Exhibit 10.1
REVOLVING CREDIT, TERM LOAN AND
GOLD CONSIGNMENT AGREEMENT
DATED as of December 16, 1996
by and among
SCHOLASTIC BRANDS, INC.
The BANKS listed on Schedule 1 hereto, and
THE FIRST NATIONAL BANK OF BOSTON, and
RHODE ISLAND HOSPITAL TRUST NATIONAL BANK, as Agents for the Banks
TABLE OF CONTENTS
1. DEFINITIONS AND RULES OF INTERPRETATION. ..............................1
1.1. Definitions. ...............................................1
1.2. Rules of Interpretation. ...................................30
2. THE DOLLAR FACILITY - REVOLVING CREDIT LOANS. .........................31
2.1. Commitment to Lend. ........................................31
2.2. Commitment Fee. ............................................31
2.3. Reduction of Total Revolver Commitment. ....................31
2.4. The Revolving Credit Notes. ................................32
2.5. Interest on Revolving Credit Loans. ........................32
2.6. Requests for Revolving Credit Loans; Conversion Options. ...32
2.7. Funds for Revolving Credit Loans. ..........................32
2.8. Maturity. ..................................................32
2.9. Optional Repayments of Revolving Credit Loans. .............33
3. THE DOLLAR FACILITY - THE TERM LOAN. ..................................33
3.1. Commitment to Lend. ........................................33
3.2. The Term Notes. ............................................33
3.3. Schedule of Installment Payments of Principal of Term Loan. 33
3.4. Optional Prepayment of Term Loan. ..........................34
3.5. Interest on Term Loan. .....................................34
3.6. Mandatory Prepayments of the Term Loan. ....................34
3.6.1. Excess Cash Flow Prepayment. ....................34
3.6.2. Asset Disposition Prepayment. ...................35
3.6.3. New Issuance Prepayment. ........................35
4. THE DOLLAR FACILITY - LETTERS OF CREDIT. ..............................35
4.1. Letter of Credit Commitments.................................35
4.1.1. Commitment to Issue Letters of Credit. ..........35
4.1.2. Letter of Credit Applications. ..................36
4.1.3. Terms of Letters of Credit. .....................36
4.1.4. Reimbursement Obligations of Dollar Banks. ......37
4.1.5. Participations of Dollar Banks. .................37
4.2. Reimbursement Obligation of the Borrower. ..................37
4.3. Letter of Credit Payments. .................................38
4.4. Obligations Absolute. ......................................38
4.5. Reliance by Issuer. ........................................39
4.6. Letter of Credit Fees. .....................................39
5. THE GOLD FACILITY - CONSIGNMENTS . ....................................40
5.1. Commitment To Make Consignments; Title To Consigned
Precious Metal. ............................................40
5.2. Consignment Fees; Gold Fronting Fees. ......................42
5.2.1. Consignment Fees. ...............................42
5.2.2. Gold Fronting Fees. .............................42
5.2.3. Payment of Fees. ................................43
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5.3. Requests For Consignments. .................................43
5.4. Payment on Account of Repurchase or Redelivery of
Consigned Precious Metal. ..................................44
5.5. Conversion Options. ........................................47
5.6. Repurchase at Maturity. ....................................48
5.7. True Consignment. ..........................................48
6. THE GOLD FACILITY - THE GOLD LOANS......................................48
6.1. Commitment to Lend. ........................................48
6.2. The Gold Notes. ............................................49
6.3. Interest on Gold Loans. ....................................50
6.4. Requests for Gold Loans; Conversion Options. ...............50
6.5. Funds for Gold Loans. ......................................50
6.6. Repayment of Gold Loans at Maturity. .......................50
6.7. Optional Repayments. .......................................50
7. CERTAIN COMMON PROVISIONS RELATING......................................50
TO THE GOLD FACILITY. .....................................................50
7.1. Commitment Fee. ............................................50
7.2. Reduction of Total Gold Commitment and Gold Fronting
Commitment. ................................................50
8. CERTAIN GENERAL PROVISIONS. ...........................................51
8.1. Interest on Loans. .........................................51
8.2. Borrowing Base and Consignment Limitations. ................51
8.3. Requests for Loans. ........................................52
8.4. Conversion Options. ........................................53
8.4.1. Conversion to Different Type of Loan. ...........53
8.4.2. Continuation of Type of Loan. ...................53
8.4.3. Eurodollar Rate Loans. ..........................54
8.5. Funds for Loans. ...........................................54
8.5.1. Funding Procedures. .............................54
8.5.2. Advances by Applicable Agent. ...................55
8.6. Settlements; Failure to Make Funds Available. ..............55
8.7. Optional Repayments of Loans. ..............................57
8.8. Repayments of Loans and Repurchases of Consigned Precious
Metals Prior to Event of Default.............................58
8.9. Repayments of Loans and Repurchases of Consigned Precious
Metals and Distribution of Collateral Proceeds After
Event of Default. ..........................................59
8.10. Closing Fee. ..............................................60
8.11. Agents' Fee. ..............................................60
8.12. Funds for Payments. .......................................60
8.12.1. Payments to Agents. ............................60
8.12.2. No Offset, etc. ................................61
8.12.3. Withholding Forms. .............................61
8.12.4. Exclusions. ....................................62
8.13. Computations. .............................................62
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8.14. Inability to Determine Eurodollar Rate or Consignment
Fixed Rate. ...............................................63
8.15. Illegality of Eurodollar Rate Loans or Consignment Fixed
Rate Amounts. .............................................63
8.16. Additional Costs, etc. ....................................64
8.17. Capital Adequacy. .........................................66
8.18. Certificate. ..............................................66
8.19. Indemnity. ................................................67
8.20. Interest After Default. ...................................68
8.21. Performance Adjustments. ..................................69
8.22. Replacement of Banks. .....................................70
9. COLLATERAL SECURITY AND GUARANTIES. ...................................70
9.1. Security of Borrower and Capital Stock of the Borrower. ....70
9.2. Guaranties and Security of Subsidiaries. ...................70
10. REPRESENTATIONS AND WARRANTIES. ......................................71
10.1. Corporate Authority. ......................................71
10.1.1. Incorporation; Good Standing. ..................71
10.1.2. Authorization. .................................71
10.1.3. Enforceability. ................................71
10.2. Governmental Approvals. ...................................72
10.3. Title to Properties; Leases. ..............................72
10.4. Financial Statements and Projections. .....................72
10.4.1. Financial Statements. ..........................72
10.4.2. Projections. ...................................73
10.5. No Material Changes, etc.; Solvency. ......................73
10.5.1. No Material Changes, etc. ......................73
10.5.2. Solvency. ......................................74
10.6. Franchises, Patents, Copyrights, etc. .....................74
10.7. Litigation. ...............................................74
10.8. No Materially Adverse Contracts, etc. .....................74
10.9. Compliance with Other Instruments, Laws, etc. .............74
10.10. Tax Status. ..............................................75
10.11. No Event of Default. .....................................75
10.12. Holding Company and Investment Company Acts. .............75
10.13. Absence of Financing Statements, etc. ....................75
10.14. Perfection of Security Interest. .........................75
10.15. Certain Transactions. ....................................76
10.16. Employee Benefit Plans. ..................................76
10.16.1. In General. ...................................76
10.16.2. Terminability of Welfare Plans. ...............76
10.16.3. Guaranteed Pension Plans. .....................77
10.16.4. Multiemployer Plans. ..........................77
10.17. Regulations U and X. .....................................77
10.18. Environmental Compliance. ................................78
10.19. Subsidiaries, etc. .......................................80
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10.20. Bank Accounts. ...........................................80
10.21. Acquisition Documents. ...................................80
11. AFFIRMATIVE COVENANTS OF THE BORROWER. ...............................80
11.1. Punctual Payment. .........................................80
11.2. Maintenance of Office. ....................................80
11.3. Records and Accounts. .....................................81
11.4. Financial Statements, Certificates and Information. .......81
11.5. Notices. ..................................................83
11.5.1. Defaults. ......................................83
11.5.2. Environmental Events. ..........................83
11.5.3. Notification of Claim against Collateral. ......84
11.5.4. Notice of Litigation and Judgments. ............84
11.6. Corporate Existence; Maintenance of Properties. ...........84
11.7. Insurance. ................................................85
11.8. Taxes. ....................................................86
11.9. Inspection of Properties and Books, etc. ..................86
11.9.1. General. .......................................86
11.9.2. Collateral Reports. ............................87
11.9.3. Appraisals. ....................................87
11.9.4. Communications with Accountants. ...............87
11.9.5. Environmental Assessments. .....................88
11.10. Compliance with Laws, Contracts, Licenses, and Permits. ..88
11.11. Employee Benefit Plans. ..................................89
11.12. Use of Proceeds. .........................................89
11.13. Additional Mortgaged Property. ...........................89
11.14. Bank Accounts. ...........................................89
11.15. Inventory Restrictions. ..................................90
11.16. Further Assurances. ......................................90
12. CERTAIN NEGATIVE COVENANTS OF THE BORROWER. ..........................91
12.1. Restrictions on Indebtedness. .............................91
12.2. Restrictions on Liens. ....................................94
12.3. Restrictions on Investments. ..............................95
12.4. Distributions. ............................................97
12.5. Merger, Consolidation and Disposition of Assets. ..........98
12.5.1. Mergers and Acquisitions. ......................98
12.5.2. Disposition of Assets. .........................98
12.6. Sale and Leaseback. .......................................99
12.7. Compliance with Environmental Laws. .......................99
12.8. Indenture and Subordinated Notes. .........................99
12.9. Employee Benefit Plans. ...................................100
12.10. Bank Accounts. ...........................................100
12.11. Consignment Transactions. ................................101
12.12. Transactions with Affiliates. ............................101
12.13. Subsidiaries. ............................................101
12.14. Limitations on Mexican Subsidiary. .......................101
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13. FINANCIAL COVENANTS OF THE BORROWER. .................................102
13.1. Senior Funded Debt to EBITDA. .............................102
13.2. Consolidated EBITDA. ......................................102
13.3. Capital Expenditures. .....................................102
13.4. Interest Coverage. ........................................103
14. CLOSING CONDITIONS. ..................................................103
14.1. Loan Documents, etc. ......................................103
14.2. Certified Copies of Charter Documents. ....................103
14.3. Corporate Action. .........................................104
14.4. Incumbency Certificate. ...................................104
14.5. Validity of Liens. ........................................104
14.6. Perfection Certificate and UCC Search Results. ............104
14.7. Certificates of Insurance. ................................104
14.8. FNBB Concentration Accounts; Agency Account Agreements. ...105
14.9. Borrowing Base Report; Consigned Precious Metal Report;
Monthly Inventory Report....................................105
14.10. Accounts Receivable Aging Report. ........................105
14.11. Opinions of Counsel. .....................................105
14.12. Payment of Fees. .........................................105
14.13. Payoff Letters. ..........................................105
14.14. Consummation of Equity Investment and Subordinated Note
Issuance. ................................................106
14.15. Financial Statements. ....................................106
14.16. Survey and Taxes; Appraisal. .............................106
14.17. Title Insurance. .........................................106
14.18. Environmental Reports. ...................................106
14.19. Landlord Consents. .......................................107
14.20. Closing of Acquisitions. .................................107
14.21. Consolidated EBITDA. .....................................107
14.22. Governmental Regulation. .................................107
14.23. Proceedings and Documents. ...............................108
15. CONDITIONS TO ALL BORROWINGS. ........................................108
15.1. Representations True; No Event of Default. ................108
15.2. Borrowing Base Report; Consigned Precious Metal Report. ...108
16. EVENTS OF DEFAULT; ACCELERATION; ETC. ................................109
16.1. Events of Default and Acceleration. .......................109
16.2. Termination of Commitments. ...............................112
16.3. Remedies. .................................................112
17. SETOFF. ..............................................................112
18. THE AGENTS. ..........................................................113
18.1. Authorization. ............................................113
18.2. Employees and Agents. .....................................114
18.3. No Liability. .............................................114
18.4. No Representations. .......................................114
18.5. Payments. .................................................115
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18.5.1. Payments to Agents. ............................115
18.5.2. Distribution by Agents. ........................115
18.5.3. Delinquent Banks. ..............................116
18.5.4 Payments Under Confirmation of Swap Agreement. ..116
18.6. Holders of Notes. .........................................117
18.7. Indemnity. ................................................117
18.8. Agents as Banks. ..........................................117
18.9. Resignation. ..............................................117
18.10. Notification of Defaults and Events of Default. ...........118
18.11. Duties in the Case of Enforcement. ........................118
19. EXPENSES. ............................................................118
20. INDEMNIFICATION. .....................................................119
21. SURVIVAL OF COVENANTS, ETC. ..........................................120
22. ASSIGNMENT AND PARTICIPATION. ........................................121
22.1. Conditions to Assignment by Banks. ........................121
22.2. Certain Representations and Warranties; Limitations;
Covenants. ................................................121
22.3. Register. .................................................123
22.4. New Notes. ................................................123
22.5. Participations. ...........................................124
22.6. Disclosure. ...............................................124
22.7. Assignee or Participant Affiliated with the Borrower. .....124
22.8. Miscellaneous Assignment Provisions. ......................125
22.9. Assignment by Borrower. ...................................125
23. NOTICES, ETC. ........................................................125
24. GOVERNING LAW. .......................................................126
25. HEADINGS. ............................................................127
26. COUNTERPARTS. ........................................................127
27. ENTIRE AGREEMENT, ETC. ...............................................127
28. WAIVER OF JURY TRIAL. ................................................127
29. CONSENTS, AMENDMENTS, WAIVERS, ETC. ..................................128
30. SEVERABILITY. ........................................................128
31. CONFIDENTIALITY. .....................................................129
EXHIBITS AND SCHEDULES
Exhibit A Form of Agency Account Agreement
Exhibit B Form of Borrowing Base Report
Exhibit C Form of Cash Collateral Agreement
Exhibit D Form of Consigned Precious Metal Report
Exhibit E Form of Revolving Credit Note
Exhibit F Form of Term Note
Exhibit G Form of Consignment Request
Exhibit H Form of Gold Note
Exhibit I Form of Loan Request
Exhibit J Form of Compliance Certificate
Exhibit K Form of Supplement to Schedule 2
Exhibit L Form of Assignment and Acceptance
Schedule 1 Banks, Commitments, Commitment Percentages, Gold
Commitments, Gold Commitment Percentages
Schedule 2 Borrower Permitted Inventory Locations
Schedule 3 Consolidated EBITDA for Prior Periods
Schedule 4 Mortgaged Properties
Schedule 10.3 Titles to Properties; Leases
Schedule 10.6 Franchises, Patents, Copyrights, etc.
Schedule 10.7 Litigation
Schedule 10.16 ERISA Matters
Schedule 10.18 Environmental Compliance
Schedule 10.19 Subsidiaries
Schedule 10.20 Bank Accounts
Schedule 12.1 Existing Indebtedness
Schedule 12.2 Existing Liens
Schedule 12.3 Existing Investments
REVOLVING CREDIT, TERM LOAN AND
GOLD CONSIGNMENT AGREEMENT
This REVOLVING CREDIT, TERM LOAN AND GOLD CONSIGNMENT AGREEMENT is made as
of December 16, 1996, by and among (a) SCHOLASTIC BRANDS, INC., a Delaware
corporation having its principal place of business at ▇▇▇▇ ▇▇▇▇▇▇ ▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (the "Borrower"); (b) THE FIRST NATIONAL BANK OF BOSTON, a
national banking association, RHODE ISLAND HOSPITAL TRUST NATIONAL BANK, a
national banking association and the other lending institutions listed on
Schedule 1; and (c) THE FIRST NATIONAL BANK OF BOSTON and RHODE ISLAND HOSPITAL
TRUST NATIONAL BANK as agents for themselves and such other lending
institutions.
1. DEFINITIONS AND RULES OF INTERPRETATION.
1.1. Definitions. The following terms shall have the meanings set forth in
this ss.1 or elsewhere in the provisions of this Credit Agreement referred to
below:
Accounts Receivable. All rights of the Borrower or any of its Subsidiaries
to payment for goods sold, leased or otherwise marketed in the ordinary course
of business and all rights of the Borrower or any of its Subsidiaries to payment
for services rendered in the ordinary course of business and all sums of money
or other proceeds due thereon pursuant to transactions with account debtors,
except for that portion of the sum of money or other proceeds due thereon that
relate to sales, use or property taxes in conjunction with such transactions,
recorded on books of account in accordance with generally accepted accounting
principles.
Acquisition Documents. (a) The Asset Purchase Agreement dated as of May 20,
1996 among the Borrower and the CJC Sellers, as amended by Amendment ▇▇. ▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇) the Amended and Restated Asset Purchase
Agreement dated as of November 20, 1996 among the Borrower, the Balfour Sellers
and certain other parties, and (c) all other agreements and documents required
to be entered into or delivered pursuant to any of the foregoing documents or in
connection with the Acquisitions, each in the form delivered to the Agents on or
prior to the Closing Date.
Acquisitions. The acquisition by the Borrower from the CJC Sellers and the
Balfour Sellers, respectively, of the assets and business of the Class Ring
division of CJC Holdings, Inc. and the assets and business of L ▇. ▇▇▇▇▇▇▇ Inc.
pursuant to the Acquisition Documents.
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Affiliate. Any Person that would be considered to be an affiliate of the
Borrower under Rule 144(a) of the Rules and Regulations of the Securities and
Exchange Commission, as in effect on the date hereof, if the Borrower were
issuing securities. Notwithstanding the foregoing, the Agents (in their
capacities as agents and in their individual capacities as Banks) shall not be
Affiliates of the Borrower and no individual shall be an Affiliate solely by
reason of his or her being a director, officer or employee of ▇▇▇▇▇▇ ▇▇▇▇▇▇,
Inc., the Borrower or any of its Subsidiaries.
Agency Account Agreement. Any Agency Account Agreement in the form of
Exhibit A attached hereto (or a form otherwise approved by the Dollar Agent in
its sole discretion) entered into by the Borrower, the Dollar Agent and a
depository institution reasonably satisfactory to the Agents.
Agents. For the Dollar Facility, FNBB; for the Gold Facility, RIHT.
Agents' Special Counsel. ▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇ LLP or such other counsel as
may be approved by the Agents.
Applicable Agent. With respect to the Dollar Facility, the Revolving Credit
Loans, the Letters of Credit, the Term Loan or the Dollar Banks, the Dollar
Agent; with respect to the Gold Facility, the Consignments, the Gold Loans or
the Gold Banks, the Gold Agent.
Applicable Banks. With respect to the Dollar Facility, the Revolving Credit
Loans, the Letters of Credit, the Term Loan or the Dollar Agent, the Dollar
Banks; with respect to the Gold Facility, the Consignments, the Gold Loans or
the Gold Agent, the Gold Banks.
Asset Disposition Prepayment. See ss.3.6.2.
Assignment and Acceptance. See ss.22.1.
Balance Sheet Date. August 31, 1996.
Balfour Sellers. Town & Country Corporation and ▇.▇. ▇▇▇▇▇▇▇ Company, Inc.
Banks. Collectively, the Dollar Banks and the Gold Banks.
Base Rate. The higher of (i) the annual rate of interest announced from
time to time by FNBB at its head office in Boston, Massachusetts, as its "base
rate" and (ii) one-half of one percent (1/2%) above the Federal Funds Effective
Rate. For the purposes of this definition, "Federal Funds Effective Rate" shall
mean for any day, the rate per annum equal 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
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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 FNBB from three funds
brokers of recognized standing selected by FNBB.
Base Rate Applicable Margin. At all times (a) from the Closing Date through
the first Performance Adjustment Date (i) with respect to Revolving Credit Loans
or Gold Loans which are Base Rate Loans, one and one quarter percent (1-1/4%)
and (ii) with respect to any portion of the Term Loan which is a Base Rate Loan,
one and three quarters percent (1-3/4%), and (b) after the first Performance
Adjustment Date, the percentage determined by reference to the provisions of
ss.8.21.
Base Rate Loans. Revolving Credit Loans, Gold Loans and all or any portion
of the Term Loan bearing interest calculated by reference to the Base Rate.
Borrower. As defined in the preamble hereto.
Borrower Permitted Inventory Locations. The manufacturing facilities and
distribution centers of the Borrower located in the United States of America and
listed on Schedule 2 hereto, as such Schedule 2 may be supplemented from time to
time in accordance with the provisions ofss.11.4(i).
Borrower's Precious Metal. Precious Metal owned by the Borrower and which
qualifies as Eligible Inventory, excluding Consigned Precious Metal and Precious
Metal otherwise held by the Borrower on consignment other than pursuant to the
Gold Facility.
Borrowing Base. At the relevant time of reference thereto, an amount
determined by the Dollar Agent by reference to the most recent Borrowing Base
Report delivered to the Banks and the Agents pursuant toss.11.4(f), which is
equal to the sum of, without duplication:
(a) 90% of the Fair Market Value of the Precious Metal content of
Eligible Inventory held by the Borrower at Borrower Permitted Inventory
Locations, plus
(b) 70% of the Fair Market Value of the Precious Metal content of
Eligible Inventory held by, or in transit to or from, Specified Refiners
(net of any amounts advanced by such Specified Refiners to the Borrower and
included in Eligible Inventory held by the Borrower at Borrower Permitted
Inventory Locations), plus
(c) 80% of the Fair Market Value of Silver and Platinum contained in
Eligible Inventory and held by the Borrower at Borrower Permitted Inventory
Locations, plus
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(d) 50% of the net book value (determined on a first-in first-out
basis at lower of cost or market) of non-precious metals contained in
Eligible Inventory and held by the Borrower at Borrower Permitted Inventory
Locations, plus
(e) 30% of the net book value (determined on a first-in first-out
basis at lower of cost or market) of the value of precious and
semi-precious stones contained in Eligible Inventory and held by the
Borrower at Borrower Permitted Inventory Locations, plus
(f) 30% of the net book value (determined on a first-in first-out
basis at lower of cost or market) of Eligible Inventory consisting of raw
material paper products or graphics inventory (excluding work-in-process
and finished goods inventory) and held by the Borrower at Borrower
Permitted Inventory Locations, plus
(g) the lesser of (i) 40% of the Fair Market Value of the Precious
Metal content of Eligible Inventory constituting samples held in the
ordinary course of business by sales representatives or at retail locations
and (ii) $1,000,000; plus
(h) 80% of Eligible Accounts Receivable for which invoices have been
issued and are payable.
Borrowing Base Report. A Borrowing Base Report signed by the chief
financial officer or treasurer of the Borrower and in substantially the form of
Exhibit B hereto.
Business Day. Any day on which banking institutions in Boston,
Massachusetts and Providence, Rhode Island, are open for the transaction of
banking business and, in the case of Eurodollar Rate Loans, also a day which is
a Eurodollar Business Day.
Capital Assets. Fixed and/or capital assets, both tangible (such as land,
buildings, fixtures, samples, tools and die, software, software development,
machinery and equipment) and intangible (such as software, patents, copyrights,
trademarks, franchises and good will); provided that Capital Assets shall not
include any item customarily charged directly to expense or depreciated over a
useful life of twelve (12) months or less in accordance with generally accepted
accounting principles.
Capital Expenditures. Amounts paid or indebtedness incurred by the Borrower
or any of its Subsidiaries in connection with the purchase or lease by the
Borrower or any of its Subsidiaries of Capital Assets that would be required to
be capitalized and shown on the balance sheet of such Person in accordance with
generally accepted accounting principles; provided, that the term Capital
Expenditures shall not include (a) expenditures made in connection with the
replacement, substitution or restoration
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of assets to the extent financed (i) from insurance proceeds paid on account of
the loss of or damage to the assets being replaced or restored or (ii) with
awards of compensation arising from the taking by eminent domain or condemnation
of the assets being replaced, and (b) the purchase price of equipment that
replaces, or is purchased simultaneously with the trade-in of, existing
equipment to the extent that the gross amount of such purchase price is reduced
by the sale price of such equipment, or the credit granted by the seller of such
equipment for the equipment being traded in at such time.
Capitalized Leases. Leases under which the Borrower or any of its
Subsidiaries is the lessee or obligor, the discounted future rental payment
obligations under which are required to be capitalized on the balance sheet of
the lessee or obligor in accordance with generally accepted accounting
principles.
Cash Collateral Agreement. The Cash Collateral Agreement to be entered into
on or prior to the Closing Date between the Borrower and the Collateral Agent
pursuant toss.4.2 andss.8.8(c) hereof, such Cash Collateral Agreement to be in
the form of Exhibit C attached hereto.
CERCLA. See ss.10.18.
CH Management Fees. Amounts due by the Borrower to ▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc. for
management services.
CJC Business. The class ring business of CJC Holdings, Inc.
CJC Sellers. CJC Holdings, Inc. and CJC North America, Inc.
Closing Date. The first date on which the conditions set forth inss.14 have
been satisfied and any Revolving Credit Loans are to be made, the Term Loan is
to be made, any Gold Loans are to be made, any Consignments are to be made or
any Letter of Credit is to be issued hereunder.
Code. The Internal Revenue Code of 1986.
Collateral. All of the property, rights and interests of the Borrower and
its Subsidiaries that are or are intended to be subject to the security
interests and mortgages created by the Security Documents.
Collateral Agent. FNBB, in its capacity as collateral agent for the benefit
of Banks and the Agents under and with respect to the Security Documents.
Commitment. With respect to each Dollar Bank, the amount set forth on Part
1 of Schedule 1 hereto as the amount of such Dollar Bank's commitment to make
Revolving Credit Loans to, and to participate in the issuance, extension and
renewal of Letters of Credit for the account of, the Borrower, as the same may
be reduced
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from time to time; or if such commitment is terminated pursuant to
the provisions hereof, zero.
Commitment Percentage. With respect to each Dollar Bank, the percentage set
forth on Part 1 of Schedule 1 hereto as such Dollar Bank's percentage of the
aggregate Commitments of all of the Dollar Banks.
Confirmation of Swap Agreement. The Confirmation of Swap Agreement dated or
to be dated on or prior to the Closing Date, between the Borrower and the Gold
Agent and in form and substance satisfactory to each of the Banks, the Agents
and the Borrower, pursuant to which the Borrower and the Gold Agent have made
certain arrangements in order to fix the price of Consigned Precious Metal
following an Event of Default.
Consigned Precious Metal. Precious Metal (a) located at Borrower Permitted
Inventory Locations or at Specified Refiners, (b) Delivered to the Borrower or
subject to a Purchase and Consignment and, in each case, consigned by the Gold
Agent (on behalf of the Gold Banks) to the Borrower pursuant to the terms of
this Credit Agreement and (c) for which the Gold Banks have not received payment
or which has not been Redelivered to the Gold Agent.
Consigned Precious Metal Report. A Consigned Precious Metal Report signed
by the chief financial officer or treasurer of the Borrower and in substantially
the form of Exhibit D hereto.
Consignment. A Delivery or Purchase and Consignment of Precious Metal by
the Gold Agent (on behalf of the Gold Banks) to the Borrower pursuant to the
terms of this Credit Agreement.
Consignment Advance Rate Percentage. Ninety five percent (95%).
Consignment Base Rate. A rate determined by RIHT from time to time in its
sole discretion plus the Eurodollar Applicable Margin from time to time
applicable to Gold Loans, which rate may be changed by RIHT following seven (7)
days' prior written notice to the Borrower and the other Gold Banks.
Consignment Base Rate Amounts. Consigned Precious Metal which is accruing a
Consignment Fee and Gold Fronting Fee calculated by reference to the Consignment
Base Rate.
Consignment Conversion Request. A notice given by the Borrower to the Gold
Agent of the Borrower's election to convert or continue Consigned Precious
Metals in accordance withss.5.5.
Consignment Dollar Cap. As defined in the definition of Consignment Limit.
-7-
Consignment Fees. Consignment fees on Consigned Precious Metal at the rates
set forth in ss.5.2.2.
Consignment Fixed Rate. With respect to any Interest Period, the amount
equal to (a) the greater of (i) the Eurodollar Rate for such Interest Period
minus the average of rates quoted to RIHT as the London Interbank Bullion Rates
as displayed on ▇▇▇▇▇▇'▇ gold loan screen or, if ▇▇▇▇▇▇'▇ gold loan screen is
not available, as set by RIHT, for Precious Metal forwards for such period (the
"Contango Rate"), and (ii) zero (0), plus (b) the Eurodollar Applicable Margin
from time to time applicable to Gold Loans.
Consignment Fixed Rate Amounts. Consigned Precious Metal which is accruing
a Consignment Fee and Gold Fronting Fee calculated by reference to the
Consignment Fixed Rate.
Consignment Limit. The lesser of (a) 26,000 ▇▇▇▇ ounces of Precious Metal
(the "Consignment Ounce Cap") or (b) Consigned Precious Metal having a Fair
Market Value equal to $10,000,000.00 minus the aggregate outstanding amount of
Gold Loans, after giving effect to all amounts requested (the "Consignment
Dollar Cap").
Consignment Ounce Cap. As defined in the definition of Consignment Limit.
Consignment Participation. See ss.5.4(b).
Consignment Premium. See ss.5.1(f).
Consignment Request. See ss.5.3.
Consolidated or consolidated. With reference to any term defined herein,
shall mean that term as applied to the accounts of the Borrower and its
Subsidiaries, consolidated in accordance with generally accepted accounting
principles.
Consolidated Adjusted EBITDA. With respect to the Borrower and its
Subsidiaries and any particular fiscal period, Consolidated EBITDA for such
period adjusted to include all extraordinary cash items of income or loss
(whether or not reflected in Consolidated EBITDA) and exclude all extraordinary
non-cash items of income or loss (whether or not reflected in Consolidated
EBITDA). Consolidated Adjusted EBITDA shall not, however, include extraordinary
items of income to the extent such items are duplicative of Net Proceeds in
connection with asset dispositions under ss.3.6.2.
Consolidated EBITDA. With respect to the Borrower and its Subsidiaries and
any particular fiscal period, the consolidated earnings (or loss) from
operations of the Borrower and its Subsidiaries for such period determined in
accordance with generally accepted accounting principles, after eliminating
therefrom all extraordinary
-8-
nonrecurring items of income (including gains on the sale of assets and earnings
from the sale of discontinued business lines), and after all expenses
(including, without limitation, all CH Management Fees only to the extent paid
in cash) and other proper charges but before payment or provision for (a) any
income taxes, Consolidated Total Interest Expense or Consignment Fees or Gold
Fronting Fees for such period, (b) depreciation for such period, (c)
amortization for such period, (d) all other noncash charges for such period, (e)
to the extent deducted from consolidated earnings from operations, the aggregate
of all amounts paid (not to exceed $1,250,000 for all such amounts paid during
the 1997 fiscal year, $650,000 for all such amounts paid during the 1998 fiscal
year, $250,000 for all such amounts paid during the 1999 fiscal year and $0
during any fiscal year thereafter and not, in any event, to exceed $1,642,000 in
the aggregate for all such amounts) during such period relating to the
consolidation of the businesses in connection with the Acquisitions to form the
Borrower and its Subsidiaries, (f) the aggregate amount of all noncash
extraordinary losses (not to exceed $1,000,000 in the aggregate for all such
noncash extraordinary losses during any fiscal year) during such period, (g) the
aggregate amount of any reductions to consolidated earnings from operations
during such period attributable to any write-up of the Borrower's current assets
consisting of inventory in connection with the Acquisitions, and (h) a portion
of all extraordinary nonrecurring losses during such period relating to the
Acquisitions not to exceed $500,000 in the aggregate for all such amounts during
all fiscal periods and not to exceed in any such period the aggregate amount of
any extraordinary nonrecurring items of cash income during such period, if any,
all determined in accordance with generally accepted accounting principles. Each
of the parties hereto agrees that the amount of Consolidated EBITDA for
specified periods prior to the Closing Date shall be as set forth on Schedule 3
hereto for all purposes under this Credit Agreement.
Consolidated Excess Cash Flow. With respect to the Borrower and its
Subsidiaries and any particular fiscal period, an amount equal to (a)
Consolidated Adjusted EBITDA for such period less (b) the sum of (without
duplication) (i) all taxes (including interest and penalties) paid in cash
during such period (without duplication of any such amounts paid in prior
periods), plus (ii) the amount of Capital Expenditures made during such period
to the extent permitted to be made hereby, plus (iii) any payments of the
principal of the Term Loan made during such period other than payments made
pursuant to ss.3.6.1 hereof, plus (iv) any mandatory payments of principal with
respect to any Indebtedness of the Borrower and its Subsidiaries pursuant to any
other agreement or instrument to which any of the Borrower or its Subsidiaries
is a party relating to the borrowing of money or in respect of Capitalized
Leases, plus (v) Consolidated Total Interest Expense (excluding any accrued and
unpaid dividends on the Borrower's Series A Preferred Stock (or, as the case may
be, any accrued and unpaid dividends or interest with respect to any Permitted
Preferred Stock Replacement) during such period), plus (vi) to the extent not
deducted from Consolidated Adjusted EBITDA, (A) the amount of CH Management Fees
paid during such period, plus (B) the aggregate of all amounts paid (not to
exceed $5,368,000 for all such amounts paid during the 1997 fiscal year,
$940,000 for all
-9-
such amounts paid during the 1998 fiscal year, $665,000 for all such amounts
paid during the 1999 fiscal year or $0 for all other fiscal years and not, in
any event, to exceed $5,473,000 in the aggregate for all such amounts) during
such period relating to the consolidation of the businesses in connection with
the Acquisitions to form the Borrower and its Subsidiaries, plus (C) the amount
of deferred compensation and post retirement medical benefits paid in cash
during such period relating to obligations existing as of the Closing Date, not
to exceed in the aggregate in any fiscal year $300,000 for all such deferred
compensation and $700,000 for all such post retirement medical benefits, plus
(vii) dividends on the Borrower's Series A Preferred Stock (or, as the case may
be, dividends or interest with respect to any Permitted Preferred Stock
Replacement) paid during such period.
Consolidated Senior Funded Debt. With respect to any fiscal period, an
amount equal to the Consolidated Total Funded Debt for such period minus the
average aggregate principal amount of the Subordinated Notes outstanding during
such period.
Consolidated Total Funded Debt. With respect to any fiscal period, an
amount equal to the average aggregate principal amount outstanding during such
period in respect of all Indebtedness of the Borrower and its Subsidiaries
pursuant to any agreement or instrument to which any of the Borrower or its
Subsidiaries is a party relating to the borrowing of money or the obtaining of
credit (including, without limitation, Obligations under this Credit Agreement
and all Indebtedness in respect of the Subordinated Notes) or in respect of
Capitalized Leases.
Consolidated Total Interest Expense. For any period, the aggregate amount
of interest required to be paid or accrued by the Borrower and its Subsidiaries
during such period in accordance with generally accepted accounting principles,
whether such interest was or is required to be reflected as an item of expense
or capitalized, including amortization of debt discount and premium and payments
consisting of interest in respect of Capitalized Leases and including commitment
fees, agency fees, facility fees, Consignment Fees, Gold Fronting Fees,
Consignment Premiums, balance deficiency fees and similar fees or expenses in
connection with the borrowing of money, Precious Metal or, Hedging Agreements,
and including all dividends accrued (together with all such dividends paid
during such period, but only to the extent such dividends were not accrued
during any prior period) on the Borrower's Series A Preferred Stock (or, as the
case may be, all accrued or (to the extent not accrued during any prior period)
paid dividends or interest with respect to any Permitted Preferred Stock
Replacement) during such period (without duplication of amounts from prior
periods). For purposes of determining, at any time of reference, the
Consolidated Total Interest Expense for periods prior to the Closing Date,
Consolidated Total Interest Expense shall be calculated by annualizing the
amount of Consolidated Total Interest Expense actually required to be paid or
accrued by the Borrower and its Subsidiaries during the period elapsed since the
Closing Date at such
-10-
time of reference, but Consolidated Total Interest Expense shall otherwise be
calculated in a manner consistent with this definition.
Contango Rate. As defined in the definition of Consignment Fixed Rate.
Conversion Request. A notice given by the Borrower to the Dollar Agent with
respect to Dollar Facility Loans and to the Gold Agent with respect to Gold
Loans, of the Borrower's election to convert or continue a Dollar Facility Loan
or, as the case may be, a Gold Loan, in each case in accordance withss.ss.2.6,
3.5, 6.4 and 8.4.
Copyright Memorandum. The Memorandum of Grant of Security Interest in
Copyrights, dated or to be dated on or prior to the Closing Date, made by the
Borrower in favor of the Collateral Agent and in form and substance satisfactory
to the Banks, the Collateral Agent and the Agents.
Credit Agreement. This Revolving Credit, Term Loan and Gold Consignment
Agreement, including the Schedules and Exhibits hereto.
Default. See ss.16.1.
Delinquent Bank. See ss.18.5.3.
Deliver(ed) or Delivery. Either actual shipment, creating the right in the
Borrower to demand actual shipment through a writing, instrument or a statement
of account, or the Gold Agent's crediting Precious Metal to the account of the
Borrower with one or more third parties when no physical movement thereof is
contemplated by the parties.
Depository Bank. Any depository institution which receives deposits
directly or indirectly of amounts from the Borrower and its Subsidiaries.
Distribution. The declaration or payment of any dividend on or in respect
of any shares of any class of capital stock of the Borrower, other than
dividends payable solely in shares of common stock of the Borrower; the
purchase, redemption, or other retirement of any shares of any class of capital
stock of the Borrower, directly or indirectly through a Subsidiary of the
Borrower or otherwise; the return of capital by the Borrower to its shareholders
as such; or any other distribution on or in respect of any shares of any class
of capital stock of the Borrower.
Dollar Agent. FNBB, acting as agent for the Dollar Banks.
Dollar Agent's Head Office. The Dollar Agent's head office located at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other location as the
Dollar Agent may designate from time to time.
-11-
Dollar Banks. FNBB and the other lending institutions listed on Part 1 of
Schedule 1 hereto and any other Person who becomes an assignee of any rights and
obligations of a Dollar Bank pursuant to ss.22.
Dollar Facility. The Dollar Banks' commitments to make Dollar Facility
Loans and the Dollar Agent's agreement to issue, extend and renew Letters of
Credit.
Dollar Facility Loans. The Revolving Credit Loans and the Term Loan.
Dollars or $. Dollars in lawful currency of the United States of America.
Domestic Lending Office. Initially, the office of each Bank designated as
such in Schedule 1 hereto; thereafter, such other office of such Bank, if any,
located within the United States that will be making or maintaining Base Rate
Loans.
Drawdown Date. The date on which any Loan is made or is to be made, and the
date on which any Loan is converted or continued in accordance withss.ss.2.6,
3.5, 6.4 or 8.4.
Eligible Assignee. Any of (i) a commercial bank or finance company
organized under the laws of the United States, or any State thereof or the
District of Columbia, and having total assets in excess of $1,000,000,000; (ii)
a savings and loan association or savings bank organized under the laws of the
United States, or any State thereof or the District of Columbia, and having a
net worth of at least $100,000,000, calculated in accordance with generally
accepted accounting principles; (iii) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having total assets in excess of $1,000,000,000, provided that such
bank is acting through a branch or agency located in the country in which it is
organized or another country which is also a member of the OECD; (iv) the
central bank of any country which is a member of the OECD; and (v) if, but only
if, any Event of Default has occurred and is continuing, any other bank,
insurance company, commercial finance company or other financial institution or
other Person approved by the Agents, such approval not to be unreasonably
withheld.
Eligible Accounts Receivable. The aggregate of the unpaid portions of
Accounts Receivable of the Borrower and its Subsidiaries (other than the Mexican
Subsidiary) which are parties to the Guaranty (net of any credits, rebates,
offsets, holdbacks or other adjustments payable to third parties that are
adjustments to such Accounts Receivable but without deducting therefrom any
commissions payable to sales representatives) (a) that the Borrower reasonably
and in good faith determine to be collectible; (b) that are with account debtors
that (i) are not Affiliates of the Borrower, (ii) purchased the goods or
services giving rise to the relevant Account Receivable in an arm's length
transaction, (iii) are not insolvent or involved in any case or proceeding,
whether voluntary or involuntary, under any bankruptcy, reorganization,
arrangement, insolvency, adjustment of debt, dissolution, liquidation
-12-
or similar law of any jurisdiction and (iv) are, in the Agents' reasonable
judgment, creditworthy; (c) that are in payment of obligations that have been
fully performed and are not subject to dispute or any other similar claims that
would reduce the cash amount payable therefor; (d) that are not subject to any
pledge, security interest or other lien or encumbrance other than those created
by the Loan Documents and other than any Permitted Liens pursuant to
ss.ss.12.2(b) and (e) hereof which are subordinate and junior to the interest of
the Collateral Agent therein; (e) in which the Collateral Agent has a valid and
perfected first priority security interest; (f) that are not Overdue
Receivables; (g) that are not due from an account debtor located in Indiana,
Minnesota or New Jersey unless the Borrower (i) has received a certificate of
authority to do business and is in good standing in such state or (ii) has filed
a notice of business activities report with the appropriate office or agency of
such state for the current year; (h) that are not due from any single account
debtor if more than (i) with respect to Accounts Receivable owing by independent
sales representatives of the division of the Borrower previously constituting
the "Scholastic Division" of the Balfour Sellers, fifty percent (50%) of the
aggregate amount of all Accounts Receivable owing from such account debtor would
otherwise not be Eligible Accounts Receivable, (ii) with respect to Accounts
Receivable of the Borrower generated in connection with the division of the
Borrower previously constituting the "Specialty Division" of the Balfour
Sellers, twenty percent (20%) of the aggregate amount of all Accounts Receivable
owing from such account debtor would otherwise not be Eligible Accounts
Receivable, and (iii) with respect to Accounts Receivable owing by any Specified
Account Debtors thirty-five percent (35%) of the aggregate amount of all
Accounts Receivable owing from such Specified Account Debtor would otherwise not
be Eligible Accounts Receivable; (i) that are payable in Dollars; (j) that are
not payable from an office outside of the United States; and (k) that are not
secured by a letter of credit unless the Collateral Agent has a prior, perfected
security interest in such letter of credit.
Eligible Inventory. With respect to the Borrower, inventory owned by the
Borrower or consigned pursuant to this Credit Agreement; provided that Eligible
Inventory shall not include any inventory (a) held on consignment (other than
inventory consigned pursuant to the Gold Facility), or not otherwise owned by
the Borrower, or of a type no longer sold by the Borrower, (b) which is damaged
or not immediately saleable or subject to any legal encumbrance other than
Permitted Liens, (c) which is not in the possession of the Borrower or a
Specified Refiner (except for (i) samples held in the ordinary course of
business by sales representatives or at retail locations solely to the extent
includable in the Borrowing Base pursuant to clause (g) of the definition of
Borrowing Base and (ii) Precious Metal in transit between the Borrower and a
Specified Refiner), (d) which is held by the Borrower on property leased by the
Borrower, unless the Agents have received a waiver from the lessor of such
leased property and, if any, sublessor thereof in form and substance
satisfactory to the Agents, (e) as to which appropriate Uniform Commercial Code
financing statements showing the Borrower as debtor and the Collateral Agent as
secured party have not been filed in the proper filing office or offices in
order to perfect the
-13-
Collateral Agent's security interest therein, (f) which has been shipped to a
customer of the Borrower regardless of whether such shipment is on a consignment
basis, or (g) which the Agents reasonably deem to be obsolete or not marketable.
Notwithstanding the requirements of this definition, the Agents may in their
discretion, but shall not be obligated to, include as Eligible Inventory
inventory held in the ordinary course of business by Specified Refiners or
samples inventory held by sales representatives or at retail locations
notwithstanding that one or more of the eligibility criteria set forth in this
definition may not be met.
Employee Benefit Plan. Any employee benefit plan within the meaning
ofss.3(3) of ERISA maintained or contributed to by the Borrower, other than a
Guaranteed Pension Plan or a Multiemployer Plan.
Environmental Laws. See ss.10.18(a).
Environmental Reports. See ss.10.18.
EPA. See ss.10.18(b).
ERISA. The Employee Retirement Income Security Act of 1974.
ERISA Affiliate. Any Person which is treated as a single employer with the
Borrower under ss.414 of the Code.
ERISA Reportable Event. A reportable event with respect to a Guaranteed
Pension Plan within the meaning ofss.4043 of ERISA and the regulations
promulgated thereunder as to which the requirement of notice has not been
waived.
Eurocurrency Reserve Rate. For any day with respect to a Eurodollar Rate
Loan or Consignment Fixed Rate Amount, the maximum rate (expressed as a decimal)
at which any lender subject thereto would be required to maintain reserves under
Regulation D of the Board of Governors of the Federal Reserve System (or any
successor or similar regulations relating to such reserve requirements) against
"Eurocurrency Liabilities" (as that term is used in Regulation D), if such
liabilities were outstanding. The Eurocurrency Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in the Eurocurrency
Reserve Rate.
Eurodollar Applicable Margin. At all times (a) from the Closing Date
through the first Performance Adjustment Date (i) with respect to Revolving
Credit Loans or Gold Loans which are Eurodollar Rate Loans, three percent (3%)
and (ii) with respect to any portion of the Term Loan which is a Eurodollar Rate
Loan, three and one-half percent (3-1/2%), and (b) after the first Performance
Adjustment Date, the percentage determined by reference to the provisions
ofss.8.21.
Eurodollar Business Day. Any day on which commercial banks are open for
international business (including dealings in Dollar deposits) in London or such
other
-14-
eurodollar interbank market as may be selected (a) with respect to Dollar
Facility Loans which are also Eurodollar Rate Loans, by the Dollar Agent, in its
sole discretion acting in good faith or (b) with respect to Gold Loans which are
also Eurodollar Rate Loans or with respect to Consignment Fixed Rate Amounts, by
the Gold Agent, in its sole discretion acting in good faith.
Eurodollar Lending Office. Initially, the office of each Bank designated as
such in Schedule 1 hereto; thereafter, such other office of such Bank, if any,
that shall be making or maintaining Eurodollar Rate Loans.
Eurodollar Rate. For any Interest Period with respect to a Eurodollar Rate
Loan or for purposes of determining the Consignment Fixed Rate, the rate of
interest equal to (a) the rate of interest for the Applicable Agent (rounded
upwards to the nearest 1/16 of one percent) of the rate at which such Applicable
Agent's Eurodollar Lending Office is offered Dollar deposits two Eurodollar
Business Days prior to the beginning of such Interest Period in the interbank
eurodollar market where the eurodollar and foreign currency and exchange
operations of such Eurodollar Lending Office are customarily conducted, for
delivery on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of the Eurodollar
Rate Loan or Consignment Fixed Rate Amount of the Applicable Agent to which such
Interest Period applies, divided by (b) a number equal to 1.00 minus the
Eurocurrency Reserve Rate, if applicable.
Eurodollar Rate Loans. Revolving Credit Loans, Gold Loans and all or any
portion of the Term Loan bearing interest calculated by reference to the
Eurodollar Rate.
Event of Default. See ss.16.1.
Excess Cash Flow Prepayment. See ss.3.6.1.
Extension of Credit. The making of any Loan or Consignment or the issuance,
extension or renewal of any Letter of Credit.
Fair Market Value. On any day, with respect to the calculation of the
Dollar value of Precious Metal, Platinum or Silver (a) with respect to Precious
Metal or Platinum, the Dollar per ounce Second London Fixing for Gold or, as the
case may be, Platinum, for such day, and (b) with respect to Silver, the Dollar
per ounce London Fixing for Silver for such day, in each case times the number
of ounces of Precious Metal, Platinum or, as the case may be, Silver, for which
such Dollar value is being calculated. If no such price is available for a
particular day, the Fair Market Value for such day shall be the price for the
immediately preceding day for which such price is available. In the event that
the London Bullion Brokers shall discontinue or alter its usual practice of
quoting a price in Dollars for gold, the Fair Market Value for such day shall be
RIHT's Spot Value for that day.
-15-
Fee Letter. See ss.8.10.
FNBB. The First National Bank of Boston, a national banking association, in
its individual capacity.
FNBB Concentration Accounts. See ss.11.14(a).
generally accepted accounting principles. (i) When used in ss.13, whether
directly or indirectly through reference to a capitalized term used therein,
means (A) principles that are consistent with the principles promulgated or
adopted by the Financial Accounting Standards Board and its predecessors, in
effect for the fiscal year ended on the Balance Sheet Date, and (B) to the
extent consistent with such principles, the accounting practice of the CJC
Sellers or the Balfour Sellers (with respect to the business acquired from the
Balfour Sellers) reflected in their financial statements for the year ended on
the Balance Sheet Date, and (ii) when used in general, other than as provided
above, means principles that are (A) consistent with the principles promulgated
or adopted by the Financial Accounting Standards Board and its predecessors, as
in effect from time to time, and (B) consistently applied with past financial
statements of the Borrower adopting the same principles, provided that in each
case referred to in this definition of "generally accepted accounting
principles" a certified public accountant would, insofar as the use of such
accounting principles is pertinent, be in a position to deliver an unqualified
opinion (other than a qualification regarding changes in generally accepted
accounting principles) as to financial statements in which such principles have
been properly applied.
Gold Agent. RIHT, acting as agent for the Gold Banks.
Gold Agent's Head Office. The Gold Agent's head office located at ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, or at such other location
as the Gold Agent may designate from time to time.
Gold Banks. RIHT and any other lending institution listed on Part 2 of
Schedule 1 hereto and any other Person who becomes an assignee of any rights and
obligations of a Gold Bank pursuant toss.22.
Gold Commitment. With respect to each Gold Bank, the Dollar amount set
forth on Part 2 of Schedule 1 hereto as the amount of such Gold Bank's
commitment to make Consignment Participations in the Consignments of Precious
Metal made by the Gold Agent or to make Gold Loans, as the same may be reduced
from time to time; or, if such commitment is terminated pursuant to the
provisions hereof, zero.
Gold Commitment Percentage. With respect to each Gold Bank, the percentage
set forth on Part 2 of Schedule 1 hereto as such Gold Bank's percentage of the
aggregate Gold Commitments of all of the Gold Banks.
-16-
Gold Drawdown Date. The date on which any Delivery or any Purchase and
Consignment is made or is to be made.
Gold Facility. The Gold Agent's commitment to make Consignments and the
Gold Banks' commitments to make Consignment Participations therein and to make
Gold Loans.
Gold Fronting Fees. Gold fronting fees payable to the Gold Agent on
Consigned Precious Metal at the rates set forth in ss.5.2.2.
Gold Fronting Commitment. The Gold Agent's commitment to make Consignments
of Precious Metal to the Borrower in an aggregate amount not to exceed the
Consignment Limit, as the same may be reduced from time to time or terminated
pursuant to the provisions hereof.
Gold Loans. Revolving credit loans made or to be made by the Gold Banks to
the Borrower pursuant to ss.6.1.
Gold Maturity Date. December 16, 2001.
Gold Note Record. A Record with respect to a Gold Note.
Gold Notes. See ss.6.2.
Guaranteed Pension Plan. Any employee pension benefit plan within the
meaning ofss.3(2) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate the benefits of which are guaranteed on termination in full or
in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer
Plan.
Guaranty. The Guaranty, dated or to be dated on or prior to the Closing
Date, made by each Subsidiary of the Borrower (other than the Mexican
Subsidiary) in favor of the Banks, the Collateral Agent and the Agents pursuant
to which each such Subsidiary of the Borrower guaranties to the Banks, the
Collateral Agent and the Agents the payment and performance of the Obligations
and in form and substance satisfactory to the Banks, the Collateral Agent and
the Agents.
Hazardous Substances. See ss.10.18(b).
Hedging Agreement. Any swap, cap, collar, floor, option or other hedging
agreement in respect of interest rates, currency exchange rates or commodities.
Indebtedness. All obligations, contingent and otherwise, that in accordance
with generally accepted accounting principles should be classified upon the
obligor's balance sheet as liabilities, or to which reference should be made by
footnotes thereto, including in any event and whether or not so classified: (i)
all debt and similar monetary obligations, whether direct or indirect; (ii) all
liabilities secured by any
-17-
mortgage, pledge, security interest, lien, charge or other encumbrance existing
on property owned or acquired subject thereto, whether or not the liability
secured thereby shall have been assumed; and (iii) all guarantees (the amount of
any such Indebtedness represented by a guarantee to be taken at the lesser of
(A) the principal amount of the obligations guaranteed and still outstanding and
(B) the maximum amount for which the guaranteeing Person may be liable pursuant
to the terms of the instrument embodying such Indebtedness), endorsements and
other contingent obligations whether direct or indirect in respect of
indebtedness of others, including any obligation to supply funds to or in any
manner to invest in, directly or indirectly, the debtor, to purchase
indebtedness, or to assure the owner of indebtedness against loss, through an
agreement to purchase goods, supplies, or services for the purpose of enabling
the debtor to make payment of the indebtedness held by such owner or otherwise,
and the obligations to reimburse the issuer in respect of any letters of credit.
Notwithstanding anything herein to the contrary, "Indebtedness" shall not
include any Trade and OCB Liabilities.
Indenture. The Indenture dated as of December 16, 1996 between the Borrower
and Marine Midland Bank, as trustee.
Installment Amount. See ss.8.19(a).
Interest Payment Date. (i) As to any Base Rate Loan, the last day of the
calendar month which includes the Drawdown Date thereof; and (ii) as to any
Eurodollar Rate Loan in respect of which the Interest Period is (A) 3 months or
less, the last day of such Interest Period and (B) more than 3 months, the date
that is 3 months from the first day of such Interest Period and, in addition,
the last day of such Interest Period.
Interest Period. With respect to each Dollar Facility Loan, Gold Loan or
Consignment Fixed Rate Amount, (a) initially, the period commencing on the
Drawdown Date of such Loan (or, as the case may be, the Gold Drawdown Date of
the Consignments with respect to such Consignment Fixed Rate Amounts) and ending
on the last day of one of the periods set forth below, as selected by the
Borrower in a Loan Request (or, as the case may be, Consignment Request with
respect to Consignment Fixed Rate Amounts) (i) for any Base Rate Loan, the
calendar month; and (ii) for any Eurodollar Rate Loan or Consignment Fixed Rate
▇▇▇▇▇▇, ▇, 2, 3 or 6 months; and (b) thereafter, each period commencing on the
last day of the next preceding Interest Period applicable to such Loan or
Consignment Fixed Rate Amount and ending on the last day of one of the periods
set forth above, as selected by the Borrower in a Conversion Request or
Consignment Conversion Request; provided that all of the foregoing provisions
relating to Interest Periods are subject to the following:
(A) if any Interest Period with respect to a Eurodollar Rate Loan or
Consignment Fixed Rate Amount would otherwise end on a day that is not a
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Eurodollar Business Day, that Interest Period shall be extended to the next
succeeding Eurodollar Business Day unless the result of such extension
would be to carry such Interest Period into another calendar month, in
which event such Interest Period shall end on the immediately preceding
Eurodollar Business Day;
(B) if any Interest Period with respect to a Base Rate Loan would end
on a day that is not a Business Day, that Interest Period shall end on the
next succeeding Business Day;
(C) if the Borrower shall fail to give notice as provided inss.ss.2.6,
3.5, 6.4 or 8.4, the Borrower shall be deemed to have requested a
conversion of the affected Eurodollar Rate Loan or Consignment Fixed Rate
Amount to a Base Rate Loan or Consignment Base Rate Amount, as applicable,
on the last day of the then current Interest Period with respect thereto;
(D) any Interest Period relating to any Eurodollar Rate Loan or
Consignment Fixed Rate Amount that begins on the last Eurodollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Eurodollar Business Day of a calendar month;
(E) any Interest Period relating to any Revolving Credit Loan that is
a Eurodollar Rate Loan that would otherwise extend beyond the Revolver
Maturity Date shall end on the Revolver Maturity Date;
(F) any Interest Period relating to (i) any Gold Loan that is a
Eurodollar Rate Loan or (ii) any Consigned Precious Metal that is a
Consignment Fixed Rate Amount, that would otherwise extend beyond the Gold
Maturity Date shall end on the Gold Maturity Date; and
(G) any Interest Period relating to any portion of the Term Loan that
is a Eurodollar Rate Loan that would otherwise extend beyond the Term Loan
Maturity Date shall end on the Term Loan Maturity Date.
Investments. All (a) expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock or Indebtedness of any
Person, (b) loans, advances and capital contributions to any Person, or (c)
guaranties (or other commitments as described under Indebtedness) of obligations
of any Person. In determining the aggregate amount of Investments outstanding at
any particular time: (i) the amount of any Investment represented by a guaranty
shall be taken at not less than the principal amount of the obligations
guaranteed and still outstanding; (ii) there shall be included as an Investment
all interest accrued with respect to Indebtedness constituting an Investment
unless and until such interest is paid; (iii) there shall be deducted in respect
of each such Investment any amount received as a return of capital (but only by
repurchase, redemption, retirement, repayment, liquidating
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dividend or liquidating distribution); (iv) there shall not be deducted in
respect of any Investment any amounts received as earnings on such Investment,
whether as dividends, interest or otherwise, except that accrued interest
included as provided in the foregoing clause (ii) may be deducted when paid; and
(v) there shall not be deducted from the aggregate amount of Investments any
decrease in the value thereof.
Issuance Prepayment Termination Date. The earlier of (a) payment in full of
the Term Loan and (b) the earliest date (in no event earlier than five Business
Days after the Borrower shall have delivered to the Agents and the Banks
quarterly or annual financial statements and computations of the Consolidated
EBITDA and Consolidated Total Funded Debt for the applicable period with
reference to which the occurrence of the Issuance Prepayment Termination Date is
being asserted and in no event prior to delivery of the financial statements and
computations for the fiscal period ending on February 28, 1998) upon which the
Borrower and its Subsidiaries shall have had a ratio of Consolidated Senior
Funded Debt for the period of four consecutive fiscal quarters most recently
ended prior to such asserted Issuance Prepayment Termination Date to
Consolidated EBITDA for the period of four consecutive fiscal quarters most
recently ended prior to such asserted Issuance Prepayment Termination Date of
less than 3.5 to 1.0.
Letter of Credit. See ss.4.1.1.
Letter of Credit Application. See ss.4.1.1.
Letter of Credit Fees. See ss.4.6.
Letter of Credit Participation. See ss.4.1.4.
Loan Documents. This Credit Agreement, the Notes, the Guaranty, the Letter
of Credit Applications, the Letters of Credit, the Fee Letter and the Security
Documents.
Loan Request. See ss.8.3(a).
Loans. The Revolving Credit Loans, the Term Loan and the Gold Loans.
Local Accounts. Depository accounts in depository institutions for, or on
behalf of, any of the Borrower or its Subsidiaries and listed on Schedule 10.20
hereto (as such may be amended from time to time in accordance withss.13.10
hereof).
Majority Banks. As of any date, the Banks (other than Delinquent Banks)
whose aggregate portions of the outstanding amount of the Term Loan and whose
aggregate Commitments or, as the case may be, Gold Commitments together
constitute at least sixty-six and two thirds percent (66-2/3%) of the Total
Commitment; provided, however, that if the Commitments or the Gold Commitments
shall have been terminated, then the Majority Banks shall be the Banks whose
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aggregate portions of the Outstanding Facility Amounts together constitute at
least sixty-six and two thirds percent (66-2/3%) of the Outstanding Facility
Amounts.
Maximum Drawing Amount. The maximum aggregate amount that the beneficiaries
may at any time draw under outstanding Letters of Credit, as such aggregate
amount may be reduced from time to time pursuant to the terms of the Letters of
Credit.
Mexican Stock Pledge Agreement. The Stock Pledge Agreement (Mexican), dated
or to be dated on or prior to the Closing Date, between the Borrower and the
Collateral Agent and in form and substance satisfactory to the Banks, the
Collateral Agent and the Agents.
Mexican Subsidiary. Pulidos ▇▇ ▇▇▇▇▇▇, ▇.▇. de C.V., a corporation
organized under the laws of Mexico.
Mortgaged Property. Any Real Estate which is subject to any Mortgage.
Mortgages. The several mortgages and deeds of trust, dated or to be dated
on or prior to the Closing Date, from the Borrower and its Subsidiaries to the
Collateral Agent with respect to the fee and leasehold interests of the Borrower
and its Subsidiaries in certain of the Real Estate described on Schedule 4
hereto and in form and substance reasonably satisfactory to the Banks, the
Collateral Agent and the Agents.
Multiemployer Plan. Any multiemployer plan within the meaning of ss.3(37)
of ERISA maintained or contributed to by the Borrower or any ERISA Affiliate.
Net Proceeds. With respect to any sale or other disposition of any asset by
any Person or any issuance of common equity securities of such Person, the
excess of (i) the gross cash proceeds received by such Person from the sale or
disposition of any such asset, or, as the case may be, the issuance of any such
common equity securities of such Person, plus, as and when received, all cash
payments received subsequent to such sale or disposition or such issuance
representing (A) any deferred purchase price therefor or (B) any cash proceeds
from the sale or other disposition of any cash equivalents (or any deferred
purchase price obligations) received therefor over (ii) the sum of (A) a
reasonable reserve for any liabilities payable incident to such sale or
disposition or such issuance, (B) the reasonable direct costs and expenses
incurred by such Person in connection with such sale or disposition or such
issuance (including, without limitation, reasonable brokerage, legal, investment
banking, accounting, consulting, survey, title and recording fees and
commissions), (C) all payments actually made on any Indebtedness (other than the
Obligations) or other obligations which are secured by any assets subject to
such sale or disposition which are required to be repaid out of the proceeds
from such transaction and (D) actual tax payments made or to be made in
connection therewith.
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New Issuance Prepayment. See ss.3.6.3.
New Lending Office. See ss.8.12.4.
New Notes. See ss.12.8.
Non-U.S. Bank. See ss.8.12.3.
Notes. The Term Notes, the Gold Notes and the Revolving Credit Notes.
Obligations. All indebtedness, obligations and liabilities of any of the
Borrower and its Subsidiaries to any of the Banks, the Agents and the Collateral
Agent, individually or collectively, existing on the date of this Credit
Agreement or arising thereafter, direct or indirect, joint or several, absolute
or contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise, arising or
incurred under this Credit Agreement or any of the other Loan Documents, or
under any Hedging Agreement entered into between any of the Borrower and its
Subsidiaries and either of the Agents, or in respect of any of the Loans or
Consignments made or Reimbursement Obligations incurred or any of the Notes, the
Guaranty, any Letter of Credit Application, Letter of Credit or other
instruments at any time evidencing any thereof.
Operating Accounts. See ss.8.3(b).
outstanding. With respect to the Loans, the aggregate unpaid principal
thereof as of any date of determination; with respect to Consignments, the
aggregate Fair Market Value or number of ▇▇▇▇ ounces of Consigned Precious Metal
which, as of any date of determination, has not been paid for by the Borrower or
Redelivered.
Outstanding Facility Amounts. The sum of (a) the outstanding amount of the
Revolving Credit Loans (after giving effect to all amounts requested) plus (b)
the outstanding amount of the Gold Loans (after giving effect to all amounts
requested) plus (c) the Fair Market Value of Consigned Precious Metal (after
giving effect to all Consignments requested) plus (d) the Maximum Drawing Amount
and all Unpaid Reimbursement Obligations.
Overdue Receivables. Accounts Receivable of the Borrower that are
outstanding for more than (a) with respect to Accounts Receivable owing by
independent sales representatives of the division of the Borrower previously
constituting the "Scholastic Division" of the Balfour Sellers, (i) during the
months of July, August, November and December of any year (and during the month
of June of 1997), one hundred eighty (180) days past the earlier to occur of (A)
the date of the respective invoices therefor and (B) the date of shipment
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thereof in the case of goods or the end of the calendar month following the
provision thereof in the case of services, and (ii) at any other time, one
hundred twenty (120) days past the earlier to occur of (A) the date of the
respective invoices therefor and (B) the date of shipment thereof in the case of
goods or the end of the calendar month following the provision thereof in the
case of services, (b) with respect to Accounts Receivable owing by Walmart
Stores, the earlier to occur of (i) one hundred fifty (150) days past the date
of shipment of the goods relating thereto and (ii) one hundred twenty (120) days
past the due date for payment thereon, (c) with respect to Accounts Receivable
owing by any of the Specified Account Debtors classified as "60 Day Term
Specified Account Debtors" on the Specified Account Debtor Letter, the earlier
to occur of (i) one hundred twenty (120) days past the date of shipment of the
goods relating thereto and (ii) sixty (60) days past the due date for payment
thereon, (d) with respect to Accounts Receivable owing by any of the Specified
Account Debtors classified as "90 Day Term Specified Account Debtors" on the
Specified Account Debtor Letter, the earlier to occur of (i) one hundred fifty
(150) days past the date of shipment of the goods relating thereto and (ii)
sixty (60) days past the due date for payment thereon, (e) with respect to
Accounts Receivable owing by any of the Specified Account Debtors classified as
"120 Day Term Specified Account Debtors" on the Specified Account Debtor Letter,
the earlier to occur of (i) one hundred fifty (150) days past the date of
shipment thereof and (ii) thirty (30) days past the due date for payment
thereon, (f) sixty (60) days past the due date for payment thereon with respect
to Accounts Receivable (A) owed by college students who have purchased goods on
an installment sale basis with full payment to be due within eight (8) months of
the date of sale, (B) owed by high school students who have purchased goods on
an installment sale basis with full payment to be due within six (6) months of
the date of sale, or (C) generated in connection with the Borrower's
"Recognition Products" division where the account debtor has purchased goods on
an installment sale basis with full payment to be due within ten (10) months of
the date of sale, provided, that the aggregate amount of any such Accounts
Receivable owing by college or high school students or generated in connection
with the Borrower's "Recognition Products" division constituting Eligible
Accounts Receivable shall in no event exceed $5,000,000 at any time, and (g)
with respect to all other Accounts Receivable of the Borrower, the earlier to
occur of (i) ninety (90) days past the earlier to occur of (A) the date of the
respective invoices therefor and (B) the date of shipment thereof in the case of
goods or the end of the calendar month following the provision thereof in the
case of services and (ii) sixty (60) days past the due date for payment thereon.
Patent Assignment. The Patent Collateral Assignment and Security Agreement,
dated or to be dated on or prior to the Closing Date, made by the Borrower in
favor of the Collateral Agent and in form and substance satisfactory to the
Banks, the Collateral Agent and the Agents.
PBGC. The Pension Benefit Guaranty Corporation created by ss.4002 of ERISA
and any successor entity or entities having similar responsibilities.
Perfection Certificates. The Perfection Certificates as defined in the
Security Agreement.
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Performance Adjustment. See ss.8.21.
Performance Adjustment Date. See ss.8.21.
Permitted Common Stock Repurchases. Repurchases of the Borrower's common
stock which are made concurrently with the issuance by the Borrower of
additional common stock to employees or sales representatives so long as the
Borrower receives a cash purchase price in respect of any such additional common
stock from such employees or sales representatives in an amount equal to the
aggregate amount of cash to be paid in order to effect such repurchases of
common stock.
Permitted Employee Stock Repurchases. Repurchases of common stock of the
Borrower theretofore issued to employees or independent sales representatives of
the Borrower so long as the aggregate amount paid by the Borrower in cash with
respect thereto shall not exceed $500,000 during any fiscal year.
Notwithstanding the foregoing, (a) any unused portion of any such amount for
common stock repurchases in any fiscal year may be used in the succeeding fiscal
year (but not any other fiscal year) and any such amounts carried forward to a
succeeding fiscal year shall be used for common stock repurchases in such
succeeding fiscal year prior to using any portion of the amount permitted for
such succeeding fiscal year, and (b) after using the entire permitted cash
amount available for such common stock repurchases in any fiscal year, the
Borrower may also issue promissory notes to employees and sales representatives
to effect such repurchases of common stock so long as such promissory notes are
issued on terms which are subordinate in all respects to the Obligations and so
long as no payments, redemptions or repurchases of any kind may be made with
respect to any such promissory notes prior to the irrevocable payment in full in
cash of all of the Obligations and the termination of all of the Commitments,
Gold Commitments and the Gold Fronting Commitment.
Permitted Liens. Liens, security interests and other encumbrances permitted
by ss.12.2.
Permitted Preferred Stock Dividends. Payments of cash dividends in respect
of the Borrower's Series A Preferred Stock as set forth in the Borrower's
Certificate of Incorporation as in effect on the date hereof or any Permitted
Preferred Stock Replacement constituting preferred stock, provided that (a) the
Borrower and its Subsidiaries shall have had, for the period of four consecutive
fiscal quarters most recently ended prior to the payment of any such dividend, a
ratio of Consolidated EBITDA to Consolidated Total Interest Expense equal to at
least 2.25:1.0, (b) no Event of Default shall have occurred and be continuing
and none would result from the making of such dividend, (c) such dividends shall
be payable at a rate not to exceed one percent (1%) per annum in excess of the
interest rate payable in respect of the Subordinated Notes, and (d) the Borrower
shall provide the Agents, prior to the making of any such dividend payment, with
a statement certified by the principal
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financial or accounting officer of the Borrower setting forth in reasonable
detail computations evidencing the calculation described in clause (a) above.
Permitted Preferred Stock Replacement. (a) Indebtedness incurred by the
Borrower, (b) additional common stock issued by the Borrower or (c) preferred
stock issued by the Borrower, in each case in connection with, and solely to the
extent of, the replacement of a portion of the Borrower's existing Series A
Preferred Stock in an aggregate principal amount not in excess of $10,000,000
(plus the amount of accrued dividends on such existing Series A Preferred Stock)
at any time outstanding, provided that (i) in the case of any such Indebtedness,
the Borrower and its Subsidiaries shall have had for the period of four
consecutive fiscal quarters most recently ended prior to the incurrence of such
Indebtedness, a ratio of Consolidated EBITDA to Consolidated Total Interest
Expense equal to at least 2.5:1.0, (ii) in the case of any such Indebtedness,
such Indebtedness shall be subordinated in all other respects to the Obligations
on terms substantially identical to, or no more favorable to the holders thereof
than, the terms of the Subordinated Notes (except that the interest rate payable
thereon may exceed the rate payable in respect of the Subordinated Notes by no
more than one percent (1%) per annum), and (iii) in the case of any such
preferred stock, such preferred stock shall have rights, preferences and terms
no more adverse to the interests of the Banks and the Agents than the existing
Series A Preferred Stock and shall accrue dividends at a rate not in excess of
the rate payable on such existing Series A Preferred Stock as of the date
hereof, and (d) the Borrower shall provide the Agents, prior to the incurrence
of such Indebtedness or, as the case may be, the issuance of such common stock
or preferred stock, with a statement certified by the principal financial or
accounting officer of the Borrower setting forth in reasonable detail
computations evidencing the calculation described in clause (a) above.
Person. Any individual, corporation, partnership, trust, unincorporated
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
Precious Metal. Gold measured in ▇▇▇▇ ounces having a fineness of not less
than .9995, without regard to whether such gold is alloyed or unalloyed, in
bullion form or contained in or processed into other materials which contain
elements other than gold.
Purchase and Consignment. Purchases from, and consignments to, the Borrower
of Borrower's Precious Metal made or to be made by the Gold Agent (on behalf of
the Gold Banks) pursuant toss.5.1(a).
Purchase Price. See ss.5.1(b).
Real Estate. All real property at any time owned or leased (as lessee or
sublessee) by the Borrower or any of its Subsidiaries.
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Record. The grid attached to a Note, or the continuation of such grid, or
any other similar record, including computer records, maintained by any Bank
with respect to any Loan referred to in such Note.
Redeliver(ed) or Redelivery. The delivery by the Borrower to the Gold
Agent's Head Office, at the Borrower's sole risk and expense, of Precious Metal
in bullion form of a type and quality which is acceptable to the Gold Agent.
Reemployment Period. See ss.8.19(a).
Register. See ss.22.3.
Reimbursement Obligation. The Borrower's obligation to reimburse the Dollar
Agent and the Dollar Banks on account of any drawing under any Letter of Credit
as provided inss.4.2.
Replaced Bank. See ss.8.22.
Replacement Bank. See ss.8.22.
Revolver Maturity Date. December 16, 2001.
Revolving Credit Loans. Revolving credit loans made or to be made by the
Dollar Banks to the Borrower pursuant to ss.2.
Revolving Credit Note Record. A Record with respect to a Revolving Credit
Note.
Revolving Credit Notes. See ss.2.4.
RIHT. Rhode Island Hospital Trust National Bank, a national banking
association, in its individual capacity.
Sales Representative Inventory Locations. The locations of the inventory
held by sale representatives of the Borrower in the United States of America and
disclosed in writing to the Agents, as such list of locations may be
supplemented from time to time in accordance with the provisions ofss.11.4(i).
Security Agreement. The Security Agreement, dated or to be dated on or
prior to the Closing Date, among the Borrower, its Subsidiaries (other than the
Mexican Subsidiary) and the Collateral Agent and in form and substance
satisfactory to the Banks, the Collateral Agent and the Agents.
Security Documents. The Security Agreement, the Mortgages, the Stock Pledge
Agreement, the Trademark Assignment, the Trademark Security Agreement, the
Patent Assignment, the Copyright Memorandum, the Mexican Stock Pledge
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Agreement, the Cash Collateral Agreement, all Agency Account Agreements, the
Confirmation of Swap Agreement, and the Swap Agreement.
Sellers. Collectively, the CJC Sellers and the Balfour Sellers.
Settlement. The making of, or receiving of payments, in immediately
available funds, by the Dollar Banks or, as the case may be, the Gold Banks, to
the extent necessary to cause each Applicable Bank's actual share of the
outstanding amount of Revolving Credit Loans (after giving effect to any Loan
Request) or, as the case may be, of Gold Loans (after giving effect to any Loan
Request) to be equal to each Dollar Bank's Commitment Percentage of the
outstanding amount of such Revolving Credit Loans (after giving effect to any
Loan Request) or, as the case may be, each Gold Bank's Gold Commitment
Percentage of the outstanding amount of such Gold Loans (after giving effect to
any Loan Request), in any case where, prior to such event or action, the actual
share is not so equal.
Settlement Amount. See ss.8.6(a).
Settlement Date. (a) The Drawdown Date relating to any Loan Request, (b)
Friday of each week, or if Friday is not a Business Day, the Business Day
immediately following such Friday, (c) the Business Day immediately following
either Agent becoming aware of the existence of an Event of Default, (d) any
Business Day on which (i) the amount of Revolving Credit Loans outstanding from
FNBB plus FNBB's Commitment Percentage of the sum of the Maximum Drawing Amount
and any Unpaid Reimbursement Obligations is equal to or greater than FNBB's
Commitment Percentage of the Total Revolver Commitment, or, as the case may be,
(ii) the amount of Gold Loans outstanding from RIHT plus RIHT's Gold Commitment
Percentage of the Fair Market Value of Consigned Precious Metal outstanding is
equal to or greater than RIHT's Gold Commitment Percentage of the Total Gold
Commitment, (e) the Business Day immediately following any Business Day on which
the amount of Loans outstanding increases or decreases by more than $5,000,000
as compared to the previous Settlement Date, (f) any day on which any conversion
of a Base Rate Loan to a Eurodollar Rate Loan occurs, or (g) any Business Day on
which (i) the amount of outstanding Revolving Credit Loans or, as the case may
be, Gold Loans decreases and (ii) the amount of the Applicable Agent's Loans
outstanding equals Zero Dollars ($0).
Settling Bank. See ss.8.6(a).
Specified Account Debtors. The account debtors of the Borrower specifically
disclosed in writing to the Agents and the Banks pursuant to a letter from the
Borrower to the Agents and the Banks delivered as of the Closing Date (the
"Specified Account Debtor Letter") so long as the Agents shall not have notified
the Borrower in writing that the Agents shall have determined in their
discretion that any such Person shall no longer constitute
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a Specified Account Debtor or shall constitute a Specified Account Debtor under
a different heading as set forth on the Specified Account Debtor Letter.
Specified Account Debtor Letter. See the definition of Specified Account
Debtors.
Specified Refiner. Any refiner of Precious Metal inventory of the Borrower
designated by the Borrower and approved by the Agents so long as the Agents
shall not have notified the Borrower in writing that the Agents shall have
determined in their sole reasonable discretion that any such refiner shall no
longer constitute a Specified Refiner due to a change in the creditworthiness of
such refiner or a change in the Agents' trading relationship with such refiner.
Spot Value: At any time, with respect to the calculation of the Dollar
value of Precious Metal, (a) in all cases in which the Borrower is purchasing
Precious Metal or in which the value of Consigned Precious Metal for purposes of
the Consignment Limit is being calculated, RIHT's "ask" spot quotation for
Precious Metal at such time times the number of ounces of such Precious Metal
and (b) in all cases in which Gold Banks are purchasing Precious Metal, RIHT's
"bid" spot quotation for Precious Metal at such time times the number of ounces
of such Precious Metal.
Stock Pledge Agreement. The Stock Pledge Agreement, dated or to be dated on
or prior to the Closing Date, between the Borrower and the Collateral Agent and
in form and substance satisfactory to the Banks, the Collateral Agent and the
Agents.
Subordinated Notes. The Borrower's (a) 11% Senior Subordinated Notes due
2006 issued by the Borrower pursuant to the Indenture, as in effect on the
Closing Date and as amended in accordance with the provisions ofss.12.8 hereof,
or any replacement thereof entered into by the Borrower in accordance with the
provisions ofss.12.8.
Subsidiary. Any corporation, association, trust, or other business entity
of which the designated parent shall at any time own directly or indirectly
through a Subsidiary or Subsidiaries at least a majority (by number of votes) of
the outstanding Voting Stock.
Survey. In relation to each Mortgaged Property (other than the Real Estate
of the Borrower located in Kentucky), an instrument survey of such Mortgaged
Property dated as of a date subsequent to December 8, 1996, which shall show the
location of all buildings, structures, easements and utility lines on such
Mortgaged Property, shall show that all buildings and structures are within the
lot lines of such Mortgaged Property, shall not show any encroachments by
others, shall show the zoning district or districts in which such Mortgaged
Property is located in a flood hazard district as established by the Federal
Emergency Management Agency or any successor agency or is located in any flood
plain, flood hazard or wetland protection district established under federal,
state or local law.
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Surveyor Certificate. In relation to each Mortgaged Property for which a
Survey has been conducted, a certificate executed by the surveyor who prepared
such Survey dated subsequent to December 8, 1996, as of a recent date and
containing such information relating to such Mortgaged Property as the
Collateral Agent or the Title Insurance Company may require.
Swap Agreement. The ISDA Master Agreement dated or to be dated on or prior
to the Closing Date, between the Borrower and the Gold Agent and in form and
substance satisfactory to each of the Borrower, the Banks and the Agents.
Taxes. See ss.8.12.2.
Term Loan. The term loan made or to be made by the Dollar Banks to the
Borrower in the aggregate principal amount of $25,000,000.00 pursuant toss.3.1.
Term Loan Maturity Date. December 16, 2003.
Term Notes. See ss.3.2.
Term Note Record. A Record with respect to a Term Note.
Title Policy. In relation to each Mortgaged Property, an ALTA standard form
title insurance policy issued by the Title Insurance Company (with such
reinsurance or co-insurance as the Collateral Agent may require, any such
reinsurance to be with direct access endorsements) in such amount as may be
determined by the Collateral Agent insuring the priority of the Mortgage of such
Mortgaged Property and that the Borrower or one of its Subsidiaries holds
marketable fee simple, or, as the case may be, leasehold title to such Mortgaged
Property, subject only to the encumbrances permitted by such Mortgage and which
shall not contain exceptions for mechanics liens, persons in occupancy or
matters which would be shown by a survey (except as may be permitted by such
Mortgage), shall not insure over any matter except to the extent that any such
affirmative insurance is acceptable to the Collateral Agent in its reasonable
discretion, and shall to the extent available contain such endorsements and
affirmative insurance as the Collateral Agent in its reasonable discretion may
require, including but not limited to (i) comprehensive endorsement, (ii)
variable rate of interest endorsement, (iii) usury endorsement, (iv) revolving
credit endorsement, (v) tie-in endorsement, (vi) doing business endorsement and
(vii) ALTA form 3.1 zoning endorsement.
Total Commitment. The sum of the Total Revolver Commitment, the Total Gold
Commitment and the then outstanding principal amount of the Term Loan.
Total Gold Commitment. The sum of the Gold Commitments of the Gold Banks,
as in effect from time to time.
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Total Revolver Commitment. The sum of the Commitments of the Dollar Banks,
as in effect from time to time.
Trade and OCB Liabilities. All liabilities of the Borrower and its
Subsidiaries incurred in the ordinary course of business not incurred through
(a) the borrowing of money, or (b) the obtaining of credit except for credit on
an open account basis customarily extended and in fact extended in connection
with normal purchases of goods and services.
Trademark Assignments. The Trademark Assignment, dated or to be dated on or
prior to the Closing Date, made by the Borrower in favor of the Collateral Agent
and in form and substance satisfactory to the Banks, the Collateral Agent and
the Agents.
Trademark Security Agreement. The Trademark Collateral Security and Pledge
Agreement, dated or to be dated on or prior to the Closing Date, between the
Borrower and the Collateral Agent and in form and substance satisfactory to the
Banks, the Collateral Agent and the Agents.
Type. As to any Revolving Credit Loan, Gold Loan or all or any portion of
the Term Loan, its nature as a Base Rate Loan or a Eurodollar Rate Loan.
Uniform Customs. With respect to any Letter of Credit, the Uniform Customs
and Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500 or any successor version thereto adopted by the
Dollar Agent in the ordinary course of its business as a letter of credit issuer
and in effect at the time of issuance of such Letter of Credit.
Unpaid Reimbursement Obligation. Any Reimbursement Obligation for which the
Borrower does not reimburse the Dollar Agent and the Dollar Banks on the date
specified in, and in accordance with,ss.4.2.
Voting Stock. Stock or similar interests, of any class or classes (however
designated), the holders of which are at the time entitled, as such holders, to
vote for the election of a majority of the directors (or persons performing
similar functions) of the corporation, association, trust or other business
entity involved, whether or not the right so to vote exists by reason of the
happening of a contingency.
1.2. Rules of Interpretation.
(a) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to
time in accordance with its terms and the terms of this Credit Agreement.
(b) The singular includes the plural and the plural includes the
singular.
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(c) A reference to any law includes any amendment or modification to
such law.
(d) A reference to any Person includes its permitted successors and
permitted assigns.
(e) Accounting terms not otherwise defined herein have the meanings
assigned to them by generally accepted accounting principles applied on a
consistent basis by the accounting entity to which they refer.
(f) The words "include", "includes" and "including" are not limiting.
(g) All terms not specifically defined herein or by generally accepted
accounting principles, which terms are defined in the Uniform Commercial
Code as in effect in the Commonwealth of Massachusetts, have the meanings
assigned to them therein, with the term "instrument" being that defined
under Article 9 of the Uniform Commercial Code.
(h) Reference to a particular "ss." refers to that section of this
Credit Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of like import
shall refer to this Credit Agreement as a whole and not to any particular
section or subdivision of this Credit Agreement.
2. THE DOLLAR FACILITY - REVOLVING CREDIT LOANS.
2.1. Commitment to Lend. Subject to the terms and conditions set forth in
this Credit Agreement, each of the Dollar Banks severally agrees to lend to the
Borrower and the Borrower may borrow, repay, and reborrow from time to time
between the Closing Date and the Revolver Maturity Date upon notice by the
Borrower to the Dollar Agent given in accordance with ss.8.3, such sums as are
requested by the Borrower up to a maximum aggregate amount outstanding (after
giving effect to all amounts requested) at any one time equal to such Dollar
Bank's Commitment minus such Dollar Bank's Commitment Percentage of the sum of
the Maximum Drawing Amount and all Unpaid Reimbursement Obligations, provided
that the sum of the outstanding amount of the Revolving Credit Loans (after
giving effect to all amounts requested) plus the Maximum Drawing Amount and all
Unpaid Reimbursement Obligations shall not at any time exceed the Total Revolver
Commitment. The Revolving Credit Loans shall be made pro rata in accordance with
each Dollar Bank's Commitment Percentage. Each request for a Revolving Credit
Loan hereunder shall constitute a representation and warranty by the Borrower
that the conditions set forth in ss.14 and ss.15, in the case of the initial
Revolving Credit Loans to be made on the Closing Date, and ss.15, in the case of
all other Revolving Credit Loans, have been satisfied on the date of such
request.
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2.2. Commitment Fee. The Borrower agrees to pay to the Dollar Agent for the
accounts of the Dollar Banks in accordance with their respective Commitment
Percentages a commitment fee calculated at the rate of one half of one percent
(1/2%) per annum on the average daily amount during each calendar quarter or
portion thereof from the Closing Date to the Revolver Maturity Date by which the
Total Revolver Commitment minus the sum of the Maximum Drawing Amount and all
Unpaid Reimbursement Obligations exceeds the outstanding amount of Revolving
Credit Loans during such calendar quarter. The commitment fee shall be payable
quarterly in arrears on the first day of each calendar quarter for the
immediately preceding calendar quarter commencing on the first such date
following the date hereof, with a final payment on the Revolver Maturity Date or
any earlier date on which the Commitments shall terminate.
2.3. Reduction of Total Revolver Commitment. The Borrower shall have the
right at any time and from time to time upon five (5) Business Days prior
written notice to the Dollar Agent to reduce by $500,000.00 or an integral
multiple thereof or terminate entirely the Total Revolver Commitment, whereupon
the Commitments of the Dollar Banks shall be reduced pro rata in accordance with
their respective Commitment Percentages of the amount specified in such notice
or, as the case may be, terminated. Promptly after receiving any notice of the
Borrower delivered pursuant to this ss.2.3, the Dollar Agent will notify the
Dollar Banks of the substance thereof. Upon the effective date of any such
reduction or termination, the Borrower shall pay to the Dollar Agent for the
respective accounts of the Dollar Banks the full amount of any commitment fee
then accrued on the amount of the reduction. No reduction or termination of the
Commitments may be reinstated.
2.4. The Revolving Credit Notes. The Revolving Credit Loans shall be
evidenced by separate promissory notes of the Borrower in substantially the form
of Exhibit E hereto (each a "Revolving Credit Note"), dated as of the Closing
Date and completed with appropriate insertions. One Revolving Credit Note shall
be payable to the order of each Dollar Bank in a principal amount equal to such
Dollar Bank's Commitment or, if less, the outstanding amount of all Revolving
Credit Loans made by such Dollar Bank, plus interest accrued thereon, as set
forth below. The Borrower irrevocably authorizes each Dollar Bank to make or
cause to be made, at or about the time of the Drawdown Date of any Revolving
Credit Loan or at the time of receipt of any payment of principal on such Dollar
Bank's Revolving Credit Note, an appropriate notation on such Dollar Bank's
Revolving Credit Note Record reflecting the making of such Revolving Credit Loan
or (as the case may be) the receipt of such payment. The outstanding amount of
the Revolving Credit Loans set forth on such Dollar Bank's Revolving Credit Note
Record shall be prima facie evidence of the principal amount thereof owing and
unpaid to such Dollar Bank, but the failure to record, or any error in so
recording, any such amount on such Dollar Bank's Revolving Credit Note Record
shall not limit or otherwise affect the obligations of the Borrower hereunder or
under any Revolving Credit Note to make payments of principal of or interest on
any Revolving Credit Note when due.
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2.5. Interest on Revolving Credit Loans. Except as otherwise provided in
ss.8.20, the Revolving Credit Loans shall bear interest in accordance with the
provisions of ss.8.1 hereof.
2.6. Requests for Revolving Credit Loans; Conversion Options. The Borrower
shall request Revolving Credit Loans by providing to the Dollar Agent Loan
Requests for Revolving Credit Loans in accordance with the requirements of
ss.8.3(a) hereof. The Dollar Agent may, in its sole discretion and without
conferring with the Dollar Banks, make Revolving Credit Loans to the Borrower in
accordance with the provisions of ss.8.3(b) hereof. The Borrower shall be
permitted to convert Revolving Credit Loans to Revolving Credit Loans of
different Types in accordance with the provisions of ss.8.4 hereof, and such
provisions of ss.8.4 shall apply mutatis mutandis with respect to the Revolving
Credit Loans so that the Borrower will have the same interest rate options with
respect to the Revolving Credit Loans as they would be entitled to with respect
to the Gold Loans and the Term Loan.
2.7. Funds for Revolving Credit Loans. The provisions of ss.8.5 and ss.8.6
with respect to the funding procedures and Settlement procedures for the Loans
shall apply to the Revolving Credit Loans.
2.8. Maturity. The Borrower promises to pay on the Revolver Maturity Date,
and there shall become absolutely due and payable on the Revolver Maturity Date,
all of the Revolving Credit Loans outstanding on such date, together with any
and all accrued and unpaid interest thereon.
2.9. Optional Repayments of Revolving Credit Loans. The Borrower shall have
the right, at its election, to repay the outstanding Revolving Credit Loans in
accordance with the provisions of ss.8.7 hereof.
3. THE DOLLAR FACILITY - THE TERM LOAN.
3.1. Commitment to Lend. Subject to the terms and conditions set forth in
this Credit agreement, each Dollar Bank agrees to lend to the Borrower the
amount of its Commitment Percentage of the principal amount of $25,000,000.00.
3.2. The Term Notes. The Term Loan shall be evidenced by separate
promissory notes of the Borrower in substantially the form of Exhibit F hereto
(each a "Term Note"), dated the Closing Date and completed with appropriate
insertions. One Term Note shall be payable to the order of each Dollar Bank in a
principal amount equal to such Dollar Bank's Commitment Percentage of the Term
Loan and representing the obligation of the Borrower to pay to such Dollar Bank
such principal amount or, if less, the outstanding amount of such Dollar Bank's
Commitment Percentage of the Term Loan, plus interest accrued thereon, as set
forth below. The Borrower irrevocably authorizes each Dollar Bank to make or
cause to be made a notation on such Dollar Bank's Term Note Record reflecting
the original principal
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amount of such Dollar Bank's Commitment Percentage of the Term Loan and, at or
about the time of such Dollar Bank's receipt of any principal payment on such
Dollar Bank's Term Note, an appropriate notation on such Dollar Bank's Term Note
Record reflecting such payment. The aggregate unpaid amount set forth on such
Dollar Bank's Term Note Record shall be prima facie evidence of the principal
amount thereof owing and unpaid to such Dollar Bank, but the failure to record,
or any error in so recording, any such amount on such Dollar Bank's Term Note
Record shall not affect the obligations of the Borrower hereunder or under any
Term Note to make payments of principal of and interest on any Term Note when
due.
3.3. Schedule of Installment Payments of Principal of Term Loan. The
Borrower promises to pay to the Dollar Agent for the account of the Dollar Banks
the principal amount of the Term Loan in twenty-eight (28) consecutive quarterly
installment payments, twenty-seven (27) of which shall be payable on each
calendar quarter ending date and each in the amount set forth in the table below
opposite the period in such table during which such calendar quarter ending date
occurs, with a final payment on the Term Loan Maturity Date in an amount equal
to the unpaid balance of the Term Loan:
Amount of
Period: Quarterly Payment:
------- ------------------
January 1, 1997 - December 31, 1997 $125,000.00
January 1, 1998 - December 31, 1998 $250,000.00
January 1, 1999 - December 31, 1999 $375,000.00
January 1, 2000 - December 31, 2000 $500,000.00
January 1, 2001 - December 31, 2001 $750,000.00
January 1, 2002 - December 31, 2002 $2,000,000.00
January 1, 2003 - September 30, 2003 $2,250,000.00
3.4. Optional Prepayment of Term Loan. The Borrower shall have the right at
any time to prepay the Term Loan in accordance with the provisions ofss.8.7. Any
prepayment of principal of the Term Loan shall be applied ratably against the
remaining scheduled installments of principal due on the Term Loan. No amount
repaid with respect to the Term Loan may be reborrowed.
3.5. Interest on Term Loan. Except as otherwise provided in ss.8.20, the
outstanding amount of the Term Loan shall bear interest in accordance with the
provisions of ss.8.1. The Borrower shall notify the Dollar Agent, such notice to
be irrevocable, at least two (2) Business Days prior to the Drawdown Date of the
Term
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Loan if all or any portion of the Term Loan is to bear interest at the
Eurodollar Rate. After the Term Loan has been made, the provisions of ss.8.4
shall apply mutatis mutandis with respect to all or any portion of the Term Loan
so that the Borrower may have the same interest rate options with respect to all
or any portion of the Term Loan as it would be entitled to with respect to the
Revolving Credit Loans and the Gold Loans. The Borrower shall select each
Interest Period with respect to the Term Loan so as not to require a payment or
prepayment of any Eurodollar Rate Loan prior to the end of the applicable
Interest Period with respect to such Eurodollar Rate Loan.
3.6. Mandatory Prepayments of the Term Loan.
3.6.1. Excess Cash Flow Prepayment. The Borrower shall pay to the
Dollar Agent, for the accounts of the Dollar Banks (each, an "Excess Cash
Flow Prepayment"), annually in arrears on February 15 of each year
(commencing on February 15, 1998), an amount equal to fifty percent (50%)
of the Consolidated Excess Cash Flow, if any, for such immediately
preceding fiscal year. Each such Excess Cash Flow Prepayment shall be
applied ratably against the remaining scheduled installments of principal
due on the Term Loan; provided, however, that a portion of the Excess Cash
Flow Prepayment (if any) scheduled to be made on February 15, 1999, not to
exceed $1,500,000, shall be applied instead to repay the outstanding
Revolving Credit Loans with the remainder of such Excess Cash Flow
Prepayment, if any, to be applied ratably against the remaining scheduled
installments of principal due on the Term Loan.
3.6.2. Asset Disposition Prepayment. The Borrower shall pay to the
Dollar Agent, for the accounts of the Dollar Banks (each, an "Asset
Disposition Prepayment"), within thirty (30) days after the completion by
the Borrower of any asset dispositions pursuant to ss.12.5.2(j), an amount
equal to one hundred percent (100%) of the Net Proceeds received by the
Borrower in connection with such asset disposition solely to the extent
that the aggregate amount of Net Proceeds received by the Borrower shall
exceed (a) for all such asset dispositions undertaken pursuant to
ss.12.5.2(j) during the period prior to the first anniversary of the
Closing Date, $500,000 and (b) for all such asset dispositions undertaken
pursuant to ss.12.5.2(j) during any one year period after the first
anniversary of the Closing Date from one anniversary of the Closing Date to
the next anniversary of the Closing Date, $250,000. Each such Asset
Disposition Prepayment shall be applied ratably against the remaining
scheduled installments of principal due on the Term Loan. The Borrower
shall also use any proceeds from the sale of assets mandated by the Federal
Trade Commission, to the extent such sale is permitted by ss.12.5.2(f), to
prepay the principal amount of the Term Loan as set forth in such
ss.12.5.2(f).
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3.6.3. New Issuance Prepayment. The Borrower shall pay to the Dollar
Agent, for the accounts of the Dollar Banks (each, a "New Issuance
Prepayment"), within ten (10) days after the completion by the Borrower of
any issuance of additional common equity securities (other than issuances
of common stock to employees or independent sales representatives of the
Borrower and other than any Permitted Preferred Stock Replacement), an
amount equal to one hundred percent 100% of the Net Proceeds received by
the Borrower in connection with any such issuance by the Borrower of equity
securities or warrants or subscription rights for equity securities;
provided however, that no such New Issuance Prepayments shall be required
from and after the occurrence of the Issuance Prepayment Termination Date.
Each such New Issuance Prepayment shall be applied ratably against the
remaining scheduled installments of principal due on the Term Loan.
4. THE DOLLAR FACILITY - LETTERS OF CREDIT.
4.1. Letter of Credit Commitments.
4.1.1. Commitment to Issue Letters of Credit. Subject to the terms and
conditions hereof and the execution and delivery by the Borrower of a
letter of credit application on the Dollar Agent's customary form (a
"Letter of Credit Application"), the Dollar Agent on behalf of the Dollar
Banks and in reliance upon the agreement of the Dollar Banks set forth in
ss.4.1.4 and upon the representations and warranties of the Borrower
contained herein, agrees, in its individual capacity, to issue, extend and
renew for the account of the Borrower one or more standby or documentary
letters of credit (individually, a "Letter of Credit"), in such form as may
be requested from time to time by the Borrower and agreed to by the Dollar
Agent; provided, however, that, after giving effect to such request, (a)
the sum of the aggregate Maximum Drawing Amount and all Unpaid
Reimbursement Obligations shall not exceed $5,000,000.00 at any one time
and (b) the sum of (i) the Maximum Drawing Amount on all Letters of Credit,
(ii) all Unpaid Reimbursement Obligations, and (iii) the amount of all
Revolving Credit Loans outstanding shall not exceed the Total Revolver
Commitment. Notwithstanding the foregoing, the Dollar Agent shall have no
obligation to issue any Letter of Credit to support or secure any
Indebtedness of the Borrower or any of its Subsidiaries to the extent that
such Indebtedness was incurred prior to the proposed issuance date of such
Letter of Credit, unless in any such case the Borrower demonstrates to the
satisfaction of the Dollar Agent that (x) such prior incurred Indebtedness
were then fully secured by a prior perfected and unavoidable security
interest in collateral provided by the Borrower or such Subsidiary to the
proposed beneficiary of such Letter of Credit or (y) such prior incurred
Indebtedness were then secured or supported by a letter of credit issued
for the account of the Borrower or such Subsidiary and the reimbursement
obligation with respect to such letter of credit was fully secured by a
prior perfected and
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unavoidable security interest in collateral provided to the issuer of such
letter of credit by the Borrower or such Subsidiary.
4.1.2. Letter of Credit Applications. Each Letter of Credit
Application shall be completed to the satisfaction of the Dollar Agent. In
the event that any provision of any Letter of Credit Application shall be
inconsistent with any provision of this Credit Agreement shall, to the
extent of any such inconsistency, govern.
4.1.3. Terms of Letters of Credit. Each Letter of Credit issued,
extended or renewed hereunder shall, among other things, (a) provide for
the payment of sight drafts for honor thereunder when presented in
accordance with the terms thereof and when accompanied by the documents
described therein, and (b) have an expiry date (i) no later than the date
which is fourteen (14) days (or, if the Letter of Credit is confirmed by a
confirmer or otherwise provides for one or more nominated persons,
forty-five (45) days) prior to the Revolver Maturity Date, (ii) no more
than one (1) year from the issue date thereof with respect to standby
Letters of Credit, and (iii) no more than one hundred twenty (120) days
from the issue date thereof with respect to documentary Letters of Credit.
Each Letter of Credit so issued, extended or renewed shall be subject to
the Uniform Customs.
4.1.4. Reimbursement Obligations of Dollar Banks. Each Dollar Bank
severally agrees that it shall be absolutely liable, without regard to the
occurrence of any Default or Event of Default or any other condition
precedent whatsoever, to the extent of such Dollar Bank's Commitment
Percentage, to reimburse the Dollar Agent on demand for the amount of each
draft paid by the Dollar Agent under each Letter of Credit to the extent
that such amount is not reimbursed by the Borrower pursuant to ss.4.2 (such
agreement for a Dollar Bank being called herein the "Letter of Credit
Participation" of such Dollar Bank).
4.1.5. Participations of Dollar Banks. Each such payment made by a
Dollar Bank shall be treated as the purchase by such Dollar Bank of a
participating interest in the Borrower's Reimbursement Obligation
underss.4.2 in an amount equal to such payment. Each Dollar Bank shall
share in accordance with its participating interest in any interest which
accrues pursuant toss.4.2.
4.2. Reimbursement of the Borrower. In order to induce the Dollar Agent to
issue, extend and renew each Letter of Credit and the Dollar Banks to
participate therein, the Borrower hereby agrees to reimburse or pay to the
Dollar Agent, for the account of the Dollar Agent or (as the case may be) the
Dollar Banks, with respect to each Letter of Credit issued, extended or renewed
by the Dollar Agent hereunder,
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(a) except as otherwise expressly provided in ss.4.2(b) and (c), on
each date that any draft presented under such Letter of Credit is honored
by the Dollar Agent, or the Dollar Agent otherwise makes a payment with
respect thereto, (i) the amount paid by the Dollar Agent under or with
respect to such Letter of Credit, and (ii) the amount of any taxes, fees,
charges or other reasonable costs and expenses whatsoever incurred by the
Dollar Agent or any Dollar Bank in connection with any payment made by the
Dollar Agent or any Dollar Bank under, or with respect to, such Letter of
Credit,
(b) upon the reduction (but not termination) of the Total Revolver
Commitment to an amount less than the Maximum Drawing Amount, an amount
equal to such difference, which amount shall be held by the Dollar Agent
for the benefit of the Dollar Banks and the Dollar Agent as cash collateral
for all Reimbursement Obligations pursuant to the Cash Collateral
Agreement, and
(c) upon the termination of the Total Revolver Commitment, or the
acceleration of the Reimbursement Obligations with respect to all Letters
of Credit in accordance with ss.16, an amount equal to the then Maximum
Drawing Amount on all Letters of Credit, which amount shall be held by
Dollar Agent as cash collateral for all Reimbursement Obligations pursuant
to the Cash Collateral Agreement.
Each such payment shall be made to the Dollar Agent at the Dollar Agent's Head
Office in immediately available funds. Interest on any and all amounts remaining
unpaid by the Borrower under this ss.4.2 at any time from the date such amounts
become due and payable (whether as stated in this ss.4.2, by acceleration or
otherwise) until payment in full (whether before or after judgment) shall be
payable to the Dollar Agent on demand at the rate specified in ss.8.20 for
overdue principal on the Revolving Credit Loans.
4.3. Letter of Credit Payments. If any draft shall be presented or other
demand for payment shall be made under any Letter of Credit, the Dollar Agent
shall notify the Borrower of the date and amount of the draft presented or
demand for payment and of the date and time when it expects to pay such draft or
honor such demand for payment. If the Borrower fails to reimburse the Dollar
Agent as provided in ss.4.2 on or before the date that such draft is paid or
other payment is made by the Dollar Agent, the Dollar Agent may at any time
thereafter notify the Dollar Banks of the amount of any such Unpaid
Reimbursement Obligation. No later than 3:00 p.m. (Boston time) on the Business
Day next following the receipt of such notice, each Dollar Bank shall make
available to the Dollar Agent, at its Head Office, in immediately available
funds, such Dollar Bank's Commitment Percentage of such Unpaid Reimbursement
Obligation, together with an amount equal to the product of (i) the average,
computed for the period referred to in clause (iii) below, of the weighted
average interest rate paid by the Dollar Agent for federal funds acquired by
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the Dollar Agent during each day included in such period, times (ii) the amount
equal to such Dollar Bank's Commitment Percentage of such Unpaid Reimbursement
Obligation, times (iii) a fraction, the numerator of which is the number of days
that elapse from and including the date the Dollar Agent paid the draft
presented for honor or otherwise made payment to the date on which such Dollar
Bank's Commitment Percentage of such Unpaid Reimbursement obligation shall
become immediately available to the Dollar Agent, and the denominator of which
is 360. The responsibility of the Dollar Agent to the Borrower and the Dollar
Banks shall be only to determine that the documents (including each draft)
delivered under each Letter of Credit in connection with such presentment shall
be in conformity in all material respects with such Letter of Credit.
4.4. Obligations Absolute. The Borrower's obligations under this ss.4 shall
be absolute and unconditional under any and all circumstances and irrespective
of the occurrence of any Default or Event of Default or any condition precedent
whatsoever or any setoff, counterclaim or defense to payment which the Borrower
may have or have had against the Dollar Agent, any Dollar Bank or any
beneficiary of a Letter of Credit in the absence of the Dollar Agent's gross
negligence or willful misconduct. The Borrower further agrees with the Dollar
Agent and the Dollar Banks that the Dollar Agent and the Dollar Banks shall not
be responsible for, and the Borrower's Reimbursement Obligations under ss.4.2
shall not be affected by, among other things, the validity or genuineness of
documents or of any endorsements thereon, even if such documents should in fact
prove to be in any or all respects invalid, fraudulent or forged, or any dispute
between or among the Borrower, the beneficiary of any Letter of Credit or any
financing institution or other party to which any Letter of Credit may be
transferred or any claims or defenses whatsoever of the Borrower against the
beneficiary of any Letter of Credit or any such transferee in the absence of the
Dollar Agent's gross negligence or willful misconduct. The Dollar Agent and the
Dollar Banks shall not be liable for any error, omission, interruption or delay
in transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit. The Borrower agrees that
any action taken or omitted by the Dollar Agent or any Dollar Bank under or in
connection with each Letter of Credit and the related drafts and documents, if
done in good faith, shall be binding upon the Borrower and shall not result in
any liability on the part of the Dollar Agent or any Dollar Bank to the Borrower
if done in the absence of gross negligence or willful misconduct and in
accordance with the standards of care specified in the Uniform Commercial Code
of the Commonwealth of Massachusetts.
4.5. Reliance by Issuer. To the extent not inconsistent with ss.4.4, the
Dollar Agent shall be entitled to rely, and shall be fully protected in relying
upon, any Letter of Credit, draft, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons
and upon advice and statements of legal counsel, independent accountants and
other experts selected by the Dollar Agent in
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the absence of the Dollar Agent's gross negligence or willful misconduct. The
Dollar Agent shall be fully justified in failing or refusing to take any action
under this Credit Agreement unless it shall first have received such advice or
concurrence of the Majority Banks as it reasonably deems appropriate or it shall
first be indemnified to its reasonable satisfaction by the Dollar Banks against
any and all liability and expense which may be incurred by it by reason of
taking or continuing to take any such action. The Dollar Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Credit Agreement in accordance with a request of the Majority Banks, and such
request and any action taken or failure to act pursuant thereto shall be binding
upon the Dollar Banks and all future holders of the Revolving Credit Notes or of
a Letter of Credit Participation.
4.6. Letter of Credit Fees. The Borrower shall pay to the Dollar Agent a
fee (in each case, a "Letter of Credit Fee") in respect of Letters of Credit on
the average daily Maximum Drawing Amount at a rate per annum equal to (a) with
respect to each standby Letter of Credit, the Eurodollar Applicable Margin per
annum from time to time applicable to Revolving Credit Loans and (b) with
respect to each documentary Letter of Credit, the Eurodollar Applicable Margin
per annum from time to time applicable to Revolving Credit Loans minus 1%, such
Letter of Credit Fees being payable quarterly in arrears on the first day of
each calendar quarter and on the Revolver Maturity Date. A portion of such
Letter of Credit Fees equal to 1/4% per annum shall be payable to the Dollar
Agent for its own account and the remainder of such Letter of Credit Fees shall
be payable to the Dollar Agent for the ratable accounts of the Dollar Banks in
accordance with their respective Commitment Percentages. The Borrower shall also
pay to the Dollar Agent, at such time or times as such charges are customarily
made by the Dollar Agent, the Dollar Agent's customary issuance fees or
amendment fees, as the case may be, and the Dollar Agent's customary time
negotiation fees per document examination or other administrative fees.
5. THE GOLD FACILITY - CONSIGNMENTS.
5.1. Commitment To Make Consignments; Title To Consigned Precious Metal.
(a) Subject to the terms and conditions set forth in this Credit
Agreement, the Gold Agent agrees, at the option of the Borrower, to
Deliver, or make Purchases and Consignments of, from time to time between
the Closing Date and the Gold Maturity Date upon notice by the Borrower to
the Gold Agent given in accordance with ss.5.3, such amounts of Precious
Metal as are requested by the Borrower up to a maximum aggregate amount of
Consigned Precious Metal outstanding (after giving effect to all amounts
requested) equal to the Total Gold Commitment minus the aggregate amount of
all outstanding Gold Loans; provided that the sum of the outstanding amount
of ▇▇▇▇ ounces or, as the case may be, Fair Market Value of Consigned
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Precious Metal which the Borrower requests that the Gold Agent purchase or
Deliver, when added to the amount of ▇▇▇▇ ounces or, as the case may be,
the Fair Market Value of Consigned Precious Metal outstanding, shall not
exceed the Consignment Ounce Cap, in the case of amounts of ▇▇▇▇ ounces of
Consigned Precious Metal, or the Consignment Dollar Cap, in the case of the
Fair Market Value of Consigned Precious Metal.
(b) The purchase price (the "Purchase Price") paid by the Gold Agent
for Consigned Precious Metal in respect of each Purchase and Consignment
shall be the Fair Market Value of Precious Metal two (2) Business Days
prior to the Gold Drawdown Date of any Purchase and Consignment.
(c) Each request for a Consignment hereunder shall constitute a
representation and warranty by the Borrower that the conditions set forth
inss.14 andss.15, in the case of the initial Consignment to be made on the
Closing Date, andss.15, in the case of all other Consignments, have been
satisfied on the date of such request.
(d) Upon receipt of the documents required by ss.ss.14 and 15 and the
satisfaction of the other conditions set forth therein, to the extent
applicable, the Gold Agent will make available to the Borrower at the Gold
Agent's Head Office (or such other location agreed to by the Gold Agent and
the Borrower) (i) in the case of a Delivery, the amount of Precious Metal
requested to be Delivered, and (ii) in the case of a Purchase and
Consignment, the Purchase Price for such Purchase and Consignment and, at
such time, the Gold Agent shall be deemed to have taken title to such
Borrower's Precious Metal. Thereafter, title to such Precious Metal shall
remain in the Gold Agent and shall not vest in the Borrower until the Gold
Agent has received payment for such Consigned Precious Metal in accordance
with the requirements of ss.5.4 or ss.5.6, as applicable. The Gold Agent
may Deliver Precious Metal to the Borrower at the Gold Agent's Head Office
or, at the option of the Borrower and with the consent of the Gold Agent,
at Borrower Permitted Inventory Locations, in each case at the Borrower's
sole expense (including insurance with respect thereto). At all times
following the Gold Drawdown Date relating to each Consignment, the Borrower
shall bear the entire risk of loss, theft, damage or destruction of the
Consigned Precious Metal from any cause whatsoever, whether or not insured,
and the Borrower agrees to hold the Consigned Precious Metal in trust for
the Gold Agent, and to indemnify and hold harmless the Gold Agent against
any and all liabilities, damages, losses, costs, expenses, suits, claims,
demands or judgments of any nature (including, without limitation,
reasonable attorneys' fees and expenses) arising from or connected with any
loss, theft, damage or destruction of the Consigned Precious Metal.
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(e) The Borrower irrevocably authorizes the Gold Agent, at or about
the time of the Gold Drawdown Date of any Consignment or at the time of any
payment or Redelivery with respect to Consigned Precious Metal, to make an
appropriate notation in the records of the Gold Agent customarily
maintained by the Gold Agent reflecting the making of such Consignment or
the receipt of such payment or Redelivery. The outstanding amount of
Consigned Precious Metal set forth in the records of the Gold Agent
customarily maintained by the Gold Agent shall be prima facie evidence of
the amount thereof owing and unpaid or not Redelivered, but the failure to
record or any error in so recording any such amount in the records of the
Gold Agent shall not limit or otherwise affect the obligations of the
Borrower hereunder to make payments or Redeliveries in accordance with the
terms hereof.
(f) In connection with each Consignment, and as a condition to the
making of any Consignment by the Gold Agent, the Borrower shall pay to the
Gold Agent a per toy ounce premium to be set by the Gold Agent based upon
prevailing market conditions (the "Consignment Premium"). In the case of
any Delivery hereunder, such Consignment Premium shall be payable upon the
making of such Delivery by the Gold Agent. In the case of any Purchase and
Consignment hereunder, such Consignment Premium shall be deducted from the
amount of the Purchase Price paid by the Gold Agent to the Borrower in
respect thereof.
5.2. Consignment Fees; Gold Fronting Fees.
5.2.1. Consigment Fees. Except as otherwise provided inss.8.20, with
respect to Consigned Precious Metal, the Borrower agrees to pay to the Gold
Agent, for the accounts of the Gold Banks in accordance with their
respective Gold Commitment Percentages, Consignment Fee equal to:
(a) for each day with respect to Consignment Base Rate Amounts,
the product of (i) the difference of (A) the Consignment Base Rate
minus (B) one half of one percent (1/2%) times (ii) a fraction, the
numerator of which is one (1) and the denominator of which is three
hundred and sixty (360) times (iii) the Fair Market Value of Consigned
Precious Metal outstanding on such day which are Consignment Base Rate
Amounts.
(b) for each day during each Interest Period with respect to
Consignment Fixed Rate Amounts, the product of (i) the difference of
(A) the Consignment Fixed Rate applicable to such Interest Period
minus (B) one half of one percent (1/2%) times (ii) a fraction, the
numerator of which is one (1) and the denominator of which is three
hundred and sixty (360) times (iii) the Fair Market Value (as of such
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date) of Consigned Precious Metal outstanding for such Interest Period
which are Consignment Fixed Rate Amounts.
5.2.2. Gold Fronting Fees. Except as otherwise provided in ss.8.20,
with respect to Consigned Precious Metal, the Borrower agrees to pay to the
Gold Agent, for its own account, a Gold Fronting Fee equal to:
(a) for each day with respect to Consignment Base Rate Amounts,
the product of (i) one half of one percent (1/2%) times (ii) a
fraction, the numerator of which is one (1) and the denominator of
which is three hundred and sixty (360) times (iii) the Fair Market
Value of Consigned Precious Metal outstanding on such day which are
Consignment Base Rate Amounts.
(b) for each day during each Interest Period with respect to
Consignment Fixed Rate Amounts, the product of (i) one half of one
percent (1/2%) times (ii) a fraction, the numerator of which is one
(1) and the denominator of which is three hundred and sixty (360)
times (iii) the Fair Market Value (as of such date) of Consigned
Precious Metal outstanding for such Interest Period which are
Consignment Fixed Rate Amounts.
5.2.3. Payment of Fees. The Consignment Fee and the Gold Fronting Fee
with respect to Consignment Base Rate Amounts shall be payable monthly in
arrears on the first Business Day of each calendar month, commencing on the
first such date following the Closing Date, with a final payment on the
Gold Maturity Date or any earlier date on which the Total Gold Commitment
shall terminate. The Consignment Fee and Gold Fronting Fee with respect to
Consignment Fixed Rate Amounts shall be payable as to any Consignment Fixed
Rate Amounts in respect of which the applicable Interest Period is (y) 3
months or less, on the last day of such Interest Period, and (z) more than
3 months, on the date that is 3 months from the first day of such Interest
Period and, in addition, on the last day of such Interest Period.
5.3. Requests For Consignments. The Borrower shall give to the Gold Agent
written notice in the form of Exhibit G hereto (or telephonic notice confirmed
in a writing in the form of Exhibit G hereto) of each Consignment requested
hereunder (a "Consignment Request") no later than 10:00 a.m. one (1) Business
Day prior to the proposed Gold Drawdown Date of any Consignment Base Rate Amount
or three (3) Business Days prior to the proposed Gold Drawdown Date of any
Consignment Fixed Rate Amount; provided, that solely with respect to Deliveries
to be made at Specified Refiner locations by the making of a book entry transfer
of Precious Metal to the Borrower's account with such Specified Refiner, the
Borrower shall be permitted to provide such Consignment Request to the Gold
Agent no later than 2:00 p.m. on the proposed Gold Drawdown Date of any such
Delivery. Each
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such Consignment Request shall specify (a) the nature of the Consignment as a
Delivery or a Purchase and Consignment, (b) the number of ▇▇▇▇ ounces of (i)
Precious Metal to be Delivered or, as the case may be (ii) Borrower's Precious
Metal to be purchased and consigned, (c) the proposed Gold Drawdown Date of such
Consignment, (d) whether such Consignment is to be a Consignment Fixed Rate
Amount or a Consignment Base Rate Amount, (e) if such Consignment is to be a
Consignment Fixed Rate Amount, the Interest Period applicable to such
Consignment, and (f) if such Consignment is to be a Delivery, whether such
Delivery is to be made to the Borrower at the Gold Agent's Head Office or at a
Borrower Permitted Inventory Location (with each such Consignment Request to
specify such Borrower Permitted Inventory Location). Each Consignment Request
shall be irrevocable and binding on the Borrower and shall obligate the Borrower
to either (i) in the case of any Purchase and Consignment, sell and take on
consignment such Borrower's Precious Metal on the proposed Gold Drawdown Date or
(ii) in the case of any Delivery, take Delivery of such Precious Metal on the
proposed Gold Drawdown Date. Each Consignment Request for Consignment Base Rate
Amounts shall be in a minimum aggregate amount of 100 ▇▇▇▇ ounces or an integral
multiple of one hundred (100) in excess thereof, and each Consignment Request
for Consignment Fixed Rate Amounts shall be in a minimum aggregate amount of
five thousand (5,000) ▇▇▇▇ ounces or an integral multiple of one thousand (1000)
in excess thereof.
5.4. Payment on Account of Repurchase or Redelivery of Consigned Precious
Metal.
(a) Notwithstanding the provisions of ss.6.1(b), upon the occurrence
and during the continuance of an Event of Default (other than an Event of
Default described in ss.16.1(g) or (h)) and upon notice from the Gold Agent
to the Borrower, unless the Borrower shall, on the date of dispatch of such
notice, immediately Redeliver to the Gold Agent an amount of Borrower's
Precious Metal (measured in ▇▇▇▇ ounces) equal to all outstanding Consigned
Precious Metal, the Borrower shall be deemed to have purchased from the
Gold Agent, on the date of dispatch of such notice, all outstanding
Consigned Precious Metal at the then applicable Spot Value thereof, and the
Gold Agent, on behalf of the Gold Banks (based upon each Gold Bank's Gold
Commitment Percentage of such outstanding Consigned Precious Metal
immediately prior to such conversion), shall simultaneously be deemed to
have made Gold Loans to the Borrower in amounts equal to the Spot Value of
Consigned Precious Metal. Such Gold Loans deemed to have been made by the
Gold Agent on behalf of the Gold Banks shall be treated as Gold Loans made
pursuant to ss.8.3(b) hereof for all purposes under this Credit Agreement
(including, without limitation, the provisions of ss.8.6 hereof relating to
Settlements).
(b) Upon the occurrence and during the continuance of an Event of
Default described in Section 16.1(g) or (h), each Gold Bank severally
agrees to purchase from the Gold Agent a participating interest in all
outstanding
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Consigned Precious Metal (if any) equal to such Gold Bank's Gold Commitment
Percentage of the Fair Market Value of Consigned Precious Metal as of the
date of such Event of Default (a "Consignment Participation"). Not later
than 11:00 a.m. (Boston time) on the Business Day following such Event of
Default described in Section 16.1(g) or (h), each of the Gold Banks will
make available to the Gold Agent, at the Gold Agent's Head Office, in
immediately available funds, an amount in Dollars equal to such Gold Bank's
Consignment Participation. If any Bank makes available to the Gold Agent
such amount on a date after such date, such Gold Bank shall pay to the Gold
Agent on demand an amount equal to the product of (i) the average computed
for the period referred to in clause (iii) below, of the weighted average
interest rate paid by the Gold Agent for federal funds acquired by the Gold
Agent during each day included in such period, times (ii) the amount owed
by such Gold Bank to the Gold Agent, times (iii) a fraction, the numerator
of which is the number of days that elapse from and including such date the
amounts were owed to the Gold Agent to the date on which the amounts due
pursuant to the Consignment Participation shall become immediately
available to the Gold Agent, and the denominator of which is 360. A
statement of the Gold Agent submitted to such Gold Bank with respect to any
amounts owing under this paragraph shall be prima facie evidence of the
amount due and owing to the Gold Agent by such Gold Bank. The failure or
refusal of any Gold Bank to make available to the Gold Agent at the
aforesaid time and place its Consignment Participation shall not relieve
any other Gold Bank from its several obligations hereunder to make
available to the Gold Agent its Consignment Participation.
(c) If, on any date, the Fair Market Value of Consigned Precious Metal
shall exceed the Consignment Dollar Cap, the Gold Agent shall calculate the
amount of Consigned Precious Metal (measured in ▇▇▇▇ ounces and calculated
by reference to the Fair Market Value thereof on the date of determination)
of such excess, and the Borrower shall either (i) pay to the Gold Agent an
amount in Dollars equal to the Fair Market Value (on the Business Day
following the date of determination) of such excess, and the Gold Agent
shall be deemed to have sold to the Borrower an amount of Consigned
Precious Metal equal to such excess, or (ii) Redeliver to the Gold Agent
Consigned Precious Metal in quantities (measured in ▇▇▇▇ ounces) equal to
such excess. If, on any date of determination, the number of ▇▇▇▇ ounces of
Consigned Precious Metal shall exceed the Consignment Ounce Cap, the
Borrower shall either (i) repurchase from the Gold Agent such excess at the
Fair Market Value thereof on the Business Day following the date of
determination, or (ii) Redeliver to the Gold Agent Consigned Precious Metal
in quantities (measured in ▇▇▇▇ ounces) equal to such excess. If, on any
date of determination, the Fair Market Value of Consigned Precious Metal
exceeds the Consignment Advance Rate Percentage multiplied by the Fair
Market Value of the sum of (A) Consigned Precious Metal plus (B) Borrower's
Precious Metal, the Borrower
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shall pay to the Gold Agent an amount in Dollars equal to the Fair Market
Value (on the Business Day following the date of determination) of such
excess, and the Gold Agent shall be deemed to have sold to the Borrower an
amount of Consigned Precious Metal equal to such excess.
(d) In connection with any sale of Consigned Precious Metal by the
Borrower (other than as part of a Purchase and Consignment pursuant to the
terms hereof), the Borrower shall immediately either (i) pay to the Gold
Agent an amount in Dollars equal to the Fair Market Value (on the Business
Day following the date of such sale) of such Consigned Precious Metal, (ii)
Redeliver to the Gold Agent an amount of Borrower's Precious Metal
(measured in ▇▇▇▇ ounces) equal to such sold Consigned Precious Metal, or
(iii) Replace such Consigned Precious Metal, so long as no Event of Default
has occurred and is continuing, with additional Precious Metal (which
replacement, if the Borrower shall not have purchased such sold Consigned
Precious Metal pursuant to clause (i) hereof or Redelivered Borrower's
Precious Metal pursuant to clause (ii) hereof, shall be automatic upon such
sale) which shall constitute Consigned Precious Metal in quantities equal
to any Consigned Precious Metal sold. At all times following the occurrence
and during the continuance of an Event of Default, upon any sale by the
Borrower of Precious Metal which prior to the Borrower's purchase thereof
pursuant to ss.5.4(a) constituted Consigned Precious Metal, the Borrower
shall hold the proceeds of such sale in trust for the Gold Agent, on behalf
of the Gold Banks, and shall immediately deliver to the Gold Agent the
proceeds of such sale to be applied to the Obligations in accordance with
ss.8.9 hereof. Prior to the occurrence of an Event of Default and absent
other instruction by the Borrower, the Gold Agent shall apply Dollar
amounts received to reduction of Consigned Precious Metal, for application
first to Consignment Base Rate Amounts and then to Consignment Fixed Rate
Amounts.
(e) At any time before the Gold Maturity Date, the Borrower may, at
its election, purchase any or all Consigned Precious Metal from the Gold
Agent in whole or in part, without penalty, provided that any full or
partial repurchase of the outstanding amount of Consignment Fixed Rate
Amounts of Consigned Precious Metal pursuant to this ss.5.4(e) may be made
only on the last day of the Interest Period relating thereto. The Borrower
shall give the Gold Agent prior written notice, no later than one-half hour
prior to the Second London Fixing for Gold on any Business Day, of any
proposed repurchase of Consigned Precious Metal specifying the amount of
Consigned Precious Metal to be so repurchased and the proposed date of
repurchase, which notice shall be irrevocable and binding on the Borrower
and shall obligate the Borrower to repurchase such Consigned Precious Metal
on the proposed date of repurchase. Each such repurchase of Consignment
Base Rate Amounts shall be in a minimum amount of one hundred (100) ▇▇▇▇
ounces or an integral multiple of one hundred (100) in excess thereof, with
accrued
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Consignment Fees and Gold Fronting Fees on the Consignment Base Rate
Amounts so purchased being due on the earliest to occur of a Default or
Event of Default and the first day of the calendar month following the
calendar month in which such purchase is made, and each such purchase of
Consignment Fixed Rate Amounts shall be in a minimum amount of five
thousand (5,000) ▇▇▇▇ ounces or an integral multiple of one thousand (1000)
▇▇▇▇ ounces in excess thereof and shall be accompanied by a payment of all
accrued but unpaid Consignment Fees and Gold Fronting Fees on the amount so
purchased. Each such repurchase shall be at a price equal to, at the
Borrower's option, (i) the Fair Market Value of Precious Metal two Business
Days prior to the date of the Borrower's purchase of Consigned Precious
Metal, or (ii) the Spot Value on the date of the Gold Agent's receipt of
the written notice described above, and, prior to the occurrence of an
Event of Default, shall be applied to effect a reduction of Consigned
Precious Metal, for application first to Consignment Base Rate Amounts and
then to Consignment Fixed Rate Amounts; provided, however, that, in lieu of
paying in Dollars the Fair Market Value, or Spot Value, as the case may be,
of such Consigned Precious Metal, the Borrower may, at its option,
Redeliver to the Gold Agent Borrower's Precious Metal in an amount
(measured in ▇▇▇▇ ounces) equal to the amount of Consigned Precious Metal
being purchased.
(f) All purchases of Consignment Fixed Rate Amounts prior to the end
of an Interest Period shall obligate the Borrower to pay any breakage costs
associated with such Consignment Fixed Rate Amounts in accordance
withss.8.19 hereof.
5.5. Conversion Options.
(a) The Borrower may elect from time to time to have the Consignment
Fee and the Gold Fronting Fee applicable to portions of Consigned Precious
Metal outstanding calculated based upon either the Consignment Base Rate or
Consignment Fixed Rate, provided that (i) with respect to any such
conversion of Consigned Precious Metal, the Borrower shall give the Gold
Agent prior written notice of such election no later than one-half hour
prior to the Second London Fixing for Gold on any Business Day; and (ii)
with respect to any such conversion of a Consignment Fixed Rate Amount into
a Consignment Base Rate Amount or another Consignment Fixed Rate Amount,
such conversion shall only be made on the last day of the Interest Period
with respect thereto. All or any part of outstanding Consigned Precious
Metal may be converted into a Consignment Fixed Rate Amount or Consignment
Base Rate Amount as provided herein, provided that any partial conversion
of Consignment Base Rate Amounts shall be for Precious Metal in a minimum
amount at least equal to one hundred (100) ▇▇▇▇ ounces or an integral
multiple of one hundred (100) in excess thereof and any partial conversion
of Consignment Fixed Rate Amounts shall be for Precious Metal in
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an amount equal to five thousand (5,000) ▇▇▇▇ ounces or an integral
multiple of one thousand (1000) in excess thereof. Each conversion request
relating to the conversion of Consigned Precious Metal to a Consignment
Fixed Rate Amount shall be irrevocable by the Borrower.
(b) Prior to the occurrence and continuance of an Event of Default,
Consigned Precious Metal may be continued as Consignment Fixed Rate Amounts
upon the expiration of an Interest Period with respect thereto by
compliance by the Borrower with the notice provisions contained in
ss.5.5(a); provided that no Consignment Fixed Rate Amounts may be continued
as such when any Event of Default has occurred and is continuing, but shall
be converted to a Consignment Base Rate Amounts on the last day of the
first Interest Period relating thereto ending during the continuance of any
Event of Default if the Gold Agent in its discretion elects not to permit
such continuation. In the event that the Borrower fails to provide any such
notice with respect to the continuation of any Consignment Fixed Rate
Amounts as such, then such Consignment Fixed Rate Amounts shall be
automatically converted to a Consignment Base Rate Amounts on the last day
of the first Interest Period relating thereto.
(c) Any conversion to or from Consignment Fixed Rate Amounts shall be
in such amounts and be made pursuant to such elections so that, after
giving effect thereto, the aggregate principal amount of all Consignment
Fixed Rate Amounts having the same Interest Period shall not be less than
five thousand (5,000) ▇▇▇▇ ounces or a whole multiple of one thousand
(1000) ▇▇▇▇ ounces in excess thereof.
5.6. Repurchase at Maturity. The Borrower promises to (a) purchase from the
Gold Agent all Consigned Precious Metal on the Gold Maturity Date, and there
shall become absolutely due and payable on the Gold Maturity Date an amount in
Dollars equal to the Spot Value as of the Gold Maturity Date of the outstanding
amount of Consigned Precious Metal (measured in ▇▇▇▇ ounces), together with any
and all accrued and unpaid Consignment Fees, Gold Fronting Fees and other
amounts accrued thereon, or (b) Redeliver to the Gold Agent Precious Metal in an
amount (measured in ▇▇▇▇ ounces) equal to all Consigned Precious Metal
outstanding, together with payment of all other amounts owed under the Gold
Facility.
5.7. True Consignment. This Credit Agreement is intended to be a true
consignment agreement, where, following a Consignment, the Gold Agent shall have
title to the Consigned Precious Metal until sold by the Borrower. If,
notwithstanding the foregoing sentence, it is determined for any reason that the
consignment created hereby is one intended as security or that the consignment
is a sale or return or other sale, the Consigned Precious Metal shall constitute
Collateral under the terms of the Security Agreement, and the terms of the
Security Agreement shall govern the Banks' security interest therein.
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6. THE GOLD FACILITY - THE GOLD LOANS.
6.1. Commitment to Lend.
(a) Subject to the terms and conditions set forth in this Credit
Agreement, each of the Gold Banks severally agrees to lend to the Borrower
and the Borrower may borrow, repay, and reborrow from time to time between
the Closing Date and the Gold Maturity Date upon notice given in accordance
with ss.6.4, such sums as are requested by the Borrower up to a maximum
aggregate amount outstanding (after giving effect to all amounts requested)
at any one time equal to the Dollar amount of such Gold Bank's Gold
Commitment minus such Gold Bank's Gold Commitment Percentage of the Fair
Market Value of Consigned Precious Metal outstanding; provided that the
aggregate amount of Gold Loans which the Borrower requests, when added to
the principal amount of Gold Loans outstanding, shall not exceed the Dollar
amount of the Total Gold Commitment minus the Fair Market Value of
Consigned Precious Metal. Gold Loans shall be made pro rata in accordance
with each Gold Bank's Gold Commitment Percentage. Each request for a Gold
Loan hereunder shall constitute a representation and warranty by the
Borrower that the conditions set forth in ss.14 and ss.15, in the case of
the initial Gold Loan, if any, to be made on the Closing Date, and ss.15,
in the case of all other Gold Loans, have been satisfied on the date of
such request.
(b) Notwithstanding anything herein contained to the contrary, the
Borrower shall not be entitled to borrow any Gold Loans on any date on
which the sum of the outstanding amount of Revolving Credit Loans plus the
Maximum Drawing Amount and all Unpaid Reimbursement Obligations is less
than the Total Revolver Commitment.
6.2. The Gold Notes. The Gold Loans shall be evidenced by separate
promissory notes of the Borrower in substantially the form of Exhibit H hereto
(each a "Gold Note"), dated as of the Closing Date and completed with
appropriate insertions. One Gold Note shall be payable to the order of each Gold
Bank in a principal amount equal to the Dollar amount of such Gold Bank's Gold
Commitment or, if less, the outstanding amount of all Gold Loans made by such
Gold Bank, plus interest accrued thereon, as set forth below. The Borrower
irrevocably authorizes each Gold Bank to make or cause to be made, at or about
the time of the Drawdown Date of any Gold Loans made by such Gold Bank or at the
time of receipt of any payment of principal on such Gold Bank's Gold Note, an
appropriate notation on such Gold Bank's Gold Note Record reflecting the making
of such Gold Loan or (as the case may be) the receipt of such payment. The
outstanding amount of the Gold Loans set forth on such Gold Bank's Gold Note
Record shall be prima facie evidence of the principal amount thereof owing and
unpaid to such Gold Bank, but the failure to record, or any error in so
recording, any such amount on such Gold Bank's Gold Note Record shall not limit
or otherwise affect the obligations of the Borrower hereunder
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or under any Gold Note to make payments of principal of or interest on any Gold
Note when due.
6.3. Interest on Gold Loans. Except as otherwise provided in ss.8.20, the
Gold Loans shall bear interest in accordance with the provisions of ss.8.1
hereof.
6.4. Requests for Gold Loans; Conversion Options. The Borrower shall
request Gold Loans by providing to the Gold Agent Loan Requests for Gold Loans
in accordance with the requirements of ss.8.3(a) hereof. The Gold Agent may, in
its sole discretion and without conferring with the Gold Banks, make Gold Loans
to the Borrower in accordance with the provisions of ss.8.3(b) hereof. The
Borrower shall be permitted to convert Gold Loans to Gold Loans of different
Types in accordance with the provisions of ss.8.4 hereof, and such provisions of
ss.8.4 shall apply mutatis mutandis with respect to the Gold Loans so that the
Borrower may have the same interest rate options with respect to the Gold Loans
as they would be entitled to with respect to the Revolving Credit Loans and the
Term Loan.
6.5. Funds for Gold Loans. The provisions of ss.8.5 and ss.8.6 with respect
to the funding procedures and Settlement procedures for the Loans shall apply to
the Gold Loans.
6.6. Repayment of Gold Loans at Maturity. The Borrower promises to pay on
the Gold Maturity Date, and there shall become absolutely due and payable on the
Gold Maturity Date, all of the Gold Loans outstanding on such date, together
with any and all accrued and unpaid interest thereon.
6.7. Optional Repayments. The Borrower shall have the right, at its
election, to repay Gold Loans in accordance with the provisions of ss.8.7
hereof.
7. CERTAIN COMMON PROVISIONS RELATING
TO THE GOLD FACILITY.
7.1. Commitment Fee. The Borrower agrees to pay to the Gold Agent, for the
accounts of the Gold Banks in accordance with their respective Gold Commitment
Percentages, a commitment fee calculated at the rate of one-half of one percent
(1/2%) per annum on the average daily amount during each calendar quarter or
portion thereof from the Closing Date to the Gold Maturity Date by which the
Dollar amount of the Total Gold Commitment exceeds the sum of the Fair Market
Value of Consigned Precious Metal plus the aggregate outstanding amount of Gold
Loans during such calendar quarter. The commitment fee shall be payable
quarterly in arrears on the first day of each calendar quarter for the
immediately preceding calendar quarter commencing on the first such date
following the date hereof, with a final payment on the Gold Maturity Date or any
earlier date on which the Gold Commitments and the Gold Fronting Commitment
shall terminate.
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7.2. Reduction of Total Gold Commitment and Gold Fronting Commitment. The
Borrower shall have the right at any time and from time to time upon five (5)
Business Days' prior written notice to the Gold Agent to reduce by $500,000.00
or an integral multiple thereof or terminate entirely the Total Gold Commitment
and the Gold Fronting Commitment, whereupon the Gold Commitments of the Gold
Banks shall be reduced pro rata in accordance with their respective Gold
Commitment Percentages of the amount specified in such notice or, as the case
may be, terminated and the Gold Fronting Commitment shall be reduced by the
amount specified in such notice or, as the case may be, terminated. Promptly
after receiving any notice of the Borrower delivered pursuant to this ss.7.2,
the Gold Agent will notify the Gold Banks of the substance thereof. Upon the
effective date of any such reduction or termination, the Borrower shall, at its
option, (a) purchase from the Gold Agent all Consigned Precious Metal
outstanding in excess of such reduced Total Gold Commitment by paying to the
Gold Agent an amount equal to the Fair Market Value as of such date of the
amount of such excess Consigned Precious Metal, together with the full amount of
any Consignment Fee, Gold Fronting Fee and commitment fee then accrued on the
amount of the reduction, or (b) Redeliver to the Gold Agent Borrower's Precious
Metal in an amount (measured in ▇▇▇▇ ounces) equal to all Consigned Precious
Metal outstanding in excess of such reduced Total Gold Commitment, together with
the full amount of any Consignment Fee, Gold Fronting Fee and commitment fee
then accrued on the amount of the reduction. No reduction or termination of the
Gold Commitments and the Gold Fronting Commitment may be reinstated.
8. CERTAIN GENERAL PROVISIONS.
8.1. Interest on Loans. Except as otherwise provided in ss.8.20,
(a) Each Base Rate Loan shall bear interest for the period commencing
with the Drawdown Date thereof and ending on the last day of the Interest
Period with respect thereto at a rate per annum equal to the sum of (i) the
Base Rate plus (ii) the Base Rate Applicable Margin.
(b) Each Eurodollar Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day of the
Interest Period with respect thereto at a rate per annum equal to the sum
of (i) the Eurodollar Rate plus (ii) the Eurodollar Applicable Margin.
(c) The Borrower promises to pay interest on each Loan in arrears on
each Interest Payment Date with respect thereto.
8.2. Borrowing Base and Consignment Limitations. (a) The Banks shall have
no obligation to make any Extension of Credit if, at any time the Outstanding
Facility Amounts, after giving effect to such Extension of Credit, would exceed
the Borrowing Base. The Borrowing Base shall be determined
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by the Agents by reference to the most recent Borrowing Base Report delivered on
a timely basis to the Agents in accordance with ss.11.4(f).
(b) The Gold Agent shall not have any obligation to make any Consignments
if, at any time, the Fair Market Value of Consigned Precious Metal (after giving
effect to all amounts requested) exceeds the Consignment Advance Rate Percentage
multiplied by the Fair Market Value of the sum of (i) Consigned Precious Metal
plus (ii) Borrower's Precious Metal. The amounts of Consigned Precious Metal and
of Borrower's Precious Metal shall be determined by the Agents by reference to
the most recent Consigned Precious Metal Report delivered on a timely basis to
the Agents in accordance with ss.11.4(f).
8.3. Requests for Loans. (a) The Borrower shall give to the Applicable
Agent written notice in the form of Exhibit I hereto (or telephonic notice
confirmed in a writing in the form of Exhibit I hereto) of each Loan requested
hereunder (a "Loan Request") no less than (i) one (1) Business Day prior to the
proposed Drawdown Date of any Base Rate Loan and (ii) two (2) Eurodollar
Business Days prior to the proposed Drawdown Date of any Eurodollar Rate Loan.
Each such notice shall specify (A) the principal amount of the Loan requested,
(B) the proposed Drawdown Date of such Loan, (C) the Interest Period for such
Loan, (D) the nature of such Loan as a Dollar Facility Loan or a Gold Loan, and
(E) the Type of such Loan. Promptly upon receipt of any such notice, the
Applicable Agent shall notify each of the Applicable Banks thereof. Each Loan
Request shall be irrevocable and binding on the Borrower and shall obligate the
Borrower to accept the Loan requested from the Applicable Banks on the proposed
Drawdown Date. Each Loan Request for a Base Rate Loan shall be in a minimum
aggregate amount of $500,000.00 or an integral multiple thereof, and each Loan
Request for a Eurodollar Rate Loan shall be in a minimum aggregate amount of
$500,000.00 or an integral multiple of $500,000.00 in excess thereof.
(b) Notwithstanding the notice and minimum amount requirements set forth in
ss.8.3(a) but otherwise in accordance with the terms and conditions of this
Credit Agreement, the Applicable Agent may, in its sole discretion and without
conferring with the Applicable Banks, make Revolving Credit Loans or, as the
case may be, Gold Loans, to the Borrower (i) by entry of credits to the
Borrower's operating account(s) (No(s). 523-02282) (the "Operating Accounts")
with the Dollar Agent to cover checks or other charges which the Borrower has
drawn or made against such account, (ii) in payment of any amounts due and
payable by the Borrower hereunder (the Borrower hereby consenting to the
automatic making of such Loans by the Applicable Agent in payment of any such
amounts, and the Applicable Agent hereby agreeing to give notice to the Borrower
promptly after the making of any such Loans in payment of any such amounts), or
(iii) in an amount as otherwise requested by
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the Borrower. The Borrower hereby requests and authorizes the Applicable Agent
to make from time to time such Revolving Credit Loans or, as the case may be,
Gold Loans by means of appropriate entries of such credits sufficient to cover
checks and other charges then presented. The Borrower acknowledges and agrees
that the making of such Loans shall, in each case, be subject in all respects to
the provisions of this Credit Agreement as if they were Loans covered by a Loan
Request including, without limitation, the limitations set forth in ss.ss.2.1
and 6.1 and the requirements that the applicable provisions of ss.ss.14 (in the
case of Loans made on the Closing Date) and ss.15 be satisfied. All actions
taken by either Agent pursuant to the provisions of this ss.8.3(b) shall be
conclusive and binding on the Borrower absent such Agent's gross negligence or
willful misconduct. Loans made pursuant to this ss.8.3(b) shall be Base Rate
Loans until converted in accordance with the provisions of the Credit Agreement
and, prior to a Settlement, such interest shall be for the account of the
Applicable Agent.
8.4. Conversion Options.
8.4.1. Conversion to Different Type of Loan. The Borrower may elect
from time to time to convert any outstanding Loan to a Loan of another
Type, provided that (a) with respect to any such conversion of a Loan to a
Base Rate Loan, the Borrower shall give the Applicable Agent at least one
(1) Business Day's prior written notice of such election; (b) with respect
to any such conversion of a Base Rate Loan to a Eurodollar Rate Loan, the
Borrower shall give the Applicable Agent at least two (2) Eurodollar
Business Days' prior written notice of such election; (c) with respect to
any such conversion of a Eurodollar Rate Loan into a Base Rate Loan, such
conversion shall only be made on the last day of the Interest Period with
respect thereto, and (d) no Loan may be converted into a Eurodollar Rate
Loan when any Event of Default has occurred and is continuing. On the date
on which such conversion is being made each Applicable Bank shall take such
action, if any, as is necessary to transfer its Commitment Percentage or
Gold Commitment Percentage, as the case may be, of such Loans to its
Domestic Lending Office or its Eurodollar Lending Office, as the case may
be. All or any part of outstanding Loans of any Type may be converted into
a Loan of another Type as provided herein, provided that (y) any partial
conversion of any Loan to a Base Rate Loan shall be in an aggregate
principal amount of $500,000.00 or an integral multiple thereof and (z) any
partial conversion of any Loan to a Eurodollar Rate Loan shall be in an
aggregate principal amount of $500,000.00 or a whole multiple of
$500,000.00 in excess thereof. Each Conversion Request relating to the
conversion of a Loan to a Eurodollar Rate Loan shall be irrevocable by the
Borrower.
8.4.2. Continuation of Type of Loan. Any Loan of any Type may be
continued as a Loan of the same Type upon the expiration of an Interest
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Period with respect thereto by compliance by the Borrower with the notice
provisions contained in ss.8.4.1; provided that no Eurodollar Rate Loan may
be continued as such when any Event of Default has occurred and is
continuing, but shall be converted to a Base Rate Loan on the last day of
the first Interest Period relating thereto ending during the continuance of
any Event of Default if the Applicable Agent in its discretion elects not
to permit such continuation. In the event that the Borrower fails to
provide any such notice with respect to the continuation of any Eurodollar
Rate Loan as such, then such Eurodollar Rate Loan shall be automatically
converted to a Base Rate Loan on the last day of the first Interest Period
relating thereto. The Applicable Agent shall notify the Applicable Banks
promptly when any such automatic conversion contemplated by this ss.8.4 is
scheduled to occur.
8.4.3. Eurodollar Rate Loans. Any conversion to or from Eurodollar
Rate Loans shall be in such amounts and be made pursuant to such elections
so that, after giving effect thereto, the aggregate principal amount of all
Eurodollar Rate Loans having the same Interest Period shall not be less
than $500,000.00 or a whole multiple of $500,000.00 in excess thereof. At
no time shall there be more than seven (7) Eurodollar Rate Loans
outstanding. Notwithstanding anything contained herein to the contrary,
until the earlier of (a) January 16, 1997 and (b) the date on which the
FNBB and RIHT's share of the Total Commitment is not more than $20,000,000,
Consignment Fixed Rate Amounts and Eurodollar Rate Loans shall not have
Interest Periods longer than seven (7) days and all such Interest Periods
shall be concurrent (and FNBB and RIHT hereby agree to provide the Borrower
with Interest Periods with a duration of seven (7) days, with interest to
be paid on the last day of each calendar month following the end of each
such Interest Period).
8.5. Funds for Loans.
8.5.1. Funding Procedures. Not later than 11:00 a.m. (Boston time) on
the proposed Drawdown Date of any Loans, each of the Applicable Banks will
make available to the Applicable Agent, at its Head Office, in immediately
available funds, the amount of such Applicable Bank's Commitment Percentage
or Gold Commitment Percentage, as the case may be, of the amount of the
requested Loans. Upon receipt from each Applicable Bank of such amount, and
upon receipt of the documents required by ss.ss.14 and 15 and the
satisfaction of the other conditions set forth therein, to the extent
applicable, the Applicable Agent will make available to the Borrower the
aggregate amount of such Loans made available to the Applicable Agent by
the Applicable Banks. The failure or refusal of any Applicable Bank to make
available to the Applicable Agent at the aforesaid time and place on any
Drawdown Date the amount of its Commitment Percentage or Gold Commitment
Percentage, as the case may be, of the requested Loans shall not relieve
any other Applicable Bank from its several obligation hereunder to
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make available to the Applicable Agent the amount of such other Applicable
Bank's Commitment Percentage or Gold Commitment Percentage, as the case may
be, of any requested Loans.
8.5.2. Advances by Applicable Agent. The Applicable Agent may, unless
notified to the contrary by any Applicable Bank prior to a Drawdown Date,
assume that such Applicable Bank has made available to the Applicable Agent
on such Drawdown Date the amount of such Applicable Bank's Commitment
Percentage or Gold Commitment Percentage, as the case may be, of the Loans
to be made on such Drawdown Date, and the Applicable Agent may (but it
shall not be required to), in reliance upon such assumption, make available
to the Borrower a corresponding amount. If any Applicable Bank makes
available to the Applicable Agent such amount on a date after such Drawdown
Date, such Applicable Bank shall pay to the Applicable Agent on demand an
amount equal to the product of (i) the average computed for the period
referred to in clause (iii) below, of the weighted average interest rate
paid by the Applicable Agent for federal funds acquired by the Applicable
Agent during each day included in such period, times (ii) the amount of
such Applicable Bank's Commitment Percentage or Gold Commitment Percentage,
as the case may be, of such Loans, times (iii) a fraction, the numerator of
which is the number of days that elapse from and including such Drawdown
Date to the date on which the amount of such Applicable Bank's Commitment
Percentage or Gold Commitment Percentage, as the case may be, of such Loans
shall become immediately available to the Applicable Agent, and the
denominator of which is 360. A statement of the Applicable Agent submitted
to such Applicable Bank with respect to any amounts owing under this
paragraph shall be prima facie evidence of the amount due and owing to the
Applicable Agent by such Applicable Bank. If the amount of such Applicable
Bank's Commitment Percentage or Gold Commitment Percentage, as the case may
be, of such Loans is not made available to the Applicable Agent by such
Applicable Bank within three (3) Business Days following such Drawdown
Date, the Applicable Agent shall be entitled to recover such amount from
the Borrower promptly after demand, with interest thereon at the rate per
annum applicable to the Loans made on such Drawdown Date.
8.6. Settlements; Failure to Make Funds Available. (a) On each Settlement
Date, the Applicable Agent shall, not later than 11:00 a.m. (Boston time), give
telephonic or facsimile notice (i) to the Applicable Banks and the Borrower of
the respective outstanding amount of Loans made by the Applicable Agent on
behalf of the Applicable Banks from the immediately preceding Settlement Date
through the close of business on the prior day and the amount of any Eurodollar
Rate Loans to be made (following the giving of notice pursuant to ss.8.3(a)(ii))
on such date pursuant to a Loan Request and (ii) to the Applicable Banks of the
amount (a "Settlement Amount") that each Applicable Bank (the "Settling Bank")
shall pay to effect a Settlement of any
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Loan. A statement of the Applicable Agent submitted to the Applicable Banks and
the Borrower or to the Applicable Banks with respect to any amounts owing under
this ss.8.6 shall be prima facie evidence of the amount due and owing. The
Settling Bank shall, not later than 3:00 p.m. (Boston time) on such Settlement
Date, effect a wire transfer of immediately available funds to the Applicable
Agent in the amount of the Settlement Amount. All funds advanced by any
Applicable Bank as a Settling Bank pursuant to this ss.8.6 shall for all
purposes be treated as a Loan made by such Settling Bank to the Borrower and all
funds received by any Bank pursuant to this ss.8.6 shall for all purposes be
treated as repayment of amounts owed with respect to Loans made by such Bank. In
the event that any bankruptcy, reorganization, liquidation, receivership or
similar cases or proceedings in which the Borrower is a debtor prevent a
Settling Bank from making any Loan to effect a Settlement as contemplated
hereby, such Settling Bank will make such disposition and arrangements with the
other Applicable Banks with respect to such Loans, either by way of purchase of
participations, distribution, pro tanto assignment of claims, subrogation or
otherwise as shall result in each Applicable Bank's share of the outstanding
Revolving Credit Loans or, as the case may be, Gold Loans being equal, as nearly
as may be, to such Dollar Bank's Commitment Percentage of the outstanding amount
of the Revolving Credit Loans, or as the case may be, such Gold Bank's
Commitment Percentage of the outstanding amount of Gold Loans.
(b) The Applicable Agent may, unless notified to the contrary by any
Applicable Bank prior to a Settlement Date, assume that such Applicable Bank has
made or will make available to the Applicable Agent on such Settlement Date the
amount of such Applicable Bank's Settlement Amount, and the Applicable Agent may
(but it shall not be required to), in reliance upon such assumption, make
available to the Borrower a corresponding amount. If any Applicable Bank makes
available to the Applicable Agent such amount on a date after such Settlement
Date, such Applicable Bank shall pay to the Applicable Agent on demand an amount
equal to the product of (i) the average computed for the period referred to in
clause (iii) below, of the weighted average interest rate paid by the Applicable
Agent for federal funds acquired by such Applicable Agent during each day
included in such period, times (ii) the amount of such Settlement Amount, times
(iii) a fraction, the numerator of which is the number of days that elapse from
and including such Settlement Date to the date on which the amount of such
Settlement Amount shall become immediately available to such Applicable Agent,
and the denominator of which is 360. A statement of the Applicable Agent
submitted to such Applicable Bank with respect to any amounts owing under this
paragraph shall be prima facie evidence of the amount due and owing to the
Applicable Agent by such Applicable Bank. If such Applicable Bank's Settlement
Amount is not made available to the Applicable Agent by such Applicable Bank
within three (3) Business Days following such Settlement Date, the Applicable
Agent shall be
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entitled to recover such amount from the Borrower promptly after
demand, with interest thereon at the rate per annum applicable to the Revolving
Credit Loans or, as the case may be, the Gold Loans as of such Settlement Date.
(c) The failure or refusal of any Applicable Bank to make available to the
Applicable Agent at the aforesaid time and place on any Settlement Date the
amount of its Settlement Amount (i) shall not relieve any other Applicable Bank
from its several obligations hereunder to make available to the Applicable Agent
the amount of such other Applicable Bank's Settlement Amount and (ii) shall not
impose upon such other Applicable Bank any liability with respect to such
failure or refusal or otherwise increase the Commitment or, as the case may be,
the Gold Commitment, of such other Applicable Bank.
8.7. Optional Repayments of Loans. (a) The Borrower shall have the right,
at its election, to repay the outstanding amount of any Loan, as a whole or in
part, at any time without penalty or premium, provided that any full or partial
prepayment of the outstanding amount of any Eurodollar Rate Loans pursuant to
this ss.8.7 may be made only on the last day of the Interest Period relating
thereto. The Borrower shall give the Agent, no later than 11:00 a.m., Boston
time, at least two (2) Business Days prior written notice of any proposed
prepayment pursuant to this ss.8.7 of Base Rate Loans, and three (3) Eurodollar
Business Days notice of any proposed prepayment pursuant to this ss.8.7 of
Eurodollar Rate Loans, in each case specifying the proposed date of prepayment
of Loans, the nature of the Loan as a Revolving Credit Loan, the Term Loan or a
Gold Loan and the principal amount to be prepaid. Each such partial prepayment
of the Loans shall be in a minimum amount of $500,000.00 or an integral multiple
of $100,000.00 in excess thereof, shall be accompanied by the payment of accrued
interest on the principal prepaid to the date of prepayment and shall be
applied, in the absence of instruction by the Borrower, first to the principal
of Base Rate Loans and then to the principal of Eurodollar Rate Loans. Each
partial prepayment shall be allocated among the Applicable Banks, in proportion,
as nearly as practicable, to the respective unpaid principal amount of each
Applicable Bank's Notes, with adjustments to the extent practicable to equalize
any prior repayments not exactly in proportion.
(b) Notwithstanding the notice and minimum amount requirements set forth in
ss.8.7(a) but otherwise in accordance with the terms and conditions of this
Credit Agreement, the Applicable Agent may, in its sole discretion at the
Borrower's request, apply amounts held in the FNBB Concentration Accounts in
payment of any Loans made to the Borrower by such Applicable Agent pursuant to
ss.8.3(b) hereof, subject to the procedures for Settlement set forth in ss.8.6.
8.8. Repayments of Loans and Repurchases of Consigned Precious Metals Prior
to Event of Default. (a) So long as the provisions of ss.8.9 are not
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applicable, (i) all funds and cash proceeds in the form of money, checks and
like items received in the FNBB Concentration Accounts as contemplated by
ss.11.14 shall be credited, on the same Business Day on which the Dollar Agent
determines that good collected funds have been received, and, prior to the
receipt of good collected funds, on a provisional basis until final receipt of
good collected funds, to the Operating Accounts, (ii) all funds and cash
proceeds in the form of a wire transfer received in the FNBB Concentration
Accounts as contemplated by ss.11.14 shall be credited on the same Business Day
as the Dollar Agent's receipt of such amounts (or up to such later date as the
Dollar Agent determines that good collected funds have been received), to the
Operating Accounts, and (iii) all funds and cash proceeds in the form of an
automated clearing house transfer received in the FNBB Concentration Accounts as
contemplated by ss.11.14 shall be credited on the next Business Day following
the Dollar Agent's receipt of such amounts (or up to such later date as the
Dollar Agent determines that good collected funds have been received), to the
Operating Accounts. For purposes of the foregoing provisions of this ss.8.8(a)
the Dollar Agent shall not be deemed to have received any such cash proceeds on
any day unless received by the Dollar Agent before 2:30 p.m. (Boston time) on
such day. The Borrower further acknowledges and agrees that any such provisional
credit or credit in respect of wire transfers shall be subject to reversal if
final collection in good funds of the related item is not received by the Dollar
Agent in accordance with the Dollar Agent's customary procedures and practices
for collecting provisional or wire transfer items.
(b) If at any time (i) the Outstanding Facility Amounts exceed the
Borrowing Base, or (ii) the Fair Market Value of Consigned Precious Metal
exceeds the Consignment Advance Rate Percentage multiplied by the Fair Market
Value of the sum of (A) Consigned Precious Metal plus (B) Borrower's Precious
Metal, the Borrower shall immediately pay the amount of such excess to the
Agents for the respective accounts of the Banks for application, so long as the
provisions of ss.8.9 are not applicable, as follows:
(i) first, to pay amounts then due and payable under the Dollar Facility
and the Gold Facility;
(ii) second, to reduce Gold Loans which are Base Rate Loans;
(iii) third, to reduce Gold Loans which are Eurodollar Rate Loans;
(iv) fourth, to reduce Revolving Credit Loans which are Base Rate Loans;
(v) fifth, to reduce Revolving Credit Loans which are Eurodollar Rate
Loans;
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(vi) sixth, to the Borrower's Operating Accounts.
All prepayments of the Loans pursuant to this ss.8.8(b) shall be allocated
among the Banks making such Loans, in proportion, as nearly as practicable,
to the respective unpaid principal amount of such Loans outstanding, with
adjustments to the extent practicable to equalize any prior payments or
repayments not exactly in proportion. Prior to any Settlement Date, all
prepayments of the Loans shall be applied in accordance with this
ss.8.8(b), first to outstanding Loans of the Applicable Agent.
8.9. Repayments of Loans and Repurchases of Consigned Precious Metals and
Distribution of Collateral Proceeds After Event of Default. If any Event of
Default shall have occurred and be continuing, the Agents may and, upon the
request of the Majority Banks, shall, apply and distribute any amounts held by
the Agents or the Collateral Agent in any accounts (including without limitation
the Borrower's Operating Accounts and the FNBB Concentration Accounts) or any
other amounts otherwise received by the Collateral Agent, either Agent or any
Bank, whether pursuant to ss.5.4(d), ss.11.14 or ss.16.4 or otherwise with
respect to the realization upon any of the Collateral, as follows (the Borrower
hereby authorizing and consenting to such application):
(a) First, to the payment of, or (as the case may be) the
reimbursement of the Agents and the Collateral Agent for or in respect of
all reasonable costs, expenses, disbursements and losses which shall have
been incurred or sustained by the Agents and the Collateral Agent in
connection with the collection of such monies by the Agents, for the
exercise, protection or enforcement by the Collateral Agent of all or any
of the rights, remedies, powers and privileges of the Collateral Agent, for
the benefit of the Agents and the Banks, under this Credit Agreement or any
of the other Loan Documents or in respect of the Collateral or in support
of any provision of adequate indemnity to the Agents and the Collateral
Agent against any taxes or liens which by law shall have, or may have,
priority over the rights of the Agents and the Collateral Agent to such
monies;
(b) Second, to all other Obligations in such order or preference as
the Majority Banks may determine; provided, however, that distributions in
respect of (i) such Obligations shall be made pari passu among Obligations
with respect to the Agents' fees payable pursuant to ss.8.11 and all other
Obligations and (ii) Obligations owing to the Banks with respect to each
type of Obligation such as interest, principal, fees and expenses, shall be
made among the Banks pro rata, with the value of the Gold Banks' claims in
respect of Consigned Precious Metal equal to the Gold Loans made pursuant
to ss.5.4 (and solely for purposes of so determining the pro rata portion
of each Gold Bank's claim in respect of Consigned Precious Metal following
an Event of Default described in ss.ss.16.1(g) or (h), the amount of the
Obligations owed to
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the Gold Banks shall be an amount equal to the Effective Date Value, as
such term is defined in the Confirmation of Swap Agreement); and provided,
further, that the Agents may in their discretion make proper allowance to
take into account any Obligations not then due and payable;
(c) Third, upon payment and satisfaction in full or other provisions
for payment in full satisfactory to each of the Banks and the Agents of all
of the Obligations, to the payment of any obligations required to be paid
pursuant to ss.9-504(1)(c) of the Uniform Commercial Code of the
Commonwealth of Massachusetts; and
(d) Fourth, the excess, if any, shall be returned to the Borrower or
to such other Persons as are entitled thereto.
8.10. Closing Fee. The Borrower agrees to pay to the Dollar Agent a closing
fee according to the terms of a separate fee letter entered into on or prior to
the Closing Date (the "Fee Letter") among the Borrower and the Agents.
8.11. Agents' Fee. The Borrower agrees to pay to the Agents, for each
Agent's own account, an Agents' fee according to the terms of the Fee Letter.
8.12. Funds for Payments.
8.12.1 Payments to Agents. All payments of principal, interest,
Reimbursement Obligations, commitment fees, Letter of Credit Fees and any
other amounts due hereunder or under any of the other Loan Documents with
respect to the Dollar Facility shall be made to the Dollar Agent, for the
respective accounts of the Dollar Banks and the Dollar Agent, at the Dollar
Agent's Head Office or at such other location in the Boston, Massachusetts,
area that the Dollar Agent may from time to time designate, in each case in
immediately available funds in Dollars. Each Redelivery and all payments of
principal, interest, commitment fees, Consignment Fees, Gold Fronting Fees,
Consignment Premiums, and any other amounts due hereunder or under any of
the other Loan Documents with respect to the Gold Facility shall be made to
the Gold Agent, for the respective accounts of the Gold Banks and the Gold
Agent, at the Gold Agent's Head Office or at such other location as the
Gold Agent may from time to time designate, in each case in immediately
available funds in Dollars or, as applicable, ▇▇▇▇ ounces.
8.12.2. No Offset, etc.(a) All payments by the Borrower hereunder and
under any of the other Loan Documents shall be made (except as otherwise
expressly provided in this ss.8.12.2) without setoff or counterclaim and
free and clear of and without deduction for any taxes, levies, imposts,
duties, charges, fees, deductions, withholdings, compulsory loans,
restrictions or conditions of any nature now or hereafter imposed or levied
by any jurisdiction or any political subdivision thereof or taxing or other
authority
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therein (but excluding (i) any tax imposed on or measured by the net income
or profits of a Bank pursuant to the laws of the jurisdiction in which it
is organized or qualified to do business or the jurisdiction in which the
principal office or applicable lending office of such Bank or Agent is
located or any subdivision thereof or therein and (ii) any franchise taxes,
branch taxes, taxes on doing business or taxes on the overall capital or
net worth of any Bank or Agent pursuant to the laws of the jurisdiction in
which it is organized or the jurisdiction in which the principal office or
applicable lending office of such Bank or Agent is located or any
subdivision thereof or therein) unless the Borrower is compelled by law to
make such deduction or withholding (all such non-excluded taxes, levies,
imposts, duties, fees, assessments or other charges being referred to
collectively as "Taxes"). If any such Tax is imposed upon the Borrower with
respect to any amount payable by it hereunder or under any of the other
Loan Documents, the Borrower will pay to the Agents, for the account of the
Banks or (as the case may be) the Agents, on the date on which such amount
is due and payable hereunder or under such other Loan Document, such
additional amount in Dollars as shall be necessary to enable the Banks or
the Agents to receive the same net amount which the Banks or the Agents
would have received on such due date had no such obligation been imposed
upon the Borrower. The Borrower will deliver promptly to the Agents
certificates or other valid vouchers for all taxes or other charges
deducted from or paid with respect to payments made by the Borrower
hereunder or under such other Loan Document.
8.12.3. Withholding Forms. Each Bank that is not incorporated or
organized under the laws of the United States of America or a state thereof
or the District of Columbia (a "Non-U.S. Bank") agrees that it will deliver
to each of the Borrower and the Agents, within ten (10) days after the
Closing Date, or, in the case of any Non-U.S. Bank that becomes a Bank
pursuant to an Assignment and Acceptance, on the date of such Assignment
and Acceptance, two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224 (or a successor form) certifying that such
Non-U.S. Bank is entitled to receive all payments under this Credit
Agreement and the Notes without deduction or withholding of any United
States federal income taxes. Each Non-U.S. Bank that so delivers a Form
1001 or 4224 further undertakes to deliver to each of the Borrower and the
Agents two additional copies of such form (or a successor form) on or
before the date that such form expires or becomes obsolete or promptly
after the occurrence of any event requiring a change in the most recent
form so delivered by it, and such amendments thereto or extensions or
renewals thereof as may be reasonably requested by the Borrower or the
Agents, in each case certifying that such Non-U.S. Bank is entitled to
receive payments under this Credit Agreement and the Notes without
deduction or withholding of any United States federal income taxes, unless
an event (including any change in treaty, law, or regulation) has occurred
prior to the date on which any such delivery would otherwise be
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required that renders all such forms inapplicable or that would prevent
such Non-U.S. Bank from duly completing and delivering any such form with
respect to it and such Non-U.S. Bank advises the Borrower and the Agents
that it is not capable of receiving payments without any deduction or
withholding of United States federal income tax.
8.12.4. Exclusions. The Borrower shall not be required to pay any
additional amounts to any Non-U.S. Bank in respect of United States federal
withholding tax pursuant to ss.8.12.2 above to the extent that (i) the
obligation to withhold amounts with respect to United States federal
withholding tax existed on the date such Non-U.S. Bank became a party to
this Credit Agreement or, with respect to payments to a different lending
office designated by the Non-U.S. Bank as its applicable lending office (a
"New Lending Office"), the date such Non-U.S. Bank designated such New
Lending Office with respect to a Loan; provided, however, that this clause
(i) shall not apply to any transferee or New Lending Office as a result of
an assignment, transfer or designation made at the request of the Borrower;
and provided further, however, that this clause (i) shall not apply to the
extent the indemnity payment or additional amounts any transferee, or Bank
through a New Lending Office, would be entitled to receive without regard
to this clause (i) do not exceed the indemnity payment or additional
amounts that the Person making the assignment or transfer to such
transferee, or Bank making the designation of such New Lending Office,
would have been entitled to receive in the absence of such assignment,
transfer or designation; or (ii) the obligation to pay such additional
amounts would not have arisen but for a failure by such Non-U.S. Bank to
comply with the provisions of ss.8.12.3 above. Each Bank agrees to use
reasonable efforts (consistent with legal and regulatory restrictions) to
change its Domestic Lending Office or Eurodollar Lending Office to avoid or
to minimize any amounts otherwise payable under ss.8.12.2 hereof solely if
such change can be made in a manner so that such Bank, in its sole
determination, suffers no legal, economic or regulatory disadvantage.
8.13. Computations. All computations of interest on the Loans and of
commitment fees, Letter of Credit Fees, Consignment Fees, Gold Fronting Fees or
other fees shall, unless otherwise expressly provided herein, be based on a
360-day year and paid for the actual number of days elapsed. Except as otherwise
provided in the definition of the term "Interest Period" with respect to
Eurodollar Rate Loans and Consignment Fixed Rate Amounts, whenever a payment
hereunder or under any of the other Loan Documents becomes due on a day that is
not a Business Day, the due date for such payment shall be extended to the next
succeeding Business Day, and, with respect to payments of principal, interest
shall accrue thereon during such extension. The outstanding amount of the Loans
and Consigned Precious Metal as reflected on the Revolving Credit Note Records,
the Term Note Records, the Gold Note Records and the other records maintained by
the Agents and each Bank from time to time shall
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be considered correct and binding on the Borrower in the absence of demonstrable
error.
8.14. Inability to Determine Eurodollar Rate or Consignment Fixed Rate. In
the event, prior to the commencement of any Interest Period relating to any
Eurodollar Rate Loan or Consignment Fixed Rate Amount, the Dollar Agent, in the
case of Dollar Facility Loans, or the Gold Agent, in the case of Gold Loans or
Consignments, shall determine in good faith that adequate and reasonable methods
do not exist for ascertaining (a) the Eurodollar Rate that would otherwise
determine the rate of interest to be applicable to any Eurodollar Rate Loan
during any Interest Period or (b) the Eurodollar Rate or the Contango Rate that
would otherwise determine the rate of interest to be applicable to any
Consignment Fixed Rate Amount during any Interest Period, such Agent shall
forthwith give notice of such determination and the basis therefor (which shall
be conclusive and binding on the Borrower and the Applicable Banks) to the
Borrower and the Applicable Banks. In such event (x) any Loan Request or
Conversion Request with respect to Eurodollar Rate Loans or Consignment Request
with respect to Consignment Fixed Rate Amounts shall be automatically withdrawn
and, shall be deemed a request for Base Rate Loans or Consignment Base Rate
Amounts, as applicable, (y) each Eurodollar Rate Loan or Consignment Fixed Rate
Amount, as applicable, will automatically, on the last day of the then current
Interest Period relating thereto, become a Base Rate Loan or Consignment Base
Rate Amount, as applicable and (z) the obligations of the Applicable Banks to
make Eurodollar Rate Loans or Consignment Fixed Rate Amounts shall be suspended
until such Applicable Agent determines that the circumstances giving rise to
such suspension no longer exist, whereupon such Applicable Agent shall so notify
the Borrower and the Applicable Banks.
8.15. Illegality of Eurodollar Rate Loans or Consignment Fixed Rate
Amounts.
(a) Notwithstanding any other provisions herein, if any change in any
present law, regulation, treaty or directive or any future law, regulation,
treaty or directive or any change in the interpretation or application of
any thereof shall make it unlawful for any Bank to make or maintain
Eurodollar Rate Loans, such Bank shall forthwith give notice of such
circumstances to the Borrower and the other Applicable Banks and thereupon
(i) the commitment of such Bank to make Eurodollar Rate Loans or convert
Loans of another Type to Eurodollar Rate Loans shall forthwith be suspended
and (ii) such Bank's Loans then outstanding as Eurodollar Rate Loans, if
any, shall be converted automatically to Base Rate Loans on the last day of
each Interest Period applicable to such Eurodollar Rate Loans or within
such earlier period as may be required by law. The Borrower hereby agrees
promptly to pay the Applicable Agent, for the account of such Bank, within
ten (10) days of demand by such Bank, any additional amounts necessary to
compensate such Bank for any reasonable costs incurred by such Bank in
making any conversion
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in accordance with this ss.8.15, including any interest or fees payable by
such Bank to lenders of funds obtained by it in order to make or maintain
its Eurodollar Rate Loans hereunder.
(b) Notwithstanding any other provisions herein, if any change in any
present law, regulation, treaty or directive or any future law, regulation,
treaty or directive or any change in the interpretation or application of
any thereof shall make it unlawful for any Gold Bank to make or maintain
Consignment Fixed Rate Amounts, such Gold Bank shall forthwith give notice
of such circumstances to the Borrower and the other Gold Banks and
thereupon (i) the commitment of such Gold Bank to make Consignment Fixed
Rate Amounts or convert Consigned Precious Metal into Consignment Fixed
Rate Amounts shall forthwith be suspended, and (ii) such Gold Bank's
Consigned Precious Metal then outstanding as Consignment Fixed Rate
Amounts, if any, shall be converted automatically to Consignment Base Rate
Amounts on the last day of each Interest Period applicable to such
Consignment Fixed Rate Amounts or within such earlier period as may be
required by law. The Borrower hereby agrees promptly to pay the Gold Agent,
for the account of such Gold Bank, within ten (10) days of demand by such
Gold Bank, any additional amounts necessary to compensate such Gold Bank
for any reasonable costs incurred by such Gold Bank in making any
conversion in accordance with this ss.8.15, including any interest or fees
payable by such Gold Bank to lenders of funds obtained by it in order to
make or maintain its Consignment Fixed Rate Amounts hereunder.
8.16. Additional Costs, etc. If any changes in applicable law, which
expression, as used herein, includes statutes, rules and regulations thereunder
and interpretations thereof by any competent court or by any governmental or
other regulatory body or official charged with the administration or the
interpretation thereof and requests, directives, instructions and notices at any
time or from time to time hereafter made upon or otherwise issued to any Bank or
either Agent by any central bank or other fiscal, monetary or other authority
(whether or not having the force of law), shall:
(a) subject any Bank or either Agent to any tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature with respect to this
Credit Agreement, the other Loan Documents, any Letters of Credit, such
Bank's Commitment, Gold Commitment, the Consignments or the Loans (other
than taxes based upon or measured by the income or profits of such Bank or
such Agent and other taxes specifically excluded from ss.8.12.2 hereof), or
(b) materially change the basis of taxation (except for changes in
taxes on income or profits and other taxes specifically excluded from
ss.8.12.2 hereof) of payments to any Bank of the principal of or the
interest on any Loans or any
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other amounts payable to any Bank or either Agent under this Credit
Agreement or any of the other Loan Documents, or
(c) impose or increase or render applicable (other than to the extent
specifically provided for elsewhere in this Credit Agreement) any special
deposit, reserve, assessment, liquidity, capital adequacy or other similar
requirements (whether or not having the force of law) against assets held
by, or deposits in or for the account of, or loans by, or letters of credit
issued by, or commitments of an office of any Bank, or
(d) impose on any Bank or either Agent any other conditions or
requirements with respect to this Credit Agreement, the other Loan
Documents, any Letters of Credit, the Loans, the Consignments, such Bank's
Commitment or Gold Commitment, or any class of loans, letters of credit or
commitments of which any of the Loans, Consignments or such Bank's
Commitment or Gold Commitment forms a part, and the result of any of the
foregoing is
(i) to increase the cost to any Bank of making, funding, issuing,
renewing, extending or maintaining any of the Loans, any Consignment
or such Bank's Commitment or Gold Commitment or any Letter of Credit,
or
(ii) to reduce the amount of principal, interest, Reimbursement
Obligation or other amount payable to such Bank or either Agent
hereunder on account of such Bank's Commitment, Gold Commitment, any
Letter of Credit, any Consignment or any of the Loans, or
(iii) to require such Bank or either Agent to make any payment or
to forego any interest or Reimbursement Obligation or other sum
payable hereunder, the amount of which payment or foregone interest or
Reimbursement Obligation or other sum is calculated by reference to
the gross amount of any sum receivable or deemed received by such Bank
or either Agent from the Borrower hereunder,
then, and in each such case, the Borrower will, within fifteen (15) days after
demand made by such Bank or (as the case may be) such Agent at any time and from
time to time and as often as the occasion therefor may arise, pay to such Bank
or such Agent such additional amounts as will be sufficient to compensate such
Bank or such Agent for such additional cost, reduction, payment or foregone
interest or Reimbursement Obligation or other sum.
8.17. Capital Adequacy. If after the date hereof any Bank or either Agent
determines that (a) the adoption of or change in any law, governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law) regarding capital requirements for banks or bank holding companies or any
change in
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the interpretation or application thereof by a court or governmental authority
with appropriate jurisdiction, or (b) compliance by such Bank or such Agent or
any corporation controlling such Bank or such Agent with any such newly adopted
or change in any applicable law, governmental rule, regulation, policy,
guideline or directive (whether or not having the force of law) of any such
entity regarding capital adequacy, has the effect of reducing the return on such
Bank's or such Agent's commitment with respect to any Loans or any Consignments
to a level below that which such Bank or such Agent could have achieved but for
such adoption, change or compliance (taking into consideration such Bank's or
such Agent's then existing policies with respect to capital adequacy and
assuming full utilization of such entity's capital) by any amount deemed by such
Bank or (as the case may be) such Agent to be material, then such Bank or such
Agent may notify the Borrower of such fact. To the extent that the amount of
such reduction in the return on capital is not reflected in the Base Rate or the
amount of Consignment Fees or Gold Fronting Fees, as applicable, the Borrower
agrees to pay such Bank or (as the case may be) such Agent for the amount of
such reduction in the return on capital as and when such reduction is determined
upon presentation by such Bank or (as the case may be) such Agent of a
certificate in accordance with ss.8.18 hereof. Each Bank shall allocate such
cost increases among its customers in good faith and on an equitable basis.
8.18. Certificate. A certificate setting forth any additional amounts
payable pursuant to ss.ss.8.16 or 8.17 and an explanation of such amounts which
are due, submitted by any Bank or either Agent to the Borrower, shall be
conclusive, absent manifest error, that such amounts are due and owing. Such
certificate shall include a written confirmation that all increases in costs for
which reimbursement is sought shall have been allocated equitably among all
similarly situated customers of such Bank or Agent. The Borrower will not be
required to compensate any Bank or Agent for any amounts pursuant to ss.ss.8.16
or 8.17 incurred by such Bank or Agent more than ninety (90) days prior to such
Bank's or Agent's request therefore given to the Borrower. The Borrower agrees
to pay such Bank or either Agent the amount shown as due on such certificate
within fifteen (15) days after receipt by the Borrower thereof. The Banks and
the Agents agree to act in a commercially reasonable manner in order, to the
extent reasonably possible, to minimize or avoid incurrence of additional costs
under ss.ss.8.16 or 8.17.
8.19. Indemnity. (a) The Borrower agrees to indemnify each Bank and to hold
each Bank harmless from and against any loss, cost or expense (excluding loss of
anticipated profits) that such Bank may sustain or incur by reason of the
liquidation or re-employment of deposits or other funds obtained by it in order
to maintain any Eurodollar Rate Loans as a consequence of (i) default by the
Borrower in payment of the principal amount of or any interest on any Eurodollar
Rate Loans as and when due and payable, including any such loss or expense
arising from interest or fees payable by such Bank to lenders of funds obtained
by it in order to maintain its Eurodollar Rate Loans, (ii) default by the
Borrower in making a borrowing or conversion after the Borrower have
-66-
given (or are deemed to have given) a Loan Request, notice (in the case of all
or any portion of the Term Loan pursuant to ss.3.5), Conversion Request or
Consignment Conversion Request relating thereto in accordance with ss.ss.2.6,
3.5, 5.5, 5.4, 8.3 or 8.4 or (iii) the making of any payment of a Eurodollar
Rate Loan or the making of any conversion of any such Loan to a Base Rate Loan
on a day that is not the last day of the applicable Interest Period with respect
thereto, the amount of such losses, costs and expenses payable to any such Bank
being determined in the following manner:
(i) First, such Bank shall determine the amount by which (A) the
total amount of interest which would have otherwise accrued hereunder
on each Eurodollar Rate Loan so paid or not paid, borrowed or, as the
case may be, converted, during the period beginning on the date of
such payment or failure to pay, borrow or convert and ending on the
last day of the Interest Period relating to such Eurodollar Rate Loan
(the "Reemployment Period"), with such interest to be calculated on
the basis of the Eurodollar Rate applicable to such Interest Period
(not including the Eurodollar Applicable Margin), exceeds (B) the
total amount of interest which would accrue and become payable to such
Bank, during the Reemployment Period, if such Bank were to reemploy,
at or about the time of such payment or failure to pay, borrow or
convert, the principal so paid by lending to a prime bank in the
eurodollar interbank market selected by such Bank in its sole
discretion, deposits of Dollars in an amount equal (as nearly as may
be) to the amount of principal so paid or not paid, borrowed or
converted for a number of days comparable to the Reemployment Period.
Each such amount is hereafter referred to as an "Installment Amount";
(ii) Second, each Installment Amount shall be treated as payable
on the last day of the Interest Period relating to such Eurodollar
Rate Loan had such Eurodollar Rate Loan not been prepaid or such
failure to repay, borrow or convert such Eurodollar Rate Loan not
occurred; and
(iii) Third, the amount to be paid on each such date shall be the
present value of the Installment Amount determined by discounting the
amount thereof from the date on which such Installment Amount is to be
treated as payable, at the same annual interest rate as that payable
upon the eurodollar deposit designated as aforesaid by such Bank.
(b) The Borrower agrees to indemnify the Gold Agent and each Gold Bank
and to hold the Gold Agent and each Gold Bank harmless from and against any
loss, cost or expense (excluding loss of anticipated profits) that the Gold
Agent or such Gold Bank may sustain or incur by reason of the liquidation
or re-employment of deposits or other funds obtained by it in order to
maintain any Consignment Fixed Rate Amount or Consignment Participation
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in a Consignment Fixed Rate Amount as a consequence of (i) default by the
Borrower in making a purchase or Redelivery in respect of any Consignment
Fixed Rate Amount or in making any payment of Consignment Fees or Gold
Fronting Fees on any Consignment Fixed Rate Amount as and when due and
payable, including any such loss or expense arising from interest or fees
payable by the Gold Agent or such Gold Bank to lenders of funds obtained by
it in order to maintain its Consignments or Consignment Participations,
(ii) default by the Borrower in making a Consignment as a Consignment Fixed
Rate Amount, or a conversion to a Consignment Fixed Rate Amount after the
Borrower has given (or is deemed to have given) a Consignment Request or a
conversion request relating thereto in accordance with ss.5.3 or ss.5.5 or
(iii) the making of any payment of a Consignment Fixed Rate Amount or the
making of any conversion of any such Consignment Fixed Rate Amount to a
Consignment Base Rate Amount on a day that is not the last day of the
applicable Interest Period with respect thereto, including interest or fees
payable by the Gold Agent or such Gold Bank to lenders of funds obtained by
it in order to maintain any such Consignments.
8.20. Interest After Default. During the continuance of an Event of Default
under ss.ss.16.1(a) or (b) hereof (a) the principal of the Loans, whether or not
due, the Fair Market Value of Consigned Precious Metal, whether or not due to be
purchased or Redelivered by the Borrower in accordance with the requirements of
ss.5.4, and (to the extent permitted by applicable law) interest on the Loans
and Consignment Fees and Gold Fronting Fees shall bear interest, compounded
monthly and payable on demand, at a rate per annum equal to two percent (2%)
above the rate of interest or, as the case may be, Consignment Fees or Gold
Fronting Fees otherwise applicable thereto pursuant to ss.8.1 or, as the case
may be, ss.5.2 until such amounts shall be paid in full (after as well as before
judgment), and (b) all other amounts payable hereunder or under any of the other
Loan Documents shall bear interest at a rate per annum equal to two percent (2%)
above the Base Rate until such amounts shall be paid in full (after as well as
before judgment).
8.21. Performance Adjustments. Based upon, and following receipt by the
Banks of (a) beginning with the Borrower's financial statements as hereafter
described for the fiscal quarter of the Borrower ending on or about February 28,
1998, (i) with respect to the first three fiscal quarters of each fiscal year,
the Borrower's quarterly unaudited consolidated financial statements pursuant to
ss.11.4(b) and (ii) with respect to the last fiscal quarter of each fiscal year,
the Borrower's annual audited consolidated financial statements pursuant to
ss.11.4(a), and (b) a certificate of the chief financial officer of the Borrower
setting forth calculations of the financial information set forth below, the
Base Rate Applicable Margin and the Eurodollar Applicable Margin shall be
subject to possible adjustment in accordance with the provisions of this
paragraph (each such adjustment, a "Performance Adjustment"). Performance
Adjustments shall be effective (the date of the effectiveness of any Performance
Adjustment, a "Performance Adjustment Date") with respect to
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adjustments to the Base Rate Applicable Margin and the Eurodollar Applicable
Margin, three (3) Business Days following receipt by the Agents of the relevant
quarterly unaudited or annual audited financial statements and the certificate
of the chief financial officer of the Borrower, each as described above. The
Eurodollar Applicable Margin and the Base Rate Applicable Margin with respect to
any period following any Performance Adjustment Date until the next succeeding
Performance Adjustment Date shall be as set forth in the table below on the line
furthest down in such table with respect to which, for the period of four
consecutive fiscal quarters most recently ended prior to such possible
Performance Adjustment Date, both (A) the Borrower's ratio of (1) Consolidated
Total Funded Debt for such period to (2) Consolidated EBITDA for such period
shall be within the range set forth on such line in such table, and (B) the
Borrower's ratio of (1) Consolidated EBITDA for such period to (2) Consolidated
Total Interest Expense for such period shall be within the range set forth on
such line in such table:
-----------------------------------------------------------------------------------------------------------------------------
Base Rate
Ratio of Eurodollar Applicable
Ratio of EBITDA Applicable Margin Eurodollar Margin for Base Rate
Total Funded to Total for Revolving Applicable Revolving Credit Applicable
Debt to Interest Credit Loans and Margin for Loans and Margin for
EBITDA Expense Gold Loans Term Loan Gold Loans Term Loan
-----------------------------------------------------------------------------------------------------------------------------
greater less than 3.00% 3.50% 1.25% 1.75%
than or or equal
equal to to
4.25:1.0 1.75:1.0
-----------------------------------------------------------------------------------------------------------------------------
greater greater 2.75% 3.25% 1.00% 1.50%
than or than
equal to 1.75:1.0
4.0:1.0 but less
but less than or
than equal to
4.25:1.0 2.0:1.0
-----------------------------------------------------------------------------------------------------------------------------
less than greater 2.50% 3.00% 0.75% 1.25%
4.0:1.0 than
2.0:1.0
-----------------------------------------------------------------------------------------------------------------------------
8.22. Replacement of Banks. If any Bank becomes a Delinquent Bank, if any
Bank delivers a certificate pursuant to ss.8.18, if any Bank requires the
Borrower to pay any additional amounts to it pursuant to ss.8.12.2, or if any
Bank fails to consent to a waiver or amendment which requires the consent of all
of the Banks (hereinafter such Bank shall be referred to as a "Replaced Bank"),
then in such case, the Borrower may, upon at least five (5) Business Days'
notice to the Agents and such Replaced Bank, designate a replacement lender (a
"Replacement Bank") for such Replaced Bank, which Replacement Bank shall be
reasonably acceptable to the Agents. Such Replaced Bank shall thereafter assign,
subject to its receipt (unless a later date for the remittance thereof shall be
agreed to by the Replaced Bank) of all amounts owed to such Replaced Bank
hereunder, all (but not less than all) of its rights and obligations
-69-
hereunder pursuant to an Assignment and Acceptance and pursuant to the terms of
ss.22 hereof. Upon the effectiveness of such Assignment and Acceptance, the
Replacement Bank shall become a Bank hereunder and the Replaced Bank shall be
released from its obligations hereunder, in each case to the extent provided in
ss.22.1 hereof.
9. COLLATERAL SECURITY AND GUARANTIES.
9.1. Security of Borrower and Capital Stock of the Borrower. The
Obligations shall be secured by a perfected first priority security interest
(subject only to Permitted Liens entitled to priority under applicable law) in
all of the assets of the Borrower (including, without limitation, in all shares
of capital stock of the Borrower's Subsidiaries owned by the Borrower other than
the Mexican Subsidiary and in 66-2/3% of the shares of the capital stock of the
Mexican Subsidiary), whether now owned or hereafter acquired, pursuant to the
terms of the Security Documents to which the Borrower is a party.
9.2. Guaranties and Security of Subsidiaries. The Obligations shall also be
guaranteed pursuant to the terms of the Guaranty. The obligations of the
Borrower's Subsidiaries (other than the Mexican Subsidiary) under the Guaranty
shall be in turn secured by a perfected first priority security interest
(subject only to Permitted Liens entitled to priority under applicable law) in
all of the assets of each such Subsidiary (including, without limitation, all
shares of capital stock of each such Subsidiary's Subsidiaries, if any, owned by
such Subsidiary), whether now owned or hereafter acquired, pursuant to the terms
of the Security Documents to which such Subsidiary is a party.
10. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Banks and the Agents as
follows:
10.1. Corporate Authority.
10.1.1 Incorporation; Good Standing. Each of the Borrower and its
Subsidiaries (i) is a corporation duly organized, validly existing and in
good standing under the laws of its state of incorporation, (ii) has all
requisite corporate power to own its property and conduct its business as
now conducted and as presently contemplated, and (iii) is in good standing
as a foreign corporation and is duly authorized to do business in each
jurisdiction where such qualification is necessary except where a failure
to be so qualified would not have a materially adverse effect on the
business or financial condition of the Borrower and its Subsidiaries taken
as a whole.
10.1.2. Authorization. The execution, delivery and performance of this
Credit Agreement and the other Loan Documents to which the Borrower or any
of its Subsidiaries is or is to become a party and the transactions
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contemplated hereby and thereby (i) are within the corporate authority of
such Person, (ii) have been duly authorized by all necessary corporate
proceedings, (iii) do not conflict with or result in any breach or
contravention of any provision of law, statute, rule or regulation to which
the Borrower or any of its Subsidiaries is subject or any judgment, order,
writ, injunction, license or permit applicable to the Borrower or any of
its Subsidiaries, except to the extent the same would not reasonably be
expected to have a material adverse effect on the business or financial
condition of the Borrower and its Subsidiaries taken as a whole and (iv) do
not conflict with any provision of the corporate charter or bylaws of, or,
except to the extent the same would not reasonably be expected to have a
material adverse effect on the business or financial condition of the
Borrower and its Subsidiaries taken as a whole, any agreement or other
instrument binding upon, the Borrower or any of its Subsidiaries.
10.1.3. Enforceability. The execution and delivery of this Credit
Agreement and the other Loan Documents to which the Borrower or any of its
Subsidiaries is or is to become a party will result in valid and legally
binding obligations of such Person enforceable against it in accordance
with the respective terms and provisions hereof and thereof, except as
enforceability is limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting generally the enforcement
of creditors' rights and except to the extent that availability of the
remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding therefor may be
brought. To the actual knowledge of the Borrower, the execution and
delivery of each of the Acquisition Documents to which the Borrower or any
of its Subsidiaries is or is to become a party will result in valid and
legally binding obligations of such Person enforceable against it in
accordance with the respective terms and provisions thereof, except as
enforceability is limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting generally the enforcement
of creditors' rights and except to the extent that availability of the
remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding therefor may be
brought.
10.2 Governmental Approvals. The execution, delivery and performance by the
Borrower or any of its Subsidiaries of this Credit Agreement and the other Loan
Documents and Acquisition Documents to which the Borrower or any of its
Subsidiaries is or is to become a party and the transactions contemplated hereby
and thereby do not require the approval or consent of, or filing with, any
governmental agency or authority other than those already obtained or those to
be made when and as required in the ordinary course of business and not
affecting the validity of the Borrower's or any such Subsidiary's obligations
under the Loan Documents.
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10.3. Title to Properties; Leases. Except as indicated on Schedule 10.3
hereto, as of the Closing Date the Borrower and its Subsidiaries own all of the
assets reflected in the pro-forma consolidated balance sheet of the Borrower and
its Subsidiaries as at the Closing Date, subject to no rights of others,
including any mortgages, leases, conditional sales agreements, title retention
agreements, liens or other encumbrances except Permitted Liens.
10.4. Financial Statements and Projections.
10.4.1. Financial Statements. There has been furnished to each of the
Banks (a) balance sheets of the CJC Business and ▇.▇. ▇▇▇▇▇▇▇ Company, Inc.
as at the Balance Sheet Date, the statements of income (loss) of the CJC
Business and the statements of operations of ▇.▇. ▇▇▇▇▇▇▇ Company, Inc.
for, in the case of the CJC Business, the fiscal year then ended, and in
the case of ▇.▇. ▇▇▇▇▇▇▇ Company, Inc., the six-month period then ended,
certified by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, (b) balance sheets of the CJC Business
and ▇.▇. ▇▇▇▇▇▇▇ Company, Inc. as at their respective fiscal year end dates
for the last three fiscal years prior to the Closing Date, the statements
of income (loss) of the CJC Business and the statements of operations of
▇.▇. ▇▇▇▇▇▇▇ Company, Inc. for the respective fiscal years then ended,
certified by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, and (c) an unaudited pro-forma combined
balance sheet of the Borrower and its Subsidiaries as at August 31, 1996
after giving effect to the transactions contemplated hereby and the
Acquisitions. Such balance sheets, statements of income (loss) and
statements of operations have been prepared in accordance with generally
accepted accounting principles in all material respects and fairly present
in all material respects the financial condition of the CJC Business or, as
applicable, ▇.▇. ▇▇▇▇▇▇▇ Company, Inc., as at the close of business on the
date thereof and the results of operations for the applicable fiscal period
then ended. There are no contingent liabilities of the businesses of the
CJC Business or, as applicable, ▇.▇. ▇▇▇▇▇▇▇ Company, Inc., acquired
pursuant to the Acquisitions, as of such date involving material amounts,
known to the officers of the Borrower as of the Closing Date, which were
not disclosed in such balance sheets and the notes related thereto or in
the reports of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP.
10.4.2. Projections. The projections of the annual operating budgets
of the Borrower and its Subsidiaries on a consolidated basis, balance
sheets and cash flow statements for the 1997 to 2002 fiscal years have been
delivered to each Bank. As of the Closing Date, the projections are based
upon reasonable estimates of the Borrower of the results of operations and
other information projected therein, it being recognized that such
projections do not constitute a warranty as to the future performance of
the Borrower or its Subsidiaries, and that actual results may vary from
projected results.
10.5. No Material Changes, etc.; Solvency.
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10.5.1. No MAterial Changes, etc. From the Balance Sheet Date until
the Closing Date, there has occurred no materially adverse change in the
financial condition or business of the Sellers acquired by the Borrower
pursuant to the Acquisitions to the extent reflected in the consolidated
balance sheet of the CJC Business or, as applicable, ▇.▇. ▇▇▇▇▇▇▇ Company,
Inc., as at the Balance Sheet Date, or the consolidated statement of income
for the fiscal year then ended, other than changes in the ordinary course
of business that have not had any materially adverse effect either
individually or in the aggregate on the business or financial condition of
the CJC Sellers or, as applicable, the Balfour Sellers. Since the Closing
Date there has occurred no materially adverse change in the financial
condition or business of the Borrower and its Subsidiaries as shown on or
reflected in the pro-forma combined balance sheet of the Borrower and its
Subsidiaries as at August 31, 1996 assuming on a pro forma basis completion
of the transactions contemplated hereby and in connection with the
Acquisitions, other than changes in the ordinary course of business that
have not had any materially adverse effect either individually or in the
aggregate on the business or financial condition of the Borrower or any of
its Subsidiaries. Since the Balance Sheet Date, the Borrower has not made
any Distribution except as permitted pursuant to ss.12.4 hereof.
10.5.2. Solvency. Both before and after giving effect to the
transactions contemplated by this Credit Agreement, the other Loan
Documents and the Acquisition Documents, the Borrower and its Subsidiaries
on a consolidated basis are Solvent. As used herein, "Solvent" shall mean
that the Borrower and its Subsidiaries (i) have assets having a fair value
in excess of their liabilities, (ii) have assets having a fair value in
excess of the amount required to pay their liabilities on existing debts as
such debts become absolute and matured, and (iii) have, and expect to
continue to have, access to adequate capital for the conduct of their
business and the ability to pay their debts from time to time incurred in
connection with the operation of their business as such debts mature.
10.6. Franchises, Patents, Copyrights, etc. Except as set forth on
Schedule 10.6 hereof, each of the Borrower and its Subsidiaries possesses all
franchises, patents, copyrights, trademarks, trade names, licenses and permits,
and rights in respect of the foregoing, adequate for the conduct of its business
substantially as now conducted without known conflict as of the Closing Date
with any rights of others.
10.7. Litigation. Except as set forth in Schedule 10.7 hereto, as of the
Closing Date there are no actions, suits, proceedings or investigations of any
kind pending or threatened against the Borrower or any of its Subsidiaries
before any court, tribunal or administrative agency or board that are reasonably
likely to be adversely determined and that, if adversely determined, could,
either in any case or in the aggregate, reasonably be expected to materially
adversely affect the financial
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condition or business of the Borrower and its Subsidiaries or materially impair
the right of the Borrower and its Subsidiaries, considered as a whole, to carry
on business substantially as now conducted by them, or which question the
validity of this Credit Agreement or any of the other Loan Documents or any of
the Acquisition Documents.
10.8. No Materially Adverse Contracts, etc. Neither the Borrower nor any of
its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation that has or is
expected in the future to have a materially adverse effect on the business or
financial condition of the Borrower and its Subsidiaries taken as a whole.
Neither the Borrower nor any of its Subsidiaries is a party to any contract or
agreement that has or is expected, in the judgment of the Borrower's officers,
to have any materially adverse effect on the business or financial condition of
the Borrower and its Subsidiaries taken as a whole.
10.9. Compliance with Other Instruments, Laws, etc. Neither the Borrower
nor any of its Subsidiaries is in violation of any provision of its charter
documents, bylaws, or any agreement or instrument to which it may be subject or
by which it or any of its properties may be bound or any decree, order,
judgment, statute, license, rule or regulation, in any of the foregoing cases in
a manner that could reasonably be expected to result in the imposition of
substantial penalties or materially and adversely affect the financial
condition, properties or business of the Borrower and its Subsidiaries taken as
a whole.
10.10 Tax Status. The Borrower and its Subsidiaries (a) have made or filed
all federal and state income and sales and all other material tax returns,
reports and declarations required by any jurisdiction to which any of them is
subject, and (b) have paid all taxes and other governmental assessments and
charges shown or determined to be due on such returns, reports and declarations,
except those being contested in good faith and by appropriate proceedings or to
the extent that the failure to do so could not reasonably be expected to have a
material adverse effect on the business or financial condition of the Borrower
and its Subsidiaries taken as a whole.
10.11. No Event of Default. No Default or Event of Default has occurred and
is continuing.
10.12. Holding Company and Investment Company Acts. Neither the Borrower
nor any of its Subsidiaries is a "holding company", or a "subsidiary company" of
a "holding company", or an affiliate" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935; nor is it a nd
Investment Company Acts. "investment company", or an "affiliated company" or a
"principal underwriter" of an "investment company", as such terms are defined in
the Investment Company Act of 1940.
10.13. Absence of Financing Statements, etc. Except with respect to
Permitted Liens, the Borrower has not signed or become a party to any financing
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statement, security agreement, chattel mortgage, real estate mortgage or other
document filed or recorded with any filing records, registry or other public
office, that purports to cover, affect or give notice of any present or possible
future lien on, or security interest in, any assets or property of the Borrower
or any of its Subsidiaries or any rights relating thereto.
10.14. Perfection of Security Interest. All filings, assignments, pledges
and deposits of documents or instruments have been made and all other actions
have been taken that are necessary or advisable, under applicable law, to
establish and perfect the Collateral Agent's security interest in the
Collateral. The Collateral and the Collateral Agent's rights with respect to the
Collateral are not subject to any setoff, claims, withholdings or other defenses
except for Permitted Liens and except for offsets or defenses of customers of
the Borrower or any of its Subsidiaries arising in the ordinary course of
business, which offsets and defenses could not reasonably be expected to have a
material adverse effect on the business or financial condition of the Borrower
and its Subsidiaries taken as a whole. The Borrower or a Subsidiary of the
Borrower party to the Security Agreement is the owner of the Collateral free
from any lien, security interest, encumbrance and any other claim or demand,
except for Permitted Liens.
10.15. Certain Transactions. Except for (a) arm's length transactions
pursuant to which one of the Borrower or any of its Subsidiaries makes payments
in the ordinary course of business upon terms no less favorable than the
Borrower or such Subsidiary could obtain from third parties, (b) payment of the
CH Management Fee to the extent permitted by ss.12.4 and ss.12.12 hereof, (c)
transactions with Oakley Insurance Group regarding the Borrower's insurance
policies and coverage upon terms not materially less favorable to the Borrower
or such Subsidiary than it could obtain in a comparable arm's-length transaction
with a party other than Oakley Insurance Group, (d) transactions among the
Borrower and its Subsidiaries, (e) any Permitted Employee Stock Repurchases, (f)
any Permitted Common Stock Repurchase, (g) any Permitted Preferred Stock
Replacement, and (h) transactions constituting Investments permitted by
ss.ss.12.3(h) or (o) hereof, none of the officers, directors, or employees of
the Borrower or any of its Subsidiaries is presently a party to any transaction
with the Borrower or any of its Subsidiaries (other than for services as
employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the
Borrower, any corporation, partnership, trust or other entity in which any
officer, director, or any such employee has a substantial interest or is an
officer, director, trustee or partner.
10.16. Employee Benefit Plans.
10.16.1. In General. Each Employee Benefit Plan and each Guaranteed
Pension Plan has been maintained and operated in compliance in all
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material respects with the provisions of ERISA and, to the extent
applicable, the Code, including but not limited to the provisions
thereunder respecting prohibited transactions and the bonding of
fiduciaries and other persons handling plan funds as required by ss.412 of
ERISA. Borrower has heretofore delivered to the Agents the most recently
completed annual report, Form 5500, with all required attachments, and
actuarial statement required to be submitted under ss.103(d) of ERISA, with
respect to each Guaranteed Pension Plan.
10.16.2. Terminability of Welfare Plans. Except as set forth on
Schedule 10.16, no Employee Benefit Plan which is an employee welfare
benefit plan within the meaning of ss.3(1) or ss.3(2)(B) of ERISA, provides
benefit coverage subsequent to termination of employment except as required
by Title I, Part 6 of ERISA or applicable state insurance laws. Except as
set forth on Schedule 10.16, the Borrower may terminate each such Plan at
any time (or at any time subsequent to the expiration of any applicable
bargaining agreement) in the discretion of the Borrower without liability
to any Person other than for claims arising prior to termination.
10.16.3. Guaranteed Pension Plans. Each contribution required to be
made to a Guaranteed Pension Plan, whether required to be made to avoid the
incurrence of an accumulated funding deficiency, the notice or lien
provisions of ss.302(f) of ERISA, or otherwise, has been timely made. No
waiver of an accumulated funding deficiency or extension of amortization
periods has been received with respect to any Guaranteed Pension Plan, and
neither the Borrower nor any ERISA Affiliate is obligated to or has posted
security in connection with an amendment of a Guaranteed Pension Plan
pursuant to ss.307 of ERISA or ss.401(a)(29) of the Code. No liability to
the PBGC (other than required insurance premiums, all of which have been
paid) has been incurred by the Borrower or any ERISA Affiliate with respect
to any Guaranteed Pension Plan, and there has not occurred any ERISA
Reportable Event (other than an Event as to which the requirement of 30
days notice has been waived), or any other event or condition which
presents a material risk of termination of any Guaranteed Pension Plan by
the PBGC. Based on the latest valuation of each Guaranteed Pension Plan
(which in each case occurred within twelve months of the date of this
representation) and on the actuarial methods and assumptions employed for
that valuation, the aggregate benefit liabilities of all such Guaranteed
Pension Plans within the meaning of ss.4001 of ERISA did not exceed the
aggregate value of the assets of all such Plans, disregarding for this
purpose the benefit liabilities and assets of any Guaranteed Pension Plan
with assets in excess of benefit liabilities, by more than $500,000.00.
10.16.4. Multiemployer Plans. Neither the Borrower nor any ERISA
Affiliate has incurred any material liability (including secondary
liability) to any Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan under ss.4201 of ERISA or as a
result of a sale of assets
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described in ss.4204 of ERISA. Neither the Borrower nor any ERISA Affiliate
has been notified that any Multiemployer Plan is in reorganization or
insolvent under and within the meaning of ss.4241 or ss.4245 of ERISA or is
at risk of entering reorganization or becoming insolvent, or that any
Multiemployer Plan intends to terminate or has been terminated under
ss.4041A of ERISA.
10.17. Regulations U and X. The proceeds of the Loans and the Consignments
shall be used to finance the Acquisitions and for operating expenses, payment of
CH Management Fees, Capital Expenditures, payments in respect of Indebtedness
and for other working capital and general corporate purposes. The Borrower will
obtain Letters of Credit solely for working capital and general corporate
purposes. No portion of any Loan or proceeds from any Consignment is to be used,
and no portion of any Letter of Credit is to be obtained, for the purpose of
purchasing or carrying any "margin security" or "margin stock" as such terms are
used in Regulations U and X of the Board of Governors of the Federal Reserve
System, 12 C.F.R. Parts 221 and 224.
10.18. Environmental Compliance. To the best knowledge of the Borrower and
its Subsidiaries, based upon reasonable inquiries to the Sellers and based upon
Phase I environmental site assessments conducted by the Borrower on its Austin,
Texas and Louisville, Kentucky facilities and the review of the 1994 site
assessment conducted by ▇.▇. ▇▇▇▇▇▇▇ Company, Inc. with respect to the North
Attleboro, Massachusetts facilities (collectively, the "Environmental Reports"):
(a) none of the Borrower, its Subsidiaries or any operator of the Real
Estate or any operations thereon is in violation, or alleged violation, of
any judgment, decree, order, law, license, rule or regulation pertaining to
environmental matters, including without limitation, those arising under
the Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 as amended ("CERCLA"), the
Superfund Amendments and Reauthorization Act of 1986, the Federal Clean
Water Act, the Federal Clean Air Act, the Toxic Substances Control Act, or
any state or local statute, regulation, ordinance, order or decree relating
to health, safety or the environment (hereinafter "Environmental Laws"),
which violation would reasonably be expected to have a material adverse
effect on the environment or the business or financial condition of the
Borrower and its Subsidiaries taken as a whole;
(b) neither the Borrower nor any of its Subsidiaries has received
notice from any third party including, without limitation, any federal,
state or local governmental authority, (i) that any one of them has been
identified by the United States Environmental Protection Agency ("EPA") as
a potentially responsible party under CERCLA with respect to a site listed
on the National Priorities List, 40 C.F.R. Part ▇▇▇ ▇▇▇▇▇▇▇▇ ▇; (ii) that
any hazardous waste, as defined by 42
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U.S.C. ss.6903(5), any hazardous substances as defined by 42 U.S.C.
ss.9601(14), any pollutant or contaminant as defined by 42 U.S.C.
ss.9601(33) and any toxic substances, oil or hazardous materials or other
chemicals or substances regulated by any Environmental Laws ("Hazardous
Substances") have been generated, transported or disposed at any site where
a federal, state or local agency or other third party has conducted or has
ordered that the Borrower or any of its Subsidiaries conduct a remedial
investigation, removal or other response action pursuant to any
Environmental Law; or (iii) that it is or shall be a named party to any
claim, action, cause of action, complaint, or legal or administrative
proceeding (in each case, contingent or otherwise) arising out of any third
party's incurrence of costs, expenses, losses or damages of any kind
whatsoever in connection with the release of Hazardous Substances, in any
case except to the extent that the foregoing would not reasonably be
expected to have a material adverse effect on the business or financial
condition of the Borrower and its Subsidiaries taken as a whole;
(c) except as set forth on Schedule 10.18 attached hereto and except
to the extent not reasonably expected to have a material adverse effect on
the business or financial condition of the Borrower and its Subsidiaries
taken as a whole: (i) no portion of the Real Estate has been used for the
handling, processing, storage or disposal of Hazardous Substances except in
accordance with applicable Environmental Laws; and no underground tank or
other underground storage receptacle used to store Hazardous Substances is
located on any portion of the Real Estate; (ii) in the course of any
activities conducted by the Borrower, its Subsidiaries or operators of its
properties, no Hazardous Substances have been generated or are being used
on the Real Estate except in accordance with applicable Environmental Laws;
(iii) there have been no releases (i.e. any past or present releasing,
spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, disposing or dumping) or threatened releases of
Hazardous Substances on, upon, into or from the properties of the Borrower
or any of its Subsidiaries, which releases would have a material adverse
effect on the value of any of the Real Estate; (iv) to the best of the
Borrower's knowledge, there have been no releases on, upon, from or into
any real property in the vicinity of any of the Real Estate which, through
soil or groundwater contamination, may have come to be located on, and
which would have a material adverse effect on the value of, the Real
Estate; and (v) in addition, any Hazardous Substances that have been
generated on any of the Real Estate have been transported offsite only by
carriers having an identification number issued by the EPA, treated or
disposed of only by treatment or disposal facilities maintaining valid
permits as required under applicable Environmental Laws, which transporters
and facilities have been and are, to the best of the Borrower's knowledge,
operating in compliance with such permits and applicable Environmental
Laws; and
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(d) None of the Borrower and its Subsidiaries, any Mortgaged Property
or any of the other Real Estate is subject to any applicable environmental
law requiring the performance of Hazardous Substances site assessments, or
the removal or remediation of Hazardous Substances, or the giving of notice
to any governmental agency or the recording or delivery to other Persons of
an environmental disclosure document or statement by virtue of the
transactions set forth and contemplated in the Loan Documents or the
Acquisition Documents, or as a condition to the recording of any Mortgage
or to the effectiveness of any other transactions contemplated hereby.
10.19. Subsidiaries, etc. Except as set forth on Schedule 10.19 hereto, the
Borrower has no Subsidiaries. Except as set forth on Schedule 10.19 hereto,
neither the Borrower nor any Subsidiary of the Borrower is engaged in any joint
venture or partnership with any other Person.
10.20. Bank Accounts. Schedule 10.20 (as such may be amended from time to
time in accordance with ss.12.10 hereof) sets forth the account numbers and
location of all bank accounts of each of the Borrower and its Subsidiaries.
10.21. Acquisition Documents. The Borrower has heretofore furnished to the
Agents true, complete and correct copies of the Acquisition Documents (including
schedules, exhibits and annexes thereto). Except as set forth on Schedule 10.6
hereto, the Acquisition Documents have not subsequently been amended,
supplemented, or modified and constitute the complete understanding among the
parties thereto in respect of the matters and transactions covered thereby. The
representations and warranties of the Borrower contained in the Acquisition
Documents were true and correct in all material respects when made or deemed to
be made except as would not have a materially adverse effect on the business or
financial condition of the Borrower and its Subsidiaries taken as a whole, and
the Agents may rely on such representations and warranties as if they were
incorporated herein on the Closing Date. The requirements of ss.14.20 have been
satisfied as of the Closing Date.
11. AFFIRMATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan, Unpaid
Reimbursement Obligation, Letter of Credit, amount of Consigned Precious Metal
or Note is outstanding or any Bank has any obligation to make any Loans or
Consignments or the Dollar Agent has any obligation to issue, extend or renew
any Letters of Credit:
11.1. Puntual Payment. The Borrower will duly and punctually pay, purchase
or Redeliver, or cause to be paid, purchased or Redelivered, the principal and
interest on the Loans, all Consigned Precious Metal, all Reimbursement
Obligations, the Letter of Credit Fees, the commitment fees, the Consignment
Fees, the Gold Fronting Fees, the Consignment Premiums, the Agents' fee and all
other
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amounts provided for in this Credit Agreement and the other Loan Documents
to which the Borrower or any of its Subsidiaries is a party, all in accordance
with the terms of this Credit Agreement and such other Loan Documents.
11.2. Maintenance of Office. The Borrower will maintain its chief executive
office in Austin, Texas, or at such other place in the United States of America
as the Borrower shall designate upon written notice to the Agents, where
notices, presentations and demands to or upon th ice. Borrower in respect of the
Loan Documents to which the Borrower is a party may be given or made.
11.3. Records and Accounts. The Borrower will (a) keep, and cause each of
its Subsidiaries to keep, true and accurate records and books of account in
accordance with generally accepted accounting principles and (b) maintain
adequate accounts and reserves for all taxes (including income taxes),
depreciation, depletion, obsolescence and amortization of its properties and the
properties of its Subsidiaries, contingencies, and other reserves in accordance
with generally accepted accounting principles.
11.4. Financial Statements, Certificates and Information. The Borrower
will deliver to each of the Banks:nformation.
(a) as soon as practicable, but in any event not later than ninety
(90) days after the end of each fiscal year of the Borrower, the
consolidated balance sheet of the Borrower and its Subsidiaries as of the
end of such year, and the related consolidated statement of income and
consolidated statement of cash flow for such year, each setting forth in
comparative form the figures for the previous fiscal year and all such
consolidated statements to be in reasonable detail, prepared in accordance
with generally accepted accounting principles, and certified by ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP or by other independent certified public accountants
satisfactory to the Agents, reported on without a "going concern" or like
qualification or exception, or qualification indicating that the scope of
the audit was inadequate to permit such independent certified public
accountants to certify such financial statements without such
qualification, together with a written statement from such accountants to
the effect that they have read a copy of this Credit Agreement, and that,
in making the examination necessary to said certification, nothing shall
have come to their attention indicating that any Default or Event of
Default shall exist, or, if such accountants shall have obtained knowledge
of any then existing Default or Event of Default they shall disclose in
such statement any such Default or Event of Default; provided that such
accountants shall not be liable to the Banks for failure to obtain
knowledge of any Default or Event of Default;
(b) as soon as practicable, but in any event not later than (i) with
respect to the first two fiscal quarters of the Borrower ending after the
Closing Date, fifty (50) days after the end of each such two fiscal
quarters of the Borrower and (ii) with respect to any other fiscal quarters
of the Borrower
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forty-five (45) days after the end of each such fiscal quarter of the
Borrower, copies of the unaudited consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such quarter, and the
related consolidated statement of income and consolidated statement of cash
flow for the portion of the Borrower's fiscal year then elapsed, all in
reasonable detail and prepared in accordance with generally accepted
accounting principles, together with a certification by the principal
financial or accounting officer of the Borrower that the information
contained in such financial statements fairly presents the financial
position of the Borrower and its Subsidiaries on the date thereof (subject
to year-end adjustments);
(c) as soon as practicable, but in any event not later than (i) with
respect to the first three months ending after the Closing Date, forty (40)
days after the end of each such three months and (ii) with respect to any
other month in each fiscal year, thirty (30) days after the end of each
such month in each fiscal year of the Borrower, unaudited monthly
consolidated financial statements of the Borrower and its Subsidiaries for
such month prepared in accordance with generally accepted accounting
principles, together with a certification by the principal financial or
accounting officer of the Borrower that the information contained in such
financial statements fairly presents the financial condition of the
Borrower and its Subsidiaries on the date thereof (subject to quarterly and
year-end adjustments);
(d) simultaneously with the delivery of the financial statements
referred to in subsections (a) and (b) above, a statement certified by the
principal financial or accounting officer of the Borrower in substantially
the form of Exhibit J hereto and setting forth in reasonable detail
computations evidencing compliance with the covenants contained in ss.13
and (if applicable) reconciliations to reflect changes in generally
accepted accounting principles since the Balance Sheet Date;
(e) contemporaneously with the filing or mailing thereof, copies of
all material of a financial nature filed with the Securities and Exchange
Commission or sent to the stockholders of the Borrower;
(f) within (i) during the period through June 30, 1997, thirty (30)
days after the end of each calendar month, and (ii) during the period after
June 30, 1997, fifteen (15) days after the end of each calendar month, or
at such earlier time as the Agents may reasonably request, (A) a Borrowing
Base Report setting forth the Borrowing Base as at the end of such calendar
month or other date so requested by the Agents, and (B) a Consigned
Precious Metal Report setting forth (1) the amount of Consigned Precious
Metal and Borrower's Precious Metal as of the end of such calendar month or
other date so requested by the Agents, and (2) a calculation of the
Consignment Advance Rate Percentage multiplied by the Fair Market Value of
the sum of (y)
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Borrower's Precious Metal plus (z) Consigned Precious Metal as of the end
of such calendar month or other date so requested by the Agents, in each
case together with supporting schedules and documentation, with each such
Borrowing Base Report and Consigned Precious Metal Report to be accompanied
by a certification by the principal financial or accounting officer of the
Borrower that the information contained therein is true and accurate in all
material respects;
(g) within thirty (30) days after the end of each calendar month, an
Accounts Receivable aging report;
(h) on or prior to September 30 of each calendar year, projections of
the Borrower and its Subsidiaries updating those projections delivered to
the Banks and referred to inss.10.4.2 or, if applicable, updating any later
such projections delivered in response to a request pursuant to
thisss.11.4(h);
(i) (i) prior to the opening by the Borrower of any location at which
Eligible Inventory or Consigned Precious Metal is to be located, a
supplement to Schedule 2 hereto in the form of Exhibit K hereto, listing
any additions or deletions to the list of Borrower Permitted Inventory
Locations, which supplement, together with Schedule 2 hereto and any prior
supplements, shall be deemed to constitute Schedule 2 for all purposes of
this Credit Agreement, and (ii) as soon as practicable, but in any event
not later than ten (10) days after the end of each fiscal quarter of the
Borrower, a supplemental listing of any additions or deletions to the list
of sales representative locations at which any inventory is to be located,
which supplemental listings, together with the list of Sales Representative
Inventory Locations disclosed in writing to the Agents on the Closing Date
and any prior such supplemental listings, shall be deemed to constitute the
list of Sales Representative Inventory Locations for all purposes of this
Credit Agreement;
(j) from time to time such other financial data and information
(including accountants' management letters) as either Agent or any Bank may
reasonably request.
11.5. Notices.
11.5.1. Defaults. The Borrower will, promptly after obtaining
actual knowledge thereof, notify each of the Agents and each of the
Banks in writing of the occurrence of any Default or Event of Default.
If any Person shall give any notice or take any other action in
respect of a claimed default (whether or not constituting an Event of
Default) under this Credit Agreement or under the Subordinated Notes,
the Borrower shall, promptly after obtaining actual knowledge thereof,
give written notice thereof to each of the Agents and each
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of the Banks, describing the notice or action and the nature of the
claimed default.
11.5.2. Environmental Events. The Borrower will give notice to
each of the Agents and each of the Banks promptly and in any event
within ten (10) days of (a) the receipt of any written notice of any
violation by the Borrower or any of its Subsidiaries of any
Environmental Law that the Borrower or any of its Subsidiaries reports
in writing or is reportable by such Person in writing (or for which
any written report supplemental to any oral report is made) to any
federal, state or local environmental agency and (b) its becoming
aware thereof, of any written inquiry, proceeding, investigation, or
other action, including a notice from any agency of potential
environmental liability, of any federal, state or local environmental
agency or board, that has the potential to materially affect the
business or financial condition of the Borrower and its Subsidiaries
taken as a whole, or the Collateral Agent's mortgages, deeds of trust
or security interests in any material Collateral covered by the
Security Documents.
11.5.3. Notification of Claim against Collateral. The Borrower
will, promptly and in any event within five (5) Business Days
following its becoming aware thereof, notify each of the Collateral
Agent, the Agents and each of the Banks in writing of any setoff,
claims (including, with respect to the Real Estate, environmental
claims), withholdings or other defenses to which any of the
Collateral, or the Collateral Agent's rights with respect to the
Collateral, are subject to the extent that any such setoff, claims,
withholdings or other defenses could reasonably be expected to result
in liability to the Borrower and its Subsidiaries in excess of
$250,000. The Borrower will, immediately upon receiving notice
thereof, notify each of the Collateral Agent, the Agents and each of
the Banks in writing of any proposed sale or transfer of any Borrower
Permitted Inventory Location by the owner thereof.
11.5.4. Notice of Litigation and Judgments. The Borrower will,
and will cause each of its Subsidiaries to, give notice to each of the
Agents and each of the Banks in writing within fifteen (15) days of
becoming aware of any litigation or proceedings threatened in writing
or any pending litigation and proceedings affecting the Borrower or
any of its Subsidiaries or to which the Borrower or any of its
Subsidiaries is or becomes a party involving an uninsured claim
against the Borrower or any of its Subsidiaries that could reasonably
be expected to have a materially adverse effect on the Borrower or and
its Subsidiaries taken as a whole and stating the nature and status of
such litigation or proceedings. The Borrower will, and will cause each
of its Subsidiaries to, give notice to each of the Agents and each of
the Banks, in writing, in form and detail satisfactory to the Agents,
within ten (10) days of any judgment not covered by insurance, final
or otherwise, against the Borrower or any of its Subsidiaries in an
amount in excess of $500,000.00.
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11.6. Corporate Existence; Maintenance of Properties.
(a) The Borrower will do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence, rights
and franchises and those of its Subsidiaries and will not, and will not
cause or permit any of its Subsidiaries to, convert to a limited liability
company.
(b) The Borrower (i) will cause all of its properties and those of its
Subsidiaries necessary in the conduct of its business or the business of
its Subsidiaries to be maintained and kept in good condition, repair and
working order, ordinary wear and tear excepted, and supplied with all
necessary equipment, (ii) will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Borrower may be necessary so that the business carried on
in connection therewith may be properly conducted at all times, and (iii)
will, and will cause each of its Subsidiaries to, continue to engage
primarily in the businesses now conducted by them; provided that nothing in
this ss.11.6 shall prevent the Borrower from discontinuing the operation
and maintenance of any of its properties or any of those of its
Subsidiaries if such discontinuance is, in the judgment of the Borrower,
desirable in the conduct of its or their business and that do not in the
aggregate materially adversely affect the business of the Borrower and its
Subsidiaries on a consolidated basis.
11.7. Insurance.
(a) The Borrower will, and will cause each of its Subsidiaries to,
maintain with financially sound and reputable insurers insurance with
respect to its properties and business against such casualties and
contingencies as shall be in accordance with the general practices of
businesses engaged in similar activities in similar geographic areas and in
amounts, containing such terms, in such forms and for such periods as may
be reasonable and prudent and in accordance with the terms of the Security
Agreement. The Borrower will, and will cause each of its Subsidiaries to,
maintain insurance on the Mortgaged Properties in accordance with the terms
of the Mortgages.
(b) Contemporaneously with the execution of this Credit Agreement, and
within fifteen (15) days of any date when any additional or replacement
insurance coverage is obtained, the Borrower will, and will cause each of
its Subsidiaries to, deliver to the Agents true copies of certificates of
insurance with respect to such additional insurance or replacement policies
and, upon request and to the extent not previously delivered to the Agents,
copies of the original insurance policies evidencing such additional or
replacement insurance, which certificates and policies (i) in the case of
property and casualty policies, shall contain an endorsement or rider
naming the Collateral Agent, for the benefit of the Collateral Agent, the
Agents and the Banks, as a
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mortgagee, loss payee and additional insured, as their interests may
appear, with the proceeds in respect of any such property and casualty
policies being payable to the Collateral Agent or, as the case may be, the
Borrower or a Subsidiary of the Borrower, in accordance with the provisions
of the Security Agreement and the Mortgages, and (ii) in the case of
liability policies, shall contain an endorsement or rider naming the
Collateral Agent, for the benefit of the Collateral Agent, the Agents and
the Banks, as an additional insured, with each such policy providing that
such insurance shall not be cancelled or amended without thirty (30) days
prior written notice to the Collateral Agent, if applicable, and each of
the Agents.
11.8. Taxes. The Borrower will, and will cause each of its Subsidiaries to,
duly pay and discharge, or cause to be paid and discharged, before the same
shall become overdue, all taxes, assessments and other governmental charges
imposed upon it and its real properties, sales and activities, or any part
thereof, or upon the income or profits therefrom, as well as all claims for
labor, materials, or supplies that if unpaid might by law become a lien or
charge upon any of its property and that if unpaid could reasonably be expected
to result in a material adverse effect upon the business or financial condition
of the Borrower and its Subsidiaries taken as a whole; provided that any such
tax, assessment, charge, levy or claim need not be paid if the validity or
amount thereof shall currently be contested in good faith by appropriate
proceedings and if the Borrower or such Subsidiary shall have set aside on its
books adequate reserves with respect thereto; and provided further that the
Borrower and each Subsidiary of each of the Borrower will pay all such taxes,
assessments, charges, levies or claims within three (3) Business Days following
the commencement of proceedings to foreclose any lien that may have attached as
security therefor unless such proceeding shall have been stayed by appropriate
proceedings within such three (3) Business Day period and such stay shall remain
in effect.
11.9. Inspection of Properties and Books, etc.
11.9.1. General. The Borrower shall permit the Banks, through the
Agents or, upon reasonable notice thereof given by any of the Banks,
through any of the Banks' other designated representatives, to visit and
inspect any of the properties of the Borrower or any of its Subsidiaries,
to examine the books of account of the Borrower or any of its Subsidiaries
(and to make copies thereof and extracts therefrom), other than materials
protected by the attorney-client privilege and materials which the Borrower
or any of its Subsidiaries may not disclose without violation of a written
confidentiality obligation binding upon it, to discuss the affairs,
finances and accounts of the Borrower or any of its Subsidiaries with, and
to be advised as to the same by, its and their officers, and to conduct
examinations and verifications of the components of the Borrowing Base, the
other assets of the Borrower or any of its Subsidiaries and all systems and
procedures of the Borrower or any of its Subsidiaries, including those
relating to cash management and those relating to
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gold tracking and valuation, all at such reasonable times and intervals as
either of the Agents or any Bank may reasonably request, provided that
prior to the occurrence and continuance of an Event of Default, the
Borrower shall not be required to permit more than four (4) such visits and
inspections provided for in this ss.11.9.1.
11.9.2. Collateral Reports. No more frequently than three times each
calendar year, or more frequently as determined by the Agents if an Event
of Default shall have occurred and be continuing, upon the request of the
Agents, the Borrower will obtain and deliver to the Agents a report of an
independent collateral auditor or appraiser satisfactory to the Agents
(which may be affiliated with one of the Banks) with respect to the
Accounts Receivable and inventory components included in the Borrowing Base
and the amounts of Borrower's Precious Metal and Consigned Precious Metal
held by the Borrower, which report shall indicate (a) whether or not the
information set forth in the Borrowing Base Report and the Consigned
Precious Metal Report most recently delivered is accurate and complete in
all material respects based upon a review by such auditors of the Accounts
Receivable and inventory (including verification as to the value, location
and respective types) or (b) in the case of an appraisal report by a
collateral appraiser (which appraisal reports of the type described in this
clause (b) only shall be required solely after the occurrence and during
the continuance of an Event of Default) shall state the then current fair
market value, orderly liquidation and forced liquidation values of all or
any portion of the Accounts Receivable and inventory owned by the Borrower
and its Subsidiaries and of the Borrower's Precious Metal and Consigned
Precious Metal. All such collateral reports shall be conducted and made at
the expense of the Borrower.
11.9.3. Appraisals. If an Event of Default shall have occurred and be
continuing, upon the request of the Agents, the Borrower will obtain and
deliver to the Agents appraisal reports in form and substance and from
appraisers reasonably satisfactory to the Agents, stating (i) the then
current fair market, orderly liquidation and forced liquidation values of
all or any portion of the equipment or real estate owned by the Borrower or
any of its Subsidiaries and (ii) the then current business value of the
Borrower and its Subsidiaries. All such appraisals shall be conducted and
made at the expense of the Borrower.
11.9.4. Communications with Accountants. The Borrower authorizes the
Agents and, if accompanied by the Agents, the Banks, upon notice to the
Borrower (and giving the Borrower the opportunity to participate therein),
to communicate directly with the Borrower's independent certified public
accountants and authorizes such accountants to disclose to the Agents and
the Banks any and all financial statements and other supporting financial
documents and schedules including copies of any management letter with
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respect to the business, financial condition and other affairs of the
Borrower and its Subsidiaries. At the request of the Agents, the Borrower
shall deliver a letter addressed to such accountants instructing them to
comply with the provisions of this ss.11.9.4
11.9.5. Environmental Assessments. Whether or not an Event of Default
shall have occurred (but prior to the occurrence and continuance of an
Event of Default only at the expense of the Collateral Agent and the
Banks), the Collateral Agent may, from time to time, in its discretion for
the purpose of assessing and ensuring the value of any Mortgaged Property,
obtain one or more environmental assessments or audits of such Mortgaged
Property prepared by a hydrogeologist, an independent engineer or other
qualified consultant or expert approved by the Collateral Agent to evaluate
or confirm (i) whether there has been a release of any Hazardous Materials
at such Mortgaged Property and (ii) whether the use and operation of such
Mortgaged Property complies with all Environmental Laws. Environmental
assessments may include without limitation detailed visual inspections of
such Mortgaged Property including any and all storage areas, storage tanks,
drains, dry ▇▇▇▇▇ and leaching areas, and the taking of soil samples,
surface water samples and ground water samples, as well as such other
investigations or analyses as the Agent reasonably deems appropriate. All
such environmental assessments shall be at the expense of the Borrower
(except as otherwise provided in the first sentence of this paragraph).
11.10. Compliance with Laws, Contracts, Licenses, and Permits. The Borrower
will, and will cause each of its Subsidiaries to, comply with (a) the applicable
laws and regulations wherever its business is conducted, including all
Environmental Laws, (b) the provisions of its charter documents and by-laws, (c)
all agreements and instruments by which it or any of its properties may be
bound, and (d) all applicable decrees, orders, and judgments, except for any
failure to so comply with any of the matters described in the foregoing clauses
(a), (c) and (d) which is not reasonably expected to result in a material
adverse effect on the business or financial condition of the Borrower and its
Subsidiaries taken as a whole. If any authorization, consent, approval, permit
or license from any officer, agency or instrumentality of any government shall
become necessary or required in order that the Borrower or any of its
Subsidiaries may fulfill any of its obligations hereunder or any of the other
Loan Documents or any of the Acquisition Documents to which the Borrower or such
Subsidiary is a party, the Borrower will, or (as the case may be) will cause
such Subsidiary to, immediately take or cause to be taken all reasonable steps
within the power of the Borrower or such Subsidiary to obtain such
authorization, consent, approval, permit or license and furnish the Agents and
the Banks with evidence thereof if the failure to obtain such authorization,
consent, approval, permit or license could reasonably be expected to have a
material adverse effect upon the business or financial condition of the Borrower
and its Subsidiaries taken as a whole.
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11.11. Employee Benefit Plans. The Borrower will (a) promptly upon request
of the Agents, furnish to the Agents a copy of the most recent actuarial
statement required to be submitted under ss.103(d) of ERISA and Annual Report,
Form 5500, with all required attachments, in respect of each Guaranteed Pension
Plan and (b) promptly upon receipt or dispatch, furnish to the Agents any
notice, report or demand sent or received in respect of a Guaranteed Pension
Plan under ss.ss.302, 4041, 4042, 4043, 4063, 4066 and 4068 of ERISA, or in
respect of a Multiemployer Plan, under ss.ss.4041A, 4202, 4219, 4242, or 4245 of
ERISA.
11.12. Use of Proceeds. The Borrower will use the proceeds of the Loans and
the Consignments solely for financing the Acquisitions and for operating
expenses, payment of the CH Management Fees, Capital Expenditures, payments in
respect of Indebtedness and for other working capita and general corporate
purposes. The Borrower will obtain Letters of Credit solely for working capital
and general corporate purposes.
11.13. Additional Mortgaged Property. If, after the Closing Date, the
Borrower or any of its Subsidiaries (except for the Mexican Subsidiary) acquires
or leases for a term in excess of five (5) years real estate used as a
manufacturing or warehouse facility, the Borrower shall, or shall cause such
Subsidiary to, deliver promptly to the Collateral Agent a fully executed
mortgage or deed of trust over such real estate, in form and substance similar
to the Mortgages being delivered on the Closing Date, together with title
insurance policies (for amounts that correspond to the value of any such
property), surveys, evidences of insurances with the Collateral Agent named as
loss payee and additional insured, legal opinions and other documents and
certificates similar to those being delivered concurrently herewith with respect
to such real estate.
11.14. Bank Accounts.
(a) On or prior to the Closing Date, the Borrower will, and will cause
each of its Subsidiaries (other than the Mexican Subsidiary) to, (i)
establish depository accounts (the "FNBB Concentration Accounts") under the
control of the Dollar Agent for the benefit of the Banks and the Agents, in
the name of the Borrower or such Subsidiary, (ii) direct all Depository
Banks (other than as set forth on Schedule 10.20 hereto with respect to a
temporary account with Citibank, N.A.), pursuant to Agency Account
Agreements satisfactory to the Agents with each of such Depository Banks,
to cause all funds held in each such Depository Bank to be transferred on a
daily basis to, and only to, the FNBB Concentration Account or such other
location as the Dollar Agent shall designate; provided that so long as no
Event of Default shall have occurred and be continuing, the Borrower or
such Subsidiary shall not be required to cause to be transferred amounts
deposited in two accounts with Texas Commerce Bank designated as the "SBI
Operations Account" and the "SBI Expense Reports (ACH only)", respectively,
of up to $800,000 in the
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aggregate for both such accounts at any time, (iii) cause all proceeds of
Accounts Receivable of the Borrower to be deposited only into the FNBB
Concentration Account or depository accounts with Depository Banks which
are parties to an Agency Account Agreement requiring such proceeds to be
transferred to the FNBB Concentration Account, and (iv) at all times ensure
that, within five (5) days following the Borrower's or any of its
Subsidiaries' receipt of any cash or cash equivalents or any other proceeds
of Collateral, all such amounts (except to the limited extent provided in
the proviso in clause (ii) above) shall have been deposited in the FNBB
Concentration Accounts.
(b) The Borrower will, and will cause each of its Subsidiaries to,
obtain Agency Account Agreements (whereby such depository institution
shall, among other things, waive any right to set-off, other than for
service charges and returns incurred in connection therewith) from each
Depository Bank (other than as set forth on Schedule 10.20 hereto with
respect to a temporary account with Citibank, N.A.).
(c) The Borrower hereby agrees that all amounts belonging to the
Borrower or any of its Subsidiaries and received by the Dollar Agent in the
FNBB Concentration Account will be the sole and exclusive property of the
Collateral Agent, for the accounts of the Banks and the Agents, to be
applied in accordance withss.8.8(b) andss.8.9 as set forth therein.
11.15. Inventory Restrictions. The Borrower shall cause, and shall cause
each of its Subsidiaries to cause, Precious Metal and all other inventory to be
located at all times solely at Borrower Permitted Inventory Locations, Specified
Refiners and Sales Representative Inventory Locations (except for (a) samples
held in the ordinary course of business by sales representatives or at retail
locations, (b) Precious Metal in transit between the Borrower and a Specified
Refiner or Precious Metal or other inventory in transit between Borrower
Permitted Inventory Locations, (c) inventory in transit to be sold, transferred
or otherwise disposed of to the extent permitted by ss.12.5.2 hereof prior to
the transferee's taking title thereto, and (d) inventory in other locations
having a value not to exceed $2,000,000 at any time). The Borrower shall also
cause, and shall cause each of its Subsidiaries to cause, Precious Metal and all
other inventory, to be sold or otherwise disposed of in the ordinary course of
the Borrower's or such Subsidiary's business, consistent with past practices or
as required pursuant to the terms of this Credit Agreement.
11,16. Further Assurances. The Borrower will, and will cause each of its
Subsidiaries to, cooperate with the Banks, the Collateral Agent and the Agents
and execute such further instruments and documents as any of the Banks, the
Collateral Agent or the Agents shall reasonably reques s. to carry out the
transactions contemplated by this Credit Agreement and the other Loan Documents.
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12. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan, Unpaid
Reimbursement Obligation, Letter of Credit, amount of Consigned Precious Metal
or Note is outstanding or any Bank has any obligation to make any Loans or
Consignments or the Dollar Agent has any obligation to issue, extend or renew
any Letters of Credit:
12.1. Restrictions on Indebtedness. The Borrower will not, and will not
permit any of its Subsidiaries to, create, incur, assume, guarantee or be or
remain liable, contingently or otherwise, with respect to any Indebtedness other
than:
(a) Indebtedness to the Banks, the Agents and the Collateral Agent
arising under any of the Loan Documents;
(b) Indebtedness consisting of the guaranty by the Borrower of rental
payment obligations of the Mexican Subsidiary under real property leases so
long as the aggregate amount of rental payment obligations so guarantied by
the Borrower shall not exceed $200,000 in any fiscal year;
(c) Indebtedness in respect of taxes, assessments, environmental,
governmental or other regulatory charges, fines, penalties or levies and
claims for labor, materials and supplies to the extent that payment
therefor shall not at the time be required to be made in accordance with
the provisions ofss.11.8;
(d) Indebtedness in respect of judgments or awards not resulting in an
Event of Default underss.16.1(i) hereof, but only so long as execution is
not levied thereunder on any property the fair market value of which is
$250,000 or more in the aggregate or $150,000 or more in any single
instance;
(e) endorsements for collection, deposit or negotiation and warranties
of products or services (including without limitation product liability
claims), in each case incurred in the ordinary course of business;
(f) Indebtedness evidenced by the Subordinated Notes (including
without limitation any Liquidated Damages (as defined in the Indenture)
referred to in the Indenture);
(g) obligations under Capitalized Leases not exceeding $1,000,000 in
aggregate amount at any time outstanding;
(h) Indebtedness incurred in connection with the acquisition after the
date hereof of any real or personal property by the Borrower or such
Subsidiary, provided that the aggregate principal amount of such
Indebtedness of the Borrower and its Subsidiaries shall not exceed
the aggregate amount of $1,000,000 at any one time;
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(i) Indebtedness existing on the date hereof and listed and described
on Schedule 12.1 hereto;
(j) Indebtedness (i) of any Subsidiary of the Borrower which is party
to the Guaranty owing to the Borrower or of the Borrower to such Subsidiary
of the Borrower, or (ii) of the Mexican Subsidiary owing to the Borrower or
of the Borrower owing to the Mexican Subsidiary in an aggregate amount for
all such Indebtedness of the Mexican Subsidiary to the Borrower (exclusive
of Indebtedness permitted by ss.12.1(b)), when combined with all other
Investments in the Mexican Subsidiary permitted by ss.12.3(f)(iii), not to
exceed $1,000,000 at any time outstanding;
(k) Indebtedness consisting of Permitted Employee Stock Repurchases
(including any promissory notes issued by the Borrower to repurchase common
stock of employees and sales representatives of the Borrower solely to the
extent permitted in the definition of Permitted Employee Stock
Repurchases);
(l) Indebtedness consisting of a Permitted Preferred Stock
Replacement;
(m) Indebtedness of the Borrower under Hedging Agreements entered into
by the Borrower in the ordinary course of business and not for speculative
purposes in order to fix or hedge the Borrower's currency risk in
connection with its purchase of foreign currencies so long as the Borrower
shall not enter into such Hedging Agreements to hedge in the aggregate at
any one time in excess of $4,000,000 worth of foreign currencies;
(n) Indebtedness of the Borrower under Hedging Agreements entered into
by the Borrower in the ordinary course of business and not for speculative
purposes in order to fix or hedge the Borrower's commodity risk in
connection with its purchase of Precious Metal so long as such Hedging
Agreements (i) consist of options or (ii) are entered into with the Gold
Agent or any of the Banks;
(o) Indebtedness consisting of guaranties of Indebtedness of employees
for moving, entertainment, travel and other similar expenses solely to the
extent permitted as Investments underss.12.3(h)
(p) Indebtedness consisting of guaranties of Indebtedness of sales
representatives to finance the acquisition of sales territories to the
extent permitted as Investments under ss.12.3(o);
(q) Indebtedness in respect of operating leases and in respect of the
payment of royalties or other similar obligations under license agreements
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which license agreements are generally consistent with and related to the
past practices and business of the Borrower;
(r) Indebtedness in respect of employee benefits, whether current or
retired employees, including, without limitation, accrued expenses, pension
liabilities, deferred compensation, bonus plans, medical, dental and other
plans providing benefits for employees;
(s) Indebtedness arising out of or related to (i) the Acquisitions or
(ii) the consolidation of the businesses acquired from the Balfour Sellers
or the CJC Sellers pursuant to the Acquisitions (including without
limitation, increased severance payments, working capital adjustments, fees
and costs), in each case solely to the extent that such Indebtedness is not
related to the borrowing of money or the obtaining of credit;
(t) Indebtedness consisting of the CH Management Fee and any deferred
portion thereof to the extent permitted pursuant toss.12.4 and 12.12
hereof;
(u) Indebtedness consisting of accrued Permitted Preferred Stock
Dividends or accrued dividends on any Permitted Preferred Stock
Replacement;
(v) Indebtedness consisting of obligations to Specified Refiners
solely in respect of amounts of Precious Metal credited or consigned to the
Borrower in exchange for unrefined Precious Metal sent by the Borrower to
such Specified Refiners;
(w) Indebtedness in respect of performance, bid or advance payment
bonds incurred in connection with bids on school ring contracts in an
aggregate amount not to exceed $400,000 outstanding at any time;
(x) Indebtedness of the Borrower and its Subsidiaries other than that
permitted elsewhere in thisss.12.1 in an aggregate principal amount not to
exceed (i) at all times prior to January of 1999, $1,000,000 at any time
outstanding and (ii) at all times during and after January of 1999,
$5,000,000 at any time outstanding; and
(y) Indebtedness of the Borrower with respect to that certain Master
Lease Agreement, No. 136331, dated as of August 2, 1994, between Town &
Country Corporation and Computer Sales International, Inc. not to exceed
$225,000.
12.2. Restrictions on Liens. The Borrower will not, and will not permit any
of its Subsidiaries to, (i) create or incur or suffer to be created or incurred
or to exist any lien, encumbrance, mortgage, pledge, charge, restriction or
other security interest
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of any kind upon any of its property or assets of any character whether now
owned or hereafter acquired, or upon the income or profits therefrom; (ii)
transfer any of such property or assets or the income or profits therefrom for
the purpose of subjecting the same to the payment of Indebtedness or performance
of any other obligation in priority to payment of its general creditors; (iii)
acquire, or agree or have an option to acquire, any property or assets upon
conditional sale or other title retention or purchase money security agreement,
device or arrangement; or (iv) except to the extent permitted in ss.12.5.2
hereof, sell, assign, pledge or otherwise transfer any accounts, contract
rights, general intangibles, chattel paper or instruments, with or without
recourse; provided that the Borrower and any of its Subsidiaries may create or
incur or suffer to be created or incurred or to exist:
(a) liens in favor of the Borrower on all or part of the assets of
Subsidiaries of the Borrower securing Indebtedness owing by Subsidiaries of
the Borrower to the Borrower, or liens in favor of a Subsidiary of the
Borrower (other than the Mexican Subsidiary) on all or part of the assets
of the Borrower securing Indebtedness owing by the Borrower to such
Subsidiary, in each case (i) to the extent such Indebtedness is permitted
by ss.12.1(j) and (ii) such indebtedness is subordinated to the Obligations
on terms and conditions reasonably satisfactory to the Agents;
(b) liens to secure taxes, assessments and other government charges in
respect of obligations not overdue or liens on properties to secure claims
for labor, material or supplies in respect of obligations not overdue;
(c) deposits or pledges made in connection with, or to secure payment
of, workmen's compensation, statutory obligations, trade contracts, leases,
insurance contracts, unemployment insurance, old age pensions or other
social security obligations, surety and appeal bonds and performance bonds
and other similar obligations, in each case arising in the ordinary course
of business and not involving the borrowing of money;
(d) liens on properties in respect of judgments or awards, the
Indebtedness with respect to which is permitted by ss.12.1(d);
(e) liens of carriers, warehousemen, mechanics and materialmen, and
other like liens, (i) in existence less than 120 days from the date of
creation thereof in respect of obligations not overdue or (ii) with respect
to which the obligations related thereto are contested by any of the
Borrower or its Subsidiaries in good faith or by appropriate proceedings
and the Borrower or such Subsidiary shall have set aside on its books
adequate reserves with respect thereto or the Borrower or such Subsidiary
will in good faith commence appropriate proceedings to contest such
obligation; provided that no proceedings in foreclosure or for the sale of
any property the fair market value of which is $250,000 or more in
aggregate or $150,000 or more in any
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single instance of the Borrower and its Subsidiaries on account of any such
liens shall have been commenced;
(f) encumbrances on Real Estate consisting of easements, rights of
way, zoning restrictions, restrictions on the use of real property and
defects and irregularities in the title thereto, landlord's or lessor's
liens under leases to which the Borrower or any of its Subsidiaries is a
party, and other minor liens or encumbrances none of which in the opinion
of the Borrower interferes materially with the use of the property affected
in the ordinary conduct of the business of the Borrower and its
Subsidiaries, which defects do not individually or in the aggregate have a
materially adverse effect on the business of the Borrower individually or
of the Borrower and its Subsidiaries on a consolidated basis;
(g) liens existing on the date hereof and listed on Schedule 12.2
hereto;
(h) purchase money security interests in or purchase money mortgages
on real or personal property acquired after the date hereof to secure
purchase money Indebtedness in an amount permitted by ss.12.1(h), incurred
in connection with the acquisition of such property, which security
interests or mortgages cover only the real or personal property so
acquired;
(i) liens and encumbrances on each Mortgaged Property as and to the
extent permitted by the Mortgage applicable thereto;
(j) liens in favor of the Collateral Agent, for the benefit of the
Banks, the Agents and the Collateral Agent, under the Loan Documents;
(k) any interest or title of a lessor of property leased to the
Borrower or such Subsidiary, or any encumbrance on any such interest or
title of such lessor, to the extent such lease is permitted hereby; and
(l) consignments of inventory by the Borrower entered into in the
ordinary course of business, consistent with past practices.
12.3. Restrictions on Investments. The Borrower will not, and will not
permit any of its Subsidiaries to, make or permit to exist or to remain
outstanding any Investment except Investments in:
(a) marketable direct or guaranteed obligations of the United States
of America or any agency or instrumentality thereof that mature within one
(1) year from the date of purchase by the Borrower or such Subsidiary;
(b) demand deposits, certificates of deposit, bankers acceptances and
time deposits of United States banks having total assets in excess of
$1,000,000,000;
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(c) securities commonly known as "commercial paper" issued by a
corporation organized and existing under the laws of the United States of
America or any state thereof that at the time of purchase have been rated
and the ratings for which are not less than "P 1" if rated by ▇▇▇▇▇'▇
Investors Services, Inc., and not less than "A 1" if rated by Standard and
Poor's;
(d) repurchase agreements secured by any one or more of the
Investments permitted by paragraphs (a), (b) or (c) above, provided, that
the Borrower holds the underlying documents and such documents are pledged
to the Collateral Agent for the benefit of the Collateral Agent, the Banks
and the Agents as collateral security for the Obligations (or if such
repurchase agreements have been purchased for the account of the Borrower
by a financial institution, such financial institution enters into an
agency agreement with the Collateral Agent in form and substance
satisfactory to the Collateral Agent);
(e) Investments existing on the date hereof and listed on Schedule
12.3 hereto;
(f) Investments (i) with respect to Indebtedness permitted by
ss.12.1(j) so long as such entities remain Subsidiaries of the Borrower,
(ii) in Subsidiaries of the Borrower (other than the Mexican Subsidiary) so
long as such entities remain Subsidiaries of the Borrower, (iii) in the
Mexican Subsidiary which, when combined with the amount of Indebtedness of
the Mexican Subsidiary to the Borrower permitted by ss.12.1(j) hereof (but
exclusive of Indebtedness permitted by ss.12.1(b) hereof) shall not exceed
$1,000,000 in the aggregate at any time, and (iv) consisting of the
guaranty by the Borrower of rental payment obligations of the Mexican
Subsidiary to the extent permitted by ss.12.1(b) hereof;
(g) Investments consisting of the Guaranty;
(h) Investments consisting of loans, guaranties and advances to
employees for moving, entertainment, travel and other similar expenses in
the ordinary course of business not to exceed (i) $1,500,000 in the
aggregate or $250,000 in the case of any single employee at any time during
the period through the date which is eighteen months following the date
hereof and (ii) $500,000 in the aggregate or $250,000 in the case of any
single employee at any time thereafter;
(i) Investments consisting of Permitted Employee Stock Repurchases or
Permitted Common Stock Repurchases;
(j) Investments (including debt obligations, stock, securities and
other obligations) to the extent received in connection with the
bankruptcy, reorganization or workout of any suppliers or customers of the
Borrower or
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such Subsidiary in settlement of delinquent obligations of, and other
disputes with, such suppliers or customers arising in the ordinary course
of business;
(k) Investments consisting of the extension of trade credit by the
Borrower and its Subsidiaries in the ordinary course of business not
involving (i) the borrowing of money, or (ii) the obtaining of credit
except for credit on an open account basis customarily extended and in fact
extended in connection with normal sales of goods and services;
(l) Investments constituting Capital Expenditures solely to the extent
otherwise permitted by the terms of this Credit Agreement;
(m) Investments consisting of promissory notes and other similar
non-cash consideration received as proceeds of asset dispositions permitted
by ss.12.5.2;
(n) Investments consisting of Hedging Agreements entered into by the
Borrower to the extent permitted by ss.12.1 hereof;
(o) Investments consisting of guaranties of Indebtedness of, or loans
or advances to, sales representatives of the Borrower to finance the
acquisition of sales territories to the extent that the aggregate amount of
such Investments shall not exceed $1,000,000 at any time outstanding; and
(p) Investments consisting of the guaranty by Subsidiaries of the
Borrower of the Borrower's obligations in respect of the Subordinated
Notes, such guaranty being subordinated to the Obligations on the same
basis as the obligations of the Borrower in respect of the Subordinated
Notes.
12.4. Distributions. The Borrower will not make any Distributions except,
so long as no Event of Default shall have occurred and be continuing and none
would result from the making thereof, (a) payment of the CH Management Fee in an
aggregate amount not to exceed $1,500,000 during any fiscal year of the
Borrower, provided that any portion of such amount not paid during any fiscal
year may be paid in any subsequent fiscal year, (b) Permitted Employee Stock
Repurchases, (c) Permitted Preferred Stock Dividends, (d) any Permitted
Preferred Stock Replacement, and (e) any Permitted Common Stock Repurchases.
12.5. Merger, Consolidation and Disposition of Assets.
12.5.1. Mergers and Acquisitions. The Borrower will not, and will not
permit any of its Subsidiaries to, become a party to any merger or
consolidation (other than an agreement to effect any such merger or
consolidation, the closing of which is conditioned upon the payment in full
in cash of all of the Obligations), or agree to or effect any asset
acquisition or stock acquisition (other than the acquisition of assets in
the ordinary course of
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business consistent with past practices) except the merger or consolidation
of one or more of the Subsidiaries of the Borrower with and into the
Borrower, or the merger or consolidation of two or more Subsidiaries of the
Borrower.
12.5.2. Disposition of Assets. The Borrower will not, and will not
permit any of its Subsidiaries to, become a party to or agree to or effect
any disposition of assets, other than (a) dispositions of assets and
consignments for sale of inventory by the Borrower or such Subsidiary or
other title retention arrangements, in each case entered into in the
ordinary course of business, consistent with past practices of the Sellers;
(b) transfers of assets resulting from any casualty or condemnation of such
assets so long as the same could not reasonably be expected to have a
material adverse effect on the business or financial condition of the
Borrower and its Subsidiaries taken as a whole and such amounts are used to
purchase replacement assets subject to the Collateral Agent's security
interest; (c) an agreement to effect the disposition of all or
substantially all of the assets of the Borrower or such Subsidiary, the
closing of which is conditioned upon the payment in full in cash of all of
the Obligations; (d) the sale or discount of overdue accounts receivable
arising in the ordinary course of business, but only in connection with the
compromise or collection thereof and only to the extent that the Collateral
Agent's security interest in such accounts receivable continues to apply to
all proceeds from the sale of such accounts receivable; (e) the sale or
other disposition of any Investments permitted to be made by ss.12.3
hereof; (f) the sale of assets by the Borrower to the extent mandated by
the Federal Trade Commission, such assets having a fair market value not
exceeding $14,000,000 in the aggregate, so long as (i) the Borrower
receives cash proceeds from such sales (either from direct proceeds of such
sales or from escrow arrangements made in connection with the Acquisitions)
equal to the fair market value of such assets, and (ii) such proceeds are
used, within two (2) Business Days of receipt by the Borrower thereof, to
prepay the principal amount of the Term Loan, such prepayment to be applied
to the remaining installments on the Term Loan in the inverse order of
their maturity; (g) the licensing of intellectual property for terms not in
excess of five (5) years other than in connection with the sale of the
business of the Borrower or such Subsidiary that do not result in a
reduction in assets of the Borrower or such Subsidiary under generally
accepted accounting principles so long as such licensing shall not
substantially impair or affect the operation of the business of the
Borrower and its Subsidiaries as a whole, (h) the licensing or granting of
rights to sales representatives to sell products of the Borrower in the
ordinary course of the Borrower's business, (i) dispositions of obsolete or
worn out machinery and equipment of the Borrower and dispositions of
machinery and equipment in connection with the consolidation of the
businesses acquired by the Borrower pursuant to the Acquisitions, and (j)
the sale or other disposition of other assets having a fair market value
not to exceed (i) for all such asset dispositions undertaken during the
period prior to the first anniversary of the Closing Date, $500,000 in the
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aggregate and (ii) for all such asset dispositions undertaken during any
one year period after the first anniversary of the Closing Date from one
anniversary of the Closing Date to the next anniversary of the Closing
Date, $250,000 in the aggregate.
12.6. Sale and Leaseback. The Borrower will not, and will not permit any of
its Subsidiaries to, enter into any arrangement, directly or indirectly, whereby
the Borrower or any Subsidiary of the Borrower shall sell or transfer any
property owned by it in order then or thereafter to lease such property or lease
other property that the Borrower or any Subsidiary of the Borrower intends to
use for substantially the same purpose as the property being sold or
transferred.
12.7. Compliance with Environmental Laws. The Borrower will not, and will
not permit any of its Subsidiaries to, except, in each case, in compliance with
all applicable Environmental Laws (a) use any of the Real Estate or any portion
thereof for the handling, processing, storage or disposal of Hazardous
Substances, (b) cause or permit to be located on any of the Real Estate any
underground tank or other underground storage receptacle for Hazardous
Substances, (c) generate any Hazardous Substances on any of the Real Estate, (d)
conduct any activity at any Real Estate or use any Real Estate in any manner so
as to cause a release (i.e. releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, disposing or
dumping) or threatened release of Hazardous Substances on, upon or into the Real
Estate or (e) otherwise conduct any activity at any Real Estate or use any Real
Estate in any manner that would violate any Environmental Law or bring such Real
Estate in violation of any Environmental Law, in any case where the same could
reasonably be expected to have a material adverse effect on the business or
financial condition of the Borrower and its Subsidiaries taken as a whole.
12.8. Indenture and Subordinated Notes. The Borrower will not amend,
supplement or otherwise modify the terms of the Indenture or any of the
Subordinated Notes or prepay, redeem, cause the defeasance of or repurchase any
of the Subordinated Notes; provided, however, the Borrower may amend or modify
the Subordinated Notes or refinance, refund or replace the Subordinated Notes
with new notes (any such amended, modified or new notes resulting from any such
amendment, modification, refinancing, refunding or replacement being herein
referred to as the "New Notes") so long as (a) such New Notes are on
substantially identical terms as the Subordinated Notes (including without
limitation, terms relating to subordination and covenants), provided that such
New Notes may have a longer maturity, lower interest rates, less restrictive
covenants, slower sinking fund payments and lower prepayment premiums and (b)
the Agents shall have reviewed such New Notes prior to their issuance. The
Borrower will not, and will not permit its Subsidiaries to, incur any additional
Indebtedness which would constitute "Designated Senior Indebtedness" as such
term is defined in the Indenture.
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12.9. Employee Benefit Plans. The Borrower will not:t Plans.
(a) engage in any non-exempt "prohibited transaction" within the
meaning ofss.406 of ERISA orss.4975 of the Code which could reasonably be
expected to result in a material liability for the Borrower or any of its
Subsidiaries; or
(b) permit any Guaranteed Pension Plan to incur an "accumulated
funding deficiency", as such term is defined inss.302 of ERISA, whether or
not such deficiency is or may be waived; or
(c) fail, or permit any ERISA Affiliate to fail, to contribute to any
Guaranteed Pension Plan to an extent which, or terminate any Guaranteed
Pension Plan in a manner which, could reasonably be expected to result in
the imposition of a lien or encumbrance on the assets of the Borrower or
any of its Subsidiaries pursuant toss.302(f) orss.4068 of ERISA; or
(d) amend, or permit any ERISA Affiliate to amend, any Guaranteed
Pension Plan in circumstances requiring the posting of security pursuant to
ss.307 of ERISA or ss.401(a)(29) of the Code; or
(e) permit or take any action which would result in the aggregate
benefit liabilities (with the meaning ofss.4001 of ERISA) of all Guaranteed
Pension Plans exceeding the value of the aggregate assets of such Plans,
disregarding for this purpose the benefit liabilities and assets of any
such Plan with assets in excess of benefit liabilities, by more than
$500,000.00.
12.10. Bank Accounts. The Borrower will not, and will not permit any of its
Subsidiaries (other than the Mexican Subsidiary) to, (a) establish any bank
accounts other than those listed on Schedule 10.20 (as such may be amended from
time to time to include new depository accounts with existing or new depository
institutions acceptable to the Agents which have executed and delivered Agency
Account Agreements in the form of Exhibit A hereto covering such new depository
accounts) without the Agents' prior written consent, (b) violate directly or
indirectly any bank agency or lock box agreement in favor of the Collateral
Agent for the benefit of the Banks, the Agents and the Collateral Agent with
respect to such account.
12.11. Consignment Transactions. Except pursuant to this Credit Agreement,
the Borrower will not, nor will the Borrower permit or suffer any of its
Subsidiaries to, enter into any consignment transactions as the consignee or
buyer thereunder, including consignments of Precious Metal, except for (a)
deliveries of diamonds to the Borrower on "approval" in the ordinary course of
business and (b) deliveries by Specified Refiners of refined Precious Metal to
the Borrower as credits against amounts of unrefined Precious Metal sent by the
Borrower to such Specified Refiners for refining in the ordinary course of
business to the extent such delivery of Precious Metal to the Borrower is deemed
to be done on a consignment basis.
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12.12. Transactions with Affiliates. The Borrower will not, nor will the
Borrower permit or suffer any of its Subsidiaries to, conduct any transactions
among themselves or with any Affiliates of the Borrower, other than (a) so long
as no Event of Default shall have occurred and be continuing and none would
result from the making thereof, payment of the CH Management Fee in an aggregate
amount not to exceed $1,500,000 during any fiscal year of the Borrower, provided
that any portion of such amount not paid during any fiscal year may be paid in
any subsequent fiscal year, (b) transactions with Oakley Insurance Group
regarding the Borrower's insurance policies and coverage upon terms not
materially less favorable to the Borrower or such Subsidiary than it could
obtain in a comparable arm's-length transaction with a party other than Oakley
Insurance Group, (c) a Permitted Preferred Stock Replacement, (d) transactions
among the Borrower and its Subsidiaries, (e) any Permitted Employee Stock
Repurchases, (f) any Permitted Common Stock Repurchase, (g) transactions
constituting Investments permitted by ss.ss.12.3(h) or (o) hereof, and (h)
transactions in the ordinary course of the Borrower's or such Subsidiary's
business, consistent with past practices, and upon terms not materially less
favorable to the Borrower or such Subsidiary than it could obtain in a
comparable arm's-length transaction with a party other than the Borrower, such
Subsidiary or such Affiliate.
12.13. Subsidiaries. The Borrower will not create any Subsidiaries in
addition to the existing Subsidiaries listed on Schedule 10.19 hereto.
12.14. Limitations on Mexican Subsidiary. The Borrower will not permit the
Mexican Subsidiary to own assets having an aggregate book value in excess of
$1,000,000.
13. FINANCIAL COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan, Unpaid
Reimbursement Obligation, Letter of Credit, amount of Consigned Precious Metal
or Note is outstanding or any Bank has any obligation to make any Loans or
Consignments or the Dollar Agent has any obligation to issue, extend or renew
any Letters of Credit:
13.1. Senior Funded Debt to EBITDA. The Borrower will not permit the ratio
of (a) Consolidated Senior Funded Debt for any period of (i) four consecutive
complete fiscal quarters occurring after the Closing Date and ending during any
period set forth in the table below or (ii) if shorter, the period since the
Closing Date ending on a fiscal quarter ending date occurring during any period
set forth in the table below, to (b) Consolidated EBITDA for any period of four
consecutive fiscal quarters then ended to exceed the ratio set forth opposite
such period in such table:
Period Ratio
------ -----
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2/28/97 - 8/31/97 3.00:1.00
11/30/97 - 2/28/98 2.75:1.00
5/31/98 - 2/28/99 2.50:1.00
5/31/99 and thereafter 2.25:1.00
13.2. Consolidated EBITDA. The Borrower will not permit Consolidated
EBITDA for any period of four consecutive fiscal quarters ending during any
period set forth in the table below to be less than the amount set forth
opposite such period in such table:
Period Amount
------ ------
2/28/97 - 8/31/97 $15,750,000
11/30/97 $19,000,000
2/28/98 $20,000,000
5/31/98 - 8/31/98 $20,600,000
11/30/98 $21,500,000
2/28/98 - 8/31/99 $22,000,000
11/30/99 - 8/31/00 $22,700,000
11/30/00 - 8/31/01 $23,500,000
11/30/01 - 8/31/02 $24,000,000
11/30/02 - 8/31/03 $24,500,000
11/30/03 and thereafter $25,000,000
13.3. Capital Expenditures. The Borrower will not make, or permit any
Subsidiary of the Borrower to make, Capital Expenditures during any fiscal year
set forth in the table below (or the portion thereof, in the case of the fiscal
year in which the Closing Date occurs) that exceed, the aggregate, the amount
set forth opposite such fiscal year in such table:
Fiscal Year Amount
----------- ------
1997 $4,395,000
1998 $3,700,000
1999 $3,500,000
2000 $3,500,000
2001 $3,500,000
2002 $3,500,000
2003 $3,500,000
2004 $3,500,000
13.4. Interest Coverage. The Borrower will not permit the ratio of (i)
Consolidated EBITDA (excluding amortization of deferred financing costs incurred
in connection with the closing of the transactions contemplated by the Loan
Documents and the Acquisition Documents) for any period of four consecutive
fiscal quarters ending during any period set forth in the table below, to (ii)
Consolidated Total Interest Expense (excluding amortization of deferred
financing costs incurred in connection with the closing of the transactions
contemplated by the Loan Documents
2
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and the Acquisition Documents) for such period, to be less than the ratio set
forth opposite such period in such table:
Period Ratio
------ -----
2/28/97 - 8/31/97 1.00:1.00
11/30/97 1.20:1.00
2/28/98 - 8/31/98 1.30:1.00
11/30/98 1.40:1.00
2/28/99 - 8/31/00 1.50:1.00
11/30/00 - 8/31/01 1.60:1.00
11/30/01 and thereafter 1.75:1.00
14. CLOSING CONDITIONS.
The obligations of the Applicable Banks to make the initial Revolving
Credit Loans, the initial Gold Loans, the initial Consignments and the Term Loan
and of the Dollar Agent to issue any initial Letters of Credit shall be subject
to the satisfaction of the following conditions precedent on or prior to
December 31, 1996:
14.1. Loan Documents, etc. Each of the Loan Documents shall have been duly
executed and delivered by the respective parties thereto, shall be in full force
and effect and shall be in form and substance satisfactory to each of the Banks.
Each Bank shall have received a fully execute copy of each such document.
14.2. Certified Copies of Charter Documents. Each of the Banks shall have
received from the Borrower and each of its Subsidiaries a copy, certified by a
duly authorized officer of such Person to be true and complete on the Closing
Date, of each of (a) its charter or other incorporation documents as in effect
on such date of certification, and (b) its by-laws as in effect on such date.
14.3. Corporate Action. All corporate action necessary for the valid
execution, delivery and performance by the Borrower and each of its Subsidiaries
of this Credit Agreement and the other Loan Documents to which it is or is to
become a party shall have been duly and effectively taken, and evidence thereof
satisfactory to the Banks shall have been provided to each of the Banks.
14.4. Incumbency Certificate. Each of the Banks shall have received from
the Borrower and each of its Subsidiaries an incumbency certificate, dated as of
the Closing Date, signed by a duly authorized officer of the Borrower or such
Subsidiary, and giving the name and bearing a specimen signature of each
individual who shall be authorized: (a) to sign, in the name and on behalf of
the Borrower or such Subsidiary, each of the Loan Documents to which the
Borrower or such Subsidiary is or is to become a party; (b) in the case of the
Borrower, to make Loan Requests, Consignment Requests, Conversion Requests and
Consignment Conversion Requests and to apply for Letters of Credit; and (c) to
give notices and to take other action on its behalf under the Loan Documents.
3
-102-
14.5. Validity of Liens. The Security Documents shall be effective to
create in favor of the Collateral Agent a legal, valid and enforceable first
(except for Permitted Liens entitled to priority under applicable law) security
interest in and lien upon the Collateral. All filings, recordings, deliveries of
instruments and other actions necessary or desirable in the opinion of the
Collateral Agent and the Agents to protect and preserve such security interests
shall have been duly effected including, without limitation, all notices
required to be filed under Section 9-114 or Section 9-312(3) of the Uniform
Commercial Code in effect in the Commonwealth of Massachusetts or any then
applicable jurisdiction. The Collateral Agent shall have received evidence
thereof in form and substance satisfactory to the Collateral Agent, the Agent
and the Banks.
14.6. Perfection Certificate and UCC Search Results. The Collateral Agent
shall have received from each of the Borrower and its Subsidiaries a completed
and fully executed Perfection Certificate and the results of current UCC
searches with respect to the Collateral, indicating no liens other than
Permitted Liens and otherwise in form and substance satisfactory to the
Collateral Agent, the Agent and the Banks. The Agents shall have received and
shall be satisfied with the form and substance of all consignment financing
statements filed or to be filed on behalf of trade vendors as consignors.
14.7. Certificates of Insurance. The Agents shall have received (a) a
certificate of insurance from an independent insurance broker dated as of the
Closing Date, identifying insurers, types of insurance, insurance limits, and
policy terms, and otherwise describing the insurance obtained in accordance with
the provisions of the Security Agreement and (b) certified copies of all
policies evidencing such insurance (or certificates therefore signed by the
insurer or an agent authorized to bind the insurer).
14.8. FNBB Concentration Accounts; Agency Account Agreements. The Borrower
shall have established the FNBB Concentration Accounts, and the Agents shall
have received an Agency Account Agreement, in form and substance reasonably
satisfactory to the Agents, from each Depository Bank, in each case concerning
the Collateral Agent's interest for the benefit of the Banks, the Agents and the
Collateral Agent, in the depository accounts maintained by the Borrower with
such Depository Banks.
14.9. Borrowing Base Report; Consigned Precious Metal Report; Monthly
Inventory Report. The Agents shall have received from the Borrower the initial
Borrowing Base Report and the initial Consigned Precious Metal Report, in each
case prepared on the basis of the best available data (taking into account that
the Acquisitions are bein ortr; Consigned Precious Metal Report; Monthly
Inventory Report. consummated simultaneously with the closing of the
transactions contemplated hereby), each dated as of the Closing Date.
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14.10. Accounts Receivable Aging Report. The Agents shall have received
from the Borrower the most recent Accounts Receivable aging report of the
Borrower dated as of a date which shall be no more than thirty (30) days prior
to the Closing Date and the Borrower shall have notified the Agents in writing
on the Closing Date of any material deviation from the Accounts Receivable
values reflected in such Accounts Receivable aging report and shall have
provided the Agents with such supplementary documentation as the Agents may
reasonably request.
14.11. Opinions of Counsel. Each of the Banks, the Collateral Agent and the
Agents shall have received (a) a favorable legal opinion addressed to the Banks,
the Collateral Agent and the Agents, dated as of the Closing Date, in form and
substance satisfactory to the Banks and the Agents, from ▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇,
counsel to the Borrower and its Subsidiaries; and (b) copies of each of all
legal opinions delivered upon the consummation of the Acquisitions by counsel to
the respective parties to the Acquisition Documents, each in form and substance
satisfactory to the Banks and the Administrative Agent, and each accompanied by
a reliance letter with respect thereto in favor of the Banks, the Collateral
Agent and the Agents.
14.12. Payment of Fees. The Borrower shall have paid to the Banks or the
Agents, as appropriate, the closing fee, and the Agents' fee pursuant to
ss.ss.8.10 and 8.11.
14.13. Payoff Letters. The Agents shall have received a payoff letter from
each of (a) State Street Bank and Trust Company, as successor to The Connecticut
Bank and Trust Company, National Association, and ▇. ▇▇▇▇▇▇▇▇▇ (the "Trustees"),
as trustees under a Trust Agreement securing an aggregate principal amount of
$130,000,000 and payable to Texas Commerce Bank, (b) Foothill Capital
Corporation ("Foothill") and (c) Fleet Bank, indicating the amount of the loan
and consignment obligations of the CJC Sellers and the Balfour Sellers,
respectively, to such parties to be discharged on the Closing Date and an
acknowledgment by each of such parties that upon receipt of such funds they will
forthwith execute and deliver evidence to the Agents of the filing of all
termination statements and take such other actions as may be necessary to
discharge all mortgages, deeds of trust and security interests and consignment
rights granted by the CJC Sellers and the Balfour Sellers, respectively, in
favor of such parties.
14.14. Consummation of Equity Investment and Subordinated Note Issuance.
The stockholders of the Borrower shall have contributed an aggregate amount of
equity to the Borrower not less than $50,000,000 in connection with the
Acquisitions and the initial capitalization of the Borrower. The Borrower shall
also have issued the Subordinated Notes, and such issuance shall have yielded
net cash proceeds to the Borrower in an aggregate amount of $83,000,000. The
Subordinated Notes shall have been issued on terms and conditions satisfactory
in all respects to the Agents and the Banks.
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14.15. Financial Statements. The Agents and the Banks shall have received
the financial statements required to be delivered to them by ss.10.4.
14.16. Survey and Taxes; Appraisal. The Collateral Agent shall have
received (i) updated Surveys of the Mortgaged Properties (other than the
Borrower's Kentucky facility) together with a Surveyor Certificate relating
thereto and (ii) evidence of payment of real estate taxes and municipal charges
on all Real Estate not delinquent on or before the Closing Date. The Agents
shall have received an appraisal in form and substance satisfactory to them from
an appraiser satisfactory to them with respect to the Sellers' machinery and
equipment and with respect to the Borrower's facilities located on Lots ▇-▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Subdivision in Austin, Texas.
14.17. Title Insurance. The Collateral Agent shall have received Title
Policies covering the Mortgaged Properties (or commitments to issue such
policies, with all conditions to issuance of each Title Policy deleted by an
authorized agent of the Title Insurance Company) together with proof of payment
of all fees and premiums for such policies, from the Title Insurance Company and
in amounts satisfactory to the Collateral Agent, insuring the interest of the
Collateral Agent and each of the Banks as mortgagee under the Mortgages.
14.18. Environmental Reports. The Agents shall have received, for the
purpose of assessing and ensuring the value of any Mortgaged Property, the
Environmental Reports.
14.19. Landlord Consents. The Borrower and its Subsidiaries shall have
delivered to the Collateral Agent all consents required for the Collateral Agent
to receive, as part of the Security Documents, a collateral assignment of each
material leasehold of personal property, and a mortgage of the Borrower's
leasehold interest in the real property located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, together with such estoppel certificates or landlord's
consents with respect to each material leasehold of real property of the
Borrower as the Collateral Agent may request. Except for a landlord's consent
and estoppel, it is understood that in no event shall any other consents or
documents be required, including without limitation, any other collateral
assignment or mortgage be required in respect of any property of the Borrower
located in Massachusetts.
14.20. Closing of Acquisitions. Each of the Acquisition Documents shall
have been duly executed and delivered by the respective parties thereto, shall
be in full force and effect and shall be in form and substance reasonably
satisfactory to each of the Agents and the Banks. The Agents shall have received
a fully executed copy of each such document. The Acquisitions shall have been
duly consummated on or prior to the Closing Date in accordance with the terms of
the Acquisition Documents. The Agents shall have received evidence, reasonably
satisfactory to them, of the completion by the parties to the Acquisition
Documents of all actions to be taken prior to or concurrently with the closing
of the transactions contemplated thereby
6
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pursuant to the terms thereof, including without limitation, the satisfaction
or, to the extent consented to in writing by the Agents, waiver, of all
conditions to closing set forth in the Acquisition Documents and the payment by
each applicable party thereto of all amounts required to be paid at closing. The
Agents shall have received evidence, reasonably satisfactory to them, that all
consents and approvals necessary to complete the Acquisitions shall have been
obtained and such consents and approvals shall be in form and substance
reasonably satisfactory to the Agents. Without limiting the foregoing, the
Agents shall have received evidence, reasonably satisfactory to them, of the
receipt of all necessary governmental or regulatory approvals, including,
without limitation, the satisfaction of all requirements under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, and the
regulations promulgated thereunder.
14.21. Consolidated EBITDA. The Sellers shall have had Consolidated EBITDA,
on a pro forma basis for the period of twelve months ending on the last day of
the October 1996 fiscal month equal to at least $18,000,000.
14.22. Governmental Regulation. Each Bank shall have received such
statements in substance and form reasonably satisfactory to such Bank as such
Bank shall require for the purpose of compliance with any applicable regulations
of the Comptroller of the Currency or the Board of Governors o ations. the
Federal Reserve System.
14.23. Proceedings and Documents. All proceedings in connection with the
transactions contemplated by this Credit Agreement, the other Loan Documents and
all other documents incident thereto shall be satisfactory in substance and in
form to the Banks and to the Agents and the Agents' Special Counsel, and the
Banks, the Agents and such counsel shall have received all information and such
counterpart originals or certified or other copies of such documents as the
Agents or such Banks may reasonably request.
15. CONDITIONS TO ALL BORROWINGS.
The obligations of the Applicable Banks to make any Loans, including the
initial Revolving Credit Loans, Gold Loans and the Term Loan, or any
Consignments, including the initial Consignments, and of the Dollar Agent to
issue, extend or renew any Letter of Credit, in each case whether on or after
the Closing Date, shall also be subject to the satisfaction of the following
conditions precedent:
15.1. Representations True; No Event of Default. Each of the
representations and warranties of any of the Borrower and its Subsidiaries
contained in this Credit Agreement, the other Loan Documents or in any document
or instrument delivered pursuant to or in connection with this Credit Agreement
shall be true in all material respects as of the date as of which they were made
and shall also be true in all material respects at and as of the time of the
making of such Loan or
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Consignment or the issuance, extension or renewal of such Letter of Credit, with
the same effect as if made at and as of that time (except to the extent of
changes resulting from transactions contemplated or permitted by this Credit
Agreement and the other Loan Documents and changes occurring in the ordinary
course of business that singly or in the aggregate are not materially adverse,
and to the extent that such representations and warranties relate expressly to
an earlier date) and no Default or Event of Default shall have occurred and be
continuing.
15.2. Borrowing Base Report; Consigned Precious Metal Report. The Agents
and the Banks shall have received the most recent Borrowing Base Report required
to be delivered to the Agents and the Banks in accordance with ss.11.4(f) and
the most recent Consigned Precious Metal Report required to be delivered to the
Agents and the Banks in accordance with ss.11.4(f), and if requested by the
Applicable Agent, updates to such most recent Borrowing Base Report or, as the
case may be, Consigned Precious Metal Report which solely provide information as
to updated sales and receipts as of a date within five (5) days of the Drawdown
Date or, as the case may be, the Gold Drawdown Date of such Loan or such
Consignment or of the date of issuance, extension or renewal of such Letter of
Credit. It is understood and agreed that the Borrower may furnish to the Agents
and the Banks from time to time an updated Borrowing Base Report or Consigned
Precious Metal Report, in which case availability under the Dollar Facility
and/or the Gold Facility shall be determined based upon such updated reports.
16. EVENTS OF DEFAULT; ACCELERATION; ETC.
16.1. Events of Default and Acceleration. If any of the following events
("Events of Default" or, if the giving of notice or the lapse of time or both is
required, then, prior to such notice or lapse of time, "Defaults") shall occur:
(a) the Borrower shall fail to pay any principal of the Loans or any
Reimbursement Obligation or fail to purchase and pay for or Redeliver
Consigned Precious Metal when the same shall become due and payable or
required, whether at the stated date of maturity or any accelerated date of
maturity or at any other date fixed for payment or Redelivery;
(b) the Borrower or any of its Subsidiaries shall fail to pay any
interest on the Loans or Consignment Fees or Gold Fronting Fees or
Consignment Premiums on Consigned Precious Metal, the commitment fees, any
Letter of Credit Fee, the Agents' fee, or other sums due hereunder or under
any of the other Loan Documents, within one (1) Business Day after the same
shall become due and payable, whether at the stated date of maturity or any
accelerated date of maturity or at any other date fixed for payment;
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(c) the Borrower shall fail to comply with any of its covenants
contained inss.ss.11.4(a), (b), (c), (d), (f), (g), (h), or (i)
orss.ss.11.5.1, 11.6(a), 11.12, 11.14, 11.15, 12 or 13;
(d) the Borrower or any of its Subsidiaries shall fail to perform any
material term, covenant or agreement contained herein or in any of the
other Loan Documents (other than those specified elsewhere in thisss.16.1)
for thirty (30) days after written notice of such failure has been given to
the Borrower by the Agents;
(e) any material representation or warranty of the Borrower or any of
its Subsidiaries in this Credit Agreement or any of the other Loan
Documents or in any other document or instrument delivered pursuant to or
in connection with this Credit Agreement shall prove to have been false in
any material respect upon the date when made or deemed to have been made or
repeated;
(f) the Borrower or any of its Subsidiaries shall (i) fail to pay at
maturity, or within any applicable period of grace, (A) any obligation in
respect of the Subordinated Notes or (B) any other obligation for borrowed
money or credit received or in respect of any Capitalized Leases, in each
case under this clause (B) in excess of $1,000,000.00, or (ii) fail to
observe or perform any material term, covenant or agreement contained (A)
in the Indenture or the Subordinated Notes or (B) in any agreement by which
it is bound, evidencing or securing borrowed money or credit received or in
respect of any Capitalized Leases, in each case under this clause (B) in
excess of $1,000,000.00, for such period of time as would permit (assuming
the giving of appropriate notice if required) the holder or holders thereof
or of any obligations issued thereunder to accelerate the maturity thereof;
(g) the Borrower or any of its Subsidiaries (other than the Mexican
Subsidiary) shall make an assignment for the benefit of creditors, or admit
in writing its inability to pay or generally fail to pay its debts as they
mature or become due, or shall petition or apply for the appointment of a
trustee or other custodian, liquidator or receiver of the Borrower or any
of its Subsidiaries (other than the Mexican Subsidiary) or of any
substantial part of the assets of the Borrower or any of its Subsidiaries
(other than the Mexican Subsidiary) or shall commence any case or other
proceeding relating to the Borrower or any of its Subsidiaries (other than
the Mexican Subsidiary) under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar law
of any jurisdiction, now or hereafter in effect, or shall take any action
to authorize or in furtherance of any of the foregoing, or if any such
petition or application shall be filed or any such case or other proceeding
shall be commenced against the Borrower or any of its Subsidiaries (other
than the Mexican Subsidiary) and the Borrower or any of its Subsidiaries
(other than the Mexican Subsidiary) shall indicate its approval thereof,
consent
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thereto or acquiescence therein or such petition or application shall not
have been dismissed within forty-five (45) days following the filing
thereof;
(h) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating the Borrower or any of
its Subsidiaries (other than the Mexican Subsidiary) bankrupt or insolvent,
or approving a petition in any such case or other proceeding, or a decree
or order for relief is entered in respect of the Borrower or any Subsidiary
of the Borrower (other than the Mexican Subsidiary) in an involuntary case
under federal bankruptcy laws as now or hereafter constituted;
(i) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty days, whether or not consecutive, any final
judgment against the Borrower or any of its Subsidiaries that, with other
outstanding final judgments, undischarged, against the Borrower or any of
its Subsidiaries exceeds in the aggregate $1,000,000.00;
(j) if any of the Loan Documents shall be cancelled, terminated,
revoked or rescinded or the Collateral Agent's security interests,
mortgages or liens in a substantial portion of the Collateral shall cease
to be perfected, or shall cease to have the priority contemplated by the
Security Documents, in each case otherwise than in accordance with the
terms thereof or with the express prior written agreement, consent or
approval of the Banks, or any action at law, suit or in equity or other
legal proceeding to cancel, revoke or rescind any of the Loan Documents
shall be commenced by or on behalf of the Borrower or any of its
Subsidiaries party thereto or any of their respective stockholders, or any
court or any other governmental or regulatory authority or agency of
competent jurisdiction shall make a determination that, or issue a
judgment, order, decree or ruling to the effect that, any one or more of
the Loan Documents is illegal, invalid or unenforceable in accordance with
the terms thereof;
(k) if the Borrower or any ERISA Affiliate shall incur any liability
to the PBGC or a Guaranteed Pension Plan pursuant to Title IV of ERISA in
an aggregate amount exceeding $1,000,000; if the Borrower or any ERISA
Affiliate shall be assessed withdrawal liability pursuant to Title IV of
ERISA by a Multiemployer Plan requiring aggregate annual payments exceeding
$1,000,000, or if any of the following shall occur with respect to a
Guaranteed Pension Plan: (i) an ERISA Reportable Event, or a failure to
make a required installment or other payment (within the meaning of
ss.302(f)(1) of ERISA), provided the Agents determine in their reasonable
discretion that such event (A) could be expected to result in liability of
the Borrower to the PBGC or the Plan in an aggregate amount exceeding
$1,000,000 and (B) could constitute grounds for the termination of such
Plan by the PBGC, for the appointment by the appropriate United States
District Court of a trustee to administer such
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Plan or for the imposition of a lien in favor of the Guaranteed Pension
Plan; (ii) the appointment by a United States District Court of a trustee
to administer such Plan; or (iii) the institution by the PBGC of
proceedings to terminate such Plan;
(l) the Borrower or any of its Subsidiaries (other than the Mexican
Subsidiary) shall be enjoined, restrained or in any way prevented by the
order of any court or any administrative or regulatory agency from
conducting any material part of its business and such order shall continue
in effect for more than thirty (30) days; or
(m) ▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners II L.P. and its affiliates shall at any
time, legally or beneficially own less than 51% of the shares of the Voting
Stock of the Borrower or shall at any time cease to be able to elect at
least a majority of the members of the board of directors of the Borrower;
then, and in any such event (i) the Borrower shall purchase all Consigned
Precious Metal in accordance with the provisions of ss.5.4 hereof and (ii) so
long as the same may be continuing, the Agents may, and upon the request of the
Majority Banks shall, by notice in writing to the Borrower declare all amounts
owing with respect to this Credit Agreement, the Notes and the other Loan
Documents and all Reimbursement Obligations to be, and they shall thereupon
forthwith become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived by
the Borrower; provided that in the event of any Event of Default specified in
ss.ss.16.1(g) or 16.1(h), all such amounts shall become immediately due and
payable automatically and without any requirement of notice from the Agents or
any Bank.
16.2. Termination of Commitments. If any one or more of the Events of
Default specified in ss.16.1(g) or ss.16.1(h) shall occur, any unused portion of
the credit hereunder shall forthwith terminate and each of the Banks shall be
relieved of all further obligations to make Loans and Consignments to the
Borrower and the Dollar Agent shall be relieved of all further obligations to
issue, extend or renew Letters of Credit. If any other Event of Default shall
have occurred and be continuing, the Agents may and, upon the request of the
Majority Banks, shall, by notice to the Borrower, terminate the unused portion
of the credit hereunder, and upon such notice being given such unused portion of
the credit hereunder shall terminate immediately and each of the Banks shall be
relieved of all further obligations to make Loans and Consignments and the
Dollar Agent shall be relieved of all further obligations to issue, extend or
renew Letters of Credit. No termination of the credit hereunder shall relieve
the Borrower or any of its Subsidiaries of any of the Obligations.
16.3. Remedies. In case any one or more of the Events of Default shall have
occurred and be continuing, and whether or not the Banks shall have accelerated
the maturity of the Loans pursuant to ss.16.1, each Bank, if owed any amount
with respect
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to the Loans, Consignments or the Reimbursement Obligations, may, with the
consent of the Majority Banks but not otherwise, proceed to protect and enforce
its rights by suit in equity, action at law or other appropriate proceeding,
whether for the specific performance of any covenant or agreement contained in
this Credit Agreement and the other Loan Documents or any instrument pursuant to
which the Obligations to such Bank are evidenced, including as permitted by
applicable law the obtaining of the ex parte appointment of a receiver, and, if
such amount shall have become due, by declaration or otherwise, proceed to
enforce the payment thereof or any other legal or equitable right of such Bank.
No remedy herein conferred upon any Bank or the Agents or the holder of any Note
or of any rights in the Consigned Precious Metal or the purchaser of any Letter
of Credit Participation is intended to be exclusive of any other remedy and each
and every remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or any other provision of law.
17. SETOFF.
Regardless of the adequacy of any collateral, during the continuance of any
Event of Default, any deposits or other sums credited by or due from any of the
Banks to the Borrower and any securities or other property of the Borrower in
the possession of such Bank may, upon notice thereof given to the Borrower, be
applied to or set off by such Bank against the payment of Obligations and any
and all other liabilities, direct, or indirect, absolute or contingent, due or
to become due, now existing or hereafter arising, of the Borrower to such Bank.
Each of the Banks agrees with each other Bank that (a) if an amount to be set
off is to be applied to Indebtedness of the Borrower to such Bank, other than
Indebtedness evidenced by the Notes held by such Bank or constituting
Reimbursement Obligations owed to, or, as the case may be, constituting
obligations in respect of Consigned Precious Metal owed to, such Bank, such
amount shall be applied ratably to such other Indebtedness and to the
Indebtedness evidenced by all such Notes held by such Bank or constituting
Reimbursement Obligations owed to, or, as the case may be, constituting
obligations in respect of Consigned Precious Metal owed to, such Bank, and (b)
if such Bank shall receive from the Borrower, whether by voluntary payment,
exercise of the right of setoff, counterclaim, cross action, enforcement of the
claim evidenced by the Notes held by, or constituting Reimbursement Obligations
owed to, or, as the case may be, constituting obligations in respect of
Consigned Precious Metal owed to, such Bank by proceedings against the Borrower
at law or in equity or by proof thereof in bankruptcy, reorganization,
liquidation, receivership or similar proceedings, or otherwise, and shall retain
and apply to the payment of the Note or Notes held by, or Reimbursement
Obligations owed to, or, as the case may be, constituting obligations in respect
of Consigned Precious Metal owed to, such Bank any amount in excess of its
ratable portion of the payments received by all of the Applicable Banks with
respect to the Notes held by, and Reimbursement Obligations owed to, or, as the
case may be, constituting obligations in respect of Consigned Precious Metal
owed to, all of the Applicable Banks, such Bank will make such disposition and
arrangements with
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the other Banks with respect to such excess, either by way of distribution, pro
tanto assignment of claims, subrogation or otherwise as shall result in each
Bank receiving in respect of the Notes held by it or Reimbursement obligations
owed it, or, as the case may be, obligations in respect of Consigned Precious
Metal owed to it, its proportionate payment as contemplated by this Credit
Agreement; provided that if all or any part of such excess payment is thereafter
recovered from such Bank, such disposition and arrangements shall be rescinded
and the amount restored to the extent of such recovery, but without interest.
18. THE AGENTS.
18.1. Authorization.
(a) Each of the Agents and the Collateral Agent is authorized to take
such action on behalf of each of the Applicable Banks and to exercise all
such powers as are hereunder and under any of the other Loan Documents and
any related documents delegated to such Agent or Collateral Agent, together
with such powers as are reasonably incident thereto, provided that no
duties or responsibilities not expressly assumed herein or therein shall be
implied to have been assumed by the Agents or the Collateral Agent.
(b) The relationship between the Agents and each of the Banks is that
of an independent contractor. The use of the terms "Agent" and "Collateral
Agent" is for convenience only and is used to describe, as a form of
convention, the independent contractual relationship between the Agents and
each of the Banks. Nothing contained in this Credit Agreement nor the other
Loan Documents shall be construed to create an agency, trust or other
fiduciary relationship between the Agents and any of the Banks.
(c) As independent contractors empowered by the Banks to exercise
certain rights and perform certain duties and responsibilities hereunder
and under the other Loan Documents, each of the Agents and the Collateral
Agent is nevertheless a "representative" of the Banks, as that term is
defined in Article 1 of the Uniform Commercial Code, for purposes of
actions for the benefit of the Banks, the Collateral Agent and the Agents
with respect to all collateral security and guaranties contemplated by the
Loan Documents. Such actions include the designation of the Collateral
Agent as "secured party", "mortgagee" or the like on all financing
statements and other documents and instruments, whether recorded or
otherwise, relating to the attachment, perfection, priority or enforcement
of any security interests, mortgages or deeds of trust in collateral
security intended to secure the payment or performance of any of the
Obligations, all for the benefit of the Banks, the Agents and the
Collateral Agent.
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18.2. Employees and Agents. The Agents may exercise their powers and
execute its duties by or through employees or agents and shall be entitled to
take, and to rely on, advice of counsel concerning all matters pertaining to its
rights and duties under this Credit Agreement and the other Loan Documents. The
Agents may utilize the services of such Persons as the Agents in their sole
discretion may reasonably determine, and all reasonable fees and expenses of any
such Persons shall be paid by the Borrower.
18.3. No Liability. Neither the Agents nor any of their shareholders,
directors, officers or employees nor any other Person assisting them in their
duties nor any agent or employee thereof, shall be liable for any waiver,
consent or approval given or any action taken, or omitted to be taken, in good
faith by them hereunder or under any of the other Loan Documents, or in
connection herewith or therewith, or be responsible for the consequences of any
oversight or error of judgment whatsoever, except that the Agents or such other
Person, as the case may be, may be liable for losses due to its willful
misconduct or gross negligence.
18.4. No Representations. The Agents shall not be responsible for the
execution or validity or enforceability of this Credit Agreement, the Notes, the
Letters of Credit, any of the other Loan Documents or any instrument at any time
constituting, or intended to constitute, collateral security for the Notes or
the obligations in respect of Consigned Precious Metal, or for the value of any
such collateral security or for the validity, enforceability or collectability
of any such amounts owing with respect to the Notes or the obligations in
respect of Consigned Precious Metal, or for any recitals or statements,
warranties or representations made herein or in any of the other Loan Documents
or in any certificate or instrument hereafter furnished to it by or on behalf of
the Borrower or any of its Subsidiaries, or be bound to ascertain or inquire as
to the performance or observance of any of the terms, conditions, covenants or
agreements herein or in any instrument at any time constituting, or intended to
constitute, collateral security for the Notes or the obligations in respect of
Consigned Precious Metal or to inspect any of the properties, books or records
of the Borrower or any of its Subsidiaries. The Agents shall not be bound to
ascertain whether any notice, consent, waiver or request delivered to it by the
Borrower or any holder of any of the Notes or of any right in respect of
Consigned Precious Metal shall have been duly authorized or is true, accurate
and complete. The Agents have not made nor do they now make any representations
or warranties, express or implied, nor do they assume any liability to the
Banks, with respect to the credit worthiness or financial conditions of the
Borrower or any of its Subsidiaries. Each Bank acknowledges that it has,
independently and without reliance upon either of the Agents or any other Bank,
and based upon such information and documents as it has deemed appropriate, made
its own credit analysis and decision to enter into this Credit Agreement.
18.5. Payments.