Borrowers
and the Agent (i) two valid, duly completed copies of IRS Form 1001 or 4224
or successor applicable form, as the case may be, and any other required
form, certifying in each case that such Tax Transferee is entitled to receive
payments under this Credit Agreement and the Notes payable to it without
deduction or withholding of United States federal income tax or with such
withholding imposed at a Reduced Rate; and (ii) a valid, duly completed IRS
Form W-8 or W-9 or successor applicable form, as the case may be, to
establish an exemption from United States backup withholding tax. Each Tax
Transferee that delivers to the Borrowers and the Agent a Form 1001 or 4224,
and Form W-8 or W-9 and any other required form, pursuant to the next
preceding sentence, further undertakes to deliver two further copies of the
said Form 1001 or 4224 and Form W-8 or W-9, or successor applicable forms, or
other manner of required certification, as the case may be, on or before the
date that any such form expires or becomes obsolete or otherwise is required
to be resubmitted as a condition to obtaining an exemption from a required
withholding of United States federal income tax or entitlement to having such
withholding imposed at the Reduced Rate or after the occurrence of any event
requiring a change in the most recent form previously delivered by it to the
Borrowers and the Agent, and such extensions or renewals thereof as may
reasonably be requested by the Borrowers and the Agent, certifying (i) in the
case of a Form 1001 or 4224 that such Tax Transferee is entitled to receive
payments under this Credit Agreement without deduction or withholding of any
United States federal income taxes or with such withholding imposed at the
Reduced Rate, unless any change in treaty, law or regulation or official
interpretation thereof has occurred after the effective date of such
acquisition or change and prior to the date on which any such delivery would
otherwise be required that renders all such forms inapplicable or that would
prevent such Tax Transferee from duly completing and delivering any such form
with respect to it, and such Tax Transferee advises the Borrowers and the
Agent that it is not capable of receiving payments (a) without any deduction
or withholding of United States federal income tax or (b) with such
withholding at the Reduced Rate, as the case may be, or (ii) in the case of a
Form W-8 or W-9, establishing an exemption from United States backup
withholding tax.
(g) If any Taxes for which any Borrower would be required to make
payment under this Section 4.15 are imposed, the Lender, the Issuing Bank or
the Agent, as the case may be, shall use its reasonable best efforts to avoid
or reduce such Taxes by taking any appropriate action (including, without
limitation, assigning its rights hereunder to a related entity or a different
office) which would
38
not in the sole opinion of such Lender, the Issuing Bank or Agent be
otherwise disadvantageous to such Lender, the Issuing Bank or Agent, as the
case may be. If and when receipt by any Lender, the Issuing Bank or the
Agent of any Taxes paid by any Borrower hereunder results in an excess
payment or credit to such Lender, the Issuing Bank or the Agent, as the case
may be, on account of such Taxes, then such Lender, the Issuing Bank or the
Agent, as the case may be, shall refund such excess to such Borrower.
(h) Without prejudice to the survival of any other agreement of any
Borrower hereunder, the agreements and obligations of the Borrowers contained
in this Section 4.15 shall survive the payment in full of the Obligations.
4.16. AFFECTED LENDERS. If any Borrower is obligated to pay to any
Lender any amount under Sections 3.10, 4.14 or 4.15 hereof or if any Lender
is a Defaulting Lender, such Borrower may, if no Default or Event of Default
then exists, replace such Lender with another lender acceptable to the Agent,
and such Lender hereby agrees to be so replaced subject to the following:
(a) The Obligations of each Borrower hereunder to the Lender to be
replaced (including such increased or additional costs incurred from the date
of incurrence of such increase or additional costs through the date such
Lender is replaced hereunder) shall be paid in full to such Lender
concurrently with such replacement;
(b) If such replacement is a result of increased costs under Sections
3.10, 4.14 or 4.15, the replacement lender shall be a bank or other financial
institution that is not subject to such increased costs which caused the
Borrower's election to replace any Lender hereunder, and each such
replacement lender shall execute and deliver to the Agent such documentation
satisfactory to the Agent pursuant to which such replacement lender is to
become a party hereto, conforming to the provisions of Section 11.8 hereof,
with total Commitments equal to that of the Lender being replaced and shall
make Revolving Loans and Term Loans in the aggregate principal amount equal
to the aggregate outstanding principal amount of the Revolving Loans and Term
Loans of the Lender being replaced;
(c) Upon such execution of such documents referred to in clause (b) and
repayment of the amounts referred to in clause (a), the replacement lender
shall be a "Lender" with Commitments as specified hereinabove and the Lender
being replaced shall cease to be a "Lender" hereunder, except with respect to
indemnification provisions under this Credit Agreement, which shall survive
as to such replaced Lender;
(d) The Agent shall reasonably cooperate in effectuating the
replacement of any Lender under this Section 4.16, but at no time shall the
Agent be obligated to initiate any such replacement;
(e) Any Lender replaced under this Section 4.16 shall be replaced at
the Borrowers' sole cost and expense and at no cost or expense to the Agent
or any of the Lenders; and
(f) If any Borrower proposes to replace any Lender pursuant to this
Section 4.16 because the Lender seeks reimbursement under either Section
3.10, 4.14 or 4.15, then it must also replace any other Lender or
proportionately replace the Commitments and Loans of all Lenders who seeks
similar levels of reimbursement (as a percentage of such Lender's
Commitments) under such Sections.
ARTICLE 5. CONDITIONS PRECEDENT
5.1. CONDITIONS TO INITIAL LOANS AND LETTERS OF CREDIT. The
obligation of each Lender to fund (or convert) its Proportionate Share of the
Term Loans and the initial Revolving Loans, and the
39
obligation of the Agent to cause the Issuing Bank to issue the initial
Letters of Credit, is subject to the satisfaction or waiver of the following
conditions precedent:
(a) CLOSING DOCUMENT LIST. The Agent and the Lenders shall have
received each of the agreements, opinions, reports, approvals, consents,
certificates and other documents set forth on the Closing Document List
attached hereto as Schedule A (the "Closing Document List").
(b) MATERIAL ADVERSE CHANGE. (i) No change, occurrence, event or
development or event involving a prospective change that is reasonably likely
to have a Material Adverse Effect shall have occurred and be continuing, and
(ii) there shall not have occurred a substantial impairment of the financial
markets generally that is reasonably likely to materially and adversely
affect the transactions contemplated hereby, in each case as reasonably
determined by the Agent and each Lender in its sole discretion, and the Agent
shall have received a certificate from a responsible officer of each of the
Borrowers certifying the foregoing.
(c) FEES AND EXPENSES; CERTAIN EXISTING OBLIGATIONS. (i) All Fees and
Expenses payable to the Agent and Lenders by the Credit Parties on or before
the Closing Date shall have been paid, (ii) all Existing Loans shall have
been converted to Prime Rate Loans (and, by its execution hereof, Perry
directs such conversion) and Perry shall have paid (A) all unpaid accrued
interest on the Existing Loans, (B) all unpaid accrued fees, expenses and
other amounts payable by Perry under the Existing Credit Agreement and (iii)
all existing ▇▇▇▇'▇ credit facilities and other debt obligations (including
those set forth on Schedule B, Part 5.1(c)) shall have been terminated, all
principal, interest, fees and other amounts owing thereunder shall be paid in
full concurrently with the funding of the initial Loans hereunder and all
Liens securing the obligations under such credit facilities and other debt
obligations shall have been unconditionally released subject only to such
payment, in each case in a manner satisfactory to the Agent.
(d) ▇▇▇▇'▇ MERGER. The ▇▇▇▇'▇ Merger shall have been consummated
strictly in accordance with the terms of the ▇▇▇▇'▇ Merger Agreement, without
any waiver or amendment not consented to in writing by the Agent and the
Lenders of any term, provision or condition set forth therein, and in
compliance with all applicable laws. The Merger Agreement shall be in full
force and effect and shall not have been terminated. The Agent shall have
received copies of all agreements relating to the ▇▇▇▇'▇ Merger, all of which
shall be satisfactory to the Agent.
(e) EQUITY FINANCING; NOTE CONVERSION. On or prior to the Closing
Date, (i) Holdings shall have received net cash proceeds of at least
$4,000,000 from the Holdings Equity Issuance, (ii) Holdings shall have
contributed such proceeds to ▇▇▇▇▇ as a common equity contribution, (iii)
Holdings shall have consummated the Note Conversion and (iv) the Agent and
the Lenders shall have received true and correct copies of the Equity
Issuance Documents and the Note Conversion Documents and all of the terms and
conditions of the Equity Issuance Documents and the Note Conversion Documents
shall be in form and substance reasonably satisfactory to the Agent and the
Majority Lenders.
(f) HOLDINGS DEBT ISSUANCE. On or prior to the Closing Date, (i)
Holdings shall have received aggregate gross cash proceeds of at least
$115,000,000 from the issuance of the Holdings Senior Subordinated Notes and
(ii) the Agent and the Lenders shall have received true and correct copies of
the Holdings Senior Subordinated Note Documents and all of the terms and
conditions of the Holdings Senior Subordinated Note Documents shall be in
form and substance reasonably satisfactory to the Agent and the Majority
Lenders.
(g) REAL PROPERTY SALE\LEASEBACK. On or prior to the Closing Date, Perry
shall have received net cash proceeds of at least $17,000,000 from the sale and
leaseback of all real property of Perry Realty Co., Inc. (or from the sale of
the capital stock of Perry Realty Co., Inc.), and the Lenders shall have
received true and correct copies of the documents and agreements related to such
sale and leaseback (or
40
such sale of capital stock) (the "Real Property Sale\Leaseback Documents")
and all of the terms and conditions of such documents and agreements shall be
in form and substance reasonably satisfactory to the Agent and the Majority
Lenders. By its execution hereof, each Existing Lender consents to the
release by the Agent of the Liens under the Existing Credit Documents with
respect to the Existing Collateral to the extent required or otherwise
reasonably requested in connection with such real property sale\leaseback (or
such sale of capital stock) and to the execution by the Agent of such
documents, agreements and instruments (including reconveyance and UCC release
and amendment documents) as may be requested in connection therewith.
(h) SHAREHOLDERS' AGREEMENTS; EMPLOYMENT AGREEMENTS; TAX SHARING
AGREEMENT; REAL PROPERTY LEASES. On or prior to the Closing Date, there
shall have been made available to the Agent a copy, certified as true and
correct by an appropriate officer of the applicable Borrower, of:
(i) all agreements entered into by any Borrower or Holdings
governing the terms and relative rights of their respective capital stock
and any agreements entered into by shareholders relating to any such entity
with respect to their capital stock (collectively, the "Shareholders'
Agreements"); and
(ii) any employment agreements entered into by any Borrower or
Holdings (collectively, the "Employment Agreements"); and
(iii) the Tax Sharing Agreement among Holdings and the other
Credit Parties providing, among other things, for an allocation for the
payment of U.S. income taxes on a basis no less favorable to any Credit
Party than such Credit Party would be obligated to pay on a stand-alone
basis; and
(iv) the real property leases with respect to all real property
leased by any Credit Party (collectively, the "Real Property Leases");
all of which Shareholders' Agreements, Employment Agreements, Tax Sharing
Agreement and Property Leases shall be in form and substance satisfactory to
the Agent.
(i) INSURANCE. The Agent shall have received and approved evidence of
insurance coverage in amount and scope, and all insurance carriers shall have
delivered endorsements in form and substance satisfactory to the Agent (x)
naming the Agent as loss payee with respect to all casualty coverages for
Holdings and its subsidiaries and containing other customary loss payable
provisions and (y) naming the Agent as additional insured for all general
liability coverages.
(j) CONSENT LETTER. On the Closing Date, the Agent shall have received
a letter from CT Corporation System presently located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, indicating its consent to its
appointment by each Credit Party as their agent to receive service of process
as specified in the Credit Documents.
(k) PERFECTION OF LIENS. The Liens and all other security interests in
favor of the Agent, for the benefit of the Lenders, shall have been duly
perfected and shall constitute first and prior Liens (or the Mortgages, UCC-1
Financing Statements and other instruments, documents and agreements, if any,
necessary to cause such perfection shall have been duly executed and
delivered to the Agent and all arrangements for the recordation thereof,
including the payment of fees and taxes in connection therewith shall be
satisfactory to the Agent), except with respect to the real property located
at ▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. and as otherwise
permitted in the Credit Documents.
41
(l) CASH MANAGEMENT. The Credit Parties shall have established cash
management systems on terms and conditions satisfactory to the Agent.
(m) UNUSED AVAILABILITY. On the Closing Date (giving effect to the
▇▇▇▇'▇ Merger), the Borrowers shall have unused borrowing availability, cash
or Cash Equivalents, or any combination thereof, of not less than $25,000,000
in the aggregate.
(n) CAPITALIZATION AND CORPORATE STRUCTURE. The capital and corporate
structure of Holdings, ▇▇▇▇'▇ and each Borrower and its Subsidiaries after
giving effect to the ▇▇▇▇'▇ Merger shall be satisfactory to the Agent and the
Lenders in all respects.
(o) CONSENTS AND APPROVALS. Except for (i) consents or authorizations
which have been obtained or filings which have been made, and which in either
case are in full force and effect or (ii) in the case of clause (C) only,
consents or authorizations the failure to obtain or filings the failure to
make could not reasonably be expected to have a Material Adverse Effect, no
consent or authorization of, filing with or other act by or in respect of,
any Governmental Authority or any other Person is required in connection with
(A) the Borrowings hereunder, (B) the grant of the Liens pursuant to the
Credit Documents, (C) the consummation of the ▇▇▇▇'▇ Merger or the continuing
operations of each Borrower and its Subsidiaries following the ▇▇▇▇'▇ Merger
or (D) with the execution, delivery, performance, validity or enforceability
of this Credit Agreement, the Term Notes, the Revolving Notes, the Letters of
Credit, the other Credit Documents or the ▇▇▇▇'▇ Merger Documents.
(p) LITIGATION. There shall be no pending or, to the best knowledge of
each Borrower, threatened litigation, proceeding, inquiry or other action
seeking an injunction or other restraining order, damages or other relief (i)
with respect to the ▇▇▇▇'▇ Merger, the ▇▇▇▇'▇ Merger Documents, the
transactions contemplated by this Credit Agreement and the Credit Documents
or (ii) against any Credit Party with respect to the Credit Parties' other
business activities.
(q) BALANCE SHEET. The Agent and the Lenders shall have received a
satisfactory unaudited pro forma condensed, combined balance sheet of
Holdings and its Subsidiaries as of September 30, 1997, after giving effect
to the ▇▇▇▇'▇ Merger.
(r) FINANCIAL STATEMENTS. The Agent, the Issuing Bank and the Lenders
shall have received and approved (i) the audited Financial Statements for
▇▇▇▇'▇ and its Subsidiaries for the fiscal year ended December 31, 1996,
along with an unqualified opinion of ▇▇▇▇, Mallone and Company, P.C. and for
Holdings and its Subsidiaries for the fiscal year ended December 31, 1996,
along with an unqualified opinion of Deloitte & Touche LLP, (ii) the
unaudited Financial Statements for ▇▇▇▇'▇ and its Subsidiaries and for
Holdings and its Subsidiaries, in each case for the nine month period ended
September 30, 1997, and (iii) consolidated financial statement forecasts
prepared by management of the Borrowers, including Financial Statements for
the period from January 1, 1998 through December 31, 2002 after giving effect
to the ▇▇▇▇'▇ Merger.
(s) SOLVENCY. The Agent shall have received a certificate of the chief
financial officer of Holdings and an opinion of Houlihan, Lokey, ▇▇▇▇▇▇ &
▇▇▇▇▇ or another valuation firm reasonably satisfactory to the Agent, in form
and substance reasonably acceptable to the Agent, attesting that, on a pro
forma basis assuming the consummation of the ▇▇▇▇'▇ Merger and the
transactions contemplated by this Credit Agreement and the Credit Documents,
both before and after such consummation, Holdings and its Subsidiaries on a
consolidated basis shall not be (i) insolvent or rendered insolvent, (ii)
left with an unreasonably small capital with which to engage in its business
or (iii) have incurred debts beyond its ability to pay as such debts mature.
42
(t) EXISTING INDEBTEDNESS. The terms and conditions of any
Indebtedness (including, without limitation, maturities, interest rates,
prepayment and redemption requirements, covenants, defaults, remedies,
security provisions and subordination provisions) of any Credit Party to
remain outstanding after the date hereof shall be satisfactory to the Agent
and each of the Lenders in all respects, and the Agent and each of the
Lenders shall be satisfied that the Credit Parties are not subject to any
material contractual obligations or other restrictions that would be violated
by the transactions contemplated by this Credit Agreement, the other Credit
Documents or the ▇▇▇▇'▇ Merger Documents.
(u) TITLE INSURANCE. The Agent and the Lenders shall have received
mortgagee title insurance policies (or marked commitments to issue the same)
for the Mortgaged Properties (except ▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇.▇.) issued by First American Title Insurance Company to the
Agent (each a "Mortgage Policy" and, collectively, the "Mortgaged Policies")
in amounts satisfactory to the Agent assuring the Agent that the Mortgages on
such Mortgaged Properties are (or will be when recorded) valid and
enforceable first priority mortgage liens on such Mortgaged Properties free
and clear of all defects and encumbrances except Permitted Mortgage
Encumbrances, and the Mortgage Policies shall otherwise be in form and
substance reasonably satisfactory to the Agent.
(v) ENVIRONMENTAL REPORTS. The Agent shall have received environment
audit reports (including, without limitation, the Environmental Reports) in
scope and substance satisfactory to the Agent concerning the properties and
business of the Borrowers and their Subsidiaries.
(w) CONTINUITY OF CONTRACTS; COMPLIANCE. The Lenders shall have
received satisfactory evidence that ▇▇▇▇'▇ material leases and material
contracts with customers and vendors shall continue in full force and effect
or be renewed for the benefit of ▇▇▇▇'▇ on and after the Closing Date on the
same substantive terms as existed on September 30, 1997. Each Credit Party
shall be in compliance with all existing instruments, indentures and other
agreements to which it is a party.
(x) OPINIONS OF COUNSEL. The Agent and the Lenders shall have received
originally executed copies of one or more favorable written opinions of
▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP, counsel to the Borrowers, substantially in
the form of Exhibit Q, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, local Wisconsin counsel to the
Borrowers, substantially in the form of Exhibit R and Nixon, Hargrave, Devans
& ▇▇▇▇▇ LLP, local Maryland, Virginia and Washington, D.C. counsel to the
Borrowers, substantially in the form of Exhibit S, in each case covering such
matters as shall be reasonably requested by the Agent and the Lenders. In
addition, the Agent, the Issuing Bank and the Lenders shall be entitled to
rely on all opinions issued in connection with the ▇▇▇▇'▇ Merger.
(y) ADDITIONAL DOCUMENTS. The Credit Parties shall have executed and
delivered to the Agent and the Lenders all other documents consistent
herewith which the Agent determines are reasonably necessary to consummate
the transactions contemplated hereby.
5.2. CONDITIONS PRECEDENT TO ALL LOANS AND LETTERS OF CREDIT. The
obligation of each Lender to fund its Proportionate Share of any requested
Loan or of the Agent to cause the Issuing Bank to issue any requested Letter
of Credit is subject to the conditions precedent set forth below. Each
Notice of Borrowing and each Letter of Credit Request shall constitute a
representation and warranty that such conditions are satisfied.
(a) All representations and warranties of any Credit Party contained in
this Credit Agreement and the other Credit Documents shall be true and
correct in all material respects on and as of the date of such Notice of
Borrowing or Letter of Credit Request or issuance of a check drawn against or
request for transfer from the Disbursement Account, as if then made, other
than representations and warranties that relate solely to an earlier date;
43
(b) No Default or Event of Default shall have occurred, or would result
from the making of the requested Loan or the issuance of the requested Letter
of Credit, which has not been waived; and
(c) No event has occurred which has had or reasonably could be expected
to have a Material Adverse Effect.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this Credit Agreement
and to make the Loans and other financial accommodations described herein,
and to induce the Issuing Bank to issue Letters of Credit, each Borrower
hereby represents and warrants to the Agent, the Lenders and the Issuing Bank
that, as of each Compliance Date, the following are true, correct and
complete (giving effect to the ▇▇▇▇'▇ Merger). Such representations and
warranties, and all other representations and warranties made by any Borrower
in any other Credit Document, shall survive the execution and delivery of the
Credit Documents.
6.1. ORGANIZATION AND QUALIFICATION. Holdings and each of its
Subsidiaries (i) is a corporation duly organized, validly existing and in
good standing under the laws of the state of its incorporation, (ii) has the
power and authority to own its properties and assets and to transact the
businesses in which it presently is, or proposes to be, engaged and (iii) is
duly qualified and is authorized to do business and is in good standing in
each jurisdiction where it currently is, or proposes to be, engaged in
business. Schedule B, Part 6.1 lists all jurisdictions in which Holdings and
its Subsidiaries are qualified to do business as foreign corporations.
6.2. AUTHORITY. Holdings and each of its Subsidiaries has the
requisite corporate power and authority to execute, deliver and perform each
of the Credit Documents and Related Documents to which it is a party. All
corporate action necessary for the execution, delivery and performance of any
of the Credit Documents and Related Documents has been taken.
6.3. ENFORCEABILITY. This Credit Agreement, each Credit Document
and each Related Document is the legal, valid and binding obligation of each
Credit Party which is a party thereto, enforceable in accordance with its
terms.
6.4. NO CONFLICT. The execution, delivery and performance of each
Credit Document and each Related Document by the Credit Parties and the
consummation of the ▇▇▇▇'▇ Merger are not in contravention of any Requirement
of Law or any material indenture, contract, lease, agreement, instrument or
other commitment to which it is a party or by which it or any of its
properties are bound and will not, except as contemplated herein, result in
the imposition of any Liens upon any of its properties.
6.5. CONSENTS AND FILINGS. No consent, authorization, permit or
filing is required in connection with the execution, delivery and performance
of this Credit Agreement or any Credit Document or any Related Document, or
the continuing operations of any Credit Party and the consummation of the
▇▇▇▇'▇ Merger, except (i) those that have been obtained or made, (ii) filings
necessary to create, perfect or retain the perfection of Liens against the
Collateral, and (iii) in the case of the continuing operations of each Credit
Party, those which the failure to obtain would not have a Material Adverse
Effect.
6.6. GOVERNMENT REGULATION. Neither Holdings nor any of its
Subsidiaries is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Interstate Commerce Act, the Investment
Company Act of 1940, or any other Requirement of Law that limits its ability to
incur indebtedness or its ability to consummate the transactions contemplated in
this Credit
44
Agreement and the other Credit Documents.
45
6.7. SOLVENCY. The fair saleable value of the assets of each
Borrower exceeds all its probable liabilities, including those to be incurred
pursuant to this Credit Agreement and the other Credit Documents. Each
Borrower (i) does not have unreasonably small capital in relation to the
business in which it is or proposes to be engaged and (ii) has not incurred,
and does not believe that it will incur, after giving effect to the
transactions contemplated by this Credit Agreement, debts beyond its ability
to pay as such debts become due.
6.8. RIGHTS IN COLLATERAL; PRIORITY OF LIENS. Each Credit Party
has good and marketable title to all property consisting of Collateral, free
and clear of any and all Liens in favor of third parties other than Liens
permitted hereunder. The security interests granted pursuant to the Credit
Documents (other than the Mortgages) constitute valid and enforceable first,
prior and perfected Liens on the Collateral, to the extent such Liens can be
perfected by the filing of financing statements, in favor of the Agent for
the benefit of the Lenders. The Mortgages create, as security for the
secured obligations described therein, a valid and enforceable perfected
security interest in and mortgage lien on all of the Mortgaged Properties in
favor of the Agent for the benefit of the Lenders, superior to and prior to
the rights of all third Persons (except for Permitted Mortgage Encumbrances
related thereto) and subject to no other Liens (other than Liens permitted
under Section 8.8).
6.9. FINANCIAL DATA. Each of Holdings and ▇▇▇▇'▇ has provided to
the Agent and each of the Lenders complete and accurate copies of annual
audited financial statements of such Person and its Subsidiaries for the
fiscal year ended December 31, 1996 and unaudited financial statements of
such Person and its Subsidiaries for the nine month period ended September
30, 1997. Such financial statements and all Financial Statements at any time
delivered pursuant to this Credit Agreement have been prepared in accordance
with GAAP consistently applied throughout the periods involved and fairly
present the respective consolidated financial positions, results of
operations and cash flows of such Person and its Subsidiaries for each of the
periods covered. In addition, the Borrowers have delivered to the Agent and
the Lenders certain projected consolidated financial data of the Borrowers
including forecasted balance sheets and income statements and statements of
cash flows for Fiscal Years 1997 through 2002 which take into consideration
the ▇▇▇▇'▇ Merger and the other transactions contemplated by this Credit
Agreement and which have been made in good faith and the Borrowers have no
reason to believe such projections and the assumptions upon which they are
based are not reasonable. Except as set forth on Schedule B, Part 6.9, no
Credit Party has any material Contingent Obligation, contingent liability or
liability for taxes, long-term leases or commitments (other than those
incurred in the ordinary course of business or otherwise, in each case in
compliance with this Credit Agreement), which is not reflected in the most
recent Financial Statements delivered to the Lenders pursuant to this Credit
Agreement.
6.10. LOCATIONS OF OFFICES, RECORDS AND INVENTORY. The Federal
Employee Identification Number and the address of the principal place of
business and chief executive office of each Credit Party is set forth on
Schedule B, Part 6.10. The books and records of each Credit Party, and all its
chattel paper and records of Accounts, are maintained exclusively at such
locations. There is no jurisdiction in which any Credit Party has any
Collateral (except for vehicles and Inventory in transit to the Borrowers or for
processing) other than those jurisdictions identified on Schedule B, Part 6.10.
The value of the Collateral (except for vehicles and Inventory in transit to the
Borrowers or for processing) of the Credit Parties in each jurisdiction (other
than Wisconsin, Maryland, Virginia and the District of Columbia) identified on
Schedule B, Part 6.10 does not exceed $100,000. A complete list of the legal
name and address of each warehouse at which Inventory is stored is set forth on
Schedule B, Part 6.10. None of the receipts received and to be received by any
Borrower from any warehouseman state that the
46
Inventory covered thereby is to be delivered to bearer or to the order of a
named person or to a named person and such named person's assigns.
6.11. SUBSIDIARIES; OWNERSHIP OF STOCK. The only direct or
indirect Subsidiaries of any Borrower are those listed on Schedule B, Part
6.11. Each Credit Party is the record and beneficial owner of all of the
shares of capital stock of each of the Subsidiaries listed as Subsidiaries of
such Credit Party on Schedule B, Part 6.11. There are no proxies,
irrevocable or otherwise, with respect to such shares, and no equity
securities of any of such Subsidiaries are or may become required to be
issued by reason of any options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities
or rights convertible into or exchangeable for, shares of any capital stock
of any such Subsidiary, and there are no contracts, commitments,
understandings or arrangements by which any such Subsidiary is or may become
bound to issue additional shares of its capital stock or securities
convertible into or exchangeable for such shares. All of such shares so
owned by any Credit Party are owned by such Credit Party free and clear of
any Liens.
6.12. NO JUDGMENTS OR LITIGATION. Except as set forth on Schedule B,
Part 6.12 no judgments, orders, writs or decrees are outstanding against any
Credit Party nor is there now pending or, to the best of each Borrower's
knowledge after diligent inquiry, threatened, any litigation, contested
claim, investigation, arbitration, or governmental proceeding by or against
any Credit Party which reasonably could be expected to have a Material
Adverse Effect or which purports to affect the legality, validity or
enforceability of this Credit Agreement or any other Credit Document or
Related Document.
6.13. NO DEFAULTS. Neither Holdings nor any of its Subsidiaries is in
default under any term of any Material Contract and all Material Contracts
are in full force and effect. Except as set forth on Schedule B, Part 6.13,
none of the Borrowers know of any material dispute regarding any such
Material Contract.
6.14. LABOR MATTERS. Schedule B, Part 6.14 accurately sets forth
all labor contracts to which Holdings or any of its Subsidiaries is a party
and their dates of expiration. There are no existing or threatened strikes,
lockouts or other disputes relating to any collective bargaining or similar
agreement to which any Credit Party is a party which reasonably could be
expected to have a Material Adverse Effect.
6.15. COMPLIANCE WITH LAW. Neither Holdings nor any of its
Subsidiaries has violated or failed to comply with any Requirement of Law,
including, without limitation, ERISA and environmental laws, except such
instances of violation or noncompliance as reasonably could not, individually
or in the aggregate, be expected to have a Material Adverse Effect.
6.16. ERISA. None of Holdings, any of its Subsidiaries or any ERISA
Affiliate maintains or contributes to any Plan, other than those listed on
Schedule B, Part 6.16. Holdings, each of its Subsidiaries and each ERISA
Affiliate have fulfilled all contribution obligations for each Plan
(including obligations related to the minimum funding standards of ERISA and
the Internal Revenue Code). No Termination Event has occurred nor has any
other event occurred that may result in a Termination Event. None of
Holdings or its Subsidiaries, any ERISA Affiliate, or any fiduciary of any
Plan is subject to any direct or indirect liability with respect to any Plan
under any Requirement of Law or agreement. None of Holdings or its
Subsidiaries or any ERISA Affiliate is required to provide security to any
Plan under Section 401(a)(29) of the Internal Revenue Code.
6.17. COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as disclosed on
Schedule B, Part 6.17, (i) no Credit Party is the subject of a judicial or
administrative proceeding or investigation relating to the violation of any
Environmental Law, or asserting potential liability arising from the disposal by
any Person of any Hazardous Material; (ii) no Credit Party has filed or received
any notice under any
47
Environmental Law of treatment, storage, disposal, spill or release or
threatened release at any other location of any Hazardous Material generated,
used, stored, treated, transported or released by or on behalf of any Credit
Party which, individually or in the aggregate, would reasonably be expected
to have a Material Adverse Effect; and (iii) no Credit Party has knowledge of
any contingent liability for any release of any Hazardous Material.
6.18. INTELLECTUAL PROPERTY. Each Borrower possesses such assets,
licenses, patents, patent applications, copyrights, service marks, trademarks
and trade names as are necessary to continue to conduct its present and
proposed business activities.
6.19. LICENSES AND PERMITS; BUSINESS RESTRICTIONS. Each of
Holdings and its Subsidiaries has obtained and holds in full force and
effect, all franchises, licenses, leases, permits, certificates,
authorizations, qualifications, easements, rights of way and other rights and
approvals which are necessary for the operation of its business as presently
conducted and as proposed to be conducted. The Non-Competition Agreement
will not restrict Holdings or Perry from operating the business purchased
from Old Perry pursuant to the Perry Acquisition substantially in the manner
conducted by Old Perry immediately prior to the consummation of the Perry
Acquisition.
6.20. TAXES AND TAX RETURNS.
(a) Except as set forth on Schedule B, Part 6.20, Holdings and each of
its Subsidiaries has timely filed, without request for extension, all income
tax returns it is required to file. The information filed is complete and
accurate in all material respects. All deductions taken in such income tax
returns are appropriate and in accordance with applicable laws and
regulations, except deductions that may have been disallowed but are being
challenged in good faith and for which adequate reserves have been made in
accordance with GAAP.
(b) All taxes, assessments, fees and other governmental charges for
periods beginning prior to the date hereof, have been timely paid and neither
Holdings nor any of its Subsidiaries has any liability for taxes in excess of
the amounts so paid or reserves so established.
(c) Except as set forth in Schedule B, Part 6.20, no deficiencies for
taxes have been claimed, proposed or assessed by any taxing or other
Governmental Authority against Holdings or any of its Subsidiaries and no tax
liens have been filed. Except as set forth in Schedule B, Part 6.20, there
are no pending or threatened audits, investigations or claims for or relating
to any liability for taxes and there are no matters under discussion with any
Governmental Authority which could result in a material additional liability
for taxes. Except as set forth in Schedule B, Part 6.20, no extension of a
statute of limitations relating to taxes, assessments, fees or other
governmental charges is in effect with respect to any Borrower or any of the
Borrowers' Subsidiaries.
(d) Except as set forth on Schedule B, Part 6.20, neither Holdings nor
any of its Subsidiaries has any obligation under any written tax sharing
agreement or agreement regarding payments in lieu of taxes.
6.21. MATERIAL CONTRACTS. Schedule B, Part 6.21, contains a true,
correct and complete list of all the Material Contracts currently in effect
on the date hereof.
6.22. NO OTHER INDEBTEDNESS. The Credit Parties have no Indebtedness
other than the Indebtedness that is permitted by Section 8.7.
6.23. TITLE TO PROPERTY. Each Credit Party has (i) good and
marketable fee simple title to or valid leasehold interests in all of its Real
Property and (ii) good and marketable title to all of its other
48
property (including, without limitation, all real and other property in each
case as reflected in the Financial Statements delivered to the Agent
hereunder), other than, with respect to properties described in clause (ii)
above, properties disposed of in the ordinary course of business or in any
manner otherwise permitted under this Credit Agreement since the date of the
most recent audited consolidated balance sheet of the Credit Parties, as
applicable, and in each case subject to no Liens other than those Liens that
are permitted by Section 8.8.
6.24. AFFILIATE TRANSACTIONS. Except as set forth in Schedule B,
Part 6.24, no Credit Party is a party to or bound by any agreement or
arrangement (whether oral or written) to which any Affiliate of such Credit
Party is a party except (i) pursuant to the reasonable requirements of such
Credit Party's business and (ii) upon fair and reasonable terms no less
favorable to such Credit Party than it could obtain in a comparable
arm's-length transaction with an unaffiliated Person.
6.25. ACCURACY AND COMPLETENESS OF INFORMATION. All factual
information furnished by or on behalf of Holdings or any of its Subsidiaries
in writing to the Agent, any Lender, or the Auditors for purposes of or in
connection with this Credit Agreement or any Credit Documents, or any
transaction contemplated hereby or thereby is or will be true and accurate in
all material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact necessary
to make such information not misleading at such time.
6.26. NO CHANGE. There has been no development or event nor any
prospective development or event, which has had or reasonably could be
expected to have a Material Adverse Effect.
6.27. SPECIAL PURPOSE CORPORATION. Holdings was formed to effect
the Perry Acquisition and, except as permitted by the Holdings Guarantee, has
no significant assets (other than the common stock of the other Credit
Parties and the Series C and Series D Preferred Stock) or liabilities (other
than liabilities under the Credit Documents to which it is a party, the
Holdings Senior Subordinated Notes and ordinary course administrative and
legal expenses).
ARTICLE 7. AFFIRMATIVE COVENANTS
Until termination of this Credit Agreement and payment and satisfaction
of all Obligations due hereunder:
7.1. FINANCIAL REPORTING. Each Borrower shall timely deliver to
each Lender the following information:
(a) ANNUAL FINANCIAL STATEMENTS. As soon as available, but not later
than 90 days after each Fiscal Year end: (i) annual audited Financial
Statements; (ii) a comparison in reasonable detail to the prior year audited
Financial Statements; (iii) (A) the Auditors' opinion, which shall be
unqualified as to going concern and scope of audit and shall state that such
consolidated financial statements present fairly the financial position of
the Credit Parties as at the dates indicated and the results of their
operations and cash flows for the periods indicated in conformity with GAAP
consistently applied and that the examination by such accountants in
connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards, (B) "Management
Letter" and (C) a statement indicating that the Auditors have not obtained
knowledge of the existence of any Default or Event of Default during their
audit; (iv) a narrative discussion of each Borrower's consolidated financial
condition and results of operations and the consolidated liquidity and
capital resources for such Fiscal Year, prepared by the chief financial
officer of Holdings; and (v) a compliance certificate substantially in the
form of Exhibit H with an attached schedule of calculations demonstrating
compliance with the Article 8 financial covenants.
49
(b) PROJECTIONS. Not later than 45 days after each Fiscal Year end,
consolidated and consolidating projections of the financial condition of
Holdings and the other Credit Parties and results of operations for the next
three years, containing projected consolidating balance sheets, statements of
operations, statements of cash flows and statements of changes in
shareholders equity on a monthly basis for the first of the three years,
quarterly for the second, and annually for the third.
(c) QUARTERLY FINANCIAL STATEMENTS. As soon as available, but not
later than 60 days after the end of each Fiscal Quarter: (i) Financial
Statements as of the Fiscal Quarter then ended, and for the Fiscal Year to
date; (ii) a comparison in reasonable detail to the Financial Statements for
the corresponding periods of the prior Fiscal Year; (iii) the certification
of the chief executive officer or chief financial officer of Holdings that
such Financial Statements have been prepared in accordance with GAAP; (iv) a
narrative discussion of each Borrower's consolidated financial condition and
results of operations and the consolidated liquidity and capital resources
for such Fiscal Quarter and Fiscal Year to date, prepared by the chief
financial officer of Holdings; and (v) a compliance certificate substantially
in the form of Exhibit H with an attached schedule of calculations
demonstrating compliance with the Article 8 financial covenants.
(d) PERIOD FINANCIAL STATEMENTS. As soon as available, but not later
than 45 days after the end of each Fiscal Period: (i) Financial Statements as
of the Fiscal Period then ended, and for the Fiscal Year to date; (ii) a
comparison in reasonable detail to the Financial Statements for the
corresponding periods of the prior Fiscal Year; (iii) the certification of
the chief executive officer or chief financial officer of Holdings that such
Financial Statements have been prepared in accordance with GAAP; and (iv) a
compliance certificate substantially in the form of Exhibit H with an
attached schedule of calculations demonstrating compliance with the Article 8
financial covenants.
(e) PERIOD COMPARISON TO PRIOR PROJECTIONS. As soon as available, but
not later than 30 days after the end of each of the first twelve Fiscal
Periods, and 45 days after the end of each Fiscal Period, a comparison of
actual results of operations, cash flow and capital expenditures for the
Credit Parties for such Fiscal Period and for the period from the beginning
of the current Fiscal Year through the end of such Fiscal Period with amounts
previously projected for those periods (see Section 7.1(b)) and with actual
results for corresponding periods in the previous Fiscal Year.
(f) SECURITIES REPORTS. Promptly after the sending or filing thereof,
but not later than 5 days thereafter, copies of all proxy statements,
financial statements and reports that any Credit Party sends to its
stockholders generally, and copies of all regular, periodic and special
reports, and all registration statements, that any Credit Party files with
the Securities and Exchange Commission or any governmental authority that may
be substituted therefor, or with any national securities exchange.
(g) EXCESS CASH FLOW CERTIFICATES. Simultaneously with the making of
the prepayment of Excess Cash Flow required by Section 4.7(a)(ii) (or if no
prepayment is required, as soon as practicable and in any event prior to
March 31 of each year), the Borrowers shall deliver, or cause to be
delivered, to each Lender a certificate of the chief financial officer of
Holdings certifying that the determination of the Excess Cash Flow prepayment
has been made in accordance with the provisions of this Credit Agreement and
setting forth in reasonable detail the computations as to the determination
of Excess Cash Flow for the relevant period together with all financial
statements or other information (not previously delivered to the Lenders)
underlying such computations or referred to in such certificate.
(h) PURCHASE PRICE ADJUSTMENT. Within 2 Business Days after receipt
thereof, all schedules, exhibits or other instruments or documents evidencing
the calculation of the Adjustment Amount (as defined in the ▇▇▇▇'▇ Merger
Agreement).
50
7.2. COLLATERAL REPORTING. Each Borrower shall timely deliver to
the Agent the following certificates and reports:
(a) BORROWING BASE CERTIFICATES. Monthly, within 10 Business Days after
the last Business day of each month (or, if and for so long as the aggregate
amount that remains available to be borrowed by the Borrowers in accordance
with Section 2.2(a) is less than $10,000,000, weekly, before 12:00 Noon, New
York City time, on the second Business Day of each week), and at any other
time reasonably requested by the Agent, a Borrowing Base Certificate, which
shall: (i) be completed substantially in the form of Exhibit I, detailing
such Borrower's Eligible Accounts Receivable and Eligible Inventory as of
each Friday of the immediately preceding week and as of the last day of each
month, as applicable (or as of such other date as the Agent may request);
(ii) be prepared by or under the supervision of such Borrower's chief
executive officer or chief financial officer and certified by such officer
subject only to adjustment upon completion of the normal year-end audit of
physical inventory; and (iii) include such additional schedules and other
information as the Agent may reasonably request.
(b) APPRAISALS. When requested by the Agent (which request will not be
made more frequently than twice per year unless an Event of Default has
occurred and is continuing), a report of Inventory, based upon a physical
count, which shall describe such Borrower's Inventory by category and by item
(in reasonable detail) and report the then appraised value (at lower of cost
or market) of such Inventory, and a report of Equipment which shall describe
such Borrower's Equipment (in reasonable detail) and report the then
appraised value (at lower of cost or market) of such Equipment.
(c) FURTHER ASSURANCES. When requested by the Agent, any further
information regarding the Collateral, business affairs and financial
condition of any Credit Party.
7.3. NOTIFICATION REQUIREMENTS. Each Borrower shall timely give the
Agent and each of the Lenders the following notices:
(a) NOTICE OF DEFAULTS. Promptly, and in any event within two (2)
Business Days after becoming aware of the occurrence of a Default or Event of
Default, a certificate of the chief executive officer or chief financial
officer of such Borrower specifying the nature thereof and such Borrower's
proposed response thereto, each in reasonable detail.
(b) PROCEEDINGS OR ADVERSE CHANGES. Promptly, and in any event within
five (5) Business Days after such Borrower becomes aware of (i) any
proceeding being instituted or threatened to be instituted by or against any
Credit Party in any federal, state, local or foreign court or before any
commission or other regulatory body (federal, state, local or foreign), (ii)
any order, judgment or decree in excess of $250,000 being entered against any
Credit Party or any of their respective properties or assets or (iii) any
actual or prospective change, development or event which has had or
reasonably could be expected to have a Material Adverse Effect, a written
statement describing such proceeding, order, judgment, decree, change,
development or event and any action being taken with respect thereto by such
Borrower or any such Subsidiary.
(c) ERISA NOTICES. (i) Promptly, and in any event within ten (10)
Business Days after such Borrower, any of its Subsidiaries or any ERISA
Affiliate knows or has reason to know that a Termination Event has occurred, a
written statement of the chief financial officer of such Borrower describing
such Termination Event and any action that is being taking with respect thereto
by such Borrower, any such Subsidiary or ERISA Affiliate, and any action taken
or threatened by the Internal Revenue Service, Department of Labor or Pension
Benefit Guaranty Corporation. Such Borrower, such Subsidiary and the ERISA
Affiliate shall be deemed to know all facts known by the administrator of any
Benefit Plan of which it is the plan sponsor; (ii) promptly, and in any event
within three (3) Business Days after the filing thereof with the Internal
Revenue Service, a copy of each funding waiver request
51
filed with respect to any Benefit Plan and all communications received by any
Credit Party or any ERISA Affiliate with respect to such request; and (iii)
promptly, and in any event within three (3) Business Days after receipt by
any Credit Party or any ERISA Affiliate, of the PBGC's intention to terminate
a Benefit Plan or to have a trustee appointed to administer a Benefit Plan,
copies of each such notice.
(d) ENVIRONMENTAL AND HEALTH AND SAFETY NOTICES. Promptly, and in any
event within ten (10) Business Days after receipt by any Credit Party of any
notice, complaint or order alleging actual or prospective violation of any
Environmental Law, health or safety Requirement of Law or alleging
responsibility for costs of a cleanup, together with a copy of such notice,
complaint, or order and a written statement describing any action being taken
with respect thereto by such Credit Party.
(e) MATERIAL CONTRACTS. Promptly, and in any event within ten (10)
Business Days after any Material Contract is terminated (other than in
accordance with their stated maturity) or amended or any new Material
Contract is entered into, a written statement describing such event, with
copies of amendments or new Material Contracts, and, if appropriate, an
explanation of any actions being taken with respect thereto.
(f) COLLATERAL MATTERS. At least thirty (30) Business Days prior
written notice to the Agent of any change in the location of any Collateral,
the name of any Credit Party or in the location of the chief executive office
or place of business of any Credit Party from the locations specified in
Schedule B, Part 6.10. At least twenty (20) Business Days prior to any such
change, the Borrowers shall cause to be executed and delivered to the Agent
any financing statements and such other documents reasonably deemed necessary
by the Agent to preserve and protect the Agent's Lien (and the priority
thereof) on the Collateral. Prior to the date of any such change, the
Borrowers shall cause to be executed and delivered to the Agent any
Collateral Access Agreements or other documents reasonably required by the
Agent, all in form and substance satisfactory to the Agent. To the extent
that the Credit Parties timely comply with the provisions set forth in this
Section, Schedule B, Part 6.10 automatically shall be deemed to be amended to
include such new jurisdictions or to reflect a change in the location of
their chief executive offices, as applicable.
7.4. CORPORATE EXISTENCE. Each Borrower shall, and shall cause
each of its Subsidiaries to, (i) maintain its corporate existence (except
that any Borrower's solvent Subsidiaries may merge with each other and with
such Borrower and a solvent Borrower may merge with another solvent Borrower,
provided the Agent receives five (5) Business Days prior written notice
thereof and a Borrower is the surviving corporation), (ii) maintain in full
force and effect all material licenses, bonds, franchises, leases, trademarks
and qualifications to do business, and all patents, contracts and other
rights necessary to the profitable conduct of their businesses, (iii)
continue in, and limit their operations to, the same general lines of
business conducted by such Person immediately prior to the Closing Date and,
subject to the Agent's satisfaction of compliance with the Non-Competition
Agreement (if then in effect), businesses ancillary thereto, and (iv) comply
with all material Requirements of Law.
7.5. BOOKS AND RECORDS; INSPECTIONS. Each Borrower agrees to
maintain, and to cause each of its Subsidiaries to maintain, books and
records pertaining to the Collateral in such detail, form and scope as is
consistent with good business practice. Each Borrower agrees that the Agent
or its agents may enter upon the premises of such Borrower or any of its
Subsidiaries at any time and from time to time, during normal business hours
and upon reasonable notice under the circumstances, and at any time at all on
and after the occurrence of an Event of Default which has not otherwise been
waived by the Agent or the Lenders, as applicable, for the purposes of (i)
inspecting and verifying the Collateral, (ii) inspecting and/or copying (at
such Borrower's expense) any and all records pertaining thereto, and (iii)
discussing the affairs, finances and business of such Borrower with any
officers, employees and directors of such Borrower or with the Auditors.
52
7.6. INSURANCE. Each Borrower agrees to maintain (or to cause to
be maintained on its behalf), and to cause each of its Subsidiaries to
maintain (or to cause to be maintained on its behalf), public liability
insurance, business interruption insurance, third party property damage
insurance and replacement value insurance on the Collateral under such
policies of insurance, with such insurance companies, in such amounts and
covering such risks as are at all times satisfactory to the Agent in its
commercially reasonable judgment. All policies covering the Collateral are
to name the Agent as an additional insured and the loss payee in case of
loss, and are to contain such other provisions as the Agent may reasonably
require to fully protect the Agent's interest in the Collateral and to any
payments to be made under such policies.
7.7. CASUALTY LOSS. Each Borrower shall provide written notice to
the Agent and the Lenders of the occurrence of any of the following events
within five (5) Business Days after the occurrence of such event: any asset
or property owned or used by any Credit Party is (i) damaged or destroyed, or
suffers any material loss, or (ii) condemned, confiscated or otherwise taken,
in whole or in part, or the use thereof is otherwise diminished so as to
render impracticable or unreasonable the use of such asset or property for
the purposes for which such asset or property were used immediately prior to
such condemnation, confiscation or taking, by exercise of the powers of
condemnation or eminent domain or otherwise, and in any such case the amount
of the damage, destruction, loss or diminution in value is in excess of
$1,000,000 (collectively, a "Casualty Loss"). Each Borrower diligently shall
file and prosecute its claim or claims for any award or payment in connection
with a Casualty Loss. In the event of a Casualty Loss, the Borrowers shall
pay to the Agent, promptly upon receipt thereof, any and all insurance
proceeds and payments received by any Credit Party on account of damage,
destruction, loss, condemnation or eminent domain proceedings. The Agent
may, in the exercise of its reasonable judgment, either (a) apply the of
proceeds realized from Casualty Losses to payment of accrued and unpaid
interest or outstanding principal under the Loans or (b) pay such proceeds to
the applicable Credit Party to be used to repair, replace or rebuild the
asset or property or portion thereof that was the subject of the Casualty
Loss. After the occurrence and during the continuance of an Event of
Default, (i) no settlement on account of any such Casualty Loss shall be made
without the consent of the Majority Lenders and (ii) the Agent may
participate in any such proceedings and each Borrower shall deliver to the
Agent such documents as may be requested by the Agent to permit such
participation and shall consult with the Agent, its attorneys and agents in
the making and prosecution of such claim or claims. Each Borrower hereby
irrevocably authorizes and appoints the Agent its attorney-in-fact, after the
occurrence and continuance of an Event of Default, to collect and receive for
any such award or payment and to file and prosecute such claim or claims,
which power of attorney shall be irrevocable and shall be deemed to be
coupled with an interest, and each Borrower shall, upon demand of the Agent,
make, execute and deliver any and all assignments and other instruments
sufficient for the purpose of assigning any such award or payment to the
Agent for the benefit of the Lenders, free and clear of any encumbrances of
any kind or nature whatsoever.
7.8. TAXES. Each Borrower agrees to pay, when due, and to cause
each of its Subsidiaries to pay when due, all taxes lawfully levied or
assessed against such Borrower, any of its Subsidiaries or any of the
Collateral before any penalty or interest accrues thereon; PROVIDED, HOWEVER,
that, unless such taxes have become a federal tax or ERISA Lien on any of the
assets of such Borrower or any of its Subsidiaries, no such tax need be paid
if the same is being contested, in good faith, by appropriate proceedings
promptly instituted and diligently conducted and if an adequate reserve or
other appropriate provision shall have been made therefor as required in
order to be in conformity with GAAP.
7.9. COMPLIANCE WITH LAWS. Each Borrower agrees to comply, and to
cause each of its Subsidiaries to comply, with all Requirements of Law
applicable to the Collateral or any part thereof, or to the operation of its
business or its assets generally, unless such Borrower contests any such
Requirements of Law in a reasonable manner and in good faith.
53
7.10. USE OF PROCEEDS. The Term Loans and up to $11,000,000 of initial
Revolving Loans made to the Borrowers hereunder shall be available for use by
the Borrowers solely to repay existing Indebtedness of the Borrowers and
their Subsidiaries and to pay the costs and expenses related to the ▇▇▇▇'▇
Merger and the Credit Documents which are due and payable on the Closing
Date, including without limitation the Fees and Expenses due on the Closing
Date pursuant to Article 4; and the proceeds of any subsequent Revolving
Loans made hereunder shall be used by the Borrowers consistent herewith for
their general corporate purposes. No Borrower shall use any portion of the
proceeds of any such Loans for the purpose of purchasing or carrying any
"margin stock" (as defined in Regulation G of the Board of Governors of the
Federal Reserve System) in any manner which violates the provisions of
Regulation G, T, U or X of said Board of Governors or for any other purpose
in violation of any applicable statute or regulation, or of the terms and
conditions of this Credit Agreement.
7.11. FISCAL YEAR. Each Borrower agrees to maintain its fiscal year as
a year ending December 31.
7.12. MAINTENANCE OF PROPERTY. Each Borrower agrees to keep, and to
cause each of its Subsidiaries to keep, all property useful and necessary to
their respective businesses in good working order and condition (ordinary
wear and tear excepted) in accordance with their past operating practices and
not to commit or suffer any material waste with respect to any of their
properties.
7.13. ERISA DOCUMENTS. Each Borrower will cause to be delivered to the
Agent, upon the Agent's request, each of the following: (i) a copy of each
Plan (or, where any such plan is not in writing, complete description
thereof) (and if applicable, related trust agreements or other funding
instruments) and all amendments thereto, all written interpretations thereof
and written descriptions thereof that have been distributed to employees or
former employees of such Borrower or its Subsidiaries; (ii) the most recent
determination letter issued by the Internal Revenue Service with respect to
each Benefit Plan; (iii) for the three most recent plan years, Annual Reports
on Form 5500 Series required to be filed with any governmental agency for
each Benefit Plan; (iv) all actuarial reports prepared for the last three
plan years for each Benefit Plan; (v) a listing of all Multiemployer Plans,
with the aggregate amount of the most recent annual contributions required to
be made by such Borrower or any ERISA Affiliate to each such plan and copies
of the collective bargaining agreements requiring such contributions; (vi)
any information that has been provided to such Borrower or any ERISA
Affiliate regarding withdrawal liability under any Multiemployer Plan; and
(vii) the aggregate amount of the most recent annual payments made to former
employees of such Borrower or any ERISA Affiliate under any Retiree Health
Plan.
7.14. FURTHER ASSURANCES. Each Borrower shall take, and shall cause
each of its Subsidiaries to take, all such further actions and execute all
such further documents and instruments as the Agent at any time reasonably
may determine in its sole discretion to be necessary or desirable to further
carry out and consummate the transactions contemplated by the Credit
Documents, to cause the execution, delivery and performance of the Credit
Documents to be duly authorized and to perfect or protect the Liens (and the
priority status thereof) of the Agent on the Collateral. Without limiting
the generality of the foregoing, in the event ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ has not sold
the real property located at 1500-1520 Eckington Place Northeast, Washington,
D.C., on or before August 15, 1998, the Borrowers shall, and shall cause ▇▇▇▇
& ▇▇▇▇▇▇▇▇▇ to, take all actions to cause the Mortgage with respect to such
real property to be recorded as a first priority lien thereon and to obtain a
policy of title insurance with respect thereto in favor of the Agent in
amount and with endorsements satisfactory to the Agent, all of the foregoing
at the Borrowers' sole cost and expense. In addition, the Borrowers shall
use commercially reasonable efforts to obtain Collateral Access Agreements
from each landlord, warehouseman, bailee and each other Person as may be
reasonably requested by the Agent or the Required Lenders and, in the event
any such
54
Collateral Access Agreement is not received on or prior to April 1,
1998, the Agent may establish such reserves as it deems necessary in the
exercise of its Permitted Discretion.
7.15. ENVIRONMENTAL AND OTHER MATTERS. (a) Each Borrower and its
Subsidiaries will conduct their businesses so as to comply in all material
respects with all applicable Environmental Laws, in all jurisdictions in
which any of them is doing business, including, without limitation,
compliance in all material respects with the terms and conditions of all
permits and governmental authorizations, except to the extent that such
Borrower or any of such Subsidiaries is contesting, in good faith by
appropriate legal proceedings, any such Environmental Law or interpretation
thereof or application thereof; PROVIDED, FURTHER, that such Borrower and
each of such Subsidiaries shall comply in all material respects with the
applicable order of any court or other governmental agency relating to such
Environmental Laws unless such Borrower or such Subsidiaries shall currently
be prosecuting an appeal or proceedings for review and shall have secured a
stay of enforcement or execution or other arrangement postponing enforcement
or execution pending such appeal or proceedings for review. If any Borrower
or any of the Borrowers' Subsidiaries shall (a) receive written notice that
any material violation of any Environmental Law may have been committed or is
about to be committed by such Borrower or any of its Subsidiaries, (b)
receive written notice that any administrative or judicial complaint or order
has been filed or is about to be filed against such Borrower or any of its
Subsidiaries alleging material violations of any Environmental Law, or
requiring such Borrower or any of its Subsidiaries to take any action in
connection with the release of toxic or hazardous substances into the
environment or (c) receive any written notice from a federal, state, or local
governmental agency or private party alleging that such Borrower or any of
its Subsidiaries may be liable or responsible for material costs associated
with a response to or cleanup of a release of a toxic or hazardous substance
into the environment or any damages caused thereby, such Borrower shall
provide the Agent and the Lenders with a copy of such notice within ten (10)
days after the receipt thereof by such Borrower or any of its Subsidiaries.
Within ten (10) days after any Borrower learns of the enactment or
promulgation of any federal, state or local Environmental Law, which
reasonably could be expected to have a Material Adverse Effect, such Borrower
shall provide the Agent and the Lenders with notice thereof. Each Borrower
shall promptly take all reasonable actions necessary to prevent the
imposition of any Liens on any of its properties arising out of or related to
any environmental matters. At the written request of the Agent (which
request will not be made more frequently than once per year unless (i) the
Agent receives a notice under Section 7.3(d) or (ii) an Event of Default has
occurred and is continuing), which request shall include a reasonably
specific statement of the basis thereof, and at the sole cost and expense of
such Borrower, such Borrower shall retain an environmental consulting firm,
satisfactory to the Agent in its commercially reasonable judgment, to conduct
an environmental review, audit or investigation of the specific items as
requested by the Agent relating to the properties of such Borrower and its
Subsidiaries located in the United States and provide to the Agent and each
Lender a copy of any reports delivered in connection therewith. At the
request of the Agent, each Borrower shall provide the Agent with any
additional information relating to environmental matters and any potential
related liability resulting therefrom as the Agent may reasonably request.
(b) For purposes of this Section 7.15, "material" means any noncompliance
or basis of liability that reasonably would be expected to subject any Borrower
or any of its Subsidiaries to liability in excess of $100,000.
7.16. SECURITY INTERESTS. Each Borrower will, and will cause each of
its Subsidiaries to, defend the Collateral against all claims and demands of all
Persons at any time claiming the same or any interest therein, other than claims
relating to Liens permitted by the Credit Documents. Each Borrower agrees to,
and will cause each of its Subsidiaries to, comply with the requirements of all
state and federal laws in order to grant to the Agent and the Lenders valid and
perfected first priority security
55
interests in the Collateral, subject to Liens permitted under Section 8.8.
If, after request by the Agent to any Borrower or any of its Subsidiaries to
execute and deliver one or more financing statements, such Borrower or such
Subsidiary fails timely to do so, the Agent is hereby authorized by such
Borrower and each of its Subsidiaries to file any financing statements
covering the Collateral whether or not such Borrower's or such Subsidiary's
signature appears thereon. Each Borrower agrees to, and will cause each of
its Subsidiaries to, do whatever the Agent reasonably may request, from time
to time, by way of: filing notices of liens, financing statements, and
amendments, renewals and continuations thereof; cooperating with Agent's
representatives; keeping stock records; paying claims which could, if unpaid,
become a Lien on the Collateral; and performing such further acts as the
Agent reasonably may require in order to effect the purposes of this Credit
Agreement and the other Credit Documents. Any and all fees, costs and
Expenses incurred by the Agent in connection with the foregoing shall be paid
by the Borrowers. If same are not promptly paid by the Borrowers, the Agent
may pay same on the Borrowers' behalf, and the amount thereof shall be an
Obligation of the Borrowers and due to the Agent on demand.
7.17. TRADEMARKS. Each Borrower shall do and cause to be done all
things necessary to preserve and keep in full force and effect all of its and
its Subsidiaries' material registrations of trademarks, service marks and other
marks, trade names or other trade rights.
7.18. DIVIDENDS ON PREFERRED STOCK. Perry shall make, to the maximum
extent permitted thereunder, all dividend payments on the Series B Preferred
Stock or the Series C Preferred Stock, as the case may be, through the issuance
of additional Series D Preferred Stock rather than in cash.
ARTICLE 8. NEGATIVE COVENANTS
Until termination of this Credit Agreement and payment and satisfaction of
all Obligations due hereunder, the Credit Parties shall comply with, and, where
required, each Borrower shall cause each of its Subsidiaries to comply with, the
following covenants:
8.1. MINIMUM EBITDA. The Credit Parties shall have EBITDA for each
Test Period ending on the last day of any Fiscal Quarter set forth below of not
less than the amount set forth below:
Fiscal Quarter Amount
-------------- ------
1st Quarter - 1998 $5,500,000
2nd Quarter - 1998 $12,000,000
3rd Quarter - 1998 $19,500,000
4th Quarter - 1998 $28,000,000
1st Quarter - 1999 $28,500,000
2nd Quarter - 1999 $29,000,000
3rd Quarter - 1999 $29,500,000
4th Quarter - 1999 $30,000,000
1st Quarter - 2000 $30,500,000
2nd Quarter - 2000 $31,000,000
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3rd Quarter - 2000 $31,500,000
4th Quarter - 2000 $32,000,000
1st Quarter - 2001 $32,500,000
2nd Quarter - 2001 $33,000,000
3rd Quarter - 2001 $33,500,000
4th Quarter - 2001 $34,000,000
1st Quarter - 2002 $34,500,000
2nd Quarter - 2002 $35,000,000
3rd Quarter - 2002 $35,500,000
4th Quarter - 2002
and thereafter $36,500,000
57
8.2. CONSOLIDATED FIXED CHARGE COVERAGE RATIO. The Credit Parties
shall maintain a ratio of EBITDA to Consolidated Fixed Charges for any Test
Period ending on the last day of any Fiscal Quarter set forth below of not less
than the ratio set forth below:
Fiscal Quarter Ratio
-------------- -----
1st Quarter - 1998 .90 to 1.0
2nd Quarter - 1998 1.0 to 1.0
3rd Quarter - 1998 1.10 to 1.0
4th Quarter - 1998
and thereafter 1.20 to 1.0
8.3. INTEREST COVERAGE RATIO. The Credit Parties shall maintain for each
Fiscal Quarter a ratio of EBITDA to Interest Expense for any Test Period
ending on the last day of any Fiscal Quarter set forth below of not less than
the ratio set forth below:
Fiscal Quarter Ratio
-------------- -----
1st Quarter - 1998 1.60 to 1.0
2nd Quarter - 1998 1.70 to 1.0
3rd Quarter - 1998 1.80 to 1.0
4th Quarter - 1998 2.0 to 1.0
1st Quarter - 1999 2.10 to 1.0
2nd Quarter - 1999 2.20 to 1.0
3rd Quarter - 1999 2.30 to 1.0
4th Quarter - 1999 2.40 to 1.0
1st Quarter - 2000 2.50 to 1.0
2nd Quarter - 2000 2.60 to 1.0
3rd Quarter - 2000 2.70 to 1.0
4th Quarter - 2000
and thereafter 2.75 to 1.0
8.4. CURRENT RATIO. The Credit Parties shall maintain for each Fiscal
Quarter a ratio of consolidated current assets to consolidated current
liabilities (which for purposes of this Section shall exclude the full
outstanding balance of the Revolving Loans and the current portion of long
term debt) of not less than 1.50 to 1.0.
8.5. DEBT RATIO. The Credit Parties shall maintain for each Fiscal
Quarter a ratio of Funded Debt to Annualized EBITDA of not more than the ratio
set forth below:
Fiscal Quarter Ratio
-------------- -----
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1st Quarter - 1998 6.00 to 1.0
2nd Quarter - 1998 5.70 to 1.0
3rd Quarter - 1998 5.30 to 1.0
4th Quarter - 1998 4.80 to 1.0
1st Quarter - 1999 4.60 to 1.0
2nd Quarter - 1999 4.50 to 1.0
3rd Quarter - 1999 4.25 to 1.0
4th Quarter - 1999 4.00 to 1.0
1st Quarter - 2000 3.80 to 1.0
2nd Quarter - 2000 3.70 to 1.0
3rd Quarter - 2000 3.60 to 1.0
4th Quarter - 2000 3.60 to 1.0
1st Quarter - 2001 3.50 to 1.0
2nd Quarter - 2001 3.40 to 1.0
3rd Quarter - 2001 3.20 to 1.0
4th Quarter - 2001 3.00 to 1.0
1st Quarter - 2002 2.80 to 1.0
2nd Quarter - 2002 2.70 to 1.0
3rd Quarter - 2002 2.60 to 1.0
4th Quarter - 2002
and thereafter 2.50 to 1.0
59
8.6. CAPITAL EXPENDITURES. The Credit Parties shall not make payments for
Capital Expenditures during any Fiscal Year set forth below in an aggregate
amount in excess of the amount set forth below:
Fiscal Year Amount
------------------------------ ------
1998 and thereafter until such
time as the outstanding
aggregate principal amount of
the Term Loans is $15,000,000
or less $7,500,000
from and after such time as the
outstanding aggregate principal
amount of the Term Loans is
$15,000,000 or less $10,000,000
The Credit Parties shall not make any Capital Expenditures that are not directly
related to the business permitted by Section 7.4.
8.7. ADDITIONAL INDEBTEDNESS. Neither any Borrower nor any of the
Borrowers' Subsidiaries shall directly or indirectly incur, create, assume or
suffer to exist any Indebtedness other than:
(a) Indebtedness under the Credit Documents;
(b) Indebtedness under Interest Rate Agreements entered into in the
ordinary course of business;
(c) Indebtedness described on Schedule B, Part 8.7, and any refinancing of
such Indebtedness, so long as the aggregate principal amount of the Indebtedness
so refinanced shall not be increased and the refinancing shall be on terms and
conditions no more restrictive than the terms and conditions of the Indebtedness
to be refinanced;
(d) Indebtedness (including capital leases) secured by purchase money
liens on equipment acquired after the date of this Credit Agreement not to
exceed $2,500,000 in the aggregate outstanding at any one time ("Purchase Money
Liens") so long as such Indebtedness shall be on terms and conditions reasonably
satisfactory to the Agent, each Purchase Money Lien shall attach only to the
property to be acquired, a description shall have been furnished to the Agent
for any item of equipment for which the purchase price is greater than $100,000,
and the debt incurred shall not exceed ninety percent (90%) of the purchase
price of the item or items of equipment purchased or acquired;
(e) (i) Other Indebtedness incurred to finance capital expenditures which
is subject to firm commitments for subsequent refinancing pursuant to
obligations not constituting Indebtedness; and (ii) other Indebtedness in an
amount not to exceed $4,000,000 in the aggregate outstanding at any time;
(f) any Borrower and any of the Borrowers' Affiliates that has executed
a Guarantee may guarantee the obligations of Holdings in respect of the Holdings
Senior Subordinated Notes pursuant to a Subsidiary Subordinated Note Guaranty;
and
(g) Indebtedness arising from intercompany loans from any Borrower to any
other Borrower, PROVIDED, that (i) all such Indebtedness shall be evidenced by a
promissory note executed by
60
the Borrower receiving such intercompany loans, substantially in the form of
Exhibit U, (ii) such Indebtedness shall be subordinated in right of payment
to the Obligations when due and payable and (iii) the promissory notes
evidencing such Indebtedness shall be pledged to the Agent, for the benefit
of the Lenders, pursuant to the Pledge Agreement.
8.8. LIENS. Neither any Borrower nor any of the Borrowers'
Subsidiaries shall directly or indirectly create, incur, assume, or suffer to
exist any Lien on any of its property now owned or hereafter acquired except:
(a) Liens granted to the Lenders under the Credit Documents;
(b) Liens listed on Schedule B, Part 8.8;
(c) Purchase Money Liens;
(d) Liens of warehousemen, mechanics, materialmen, workers, repairmen,
common carriers, or landlords, liens for taxes, assessments or other
governmental charges, and other similar Liens arising by operation of law for
amounts that are not yet due and payable or which are being diligently contested
in good faith by the applicable Borrower, so long as the Agent has been notified
thereof and adequate reserves are maintained by such Borrower for their payment;
(e) Attachment or judgment Liens not to exceed an aggregate of $500,000,
excluding amounts (i) bonded to the reasonable satisfaction of the Agent or (ii)
covered by insurance to the reasonable satisfaction of the Agent;
(f) Liens for taxes, assessments or other governmental charges not yet due
and payable or which are being diligently contested in good faith by the
applicable Borrower by appropriate proceedings, PROVIDED that in any such case
an adequate reserve is being maintained by such Borrower for the payment of
same;
(g) Deposits or pledges to secure obligations under workmen's
compensation, social security or similar laws, or under unemployment insurance,
not to exceed an aggregate of $250,000;
(h) Deposits or pledges to secure bids, tenders, contracts (other than
contracts for the payment of money), leases, statutory obligations, surety and
appeal bonds and other obligations of like nature arising in the ordinary course
of business not to exceed an aggregate of $250,000;
(i) Permitted Mortgage Encumbrances;
(j) 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 materially detract from the value of the
property subject thereto or materially interfere with the ordinary conduct of
the business of any Borrower or any of the Borrowers' Subsidiaries;
(k) bankers' liens or rights of recoupment or offset arising in connection
with investments in Cash Equivalents; and
(l) Extensions and renewals of any of the foregoing so long as the
aggregate amount of extended or renewed Liens are not increased and are on terms
and conditions no more restrictive than the terms and conditions of the Liens
extended or renewed.
8.9. CONTINGENT OBLIGATIONS. Neither any Borrower nor any of the
Borrowers' Subsidiaries shall directly or indirectly incur, assume, or suffer to
exist any Contingent Obligation, excluding
61
indemnities given in connection with the sale of inventory or other asset
dispositions permitted hereunder, Contingent Obligations created under the
Credit Documents in favor of the Agent, the Lenders or the Issuing Bank, and
Contingent Obligations of any Borrower for Indebtedness of such Borrower
permitted to be incurred under Section 8.7 except for the Indebtedness
referred to in Section 8.7(f).
8.10. SALE OF ASSETS. Each Borrower shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, sell, lease, assign,
transfer or otherwise dispose of any assets other than (i) sales by each
Borrower of Inventory in the ordinary course of business, (ii) sales by the
Credit Parties of individual items of Collateral with a book value of less than
$1,500,000 in the aggregate during any Fiscal Year, (iii) sales by each Credit
Party of obsolete or worn out property disposed of in the ordinary course of
business, (iv) other dispositions of assets by the Credit Parties, PROVIDED that
(a) such dispositions are for fair value, (b) not less than 85% of the aggregate
consideration is paid in full in cash at the time of disposition and is used to
repay the Loans as required by this Credit Agreement, and (c) the aggregate
amount of all such dispositions for all Credit Parties does not exceed
$3,000,000 in the aggregate for any Fiscal Year, and (v) the sale of equipment
by any Borrower to the extent that such equipment is exchanged for credit
against the purchase price of similar replacement equipment or the proceeds of
such sale are applied within 60 days of such sale to the purchase price of such
replacement equipment; PROVIDED, HOWEVER, that the exceptions contained in
clauses (i) through (vi) of this Section shall not apply to any sale, lease,
assignment, transfer or other disposition of the Mortgaged Properties;
8.11. RESTRICTED PAYMENTS. Each Borrower shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly:
(a) declare or pay any dividend (other than dividends payable solely in
common stock of such Borrower or, with respect to Perry, in Series B Preferred
Stock or Series C Preferred Stock as to which the dividends are payable only in
shares of Series D Preferred Stock until the Obligations have been paid in full)
on, or make any payment (including by way of offset) 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 such Borrower or any warrants, options or rights 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 such Borrower or any of its Subsidiaries,
except that:
(i) any Subsidiary may declare and pay dividends to the Borrower that
is its corporate parent or any other Subsidiary of such Borrower;
(ii) Perry may pay cash dividends to Holdings and Shenandoah and Port
City may pay cash dividends from time to time to ▇▇▇▇'▇ in each case with
respect to their common stock and in an aggregate amount sufficient to
permit Holdings to make interest payments with respect to the Holdings
Senior Subordinated Notes, but only to the extent permitted by the
subordination provisions contained in the Holdings Senior Subordinated Note
Documents or otherwise as approved in writing by Majority Lenders and
Holdings may make such payments; PROVIDED that nothing in this clause (ii)
shall be deemed to permit any voluntary prepayment with respect to, or
redemption or defeasance of, any such Holdings Senior Subordinated Note;
(iii) so long as no Default or Event of Default has occurred and is
continuing or would result therefrom, Perry may pay dividends on the Series
B Preferred Stock in an amount not to exceed $812,500 PER ANNUM;
(iv) so long as no Default or Event of Default is continuing or would
result therefrom, Perry may pay cash dividends to Holdings and Shenandoah
and Port City may pay cash dividends to
62
▇▇▇▇'▇, in each case for administrative expenses of Holdings and ▇▇▇▇'▇
incurred in the ordinary course of business and solely attributable to
business activities relating to the Borrowers and their Subsidiaries and
not any Excluded Subsidiary, so long as such dividends are applied promptly
to pay such administrative expenses and that in any event do not exceed in
the aggregate $150,000 in any fiscal year of Holdings;
(v) so long as no Default or Event of Default is continuing or would
result therefrom, Perry may pay cash dividends to Holdings and Shenandoah
and Port City may pay cash dividends to ▇▇▇▇'▇, in each case in the amount
and to the extent such proceeds are promptly used by Holdings to make
payments in respect of repurchased shares of Holdings common stock from
employees or any partnership through which they indirectly own such shares,
who retire or terminate employment; PROVIDED that such payments shall not
exceed in the aggregate $350,000 in any year; and
(vi) so long as no Default or Event of Default has occurred and is
continuing or would result therefrom, Perry may use not more than 25% of
the net cash proceeds in excess of $30,000,000 from a public offering of
Perry's common stock (or from a public offering of Holdings' common stock
which excess proceeds have been contributed to Perry as common equity) to
redeem Series B, Series C or Series D Preferred Stock in such order as
their interests may appear;
(b) make any optional payment or prepayment on or redemption (including,
without limitation, by making payments to a sinking or analogous fund), offer to
purchase or repurchase of, or defease, any Indebtedness (other than Indebtedness
pursuant to this Credit Agreement and other than any refinancing of Indebtedness
permitted under the Credit Documents); PROVIDED that any Subsidiary of a
Borrower may make payments on account of Indebtedness owing to such Borrower or
any other Subsidiary of such Borrower; or
(c) make any payment (whether for fees, as compensation for services or
otherwise) to the ▇▇▇▇▇▇▇ Parties or any of their Affiliates after the Closing
Date, except that:
(i) the Borrowers may make annual compensation payments to ▇▇▇▇ ▇.
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or any of their Affiliates of not more than
$500,000 in the aggregate, which amount may be increased each year by 10%
of the prior year's permitted amount; and
(ii) so long as no Default or Event of Default has occurred and is
continuing or would result therefrom, Perry may make payments to Novamil
Corporation under the Management Agreement of not more than $750,000 in any
year, plus any cost of living increases provided for in the Management
Agreement.
8.12. INVESTMENTS. Each Borrower shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly, make any Investment in any Person,
whether in cash, securities, or other property of any kind including, without
limitation, any Subsidiary or Affiliate of such Borrower, other than:
(a) Advances or loans by each Borrower made in the ordinary course of
business to employees or other Persons not to exceed $100,000 outstanding at any
one time to any one Person and $500,000 in the aggregate outstanding at any one
time;
(b) Loans, investments and advances in existence as of the date hereof and
described on Schedule B, Part 8.12;
(c) Cash Equivalents;
63
(d) Deposits with financial institutions, disclosed in Schedule B, Part
8.14, and which are insured by the Federal Deposit Insurance Corporation
("FDIC") or a similar federal insurance program; PROVIDED, HOWEVER, that each
Borrower may, in the ordinary course of its business, maintain in its
disbursement accounts from time to time amounts in excess of then applicable
FDIC or other program insurance limits;
(e) Investments resulting from the performance by any Borrower of its
obligations under permitted Contingent Obligations;
(f) Investments of any Borrower received in connection with asset sales
permitted under Section 8.10(iv);
(g) Investments of any Borrower in respect of accounts receivable that
have become delinquent, including securities of the account debtor received by
such Borrower or its Subsidiaries in connection with a plan of reorganization of
the Indebtedness of such account debtor;
(h) Investments arising from intercompany loans permitted by Section
8.7(g); and
(i) Such other Investments of any Borrower as the Agent and the Majority
Lenders may approve in writing in their sole discretion.
8.13. AFFILIATE TRANSACTIONS. Except for transactions permitted under
Section 8.11(c) and 8.7(g), each Borrower shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly, enter into any transaction with,
including, without limitation, the purchase, sale or exchange of property or the
rendering of any service to, any Subsidiary or Affiliate of any Borrower, except
pursuant to the reasonable requirements of such Borrower's or such Subsidiary's
business, as the case may be, and upon fair and reasonable terms no less
favorable to such Borrower or such Subsidiary than could be obtained in a
comparable arm's-length transaction with an unaffiliated Person.
8.14. ADDITIONAL BANK ACCOUNTS. Each Borrower shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly, open, maintain or
otherwise have any checking, savings or other accounts at any bank or other
financial institution, or any other account where money is or may be deposited
or maintained with any Person, other than the Disbursement Account and the
accounts set forth on Schedule B, Part 8.14.
8.15. EXCESS CASH. Each Borrower shall not, and shall not permit its
Subsidiaries to, directly or indirectly, maintain in the aggregate in all
deposit accounts of such Borrower and its Subsidiaries (other than the
Disbursement Account and payroll accounts), total cash balances and Investments
permitted by Sections 8.12(c), (d) and (e), in excess of $1,500,000 at any time
during which any Revolving Loans bearing interest at the Prime Rate are
outstanding hereunder or on any date when any Interest Period applicable to
Revolving Loans that are Eurodollar Rate Loans ends.
8.16. NO CORPORATE CHANGES. Each Borrower will not, and shall not
permit any of its Subsidiaries to (except, in each case, as permitted under
Section 7.4 hereof), directly or indirectly, merge, consolidate or otherwise
alter, modify or amend such Borrower's or such Subsidiary's Governing Documents
(including, without limitation, by filing any certificate of designation with
respect to any preferred stock or otherwise creating any new preferred stock),
structure, status or existence, or liquidate or dissolve itself (or suffer any
liquidation or dissolution).
64
8.17. NO PROHIBITED TRANSACTIONS UNDER ERISA. Each Borrower will
not, and shall not permit any of its Subsidiaries to, directly or indirectly:
(a) Engage, or permit any Subsidiary to engage, in any prohibited
transaction which is reasonably likely to result in a civil penalty or excise
tax described in Sections 406 of ERISA or 4975 of the Internal Revenue Code for
which a statutory or class exemption is not available or a private exemption has
not been previously obtained from the DOL;
(b) permit to exist with respect to any Benefit Plan any accumulated
funding deficiency (as defined in Sections 302 of ERISA and 412 of the Internal
Revenue Code), whether or not waived;
(c) fail, or permit any Subsidiary to fail, to pay timely required
contributions or annual installments due with respect to any waived funding
deficiency to any Benefit Plan;
(d) terminate, or permit any Subsidiary to terminate, any Benefit Plan
where such event would result in any liability of any Borrower, any of its
Subsidiaries or any ERISA Affiliate under Title IV of ERISA;
(e) fail, or permit any Subsidiary to fail, to make any required
contribution or payment to any Multiemployer Plan;
(f) fail, or permit any Subsidiary to fail, to pay any required
installment or any other payment required under Section 412 of the Internal
Revenue Code on or before the due date for such installment or other payment;
(g) amend, or permit any Subsidiary to amend, a Plan resulting in an
increase in current liability for the plan year such that any of any Borrower,
any of its Subsidiaries or any ERISA Affiliate is required to provide security
to such Plan under Section 401(a)(29) of the Internal Revenue Code; or
(h) withdraw, or permit any Subsidiary to withdraw, from any Multiemployer
Plan where such withdrawal is reasonably likely to result in any liability of
any such entity under Title IV of ERISA;
which, individually or in the aggregate, results in or reasonably would be
expected to result in a claim against or liability of any Borrower, any of its
Subsidiaries or any ERISA Affiliate in excess of $500,000.
8.18. MATERIAL AMENDMENTS OF MATERIAL CONTRACTS; ETC. Each Borrower will
not, and shall not permit any of its Subsidiaries to, directly or indirectly,
without the prior written consent of the Agent and the Majority Lenders, amend,
modify, cancel or terminate or permit the amendment, modification, cancellation
or termination (other than at its stated maturity) of (i) any of the Material
Contracts (other than the Holdings Senior Subordinated Note Documents and the
Sale\Leaseback Documents) if the effect thereof would or reasonably could be
expected to have a Material Adverse Effect, (ii) any Tax Sharing Agreement,
(iii) the Management Agreement, (iv) any Real Property Lease, (v) any of the
Sale\Leaseback Documents or (vi) any of the Holdings Senior Subordinated Note
Documents.
8.19. ADDITIONAL NEGATIVE PLEDGES. Except for restrictions actually
imposed by the secured parties with respect to the Purchase Money Liens on the
creation of Liens on the assets subject to such Liens, each Borrower shall not,
and shall not permit any of its Subsidiaries to, directly or indirectly, create
or otherwise cause or suffer to exist or become effective, or permit any of its
Subsidiaries to create or otherwise cause or suffer to exist or become
effective, directly or indirectly, (i) any prohibition or restriction (including
any agreement to provide equal and ratable security to any other Person in the
event a Lien is granted to or for the benefit of the Agent and the Lenders) on
the creation or existence of
65
any Lien upon the assets of any Borrower or its Subsidiaries or (ii) any
contractual obligation which may restrict or inhibit the Agent's rights or
ability to sell or otherwise dispose of the Collateral or any part thereof
after the occurrence of an Event of Default.
8.20. ADDITIONAL SUBSIDIARIES; PARTNERSHIPS, JOINT VENTURES. Each
Borrower shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, form or acquire any new Subsidiaries or become a partner in any
partnership or a party to any joint venture.
ARTICLE 9. EVENTS OF DEFAULT AND REMEDIES
9.1. EVENTS OF DEFAULT. The occurrence of any of the following events
shall constitute an Event of Default hereunder:
(a) FAILURE TO PAY. Any Borrower shall fail to pay (i) any interest,
Fees, Expenses or other Obligation (other than principal) within three (3)
Business Days of when due, whether at stated maturity, by acceleration or
otherwise or (ii) any principal when due, whether at stated maturity, by
acceleration or otherwise.
(b) BREACH OF CERTAIN COVENANTS. (i) Any Borrower shall fail to perform
or observe any term, covenant, or agreement contained in Sections 7.3, 7.10 or
7.18 or Article 8 of this Agreement or (ii) Holdings shall fail to perform or
observe any term, covenant or agreement contained in Section 4(b) of the
Holdings Guarantee or (iii) ▇▇▇▇'▇ shall fail to perform or observe any term,
covenant or agreement contained in Section 4 of the ▇▇▇▇'▇ Guarantee.
(c) OTHER DEFAULTS. (i) Any Borrower shall fail to comply with any
provisions contained in any Material Contract or fail to perform or observe any
term, covenant, or agreement contained in Sections 7.1 or 7.2 (other than
Section 7.2(a)) if such failure shall remain unremedied for ten days after such
failure or (ii) any Borrower shall fail to perform or observe any term,
covenant, or agreement contained in Section 7.2(a) if such failure shall remain
unremedied for two days after such failure or (iii) obligations in excess of
$500,000 under any Sale\Leaseback Documents shall have been declared due and
payable or any lessor thereunder shall have commenced (or given notice of its
intention to commence) the exercise of any remedies thereunder.
(d) CREDIT DOCUMENTS. Any Credit Party shall fail to perform or observe
any term, covenant, or agreement contained in this Credit Agreement or any other
Credit Document (other than a default under subsection (a), (b) or (c) of this
Section 9.1) if such failure shall remain unremedied for thirty days after the
earlier of (i) the date such Credit Party obtains knowledge of such failure or
(ii) the date such Credit Party receives notice from the Agent or any Lender of
such failure.
(e) BREACH OF REPRESENTATION OR WARRANTY. Any representation or warranty
made or deemed to be made by any Credit Party in this Credit Agreement or in any
other Credit Document (and in any statement or certificate given under this
Credit Agreement or any other Credit Document), shall be false or misleading in
any material respect when made or deemed to be made.
(f) DISSOLUTION. Any Credit Party shall dissolve, wind up or otherwise
cease its business.
(g) INSOLVENCY EVENT. Any Credit Party shall become the subject of an
Insolvency Event.
(h) CHANGE OF CONTROL. A Change of Control or a Triggering Event (as
defined in the certificate of designation relating to the Series A Preferred
Stock) shall occur or a Person or Persons (other than
66
the Agent) shall acquire, directly or indirectly, a Lien on any of the
capital stock of ▇▇▇▇'▇, any Borrower or any of their Subsidiaries.
(i) CROSS DEFAULT. A default or event of default shall occur (and
continue beyond any applicable grace period) under any Holdings Senior
Subordinated Note Document or any other note, agreement or instrument evidencing
any other Indebtedness of any Credit Party, which default or event of default
permits the acceleration of its maturity, PROVIDED THAT the aggregate principal
amount of all such Indebtedness for which the default or event of default has
occurred exceeds $500,000.
(j) FAILURE OF ENFORCEABILITY OF CREDIT DOCUMENTS; SECURITY. Any
covenant, agreement or obligation of any Credit Party contained in or evidenced
by any of the Credit Documents shall cease to be enforceable, or shall be
determined to be unenforceable, in accordance with its terms; any Credit Party
shall deny or disaffirm its obligations under any of the Credit Documents or any
Liens granted in connection therewith; or, any Liens granted in any of the
Collateral shall be determined to be void, voidable, invalid or unperfected, or
are subordinated or not given the priority contemplated by this Credit Agreement
or the applicable Credit Document.
(k) JUDGMENTS. One or more judgments or decrees shall be entered against
any Credit Party involving in the aggregate a liability (not paid or fully
covered by insurance satisfactory to the Agent) of $500,000 or more and all such
judgments or decrees shall not have been vacated, discharged, stayed or bonded
pending appeal within thirty (30) days from the entry thereof.
9.2. ACCELERATION AND CASH COLLATERALIZATION. Upon the occurrence and
during the continuance of an Event of Default, the Agent may take any or all
of the following actions, without prejudice to the rights of the Agent or any
Lender to enforce its claims against any Borrower:
(a) ACCELERATION. Upon the written request of the Majority Lenders, and
by delivery of written notice to the Borrowers from the Agent, all Obligations
shall be declared to be immediately due and payable (except with respect to any
Event of Default set forth in Section 9.1(g), in which case all Obligations
shall automatically become immediately due and payable without the necessity of
any request of the Majority Lenders or notice or other demand to any Borrower)
without presentment, demand, protest or any other action or obligation of the
Agent or any Lender.
(b) TERMINATION OF COMMITMENTS. Upon the written request of the Majority
Lenders, and by delivery of written notice to the Borrowers from the Agent, the
Commitments shall be immediately terminated and, at all times thereafter, all
Revolving Loans made by any Lender pursuant to this Credit Agreement shall be at
such Lender's sole discretion, unless such Event of Default is waived in
accordance with Section 11.11.
(c) CASH COLLATERALIZATION. On demand of the Agent or the Majority
Lenders each Borrower shall immediately deposit with the Agent for each Letter
of Credit then outstanding for the account of such Borrower, cash or Cash
Equivalents in an amount equal to 105% of the greatest amount drawable
thereunder.
9.3. RESCISSION OF ACCELERATION. After acceleration of the maturity of
the Loans, if each Borrower pays all accrued interest and all principal due
(other than by reason of the acceleration) and all Defaults and Events of
Default are otherwise remedied or waived in accordance with Section 11.11, the
Majority Lenders may elect in their sole discretion, to rescind the acceleration
and return any cash collateral. (This Section is intended only to bind all of
the Lenders to a decision of the Majority Lenders and not to confer any right on
the Borrowers, even if the described conditions for the Majority Lenders'
election may be met.)
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9.4. REMEDIES. Upon the occurrence and during the continuance of an
Event of Default, the Agent may, in addition to exercising any other rights now
or hereafter existing under applicable law or any Credit Document, do any or all
of the following:
(a) remove all documents, instruments, files and records (including the
copying of any computer records) relating to the Accounts or use (at the expense
of the Borrowers) such supplies or space of any Borrower at such Borrower's
place of business necessary to properly administer and collect the Accounts
thereon;
(b) accelerate or extend the time of payment, compromise, issue credits,
or bring suit on the Accounts (in the name of any Borrower or the Lenders) and
otherwise administer and collect the Accounts;
(c) sell, assign and deliver the Accounts and any returned, reclaimed or
repossessed merchandise, with or without advertisement, at public or private
sale, for cash, on credit or otherwise; and
(d) foreclose the security interests created pursuant to the Credit
Documents by any available procedure, or take possession of any or all of the
Collateral without judicial process and enter any premises where any Collateral
may be located for the purpose of taking possession of or removing the same.
Any Lender may bid or become a purchaser at any sale, free from any right of
redemption, which right is hereby expressly waived by each Borrower. If notice
of intended disposition of any Collateral is required by law, it is agreed that
ten (10) days notice shall constitute reasonable notification. Each Borrower
will assemble the Collateral and make it available to the Agent at such
locations as the Agent may specify, whether at the premises of such Borrower or
elsewhere, and will make available to the Agent the premises and facilities of
such Borrower for the purpose of the Agent's taking possession of, removing or
putting the Collateral in saleable form.
9.5. RIGHT OF SETOFF. In addition to and not in limitation of all
rights of offset that any Lender or the Issuing Bank may have under applicable
law, upon the occurrence of any Event of Default, and whether or not any Lender
or the Issuing Bank has made any demand or the Obligations of any Credit Party
have matured, each Lender and the Issuing Bank shall have the right to
appropriate and apply to the payment of the Obligations of such Credit Party all
deposits and other obligations then or thereafter owing by such Lender or the
Issuing Bank to such Credit Party. Each Lender or the Issuing Bank exercising
such rights shall notify the Agent thereof and any amount received as a result
of the exercise of such rights shall be shared in accordance with Section 2.8.
9.6. LICENSE FOR USE OF SOFTWARE AND OTHER INTELLECTUAL PROPERTY. Unless
expressly prohibited by the licensor thereof, if any, the Agent is hereby
granted a license to use all computer software programs, data bases, processes
and materials used by any Borrower in connection with its businesses or in
connection with the Collateral. The Agent agrees not to use any such license
prior to the occurrence of an Event of Default.
9.7. NO MARSHALLING; DEFICIENCIES; REMEDIES CUMULATIVE. The net cash
proceeds resulting from the Agent's exercise of any of the foregoing rights to
liquidate all or substantially all of the Collateral (after deducting all of the
Agent's Expenses related thereto) shall be applied by the Agent to the payment
of the Borrowers' Obligations to the Agent and the Lenders, whether due or to
become due, in such order as the Agent may elect. Each Borrower shall remain
liable to the Agent and the Lenders for any deficiencies, and the Agent and the
Lenders in turn agree to remit to the Borrowers or their respective successors
or assigns, any surplus resulting therefrom. The foregoing remedies are not
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intended to be exhaustive and the full or partial exercise of any of them shall
not preclude the full or partial exercise of any other available remedy under
the Credit Agreement, under any other Credit Document, at equity or at law.
ARTICLE 10. THE AGENT
10.1. APPOINTMENT OF AGENT (a) Each Lender and the Issuing Bank (by its
acceptance of the benefits hereof) hereby designates BT Commercial Corporation
as its Agent and irrevocably authorizes the Agent to take action on its behalf
under the Credit Documents, to exercise the powers and perform the duties
described therein, and to exercise such other powers reasonably incidental
thereto. The Agent may perform any of its duties through its agents or
employees.
(b) Other than the Borrowers' rights under Section 10.8, this Article 10
is for the benefit of the Agent, the Lenders and the Issuing Bank only. The
Agent shall act only for the Lenders and the Issuing Bank and assumes no
obligation to or agency or trust relationship with any Credit Party.
10.2. NATURE OF DUTIES OF AGENT. The Agent has no duties or
responsibilities except those expressly set forth in the Credit Documents.
Neither the Agent nor any of its officers, directors, employees or agents shall
be liable for any action taken or omitted hereunder or in connection herewith,
unless caused by its or their gross negligence or willful misconduct. The
duties of the Agent shall be mechanical and administrative in nature. The Agent
shall not have a fiduciary relationship to any Lender or any participant of any
Lender.
10.3. LACK OF RELIANCE ON AGENT. Independently and without reliance
upon the Agent, each Lender has made and shall continue to make its own
independent investigation and analysis of the content and validity of the Credit
Documents or of the performance and creditworthiness of the Credit Parties
thereunder. The Agent assumes no responsibility and undertakes no obligation to
make inquiry with respect to such matters, unless specifically requested to do
so in writing by a Lender.
10.4. CERTAIN RIGHTS OF THE AGENT. The Agent may request instructions
from the Majority Lenders at any time. If the Agent requests instructions from
the Majority Lenders with respect to any action or inaction, the Agent shall be
entitled to await instructions from the Majority Lenders before such action or
inaction. No Lender shall have any right of action based upon the Agent's
action or inaction in response to instructions from the Majority Lenders.
10.5. RELIANCE BY AGENT. The Agent may rely upon written or telephonic
communication it believes to be genuine and to have been signed, sent or made by
the proper person. The Agent may obtain the advice of legal counsel (including,
for matters concerning any Borrower, counsel for such Borrower), independent
public accountants and other experts selected by it and shall have no liability
for action or inaction in good faith based upon such advice.
10.6. INDEMNIFICATION OF AGENT. TO the extent the Agent is not
reimbursed and indemnified by the Borrowers, each Lender will reimburse and
indemnify the Agent, to the extent of its Proportionate Share, for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including counsel fees and disbursements) or disbursements of
any kind or nature whatsoever (including all Expenses) which may be imposed on,
incurred by or asserted against the Agent in performing its duties hereunder or
otherwise relating to the Credit Documents, unless resulting from the Agent's
gross negligence or willful misconduct.
10.7. THE AGENT IN ITS INDIVIDUAL CAPACITY. In its individual capacity,
the Agent shall have the same rights and powers hereunder as any other Lender
and may exercise them as though it was not
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performing the duties specified herein. The terms "Lenders," "Majority
Lenders," or any similar terms shall, unless the context clearly otherwise
indicates, include the Agent in its individual capacity. The Agent and its
Affiliates may accept deposits from, lend money to, acquire equity interests
in, and generally engage in any kind of banking, trust, financial advisory or
other business with any Borrower or any Affiliate of any Borrower as if it
were not performing the duties specified herein, and may accept fees and
other consideration from any Borrower for services in connection with this
Credit Agreement and otherwise without having to account for the same to the
Lenders.
10.8. SUCCESSOR AGENT
(a) The Agent may, upon five Business Days' notice to the Lenders and the
Borrowers, resign by giving written notice thereof to the Lenders and the
Borrowers. The Agent's resignation shall be effective upon the appointment of a
successor Agent. Any such resignation shall be deemed to be a resignation of
Bankers Trust Company as Issuing Bank.
(b) Upon receipt of the Agent's resignation, the Majority Lenders may
appoint a successor Agent. Unless an Event of Default shall have occurred and
be continuing at the time of such appointment, the successor Agent shall be
subject to approval by the Borrowers, which approval shall not to be
unreasonably withheld and shall be delivered to the Majority Lenders within five
Business Days after the Borrower's receipt of notice of a proposed successor
Agent. If a successor Agent has not accepted its appointment within fifteen
Business Days, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent.
(c) Upon its acceptance of the agency hereunder, a successor Agent shall
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations under this Credit Agreement. The retiring Agent shall
continue to have the benefit of this Article 10 for any action or inaction while
it was Agent.
10.9. COLLATERAL MATTERS.
(a) Each Lender authorizes and directs the Agent to enter into the
Collateral Documents for the benefit of the Lenders. Except as otherwise set
forth herein, any action or exercise of powers by the Majority Lenders under the
Credit Documents, together with such other powers as are reasonably incidental
thereto, shall be authorized and binding upon all of the Lenders. Prior to an
Event of Default, without notice to or consent from any Lender, the Agent may
take any action necessary or advisable to perfect and maintain the perfection of
the Liens upon the Collateral.
(b) The Agent is authorized to release any Lien granted to or held by the
Agent upon any Collateral (i) upon termination of the Commitments and payment
and satisfaction of all of the Obligations, (ii) upon receipt of the proceeds of
sales of the Collateral permitted hereunder or (iii) if the release can be and
is approved by the Majority Lenders. The Agent may request and the Lenders will
provide confirmation of the Agent's authority to release particular types or
items of Collateral.
(c) The Agent shall have no obligation to assure that the Collateral
exists or is owned by any Borrower or any of the Borrowers' Subsidiaries, that
such Collateral is cared for, protected or insured, or that the Liens in the
Collateral have been created, perfected, or have any particular priority. With
respect to the Collateral, the Agent may act in any manner it may deem
appropriate, in its sole discretion, given the Agent's own interest in the
Collateral as one of the Lenders, and it shall have no duty or liability
whatsoever to the Lenders, except for its gross negligence or willful
misconduct.
10.10. ACTIONS WITH RESPECT TO DEFAULTS. In addition to the Agent's
right to take actions on its own accord as permitted under this Credit
Agreement, the Agent shall take such action with respect to a
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Default or Event of Default as shall be directed by the Majority Lenders.
Until the Agent shall have received such directions, the Agent may act (or
not act) as it deems advisable and in the best interests of the Lenders.
ARTICLE 11. MISCELLANEOUS
11.1. GOVERNING LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF
THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND ANY DISPUTE ARISING OUT
OF OR IN CONNECTION WITH THIS CREDIT AGREEMENT OR ANY OF THE CREDIT DOCUMENTS,
WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE GOVERNED BY
THE LAWS AND DECISIONS OF THE STATE OF CALIFORNIA.
11.2. SUBMISSION TO JURISDICTION. ALL DISPUTES AMONG ANY BORROWER AND
THE LENDERS OR THE ISSUING BANKS (OR THE AGENT ACTING ON THEIR BEHALF), WHETHER
SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE
AND FEDERAL COURTS LOCATED IN LOS ANGELES, CALIFORNIA, AND THE COURTS TO WHICH
AN APPEAL THEREFROM MAY BE TAKEN; PROVIDED, HOWEVER, THAT THE AGENT, ON BEHALF
OF THE LENDERS, SHALL HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
TO PROCEED AGAINST ANY BORROWER OR ITS PROPERTY IN ANY LOCATION REASONABLY
SELECTED BY THE AGENT IN GOOD FAITH TO ENABLE THE AGENT TO REALIZE ON SUCH
PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE AGENT.
EACH BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT
IN WHICH THE AGENT HAS COMMENCED A PROCEEDING, INCLUDING, WITHOUT LIMITATION,
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON FORUM NON CONVENIENS.
11.3. SERVICE OF PROCESS. EACH BORROWER HEREBY IRREVOCABLY
DESIGNATES CT CORPORATION SYSTEM, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ AS THE DESIGNEE, APPOINTEE AND AGENT OF SUCH BORROWER TO
RECEIVE, FOR AND ON BEHALF OF SUCH BORROWER, SERVICE OF PROCESS IN THE STATE OF
CALIFORNIA IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS CREDIT
AGREEMENT OR ANY OTHER CREDIT DOCUMENT. IT IS UNDERSTOOD THAT A COPY OF SUCH
PROCESS SERVED ON SUCH AGENT AT ITS ADDRESS WILL BE PROMPTLY FORWARDED BY MAIL
TO SUCH BORROWER, BUT FAILURE OF SUCH BORROWER TO RECEIVE SUCH COPY SHALL NOT
AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS.
11.4. JURY TRIAL. EACH BORROWER, THE AGENT AND THE LENDERS AND THE
ISSUING BANKS EACH HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY. INSTEAD, ANY
DISPUTES WILL BE RESOLVED IN A BENCH TRIAL.
11.5. LIMITATION OF LIABILITY. NEITHER THE AGENT NOR ANY LENDER OR
ISSUING BANK SHALL HAVE ANY LIABILITY TO ANY BORROWER (WHETHER SOUNDING IN TORT,
CONTRACT, OR OTHERWISE) FOR LOSSES SUFFERED BY ANY BORROWER IN CONNECTION WITH,
ARISING OUT OF, OR IN ANY WAY RELATED TO THE TRANSACTIONS OR RELATIONSHIPS
CONTEMPLATED BY THIS CREDIT AGREEMENT, THE EXISTING CREDIT AGREEMENT, OR ANY
ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS
DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OR COURT ORDER BINDING ON THE
AGENT OR ANY SUCH
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LENDER, THAT THE LOSSES WERE THE RESULT OF ACTS OR OMISSIONS CONSTITUTING
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
11.6. DELAYS. No delay or omission of the Agent or the Lenders to
exercise any right or remedy hereunder shall impair any such right or operate as
a waiver thereof.
11.7. NOTICES. Except as otherwise provided herein, all notices, demands
required to be in writing and correspondences hereunder shall be in writing and
sent by certified or registered mail, return receipt requested, or by overnight
delivery service, with all charges prepaid, if to the Agent or any of the
Lenders, then to BT Commercial Corporation, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and if to any Borrower, then to Perry at ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, with copies to ▇▇▇▇▇▇▇ Group, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ Group, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇▇ Hilson, Esq. or
by facsimile transmission, promptly confirmed in writing sent by first class
mail, if to the Agent, or any of the Lenders, at (▇▇▇) ▇▇▇-▇▇▇▇, and if to any
Borrower at (▇▇▇) ▇▇▇-▇▇▇▇, with copies to (▇▇▇) ▇▇▇-▇▇▇▇, (▇▇▇) ▇▇▇-▇▇▇▇ and
(▇▇▇) ▇▇▇-▇▇▇▇. All such notices and correspondence shall be deemed given
(i) if sent by certified or registered mail, three Business Days after being
postmarked, (ii) if sent by overnight delivery service, when received at the
above stated addresses or when delivery is refused and (iii) if sent by telex or
facsimile transmission, when receipt of such transmission is acknowledged.
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11.8. ASSIGNMENTS AND PARTICIPATIONS.
(a) BORROWER ASSIGNMENT. No Borrower shall assign this Credit Agreement,
or any rights or obligations hereunder, without the prior written consent of the
Agent and the Lenders.
(b) LENDER ASSIGNMENTS. Each Lender may assign to one or more banks or
other financial institutions all or a ratable portion of all its rights and
obligations under this Credit Agreement, the Notes and the other Credit
Documents, with the consent of the Agent and the consent of the Borrowers (which
shall not be unreasonably withheld), and upon execution and delivery to the
Agent, for its acceptance and recording in the Register (as defined below), of
an agreement in substantially the form of Exhibit N (an "Assignment and
Assumption Agreement"), together with surrender of any Note or Notes subject to
such assignment and a processing and recordation fee of $2,500. No such
assignment shall be for less than $5,000,000 of the Commitments and Term Loans
unless it is to another Lender. (This Section does not apply to branches and
Affiliates of a Lender, it being understood that a Lender may make, carry or
transfer Loans at or for the account of any of its branch offices or Affiliates
without consent of the Borrowers, the Agent or any other Lender.)
(c) AGENT'S REGISTER. The Agent shall maintain a register of the names
and addresses of the Lenders, their Commitments, and the principal amount of
their Loans (the "Register"). The Agent shall also maintain a copy of each
Assignment and Assumption Agreement delivered to and accepted by it and modify
the Register to give effect to each Assignment and Assumption Agreement. Upon
its receipt of each Assignment and Assumption Agreement and surrender of the
affected Note or Notes, the Agent will give prompt notice thereof to the
Borrowers and deliver to the Borrowers a copy of the Assignment and Assumption
Agreement and the surrendered Note or Notes. Within five Business Days after
its receipt of such notice, each Borrower shall execute and deliver to the Agent
a new Note or Notes to the order of the assignee in the amount of the
Commitment, Commitments or Loans, as the case may be, assumed by it and to the
assignor in the amount of the Commitment, Commitments or Loans, as the case may
be, retained by it, if any. Such new Note or Notes shall re-evidence the
Indebtedness outstanding under the surrendered Note or Notes and shall be dated
as of the Closing Date. The Agent shall be entitled to rely upon the Register
exclusively for purposes of identifying the Lenders hereunder.
(d) LENDER PARTICIPATIONS. Each Lender may sell participations (without
the consent of the Agent, any Borrower or any other Lender) to one or more
parties in or to all or a ratable portion of all its rights and obligations
under this Credit Agreement, the Notes and the other Credit Documents.
Notwithstanding a Lender's sale of a participation interest, its obligations
hereunder shall remain unchanged. Each Borrower, the Agent, and the other
Lenders shall continue to deal solely and directly with such Lender. No
participant shall have rights to approve any amendment or waiver of this Credit
Agreement except to the extent such amendment or waiver would (i) increase the
Commitment of the Lender from whom the participant purchased its participation
interest; (ii) reduce the principal of, or rate or amount of interest on the
Loans subject to such participation, (iii) postpone any date fixed for any
payment of principal of, or interest on, the Loans subject to the participation
interest, and (iv) release any guarantor of the Obligations or all or a
substantial portion of the Collateral, other than when otherwise permitted
hereunder.
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11.9. CONFIDENTIALITY. Each Lender agrees that it will not disclose
without the prior consent of a Borrower any information with respect to such
Borrower or any of its Subsidiaries which is furnished pursuant to this Credit
Agreement and which is designated by such Borrower to the Lenders in writing as
confidential, PROVIDED, THAT any Lender may disclose any such information (a) to
its employees, auditors, counsel or its parent or holding company or any
Subsidiary of such parent or holding company, or to another Lender if the
disclosing Lender or such disclosing Lender's holding or parent company in its
sole discretion determines that any such party should have access to such
information, (b) as has become generally available to the public, (c) as may be
required or appropriate in any report, statement or testimony submitted to any
Governmental Authority having or claiming to have jurisdiction over such Lender,
(d) as may be required or appropriate in response to any summons or subpoena or
in connection with any litigation, (e) in order to comply with any Requirement
of Law, and (f) to any prospective or actual transferee or participant in
connection with any contemplated transfer or participation of any of the Notes
or Commitments or any interest therein by such Lender so long as, in connection
therewith, either such prospective or actual transferee has agreed in writing in
favor of the applicable Borrower to acquire any information regarding such
Borrower or the other Credit Parties subject to the terms of this Section 11.9
or such Lender obtains a confidentiality agreement from such prospective or
actual transferee or participant containing substantially the terms of this
Section 11.9.
11.10. INDEMNIFICATION; REIMBURSEMENT OF EXPENSES OF COLLECTION. Each
Borrower hereby indemnifies and agrees to defend and hold harmless the Agent,
the Issuing Bank and each of the Lenders and their respective directors,
officers, agents, employees and counsel from and against any and all losses,
claims, damages, liabilities, deficiencies, judgments or expenses incurred by
any of them (except to the extent that it is finally judicially determined to
have resulted from their own gross negligence or willful misconduct) arising out
of or by reason of (a) any litigations, investigations, claims or proceedings
which arise out of or are in any way related to (i) this Credit Agreement, the
existing Credit Agreement or the transactions contemplated hereby or thereby,
including, without limitation, the Perry Acquisition or the ▇▇▇▇'▇ Merger,
(ii) the issuance of the Letters of Credit, (iii) the failure of the Issuing
Bank to honor a drawing under any Letter of Credit, as a result of any act or
omission, whether rightful or wrongful, of any present or future de jure or de
facto government or Governmental Authority, (iv) any actual or proposed use by
any Borrower of the proceeds of the Loans or (v) the Agent's or the Lenders'
entering into this Credit Agreement, the existing Credit Agreement, the other
Credit Documents, the other Existing Credit Documents or any other agreements
and documents relating hereto, including, without limitation, amounts paid in
settlement, court costs and the reasonable fees and disbursements of counsel
incurred in connection with any such litigation, investigation, claim or
proceeding or any advice rendered in connection with any of the foregoing and
(b) any remedial or other action taken by any Borrower or any of its
Subsidiaries in connection with compliance by any Borrower or any of its
Subsidiaries, or any of their respective properties, with any federal, state or
local environmental laws, acts, rules, regulations, orders, directions,
ordinances, criteria or guidelines. In addition, each Borrower shall, upon
demand, pay to the Agent and any Lender all costs and expenses (including the
reasonable fees and disbursements of counsel and other professionals) paid or
incurred by the Agent or such Lender in (i) enforcing or defending its rights
under or in respect of this Credit Agreement, the Existing Credit Agreement, the
other Credit Documents, the other Existing Credit Documents or any other
document or instrument now or hereafter executed and delivered in connection
herewith, (ii) in collecting the Loans, (iii) in foreclosing or otherwise
collecting upon the Collateral or any part thereof and (iv) obtaining any legal,
accounting or other advice in connection with any of the foregoing items (i)
through (iii).
11.11. AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Credit Agreement, any part of Schedule B, or any other Credit Document
shall be effective unless in writing and signed by the Majority Lenders (or by
the Agent on their behalf), except that:
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(a) the consent of all the Lenders is required to (i) increase the
Commitments, (ii) reduce the principal of, or interest on, the Notes, any Letter
of Credit reimbursement obligations or any Fees hereunder (other than Fees that
are exclusively for the account of the Agent or the Issuing Bank),
(iii) postpone any date fixed for any payment in respect of principal of, or
interest on, the Notes, any Letter of Credit Reimbursement Obligations or any
Fees hereunder, (iv) change the percentage of the Commitments, or any minimum
requirement necessary for the Lenders or the Majority Lenders to take any action
hereunder, (v) amend or waive this Section 11.11(a), or change the definition of
Majority Lenders, (vi) amend or waive Section 2.3(b)(y) or (vii) except as
otherwise expressly provided in this Credit Agreement, and other than in
connection with the financing, refinancing, sale or other disposition of any
asset of any Borrower permitted (including by means of amendment or waiver)
under this Credit Agreement, release any Liens in favor of the Lenders on any of
the Collateral; and
(b) the consent of the Agent or the Issuing Bank, as the case may be,
shall be required for any amendment, waiver or consent affecting the rights or
duties of the Agent or the Issuing Bank under any Credit Document, in addition
to the consent of the Lenders otherwise required by this Section.
No consent of any Borrower shall be required for any amendment, modification or
waiver of the provisions of Article 10 (other than Section 10.8). Each Borrower
and the Lenders hereby authorize the Agent to modify this Credit Agreement by
unilaterally amending or supplementing Annex I to reflect assignments of the
Commitments. Notwithstanding the foregoing, the Borrowers may amend Schedule B,
Parts 6.1, 6.10, 6.14 and 8.14, without the consent of the Majority Lenders;
PROVIDED that, no amendment to any such Schedule shall be permitted to cure any
Default or Event of Default which would otherwise have existed in the absence of
such amendment.
11.12. COUNTERPARTS; INCONSISTENCIES AND EFFECTIVENESS. This Credit
Agreement and any waiver or amendment hereto may be executed in any number of
counterparts and by the different parties hereto in separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument. This Credit
Agreement and each of the other Credit Documents shall be construed to the
extent reasonable to be consistent one with the other, but to the extent that
the terms and conditions of this Credit Agreement are actually inconsistent
with the terms and conditions of any other Credit Document, this Credit
Agreement shall govern. This Credit Agreement shall become effective on the
date on which all of the parties hereto shall have signed a copy hereof
(whether the same or different copies) and shall have delivered the same to
the Agent pursuant to Section 11.7 or, in the case of the Lenders, shall have
given to the Agent written, telecopied or telex notice (actually received) at
such office that the same has been signed and mailed to it.
11.13. SEVERABILITY. In case any provision in or obligation under
this Credit Agreement or the Notes or the other Credit Documents shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations shall not in any
way be affected or impaired thereby.
11.14. INDEPENDENCE OF COVENANTS. All covenants hereunder shall be
given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of a Default or Event of Default if such action is
taken or condition exists.
11.15. SURVIVAL. All agreements, representations and warranties made
herein shall survive the execution and delivery of this Credit Agreement, the
Notes and the other Credit Documents, the making of the Loans and issuance of
Letters of Credit hereunder. Notwithstanding anything in this Credit Agreement,
any other Credit Document or implied by law to the contrary, all indemnities set
forth herein, including, without limitation, in Sections 3.10, 4.6, 4.13, 4.14,
4.15, 10.6 and 11.10, shall survive the payment of the Obligations and the
termination of this Credit Agreement.
75
11.16. MAXIMUM RATE. Notwithstanding anything to the contrary
contained elsewhere in this Credit Agreement or in any other Credit Document,
each Borrower, the Agent and the Lenders hereby agree that all agreements among
them under this Credit Agreement and the other Credit Documents, whether now
existing or hereafter arising and whether written or oral, are expressly limited
so that in no contingency or event whatsoever shall the amount paid, or agreed
to be paid, to the Agent or any Lender for the use, forbearance, or detention of
the money loaned to any Borrower and evidenced hereby or thereby or for the
performance or payment of any covenant or obligation contained herein or
therein, exceed the Highest Lawful Rate. If due to any circumstance whatsoever,
fulfillment of any provisions of this Credit Agreement or any of the other
Credit Documents at the time performance of such provision shall be due shall
exceed the Highest Lawful Rate, then, automatically, the obligation to be
fulfilled shall be modified or reduced to the extent necessary to limit such
interest to the Highest Lawful Rate, and if from any such circumstance any
Lender should ever receive anything of value deemed interest by applicable law
which would exceed the Highest Lawful Rate, such excessive interest shall be
applied to the reduction of the principal amount then outstanding hereunder or
on account of any other then outstanding Obligations and not to the payment of
interest, or if such excessive interest exceeds the principal unpaid balance
then outstanding hereunder and such other then outstanding Obligations, such
excess shall be refunded to the Borrowers. All sums paid or agreed to be paid
to the Agent or any Lender for the use, forbearance, or detention of the
Obligations and other Indebtedness of the Borrowers to the Agent or any Lender,
to the extent permitted by applicable law, shall be amortized, prorated,
allocated and spread throughout the full term of such Indebtedness, until
payment in full thereof, so that the actual rate of interest on account of all
such Indebtedness does not exceed the Highest Lawful Rate throughout the entire
term of such Indebtedness. The terms and provisions of this Section shall
control every other provision of this Credit Agreement and all agreements among
the Borrowers, the Agent and the Lenders.
11.17. ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS. This Credit Agreement
and the other Credit Documents constitute the entire agreement among the
Borrowers, the Agent, and the Lenders, supersedes any prior agreements among
them, and shall bind and benefit the Borrowers, and the Lenders and their
respective successors and permitted assigns.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to be
executed and delivered by their proper and duly authorized officers as of the
date set forth above.
BORROWERS:
PERRY GRAPHIC COMMUNICATIONS, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------------------------
Title: Secretary
SHENANDOAH VALLEY PRESS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------------------------
Title: Secretary
PORT CITY PRESS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------------------------
Title: Secretary
AGENT:
BT COMMERCIAL CORPORATION,
As Agent
By: /s/ ▇▇▇▇ ▇▇▇▇
---------------------------------------------------------
Vice President
S-1
LENDERS:
BT COMMERCIAL CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇
---------------------------------------------------------
Vice President
S-2
THE CIT GROUP/BUSINESS CREDIT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Assistant Vice President
S-3
LASALLE NATIONAL BANK
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------------------------
Title: Senior Vice-President
---------------------------------------------------------
S-4
NATIONSBANK OF TEXAS, N.A.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
S-5
BANKBOSTON, N.A.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
S-6
BANK OF AMERICA, NT & SA
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------------------------
Title: Vice-President
---------------------------------------------------------
S-7
Amended and Restated Credit Agreement among Perry Graphic
Communications, Inc., Shenandoah Valley Press, Inc., and Port City Press,
Inc., the Lenders (as defined therein) and BT Commercial Corporation as Agent
dated as of December 16, 1997.
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ALL EXHIBITS OMITTED IN ACCORDANCE WITH ITEM 601(b)(2) OF REGULATION ▇-▇
▇▇▇▇▇-▇▇▇▇'▇ Incorporated will furnish supplementally a copy of any
omitted schedule or exhibit to the Securities and Exchange Commission upon
request; provided, however, that ▇▇▇▇▇-▇▇▇▇'▇ Incorporated may request
confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any
schedule or exhibit so furnished.