Execution Copy
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ABL CREDIT AGREEMENT
Dated as of May 25, 2007
Among
AAH HOLDINGS CORPORATION
AMSCAN HOLDINGS, INC.
THE SUBSIDIARIES OF AMSCAN HOLDINGS, INC. FROM TIME TO TIME
PARTY HERETO
THE FINANCIAL INSTITUTIONS PARTY HERETO
as the Lenders,
CREDIT SUISSE,
as Administrative Agent,
and
BANK OF AMERICA, N.A.,
as Collateral Agent
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CREDIT SUISSE SECURITIES (USA) LLC,
and
BANC OF AMERICA SECURITIES LLC,
as Joint Bookrunners and Joint Lead Arrangers,
BANC OF AMERICA SECURITIES LLC
and
WACHOVIA SECURITIES LLC
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as Co-Syndication Agents
▇▇▇▇▇▇▇ ▇▇▇▇▇ CAPITAL
and
▇▇▇▇▇ FARGO RETAIL FINANCE LLC
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as Co-Documentation Agents
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TABLE OF CONTENTS
PAGE
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ARTICLE 1
DEFINITIONS
Section 1.01. Defined Terms............................................. 1
Section 1.02. Classification of Loans and Borrowings.................... 47
Section 1.03. Terms Generally........................................... 47
Section 1.04. Accounting Terms; GAAP.................................... 48
Section 1.05. Effectuation of Transactions.............................. 48
Section 1.06. Timing of Payment of Performance.......................... 48
ARTICLE 2
THE CREDITS
Section 2.01. Commitments............................................... 48
Section 2.02. Loans and Borrowings...................................... 49
Section 2.03. Requests for Borrowings................................... 50
Section 2.04. Protective Advances....................................... 50
Section 2.05. Swingline Loans........................................... 52
Section 2.06. Letters of Credit......................................... 53
Section 2.07. Funding of Borrowings..................................... 59
Section 2.08. Type; Interest Elections.................................. 60
Section 2.09. Termination and Reduction of Commitments.................. 61
Section 2.10. Repayment of Loans; Evidence of Debt...................... 62
Section 2.11. Prepayment of Loans....................................... 63
Section 2.12. Fees...................................................... 64
Section 2.13. Interest.................................................. 65
Section 2.14. Alternate Rate of Interest................................ 66
Section 2.15. Increased Costs........................................... 66
Section 2.16. Break Funding Payments.................................... 68
Section 2.17. Taxes..................................................... 69
Section 2.18. Payments Generally; Allocation of Proceeds; Sharing of
Set offs.................................................. 71
Section 2.19. Mitigation Obligations; Replacement of Lenders............ 73
Section 2.20. Illegality................................................ 74
Section 2.21. Cash Receipts............................................. 75
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.01. Organization; Powers...................................... 77
Section 3.02. Authorization; Enforceability............................. 77
Section 3.03. Governmental Approvals; No Conflicts...................... 78
Section 3.04. Financial Condition; No Material Adverse Change........... 78
Section 3.05. Properties................................................ 79
Section 3.06. Litigation and Environmental Matters...................... 80
Section 3.07. Compliance with Laws and Agreements; Licenses and
Permits................................................... 80
Section 3.08. Investment Company Status................................. 80
Section 3.09. Taxes..................................................... 80
Section 3.10. ERISA..................................................... 81
Section 3.11. Disclosure................................................ 81
Section 3.12. Material Contracts........................................ 81
Section 3.13. Solvency.................................................. 82
Section 3.14. Insurance................................................. 82
Section 3.15. Capitalization and Subsidiaries........................... 82
Section 3.16. Security Interest in Collateral........................... 83
Section 3.17. Labor Disputes............................................ 83
Section 3.18. Federal Reserve Regulations............................... 83
Section 3.19. Senior Debt............................................... 84
Section 3.20. Sanctioned Persons........................................ 84
ARTICLE 4
CONDITIONS
Section 4.01. Closing Date.............................................. 84
Section 4.02. Each Credit Event......................................... 87
ARTICLE 5
AFFIRMATIVE COVENANTS
Section 5.01. Financial Statements and Other Reports.................... 89
Section 5.02. Existence................................................. 94
Section 5.03. Payment of Taxes and Claims............................... 94
Section 5.04. Maintenance of Properties................................. 95
Section 5.05. Insurance................................................. 95
Section 5.06. Inspections............................................... 95
Section 5.07. Lenders Meetings.......................................... 96
Section 5.08. Compliance with Laws...................................... 96
Section 5.09. Environmental............................................. 97
Section 5.10. Maintenance of Ratings.................................... 98
Section 5.11. Use of Proceeds........................................... 98
Section 5.12. Additional Collateral; Further Assurances................. 98
Section 5.13. Post-closing Items........................................ 100
ARTICLE 6
NEGATIVE COVENANTS
Section 6.01. Indebtedness.............................................. 100
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Section 6.02. Liens..................................................... 104
Section 6.03. Equitable Lien............................................ 107
Section 6.04. No Further Negative Pledges............................... 107
Section 6.05. Restricted Junior Payments................................ 108
Section 6.06. Restrictions on Subsidiary Distributions.................. 109
Section 6.07. Investments............................................... 109
Section 6.08. Fundamental Changes; Disposition of Assets;
Acquisitions.............................................. 112
Section 6.09. Disposal of Subsidiary Interests.......................... 115
Section 6.10. Sales and Lease-backs..................................... 115
Section 6.11. Transactions with Shareholders and Affiliates............. 115
Section 6.12. Conduct of Business....................................... 116
Section 6.13. Amendments or Waivers of Certain Related Agreements....... 116
Section 6.14. Amendments of or Waivers with Respect to Certain
Indebtedness.............................................. 116
Section 6.15. Fiscal Year............................................... 117
Section 6.16. Permitted Activities of Holdings.......................... 117
Section 6.17. Consolidated Capital Expenditures......................... 117
Section 6.18. Fixed Charge Coverage Ratio............................... 118
ARTICLE 7
EVENTS OF DEFAULT
Section 7.01. Events of Default......................................... 118
ARTICLE 8
THE AGENTS
ARTICLE 9
MISCELLANEOUS
Section 9.01. Notices................................................... 124
Section 9.02. Waivers; Amendments....................................... 126
Section 9.03. Expenses; Indemnity; Damage Waiver........................ 129
Section 9.04. Successors and Assigns.................................... 131
Section 9.05. Survival.................................................. 138
Section 9.06. Counterparts; Integration; Effectiveness.................. 138
Section 9.07. Severability.............................................. 138
Section 9.08. Right of Setoff........................................... 139
Section 9.09. Governing Law; Jurisdiction; Consent to Service of
Process................................................... 139
Section 9.10. Waiver of Jury Trial...................................... 140
Section 9.11. Headings.................................................. 141
Section 9.12. Confidentiality........................................... 141
Section 9.13. Several Obligations; Violation of Law..................... 141
Section 9.14. USA PATRIOT Act........................................... 142
Section 9.15. Disclosure................................................ 142
Section 9.16. Appointment for Perfection................................ 142
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Section 9.17. Interest Rate Limitation.................................. 142
Section 9.18. Intercreditor Agreement................................... 142
Section 9.19. Designation Of Subsidiaries............................... 143
ARTICLE 10
LOAN GUARANTY
Section 10.01. Guaranty.................................................. 143
Section 10.02. Guaranty of Payment....................................... 144
Section 10.03. No Discharge or Diminishment of Loan Guaranty............. 144
Section 10.04. Defenses Waived........................................... 145
Section 10.05. Rights of Subrogation..................................... 145
Section 10.06. Reinstatement; Stay of Acceleration....................... 145
Section 10.07. Information............................................... 146
Section 10.08. Taxes..................................................... 146
Section 10.09. Maximum Liability......................................... 146
Section 10.10. Contribution.............................................. 147
Section 10.11. Liability Cumulative...................................... 147
Section 10.12. Release of Loan Guarantors................................ 148
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SCHEDULES:
Schedule 1.01(a) - Existing Letters of Credit
Schedule 1.01(b) - Mortgaged Properties
Schedule 2.21(a) - DDAs
Schedule 2.21(b) - Credit Card Arrangements
Schedule 2.21(c) - Blocked Accounts
Schedule 3.14 - Insurance
Schedule 3.15 - Capitalization and Subsidiaries
Schedule 4.01(b) - Local Counsel
Schedule 6.01(i)- Existing Indebtedness
Schedule 6.01(t) - Corporate Leases Assigned/Sold/Transferred
Schedule 6.02 - Existing Liens
Schedule 6.07 - Existing Investments
Schedule 6.11 - Transactions with Affiliates
Schedule 9.01 - Borrower's Website Address for Electronic Delivery
EXHIBITS:
Exhibit A - Form of Administrative Questionnaire
Exhibit B - Form of Assignment and Assumption
Exhibit C - Form of Borrowing Base Certificate
Exhibit D - Form of Compliance Certificate
Exhibit E - Joinder Agreement
Exhibit F - Form of Letter of Credit Request
Exhibit G - Form of Borrowing Request
Exhibit H - Form of Promissory Note
Exhibit I - Form of Interest Election Request
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ABL CREDIT AGREEMENT dated as of May 25, 2007 (this "AGREEMENT"), among
AMSCAN HOLDINGS, INC., a Delaware corporation (the "BORROWER"), AAH HOLDINGS
CORPORATION, a Delaware corporation ("HOLDINGS"), the subsidiaries of the
Borrower from time to time party hereto, the Lenders (as defined in Article 1),
CREDIT SUISSE, as administrative agent for the Lenders hereunder (in such
capacity, the "ADMINISTRATIVE AGENT"), and Bank of America, as collateral agent
for the Lenders hereunder (in such capacity, the "COLLATERAL AGENT").
The Borrower has requested (a) the Lenders to extend credit in the form of
Revolving Loans at any time and from time to time during the Availability
Period, in an aggregate principal amount at any time outstanding not in excess
of $200,000,000, (b) the Swingline Lender to extend credit, at any time and from
time to time during the Availability Period, in the form of Swingline Loans, in
an aggregate principal amount at any time outstanding not in excess of
$10,000,000 and (c) the Issuing Banks to issue Letters of Credit, in an
aggregate face amount at any time outstanding not in excess of $25,000,000, to
support payment obligations incurred in the ordinary course of business by the
Borrower and its subsidiaries. The proceeds of the Revolving Loans and the
Swingline Loans are to be used solely (a) with respect to the Initial Revolving
Borrowing, to refinance certain existing indebtedness of the Borrower and its
Subsidiaries, to pay Transactions Costs, for working capital adjustments and to
replace or backstop letters of credit of the Borrower existing on the Closing
Date, and (b) with respect to all other borrowings thereof, for working capital
and other general corporate purposes of the Borrower and its subsidiaries.
The Lenders and the Swingline Lender are willing to extend such credit to
the Borrower, and the Issuing Banks are willing to issue Letters of Credit for
the account of the Borrower and its Subsidiaries, in each case on the terms and
subject to the conditions set forth herein. Accordingly, the parties hereto
agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.01. Defined Terms. As used in this Agreement, the following terms
have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Alternate Base Rate.
"ACCOUNT" has the meaning assigned to such term in the Pledge and Security
Agreement.
"ACCOUNT DEBTOR" means any Person obligated on an Account.
"ACH" means automated clearing house transfers.
"ADJUSTED LIBO RATE" means, for any Interest Period, the rate obtained by
dividing (a) the LIBO Rate for such Interest Period by (b) a percentage equal to
1 minus the stated maximum rate (stated as a decimal) of all reserves, if any,
required to be maintained against "Eurocurrency liabilities" as specified in
Regulation D (including any marginal, emergency, special or supplemental
reserves).
"ADJUSTMENT DATE" means the first day of each January, April, July and
October, as applicable.
"ADMINISTRATIVE AGENT" has the meaning assigned to such term in the
preamble to this Agreement.
"ADMINISTRATIVE QUESTIONNAIRE" means an Administrative Questionnaire in the
form of Exhibit A.
"ADVERSE PROCEEDING" means any action, suit, proceeding (whether
administrative, judicial or otherwise), governmental investigation or
arbitration (whether or not purportedly on behalf of the Borrower or any of its
Subsidiaries) at law or in equity, or before or by any Governmental Authority,
domestic or foreign (including any Environmental Claims), whether pending or, to
the knowledge of the Borrower or any of its Subsidiaries, threatened against or
affecting the Borrower or any of its Subsidiaries or any property of the
Borrower or any of its Subsidiaries.
"AFFILIATE" means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "CONTROL", (including, with
correlative meanings, the terms "CONTROLLING", "CONTROLLED BY" and "UNDER COMMON
CONTROL WITH"), as applied to any Person, means the possession, directly or
indirectly, of the power (i) to vote 10% or more of the Capital Stock having the
ordinary voting power for the election of directors of such Person or (ii) to
direct or cause the direction of the management and policies of that Person,
whether through the ownership of voting securities or by contract or otherwise,
but excluding any Person that would be an "Affiliate" solely because it is an
unrelated portfolio company of either Sponsor.
"AGENTS" means the Administrative Agent and the Collateral Agent.
"AGGREGATE COMMITMENTS" means, at any time, the sum of the Commitments at
such time. As of the Closing Date, the Aggregate Commitments is $200,000,000.
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"ALTERNATE BASE RATE" means, for any day, a rate per annum equal to the
greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate
Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.
"APPLICABLE PERCENTAGE" means, with respect to any Lender, a percentage
equal to a fraction the numerator of which is such Lender's Commitment and the
denominator of which is the Aggregate Commitments.
"APPLICABLE RATE" means, for any day, with respect to any ABR Loan or LIBO
Rate Loan, the applicable rate per annum set forth below under the caption "LIBO
Rate Spread" or "ABR Spread", as the case may be, based upon the Average
Historical Excess Availability as of the most recent Adjustment Date; provided
that until the first Adjustment Date occurring at least six full months after
the Closing Date, the "Applicable Rate" shall be the applicable rate per annum
set forth below in Category 2:
AVERAGE HISTORICAL EXCESS AVAILABILITY LIBO RATE SPREAD ABR SPREAD
----------------------------------------- ---------------- ----------
Category 1
Average Historical Excess Availability
less than $25,000,000 1.50% 0.50%
Category 2
Average Historical Excess Availability
equal to or greater than $25,000,000
but less than $100,000,000 1.25% 0.25%
Category 3
Average Historical Excess Availability
equal to or greater than $100,000,000 1.00% 0.00%
The Applicable Rate shall be adjusted quarterly on a prospective basis on
each Adjustment Date based upon the Average Historical Excess Availability in
accordance with the table above; provided, however, that if an Event of Default
shall have occurred and be continuing at any time a reduction of the Applicable
Rate would otherwise be implemented, no such reduction shall be implemented
until the date on which such Event of Default shall have been cured or waived;
provided further that if a Borrowing Base Certificate is not delivered on a
timely basis pursuant to Section 5.01(q), Average Historical Excess Availability
shall be deemed to be less than $25,000,000 until a Borrowing Base Certificate
is delivered in compliance with Section 5.01(q).
"APPROVED FUND" means any Person (other than a natural person) that is
engaged in making, purchasing, holding or investing in bank loans and similar
extensions of credit in the ordinary course and that is administered or managed
by
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(a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of
an entity that administers or manages a Lender.
"ARRANGERS" means Credit Suisse Securities (USA) LLC and Banc of America
Securities LLC.
"ASSET SALE" means the sale by Holdings or any of its Subsidiaries to any
Person other than the Borrower or any of its wholly-owned Subsidiaries of (i)
any of the Capital Stock of any of Holdings' Subsidiaries (including by issuance
of such Capital Stock), (ii) substantially all of the assets of any division or
line of business of the Borrower or any of its Subsidiaries, or (iii) any other
assets (whether tangible or intangible) of the Borrower or any of its
Subsidiaries (other than (a) inventory sold in the ordinary course of business,
(b) sales of Cash Equivalents for the fair market value thereof, and (c) any
such other assets to the extent that (x) the aggregate value of such assets sold
in any single transaction or related series of transactions is equal to
$2,500,000 or less and (y) the aggregate value of such assets sold is equal to
$10,000,000 or less in any Fiscal Year).
"ASSIGNMENT AND ASSUMPTION" means an assignment and assumption entered into
by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of Exhibit B or any other form approved by the Administrative Agent and the
Borrower.
"AVAILABLE COMMITMENT" means, at any time, the Aggregate Commitments then
in effect minus the Revolving Exposure of all Lenders at such time.
"AVAILABILITY PERIOD" means the period from and including the Closing Date
to but excluding the Maturity Date.
"AVAILABILITY RESERVES" means, without duplication of any other Reserves or
items that are otherwise addressed or excluded through eligibility criteria,
such reserves as the Agents from time to time determine in their Permitted
Discretion, as being appropriate to reflect any impediments to the realization
upon the Collateral consisting of Eligible Inventory, Eligible Credit Card
Receivables, or Eligible Trade Receivables included in the Borrowing Base
(including claims that the Agents reasonably determine will need to be satisfied
in connection with the realization upon such Collateral).
"AVERAGE HISTORICAL EXCESS AVAILABILITY" means, at any Adjustment Date, the
average daily Excess Availability for the three (3)-month period immediately
preceding such Adjustment Date (with the Borrowing Base at such time for any
such day used to determine "Excess Availability" calculated by reference to the
most recent Borrowing Base Certificate delivered to the Administrative Agent on
or prior to such day pursuant to Section 5.01(q).
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"BANKING SERVICES" means each and any of the following bank services
provided to any Loan Party at the written request of such Loan Party by the
Administrative Agent, any Lender or any of their Affiliates: (a) commercial
credit cards, (b) stored value cards and (c) treasury management services
(including, without limitation, controlled disbursement, ACH transactions,
return items and interstate depository network services).
"BANKING SERVICES OBLIGATIONS" of the Loan Parties means any and all
obligations of the Loan Parties, whether absolute or contingent and however and
whenever created, arising, evidenced or acquired (including all renewals,
extensions and modifications thereof and substitutions therefor), in connection
with Banking Services.
"BANKING SERVICES RESERVES" means all Reserves which the Agents from time
to time establish in their Permitted Discretion as being appropriate to reflect
reasonably anticipated liabilities and obligations of the Loan Parties in
respect of Banking Services then provided or outstanding.
"BANKRUPTCY CODE" means Title 11 of the United States Code (11 U.S.C.
Section 101 et seq.).
"BERKSHIRE" means Berkshire Partners LLC and shall include any fund
affiliated with Berkshire Partners LLC.
"BLOCKED ACCOUNT AGREEMENT" has the meaning assigned to such term in
Section 2.21(c).
"BLOCKED ACCOUNTS" has the meaning assigned to such term in Section
2.21(c).
"BOARD" means the Board of Governors of the Federal Reserve System of the
United States of America.
"BORROWER" has the meaning assigned to such term in the preamble to this
Agreement.
"BORROWING" means any (a) Revolving Loans of the same Type made, converted
or continued on the same date and, in the case of LIBO Rate Loans, as to which a
single Interest Period is in effect, (b) Swingline Loan or (c) Protective
Advance.
"BORROWING BASE" means, at any time, an amount equal to (a) the Trade
Receivables Component plus (b) the Inventory Component plus (c) the Credit Card
Receivables Component minus (d) without duplication, the then amount of all
Availability Reserves and other Reserves as the Agents may at any time and from
time to time in the exercise of their Permitted Discretion establish. The
Borrowing Base at any time shall be determined by reference to the most recent
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Borrowing Base Certificate delivered to the Administrative Agent pursuant to
Section 5.01(q).
"BORROWING BASE CERTIFICATE" means a certificate, signed and certified as
accurate and complete by a Financial Officer of the Borrower, in substantially
the form of Exhibit C or another form which is acceptable to the Agents in their
reasonable discretion.
"BORROWING REQUEST" means a request by the Borrower for a Borrowing in
accordance with Section 2.03 and substantially in the form attached hereto as
Exhibit G, or such other form as shall be approved by the Administrative Agent.
"BUSINESS DAY" means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed; provided that, when used in connection with a LIBO Rate Loan, the
term "Business Day" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.
"CAPITAL LEASE" means, as applied to any Person, any lease of any property
(whether real, personal or mixed) by that Person as lessee that, in conformity
with GAAP, is or should be accounted for as a capital lease on the balance sheet
of that Person.
"CAPITAL STOCK" means any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation),
including, without limitation, partnership interests and membership interests,
and any and all warrants, rights or options to purchase or other arrangements or
rights to acquire any of the foregoing.
"CASH" means money, currency or a credit balance in any demand or Deposit
Account.
"CASH EQUIVALENTS" means, as at any date of determination, (i) marketable
securities (a) issued or directly and unconditionally guaranteed as to interest
and principal by the United States Government or (b) issued by any agency of the
United States the obligations of which are backed by the full faith and credit
of the United States, in each case maturing within one year after such date;
(ii) marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof, in each case maturing within one year after such date
and having, at the time of the acquisition thereof, a rating of at least A-2
from S&P or at least P-2 from ▇▇▇▇▇'▇; (iii) commercial paper maturing no more
than one year from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
▇▇▇▇▇'▇; (iv) certificates of deposit or bankers' acceptances maturing within
one year after such date and issued or accepted by any Lender or by any
commercial bank organized
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under the laws of the United States of America or any state thereof or the
District of Columbia that has Tier 1 capital (as defined in the regulations of
its primary federal banking regulator) of not less than $100,000,000 (each
Lender and each commercial bank referred to herein as a "CASH EQUIVALENT BANK");
(v) shares of any money market mutual fund that (a) has substantially all of its
assets invested continuously in the types of investments referred to in clauses
(i) and (ii) above, (b) has net assets of not less than $250,000,000, and (c)
has the highest rating obtainable from either S&P or ▇▇▇▇▇'▇; and (vi) with
respect to Foreign Subsidiaries, investments of the types described in clause
(iv) above issued by a Cash Equivalent Bank or any commercial bank of recognized
international standing chartered in the country where such Foreign Subsidiary is
domiciled having unimpaired capital and surplus of at least $250,000,000.
"CHANGE IN LAW" means (a) the adoption of any law, rule or regulation after
the date of this Agreement, (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
the date of this Agreement or (c) compliance by any Lender or any Issuing Bank
(or, for purposes of Section 2.15(b), by any lending office of such Lender or by
such Lender's or such Issuing Bank's holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement (other
than any such request, guideline or directive to comply with any law, rule or
regulation that was in effect on the date of this Agreement).
"CHANGE OF CONTROL" means, at any time, (i) if Sponsor shall cease to
beneficially own and control 51% or more of the combined voting power of all of
the Capital Stock of Holdings, (ii) any Person or "group" (within the meaning of
Rules 13d-3 and 13d-5 under the Exchange Act) other than Sponsor shall have
after the Closing Date obtained the power (whether or not exercised) to elect a
majority of the members of the board of directors (or similar governing body) of
Holdings, (iii) the majority of the seats (other than vacant seats) on the board
of directors (or similar governing body) of Holdings cease to be occupied by
Persons who either (a) were members of the board of directors of Holdings on the
Closing Date or (b) were nominated for election by a majority of the board of
directors of Holdings, who were either (I) directors on the Closing Date or (II)
whose election or nomination for election was previously approved by a majority
of such directors or by Sponsor, (iv) Holdings shall cease to own 100% of the
Capital Stock of the Borrower or (v) any "change of control" or similar event
under the Senior Subordinated Note Indenture shall occur.
"CHARGES" has the meaning assigned to such term in Section 9.17.
"CHESTER DISTRIBUTION CENTER" means the distribution center located at ▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇.
"CHESTER DISTRIBUTION CENTER COLLATERAL" means the land and improvements
comprising the Chester Distribution Center.
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"CHESTER DISTRIBUTION CENTER PERMANENT FINANCING" means Indebtedness of the
Borrower pursuant to that certain mortgage dated December 20, 2001 with the New
York Job Development Authority in an individual principal amount, as of the
Closing Date, of $7,916,919, the proceeds of which have been used by the
Borrower to finance a portion of the construction and development of the ▇▇▇▇▇▇▇
Distribution Center.
"CLASS", when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are Revolving Loans,
Swingline Loans or Protective Advances.
"CLOSING DATE" means May 25, 2007, which is the date on which the
conditions specified in Section 4.01 are satisfied (or waived in accordance with
Section 9.02).
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COLLATERAL" means any and all property of a Loan Party subject to a Lien
under the Collateral Documents and any and all other property of any Loan Party,
now existing or hereafter acquired, that is or becomes subject to a Lien
pursuant to the Collateral Documents in favor of the Collateral Agent, on behalf
of itself and the Lenders, to secure the Secured Obligations.
"COLLATERAL ACCESS AGREEMENT" has the meaning assigned to such term in the
Pledge and Security Agreement.
"COLLATERAL AGENT" has the meaning assigned to such term in the preamble to
this Agreement.
"COLLATERAL AGENT ACCOUNT" has the meaning assigned to such term in Section
2.21(d).
"COLLATERAL DOCUMENTS" means, collectively, the Pledge and Security
Agreement, the Mortgages and any other documents granting a Lien upon the
Collateral as security for payment of the Secured Obligations.
"COMMITMENT" means, with respect to each Lender, the commitment of such
Lender to make Revolving Loans, acquire participations in Letters of Credit, and
to make Protective Advances and Swingline Loans hereunder, expressed as an
amount representing the maximum possible aggregate amount of such Lender's
Revolving Exposure hereunder, as such commitment may be (a) reduced from time to
time pursuant to Section 2.09 or (b) reduced or increased from time to time
pursuant to assignments by or to such Lender pursuant to Section 9.04. The
initial amount of each Lender's Commitment is set forth on the Commitment
Schedule, or in the Assignment and Assumption pursuant to which such Lender
8
shall have assumed its Commitment, as applicable. The initial aggregate amount
of the Lenders' Commitments is $200,000,000.
"COMMITMENT SCHEDULE" means the Schedule attached hereto identified as
such.
"COMMITMENT FEE RATE" means (a) for any day from the Closing Date until the
first Adjustment Date occurring at least six months after the Closing Date, a
rate equal to 0.25% per annum and (b) for any day thereafter, the applicable
rate per annum set forth below based upon the Average Historical Excess
Availability as of the most recent Adjustment Date:
AVERAGE HISTORICAL EXCESS AVAILABILITY COMMITMENT FEE RATE
---------------------------------------- -------------------
Category 1
Average Historical Excess
Availability less than $25,000,000 0.30%
Category 2
Average Historical Excess
Availability equal to or greater
than $25,000,000 0.25%
The Commitment Fee Rate shall be adjusted quarterly on a prospective basis on
each Adjustment Date based upon the Average Historical Excess Availability in
accordance with the table above; provided, however, that if an Event of Default
shall have occurred and be continuing at the time any reduction in the
Commitment Fee Rate would otherwise be implemented, no such reduction shall be
implemented until the date on which such Event of Default shall have been cured
or waived; provided further that if a Borrowing Base Certificate is not
delivered on a timely basis pursuant to Section 5.01(q), Average Historical
Excess Availability shall be deemed to be less than $25,000,000 until a
Borrowing Base Certificate is delivered in compliance with Section 5.01(q).
"COMPLIANCE CERTIFICATE" means a Compliance Certificate substantially in
the form of Exhibit D.
"CONSOLIDATED ADJUSTED EBITDA" means, for any period, an amount determined
for Holdings and its Subsidiaries on a consolidated basis equal to the total of
(I) Consolidated Net Income for such period plus (II) the sum, without
duplication, of (to the extent deducted in calculating Consolidated Net Income)
the amounts of:
(a) Consolidated Interest Expense;
(b) taxes paid and provisions for taxes based on income or profits;
(c) total depreciation expense;
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(d) total amortization expense;
(e) other non-cash items reducing Consolidated Net Income including without
limitation provisions for minority interests, and items resulting from marking
hedging obligations to market, purchase accounting, deferred rent and from
compensation charges due to stock awards or stock options (excluding any such
non-cash item to the extent that it represents (x) an accrual or reserve for
potential cash items in any future period, (y) amortization of a prepaid Cash
item that was paid in a prior period or (z) a reserve against or write down or
write-off of inventory in accordance with GAAP);
(f) Transaction Costs;
(g) any non-recurring or unusual Cash costs incurred in the relevant period
which are properly classified as such on the income statement of Holdings in
accordance with GAAP; provided that the aggregate amount of such non-recurring
or unusual Cash costs included in this clause (g) incurred during any Fiscal
Year shall not exceed $5,000,000;
(h) Management Fees accrued or paid in such period (excluding any
Management Fees paid in such period to the extent they represent an accrual in a
prior period); and
(i) any reasonable expenses or charges related to any issuance of Capital
Stock, Investments permitted under Section 6.07, Permitted Acquisitions, asset
sales permitted pursuant to Section 6.08 (d), (p), (q) or (r) or Indebtedness
permitted to be incurred under Section 6.01 (or related to any similar event
occurring prior to the Closing Date to the extent such expenses or charges were
incurred in such period), in each case whether or not consummated; and
minus (III) non-cash items increasing Consolidated Net Income for such period.
Notwithstanding anything to the contrary, it is agreed, that for the purpose of
calculating the Interest Coverage Ratio and the Fixed Charge Coverage Ratio, for
any period that includes the Fiscal Quarter ended on September 30, 2006 or the
Fiscal Quarter ended December 31, 2006, Consolidated Adjusted EBITDA for the
Fiscal Quarter ended on September 30, 2006, shall be deemed to be $18,940,000
and Consolidated Adjusted EBITDA for the Fiscal Quarter ended on December 31,
2006 shall be deemed to be $60,785,000.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the aggregate of
all expenditures of Holdings and its Subsidiaries during such period determined
on a consolidated basis that, in accordance with GAAP, are or should be included
in "purchase of property and equipment" or similar items reflected in the
consolidated statement of cash flows of Holdings and its Subsidiaries.
Notwithstanding the foregoing, Consolidated Capital Expenditures shall not
include (i) any amounts reinvested from Net Proceeds (determined without giving
10
effect to the exclusions in the definition of Asset Sale) or Net
Insurance/Condemnation Proceeds, (ii) expenditures made with tenant allowances
received by the Borrower or any of its Subsidiaries from landlords in the
ordinary course of business and subsequently capitalized, (iii) any amounts
spent in connection with Investments permitted pursuant to Section 6.07 and
Permitted Acquisitions permitted pursuant to Section 6.08(f), (iv) any additions
to property and equipment and other capital expenditures made with the proceeds
of any Sponsor Equity Contribution, (v) expenditures that are accounted for as
capital expenditures by the Borrower or any Subsidiary and that actually are
paid for by a Person other than the Borrower or any Subsidiary to the extent
neither the Borrower nor any Subsidiary has provided or is required to provide
or incur, directly or indirectly, any consideration or obligation to such Person
or any other Person (whether before, during or after such period), (vi) any
expenditures which are contractually required to be, and are, advanced or
reimbursed to the Loan Parties in cash by a third party (including landlords)
during such period of calculation, (vii) the book value of any asset owned by
the Borrower or any Subsidiary prior to or during such period to the extent that
such book value is included as a capital expenditure during such period as a
result of such Person reusing or beginning to reuse such asset during such
period without a corresponding expenditure actually having been made in such
period, provided that (A) any expenditure necessary in order to permit such
asset to be reused shall be included as a capital expenditure during the period
in which such expenditure actually is made and (B) such book value shall have
been included in capital expenditures when such asset was originally acquired,
or (viii) that portion of interest on Indebtedness incurred for capital
expenditures which is paid in cash and capitalized in accordance with GAAP.
"CONSOLIDATED CASH INTEREST EXPENSE" means, for any period, Consolidated
Interest Expense for such period, excluding any amount not payable currently in
cash.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, total interest
expense (including that portion attributable to Capital Leases in accordance
with GAAP and capitalized interest) of Holdings and its Subsidiaries on a
consolidated basis with respect to all outstanding Indebtedness of Holdings and
its Subsidiaries, including (i) all commissions, discounts and other fees and
charges owed with respect to letters of credit and (ii) any commitment fees on
the unused portion of the Revolving Commitments as set forth in Section 2.12.
For avoidance of doubt, Consolidated Interest Expense shall be net of payments
made or received under interest rate Hedge Agreements.
Notwithstanding anything to the contrary contained herein, for purposes of
determining Consolidated Interest Expense for any period ending prior to the
first anniversary of the Closing Date, Consolidated Interest Expense shall be an
amount equal to actual Consolidated Interest Expense from the Closing Date
through the date of determination multiplied by a fraction the numerator of
which
11
is 365 and the denominator of which is the number of days from the Closing Date
through the date of determination.
"CONSOLIDATED NET INCOME" means, for any period, the net income (or loss)
of Holdings and its Subsidiaries on a consolidated basis for such period taken
as a single accounting period determined in conformity with GAAP, provided that
there shall be excluded, without duplication, (a) the income (or loss) of any
Person (other than a Subsidiary of the Borrower and other than Amscan de Mexico,
S.A. de C.V. for so long as it is treated as a consolidated subsidiary of the
Borrower in accordance with GAAP) in which any other Person (other than Holdings
or any of its Subsidiaries) has a joint interest, except to the extent of the
amount of dividends or other distributions actually paid to Holdings or any of
its Subsidiaries by such Person during such period, (b) the income (or loss) of
any Person accrued prior to the date it becomes a Subsidiary of Holdings or is
merged into or consolidated with Holdings or any of its Subsidiaries or that
Person's assets are acquired by Holdings or any of its Subsidiaries, (c) the
income of any Subsidiary of Holdings to the extent that the declaration or
payment of dividends or similar distributions by that Subsidiary of that income
is not at the time permitted by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary, (d) any after-tax gains or losses
attributable to Asset Sales or returned surplus assets of any Plan, and (e) any
net extraordinary gains or net extraordinary losses.
"CONTRACTUAL OBLIGATION" means, as applied to any Person, any provision of
any Security issued by that Person or of any material indenture, mortgage, deed
of trust, contract, undertaking, agreement or other instrument to which that
Person is a party or by which it or any of its properties is bound or to which
it or any of its properties is subject.
"CONTROL" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"CONTROLLING" and "CONTROLLED" have meanings correlative thereto.
"COST" means the cost of purchases of Inventory determined according to the
accounting policies used in the preparation of the Borrower's most recent
audited financial statements (pursuant to which the average cost method of
accounting is utilized for substantially all merchandise Inventories).
"CREDIT CARD NOTIFICATION" has the meaning provided in Section 2.21(c).
"CREDIT CARD RECEIVABLES COMPONENT" means the face amount of Eligible
Credit Card Receivables multiplied by the 85%.
"CREDIT EXTENSION" means a Credit Extension made under the Commitments,
including all Swingline Loans, Protective Advances and LC Credit
12
Extensions (other than LC Credit Extensions made by Lenders pursuant to Section
2.06(d)).
"CREDIT EXTENSIONS" means each of (a) a Borrowing and (b) an LC Credit
Extension.
"CUSTOMER CREDIT LIABILITY RESERVE" means at any time, the aggregate
remaining value at such time of (a) outstanding gift certificates and gift cards
sold by the Borrower and Subsidiary Guarantors entitling the holder thereof to
use all or a portion of the certificate or gift card to pay all or a portion of
the purchase price for any Inventory, and (b) outstanding merchandise credits
issued by and customer deposits received by the Borrower and the Subsidiary
Guarantors.
"CUSTOMS BROKER AGREEMENT" means an agreement, in form and substance
reasonably satisfactory to the Collateral Agent, among the Borrower, the
Subsidiary Guarantors, a customs broker or other carrier, and the Collateral
Agent, in which the customs broker or other carrier acknowledges that it has
control over and holds the documents evidencing ownership of the subject
Inventory for the benefit of the Collateral Agent and agrees, upon notice from
the Collateral Agent (which notice shall be delivered only upon the occurrence
and during the continuation of the Event of Default), to hold and dispose of the
subject Inventory solely as directed by the Collateral Agent.
"DDA NOTIFICATION" has the meaning assigned to such term in Section
2.21(c).
"DDAS" means any checking or other demand deposit account maintained by the
Loan Parties (excluding any payroll, trust, VEBA and tax withholding accounts)
other than accounts with outstanding balances no greater than $500,000
individually and $1,500,000 in the aggregate. All funds in such DDAs shall be
conclusively presumed to be Collateral and proceeds of Collateral and the Agents
and the Lenders shall have no duty to inquire as to the source of the amounts on
deposit in the DDAs, subject to the Intercreditor Agreement.
"DEFAULT" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"DEFAULTING LENDER" means any Revolving Lender that has (a) defaulted in
its obligations under this Agreement, including without limitation, to make a
Revolving Loan or to fund its participation in a Letter of Credit, Swingline
Loan or Protective Advance required to be made or funded by it hereunder, (b)
notified the Administrative Agent or a Loan Party in writing that it does not
intend to satisfy any such obligation or (c) become insolvent or the assets or
management of which has been taken over by any Governmental Authority.
13
"DEPOSIT ACCOUNT" means a demand, time, savings, passbook or like account
with a bank, savings and loan association, credit union or like organization,
other than an account evidenced by a negotiable certificate of deposit.
"DERIVATIVE TRANSACTION" means (a) an interest-rate transaction, including
an interest-rate swap, basis swap, forward rate agreement, interest rate option
(including a cap, collar and floor), and any other instrument linked to interest
rates that gives rise to similar credit risks (including when-issued securities
and forward deposits accepted), (b) an exchange-rate transaction, including a
cross-currency interest-rate swap, a forward foreign-exchange contract, a
currency option, and any other instrument linked to exchange rates that gives
rise to similar credit risks, (c) an equity derivative transaction, including an
equity-linked swap, an equity-linked option, a forward equity-linked contract,
and any other instrument linked to equities that gives rise to similar credit
risk and (d) a commodity (including precious metal) derivative transaction,
including a commodity-linked swap, a commodity-linked option, a forward
commodity-linked contract, and any other instrument linked to commodities that
gives rise to similar credit risks; provided that no phantom stock or similar
plan providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of Holdings or its
subsidiaries shall be a Derivative Transaction.
"DISQUALIFIED CAPITAL STOCK" means any Capital Stock which, by its terms
(or by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, (i) matures (excluding any
maturity as the result of an optional redemption by the issuer thereof) or is
mandatorily redeemable (other than for Qualified Capital Stock), pursuant to a
sinking fund obligation or otherwise, or is redeemable at the option of the
holder thereof (other than for Qualified Capital Stock), in whole or in part, on
or prior to the first anniversary of the Maturity Date, (ii) is convertible into
or exchangeable (unless at the sole option of the issuer thereof) for (a) debt
securities or (b) any Equity Interests referred to in (i) above, in each case at
any time on or prior to the first anniversary of the Maturity Date, or (iii)
contains any repurchase obligation which may come into effect prior to payment
in full of all Obligations; provided, however, that any Capital Stock that would
not constitute Disqualified Capital Stock but for provisions thereof giving
holders thereof (or the holders of any security into or for which such Capital
Stock is convertible, exchangeable or exercisable) the right to require the
issuer thereof to redeem such Capital Stock upon the occurrence of a change in
control or an asset sale occurring prior to the first anniversary of the
Maturity Date shall not constitute Disqualified Capital Stock if such Capital
Stock provides that the issuer thereof will not redeem any such Capital Stock
pursuant to such provisions prior to the repayment in full of the Obligations.
"DOCUMENT" has the meaning set forth in Article 9 of the UCC.
14
"DOLLARS" or "$" refers to lawful money of the United States of America.
"DOMESTIC SUBSIDIARIES" means all Subsidiaries incorporated or organized
under the laws of the United States of America, any State thereof or the
District of Columbia.
"ELIGIBLE ASSIGNEE" means (i) a Lender, (ii) a commercial bank, insurance
company or company engaged in the business of making commercial loans or a
commercial finance company, which Person, together with its Affiliates, has a
combined capital and surplus in excess of $1,000,000,000, (iii) any Affiliate of
a Lender under common control with such Lender or (iv) an Approved Fund of a
Lender; provided that in any event, "Eligible Assignee" shall not include (w)
any natural person, (x) any Defaulting Lender, (y) Holdings or the Borrower or
any Affiliate thereof or (z) the Sponsor or any of their respective Affiliates.
"ELIGIBLE CREDIT CARD RECEIVABLES" means Accounts due to the Borrower and
the Subsidiary Guarantors on a non-recourse basis from Visa, Mastercard,
American Express Company, Discover, and other credit card or debit card issuer
and processors, as arise in the ordinary course of business, which have been
earned by performance, and are not excluded as ineligible by one or more of the
criteria set forth below (without duplication of any Reserves established by the
Agents). Without limiting the foregoing, none of the following shall be deemed
to be Eligible Credit Card Receivables:
(a) Accounts due from major credit card or debit card processors that
have been outstanding for more than five (5) Business Days from the date of
sale or for such longer period as may be approved by the Administrative
Agent in its reasonable discretion;
(b) Accounts due from major credit card or debit card processors with
respect to which the Borrower or a Subsidiary Guarantor does not have good,
valid and marketable title, free and clear of any Lien (other than Liens
granted to the Collateral Agent for its own benefit and the ratable benefit
of the other Credit Parties and Second Priority Liens and Permitted
Encumbrances);
(c) Accounts due from major credit card or debit card processors that
are not subject to a first priority security interest in favor of the
Collateral Agent for its own benefit and the ratable benefit of the other
Loan Parties other than Permitted Encumbrances having priority by
applicable law (it being the intent that chargebacks in the ordinary course
by the credit card processors shall not be deemed violative of this
clause);
(d) Accounts due from major credit card or debit card processors which
are disputed, are with recourse, or with respect to which a claim,
counterclaim, offset or chargeback has been asserted (to the extent of such
claim, counterclaim, offset or chargeback);
15
(e) Except as otherwise approved by the Administrative Agent (such
approval not to be unreasonably withheld), Accounts due from major credit
card or debit card processors as to which the credit card or debit card
processor has the right under certain circumstances to require the Borrower
or a Subsidiary Guarantor to repurchase the Accounts from such credit card
processor;
(f) Except as otherwise approved by the Administrative Agent (such
approval not to be unreasonably withheld), Accounts due from any Person on
account of any private label credit card or debit card receivables other
than such Accounts under programs between a Loan Party and a third party
reasonably acceptable to the Administrative Agent where the third party
retains the consumer credit exposure; or
(g) Accounts due from major credit card or debit card processors
(other than Visa, Mastercard, American Express Company and Discover) which
the Administrative Agent determines in its reasonable discretion acting in
good faith to be uncertain of collection.
"ELIGIBLE IN-TRANSIT INVENTORY" means, at any time, without duplication of
other Eligible Inventory, Inventory:
(a) which has been shipped (i) from a foreign location for receipt by
any Loan Party within forty-five (45) days of the date of shipment, or (ii)
from a domestic location for receipt by any Loan Party within fifteen (15)
days of the date of shipment, but, in either case, which has not yet been
delivered to such Loan Party;
(b) for which the purchase order is in the name of a Loan Party and
title has passed to such Loan Party;
(c) for which the document of title reflects any Loan Party as
consignee or, if requested by the Collateral Agent, names the Collateral
Agent as consignee, and in each case for Inventory shipped from a foreign
location, as to which the Collateral Agent has control over the documents
of title which evidence ownership of the subject Inventory (such as, if
requested by the Collateral Agent, by the delivery of a Customs Broker
Agreement);
(d) which is insured in accordance with the terms of this Agreement;
and
(e) which otherwise is not excluded from the definition of Eligible
Inventory (except by violation of (g), (j) or (n) of that definition).
16
"ELIGIBLE INVENTORY" means, at any time, all Inventory (excluding Eligible
In- Transit Inventory) of the Loan Parties; provided, however, that Eligible
Inventory shall not include any Inventory:
(a) which is not subject to a first priority perfected Lien in favor
of the Collateral Agent (other than a Landlord Lien as to which a Landlord
Lien Reserve applies and other than Liens Permitted under Section 6.02);
(b) which is subject to any Lien other than (i) a Lien in favor of the
Collateral Agent, (ii) a Second Priority Lien, (iii) a Permitted
Encumbrance arising by operation of law, (iv) a Landlord Lien as to which a
Landlord Lien Reserve applies or (v) Liens Permitted under Section 6.02;
(c) which is unmerchantable, defective or unfit for sale;
(d) which does not conform in all material respects to the
representations and warranties contained in this Agreement or the Pledge
and Security Agreement;
(e) which is not owned only by one or more Loan Parties;
(f) which constitutes work-in-process or supplies, spare parts or
other similar items dedicated for internal use by the Loan Parties,
▇▇▇▇-and-hold goods or goods that constitute goods held on consignment or
goods that are not of a type held for sale in the ordinary course of
business;
(g) which is not located in the U.S. or Canada or is in transit with a
common carrier from vendors or suppliers (other than Eligible In-Transit
Inventory);
(h) which is located at any location leased by a Loan Party, unless
(i) the lessor has delivered to the Collateral Agent a Collateral Access
Agreement as to such location or (ii) a Landlord Lien Reserve with respect
to such location has been established by the Agents in their Permitted
Discretion;
(i) which is located in any third party warehouse or is in the
possession of a bailee (other than a third party processor) and is not
evidenced by a Document, unless (i) such warehouseman or bailee has
delivered to the Collateral Agent a Collateral Access Agreement and such
other documentation as the Agents may reasonably require or (ii) a Landlord
Lien Reserve has been established by the Agents in their Permitted
Discretion;
17
(j) which is being processed offsite by a third party at a third party
location or outside processor, or is in transit (other than Eligible
In-Transit Inventory) to or from said third party location or outside
processor;
(k) which is the subject of a consignment by the Borrower as consignor
or consignee;
(l) which contains or bears any intellectual property rights licensed
to any Loan Party pursuant to a license with any Person other than a Loan
Party unless the Collateral Agent may sell or otherwise dispose of such
Inventory without (i) infringing the rights of such licensor, (ii)
violating any contract with such licensor, or (iii) incurring any liability
with respect to payment of royalties other than royalties incurred pursuant
to sale of such Inventory under the current licensing agreement relating
thereto;
(m) which is not reflected in a current perpetual inventory report
(other than Eligible In-Transit Inventory) of the Borrower or any of its
Subsidiaries; or
(n) which is acquired in connection with a Permitted Acquisition to
the extent the Agents shall not have received a Report in respect of such
Inventory, which Report shows results reasonably satisfactory to the
Agents; it being agreed that the Agents shall take such actions as are
reasonably required to obtain such a Report promptly upon the request of
the Borrower.
"ELIGIBLE TRADE RECEIVABLES" means, at any time, all Accounts (excluding
Eligible Credit Card Receivables) due to the Loan Parties arising from the sale
of goods of the Loan Parties or the provision of services by the Loan Parties;
provided, however, that Eligible Trade Receivables shall not include any
Account:
(a) which is not subject to a first priority perfected security
interest in favor of the Collateral Agent;
(b) which is subject to any Lien other than (i) a Lien in favor of the
Collateral Agent, (ii) a Second Priority Lien, (iii) a Permitted
Encumbrance arising by operation of law or (iv) a Lien that is permitted to
exist under Section 6.02;
(c) with respect to which more than 120 days have elapsed from the
original invoice date thereof, or which is more than 30 days past due, or
which has been written off the books of the Borrower or otherwise
designated as uncollectible;
18
(d) which is owing by an Account Debtor for which more than 50% of the
Accounts owing from such Account Debtor and its Affiliates are ineligible
pursuant to clause (c) above;
(e) which is owing by an Account Debtor to the extent the aggregate
amount of Accounts owing from such Account Debtor and its Affiliates to the
Borrower exceeds 20% of the aggregate Eligible Trade Receivables;
(f) which does not conform in all material respects to the
representations and warranties contained in this Agreement or in the Pledge
and Security Agreement;
(g) which (i) does not arise from the sale of goods or performance of
services in the ordinary course of business, (ii) is not evidenced by an
invoice or other documentation satisfactory to the Agents which has been
sent to the Account Debtor (it being agreed that the Borrower's current
practice with respect to electronic purchase orders and confirmations is
satisfactory to the Agents), (iii) represents a progress billing, (iv) is
contingent upon the Borrower's completion of any further performance, (v)
represents a sale on a ▇▇▇▇-and-hold, guaranteed sale, sale-and-return,
sale on approval, consignment, cash-on-delivery or any other repurchase or
return basis or (vi) relates to payments of interest;
(h) for which the goods giving rise to such Account have not been
shipped to the Account Debtor or for which the services giving rise to such
Account have not been performed by the Borrower or if such Account was
invoiced more than once;
(i) with respect to which any check or other instrument of payment has
been returned uncollected for any reason;
(j) which is owed by an Account Debtor which has (i) applied for,
suffered, or consented to the appointment of any receiver, custodian,
trustee or liquidator of its assets, (ii) has had possession of all or a
material part of its property taken by any receiver, custodian, trustee or
liquidator, (iii) filed, or had filed against it, any request or petition
for liquidation, reorganization, arrangement, adjustment of debts,
adjudication as bankrupt, winding-up, or voluntary or involuntary case
under any state or Federal bankruptcy laws, (iv) has admitted in writing
its inability, or is generally unable to, pay its debts as they become due,
(v) become insolvent, or (vi) ceased operation of its business;
(k) which is owed by any Account Debtor which has sold all or a
substantially all of its assets;
19
(l) which is owed by an Account Debtor which (i) does not maintain its
chief executive office in the U.S. or Canada or (ii) is not organized under
applicable law of the U.S. or Canada or any state or province thereof
unless, in any case, such Account is backed by a Letter of Credit
acceptable to the Agents which is in the possession of, has been assigned
to and is directly drawable by the Collateral Agent;
(m) which is owed in any currency other than U.S. Dollars;
(n) which is owed by (i) the government (or any department, agency,
public corporation or instrumentality thereof) of any country other than
the U.S. unless such Account is backed by a letter of credit reasonably
acceptable to the Agents and, if requested by an Agent, which is in the
possession of such Agent, or (ii) the government of the U.S., or any
department, agency, public corporation or instrumentality thereof, unless
the Federal Assignment of Claims Act of 1940, as amended (31 U.S.C. Section
3727 et seq. and 41 U.S.C. Section 15 et seq.), and any other steps
necessary to perfect the Lien of the Collateral Agent in such Account have
been complied with to the Agents' reasonable satisfaction;
(o) which is owed by any Affiliate, employee, officer, director, agent
or stockholder of any Loan Party;
(p) which is owed by an Account Debtor or any Affiliate of such
Account Debtor to which any Loan Party is indebted (but, subject to the
proviso below, only to the extent of such indebtedness) or is subject to
any security, deposit, progress payment, retainage or other similar advance
made by or for the benefit of an Account Debtor, in each case to the extent
thereof; provided, that no Account that otherwise constitutes an Eligible
Trade Receivable shall be rendered ineligible by virtue of this clause (p)
to the extent, but only to the extent, that the Account Debtor's right of
setoff is limited by an enforceable agreement that is reasonably
satisfactory to the Agents;
(q) which is subject to any counterclaim, deduction, defense, setoff
or dispute notice of which is provided to the Borrower or any of its
Subsidiaries but only to the extent of any such counterclaim, deduction,
defense, setoff or dispute; provided, that no Account that otherwise
constitutes an Eligible Trade Receivable shall be rendered ineligible by
virtue of this clause (q) to the extent, but only to the extent, that the
Account Debtor's right of setoff is limited by an enforceable agreement
that is reasonably satisfactory to the Agents;
(r) which is evidenced by any promissory note, chattel paper or
instrument;
20
(s) which is owed by an Account Debtor located in any jurisdiction
which requires filing of a "Notice of Business Activities Report" or other
similar report in order to permit the Borrower to seek judicial enforcement
in such jurisdiction of payment of such Account, unless the Borrower has
filed such report or is qualified to do business in such jurisdiction;
(t) with respect to which the Borrower has made any agreement with the
Account Debtor for the reduction thereof, other than discounts and
adjustments given in the ordinary course of business, or other than any
Account which was partially paid and the Borrower created a new receivable
for the unpaid portion of such Account; provided, that only the amount of
the reduction of any such Account shall be deemed ineligible by virtue of
this clause (t);
(u) which does not comply in all material respects with the
requirements of all applicable laws and regulations, whether Federal, state
or local, including without limitation the Federal Consumer Credit
Protection Act, the Federal Truth in Lending Act and Regulation Z of the
Board;
(v) which the Agents determine in their Permitted Discretion may not
be paid by reason of the Account Debtor's inability to pay; or
(w) which is acquired in connection with a Permitted Acquisition to
the extent the Agents shall not have received a Report in respect of such
Account, which Report shows results reasonably satisfactory to the Agents;
it being agreed that the Agents shall take such actions as are reasonably
required to obtain such a Report promptly upon the request of the Borrower.
If any Account at any time ceases to be an Eligible Trade Receivable, then
such Account shall promptly be excluded from the calculation of the Borrowing
Base.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as defined in
Section 3(3) of ERISA which is or was sponsored, maintained or contributed to
by, or required to be contributed by, the Borrower, any of its Subsidiaries or
any of their respective ERISA Affiliates.
"ENVIRONMENTAL CLAIM" means any investigation, notice, notice of violation,
claim, action, suit, proceeding, demand, abatement order or other order or
directive (conditional or otherwise), by any Governmental Authority or any other
Person, arising (i) pursuant to or in connection with any actual or alleged
violation of any Environmental Law; (ii) in connection with any Hazardous
Material or any actual or alleged Hazardous Materials Activity; or (iii) in
21
connection with any actual or alleged damage, injury, threat or harm to health,
safety, natural resources or the environment.
"ENVIRONMENTAL LAWS" means any and all current or future foreign or
domestic, federal or state (or any subdivision of either of them), statutes,
ordinances, orders, rules, regulations, judgments, Governmental Authorizations,
or any other requirements of Governmental Authorities and the common law
relating to (i) environmental matters, including those relating to any Hazardous
Materials Activity; (ii) the generation, use, storage, transportation or
disposal of Hazardous Materials; or (iii) occupational safety and health,
industrial hygiene, land use or the protection of human, plant or animal health
or welfare, in any manner applicable to the Borrower or any of its Subsidiaries
or any Facility.
"ENVIRONMENTAL LIABILITY" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor thereto.
"ERISA AFFILIATE" means, as applied to any Person, (i) any corporation
which is a member of a controlled group of corporations within the meaning of
Section 414(b) of the Internal Revenue Code of which that Person is a member;
and (ii) any trade or business (whether or not incorporated) which is a member
of a group of trades or businesses under common control within the meaning of
Section 414(c) of the Internal Revenue Code of which that Person is a member.
"ERISA EVENT" means (i) a "reportable event" within the meaning of Section
4043 of ERISA and the regulations issued thereunder with respect to any Pension
Plan (excluding those for which the 30-day notice period has been waived); (ii)
the failure to meet the minimum funding standard of Section 412 of the Code,
(iii) the provision by the administrator of any Pension Plan pursuant to Section
4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress
termination described in Section 4041(c) of ERISA; (iv) the withdrawal by the
Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates
from any Pension Plan with two or more contributing sponsors or the termination
of any such Pension Plan resulting in liability to the Borrower, any of its
Subsidiaries or any of their respective Affiliates pursuant to Section 4063 or
4064 of ERISA; (v) the institution by the PBGC of proceedings to terminate any
Pension Plan, or the occurrence of any event or condition which could reasonably
be expected to constitute grounds under ERISA for the termination of, or the
22
appointment of a trustee to administer, any Pension Plan; (vi) the imposition of
liability on the Borrower, any of its Subsidiaries or any of their respective
ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of
the application of Section 4212(c) of ERISA; (vii) the withdrawal of the
Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates in
a complete or partial withdrawal (within the meaning of Sections 4203 and 4205
of ERISA) from any Multiemployer Plan if there is any potential liability
therefore, or the receipt by the Borrower, any of its Subsidiaries or any of
their respective ERISA Affiliates of notice from any Multiemployer Plan that it
is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or
that it intends to terminate or has terminated under Section 4041A or 4042 of
ERISA; (viii) the occurrence of an act or omission which could reasonably be
expected to give rise to the imposition on the Borrower, any of its Subsidiaries
or any of their respective ERISA Affiliates of fines, penalties, taxes or
related charges under Chapter 43 of the Internal Revenue Code or under Section
409, Section 502(c), (i) or (l), or Section 4071 of ERISA in respect of any
Employee Benefit Plan; or (ix) the imposition of a Lien pursuant to Section
401(a)(29) or 412(n) of the Internal Revenue Code or pursuant to ERISA with
respect to any Pension Plan.
"EVENT OF DEFAULT" has the meaning assigned to such term in Article 7.
"EXCESS AMOUNT" has the meaning assigned to such term in Section 2.06(d).
"EXCESS AVAILABILITY" means, at any time, an amount equal to (a) the lesser
of (i) the Aggregate Commitments at such time and (ii) the Borrowing Base at
such time (as determined by reference to the most recent Borrowing Base
Certificate delivered to the Administrative Agent pursuant to Section 5.01(q)),
minus (b) the aggregate Revolving Exposures of all Revolving Lenders at such
time.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"EXCLUDED TAXES" means, with respect to any Agent, any Lender, any Issuing
Bank or any other recipient of any payment to be made by or on account of any
obligation of the Borrower or any other Loan Party hereunder, (a) income or
franchise taxes imposed on (or measured by) its net income by the United States
of America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, or in which such
Lender is otherwise subject to tax without regard to the transactions
contemplated by this Agreement, (b) any branch profits taxes imposed by the
United States of America or any similar tax imposed by any other jurisdiction in
which the Borrower or any other Loan Party is located and (c) in the case of a
Foreign Lender (other than an assignee pursuant to a request by the Borrower
under Section 2.19(b)), any withholding tax that is imposed on amounts payable
to such Foreign Lender at the
23
time such Foreign Lender becomes a party to this Agreement (or designates a new
lending office), except to the extent that such Foreign Lender (or its assignor,
if any) was entitled, at the time of designation of a new lending office (or
assignment), to receive additional amounts from the Borrower or any other Loan
Party with respect to such withholding tax pursuant to Section 2.17(a) or is
attributable to such Lender's failure to comply with Section 2.17(e).
"EXISTING CREDIT AGREEMENTS" means the First Lien Credit Agreement, dated
as of December 23, 2005, among AAH Holdings Corporation, Amscan Holdings, Inc.,
certain subsidiaries of Amscan Holdings, Inc., as guarantors, the several
lenders from time to time party thereto, Bank of America, N.A., as documentation
agent, ▇▇▇▇▇▇▇ Sachs Credit Partners L.P., as joint lead arranger, joint
bookrunner and syndication agent, Banc of America Securities LLC as joint lead
arranger and joint bookrunner, and General Electric Capital Corporation, as
administrative agent and collateral agent, and the Second Lien Credit Agreement,
dated as of December 23, 2005, among AAH Holdings Corporation, Amscan Holdings,
Inc., certain subsidiaries of Amscan Holdings, Inc., as guarantors, the several
lenders from time to time party thereto, Bank of America, N.A., as documentation
agent, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P., as joint lead arranger, joint
bookrunner, syndication agent, administrative agent and collateral agent and
Banc of America Securities LLC as joint lead arranger and joint bookrunner.
"EXISTING DEBT REFINANCING" means the payment in full of all amounts, if
any, due or owing under the Existing Credit Agreements, the termination of all
commitments thereunder and the release and discharge of all guarantees thereof
(if any) and all security therefor (if any).
"EXISTING LETTER OF CREDIT" means any letter of credit previously issued
for the account of the Borrower or any other Loan Party by a Lender or an
Affiliate of a Lender that is (a) outstanding on the Closing Date and (b) listed
on Schedule 1.01(a).
"FACILITY" means any real property (including all buildings, fixtures or
other improvements located thereon) now, hereafter or, except with respect to
Articles 5 and 6, heretofore owned, leased, operated or used by the Borrower or
any of its Subsidiaries or any of their respective predecessors or Affiliates.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for such day for such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected by it.
24
"FEE LETTER" means that certain Fee Letter dated as of April 18, 2007, by
and among the Borrower, the Administrative Agent, the Arrangers and ▇▇▇▇▇▇
Brothers Inc.
"FINANCIAL OFFICER" of any person means the chief financial officer,
treasurer, assistant treasurer, vice president of finance or controller of such
person.
"FINANCIAL OFFICER CERTIFICATION" means, with respect to the financial
statements for which such certification is required, the certification of the
chief financial officer of the Borrower that such financial statements fairly
present, in all material respects, the financial condition of the Borrower and
its Subsidiaries as at the dates indicated and the results of their operations
and their cash flows for the periods indicated, subject to changes resulting
from audit and normal year-end adjustments.
"FINANCIAL PLAN" as defined in Section 5.1(i).
"FIRST PRIORITY" means, with respect to any Lien purported to be created in
any Collateral pursuant to any Collateral Document, that such Lien is the only
Lien to which such Collateral is subject, other than any Permitted Lien.
"FISCAL QUARTER" means a fiscal quarter of any Fiscal Year.
"FISCAL YEAR" means the fiscal year of Holdings and its Subsidiaries ending
on December 31 of each calendar year or the Saturday closest to December 31 of
each calendar year.
"FIXED CHARGE COVERAGE RATIO" means for any period, the ratio of
Consolidated Adjusted EBITDA minus the unfinanced portion of Consolidated
Capital Expenditures to (ii) Fixed Charges, in all cases calculated for the
Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP.
"FIXED CHARGES" means, with reference to any period, without duplication,
the sum of (a) Consolidated Cash Interest Expense, plus (b) the aggregate amount
of scheduled principal payments in respect of long-term Indebtedness of the
Borrower and the Subsidiaries paid in cash during such period (other than
payments made by the Borrower or any Subsidiary to the Borrower or a
Subsidiary), plus (c) expense for taxes paid in cash during such period, in each
case paid in cash during such period, plus (d) the aggregate amount of
Restricted Junior Payments (other than (x) those described in clause (v) of the
definition thereof and (y) those described in clauses (i), (ii) and (iii)
thereof for purposes only of clause (d) of the definition of "Payment
Conditions") paid in cash during such period, plus (e) scheduled Capital Lease
Obligation payments paid in cash during such period, all calculated for such
period for the Borrower and its Subsidiaries on a consolidated basis.
25
"FLOOD HAZARD PROPERTY" means any Real Estate Asset subject to a Mortgage
and located in an area designated by the Federal Emergency Management Agency as
having special flood or mud slide hazards.
"FOREIGN LENDER" means a Lender that is not a "United States person" within
the meaning of Section 7701(a)(30) of the Code.
"FOREIGN SUBSIDIARY" means any Subsidiary that is not a Domestic
Subsidiary.
"FUNDING ACCOUNT" has the meaning assigned to such term in Section 4.01(i).
"GAAP" means generally accepted accounting principles in the United States
of America in effect and applicable to that accounting period in respect of
which reference to GAAP is being made, subject to the provisions of Section
1.04.
"GOVERNMENTAL AUTHORITY" means any federal, state, municipal, national or
other government, governmental department, commission, board, bureau, court,
agency or instrumentality or political subdivision thereof or any entity or
officer exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to any government or any court, in
each case whether associated with a state or locality of the United States, the
United States, or a foreign government.
"GOVERNMENTAL AUTHORIZATION" means any permit, license, authorization,
plan, directive, consent order or consent decree of or from any Governmental
Authority.
"GRANTING LENDER" has the meaning assigned to such term in Section 9.04(e).
"GUARANTEE" of or by any Person (the "GUARANTOR") means any obligation,
contingent or otherwise, of the Guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other monetary obligation of any
other Person (the "PRIMARY OBLIGOR") in any manner, whether directly or
indirectly, and including any obligation of the Guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other monetary obligation or to purchase (or to advance
or supply funds for the purchase of) any security for the payment thereof, (b)
to purchase or lease property, securities or services for the purpose of
assuring the owner of such Indebtedness or other monetary obligation of the
payment thereof, (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the Primary Obligor so as to
enable the Primary Obligor to pay such Indebtedness or other monetary obligation
or (d) as an account party in respect of any letter of credit or letter of
guaranty issued to support such Indebtedness or
26
monetary obligation; provided, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business, or
customary and reasonable indemnity obligations in effect on the Closing Date or
entered into in connection with any acquisition or disposition of assets
permitted under this Agreement (other than such obligations with respect to
Indebtedness). The amount of any Guarantee shall be deemed to be an amount equal
to the stated or determinable amount of the related primary obligation, or
portion thereof, in respect of which such Guarantee is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof as
determined by the guaranteeing Person in good faith.
"GUARANTEED OBLIGATIONS" has the meaning assigned to such term in Section
10.01.
"GUARANTOR PERCENTAGE" has the meaning assigned to such term in Section
10.10.
"HAZARDOUS MATERIALS" means any chemical, material, substance or waste, or
any constituent thereof, exposure to which is prohibited, limited or regulated
by any Environmental Law or any Governmental Authority or which may or could
pose a hazard to the health and safety or to the indoor or outdoor environment.
"HAZARDOUS MATERIALS ACTIVITY" means any past, current, proposed or
threatened activity, event or occurrence involving any Hazardous Material,
including the use, manufacture, possession, storage, holding, presence,
existence, location, Release, threatened Release, discharge, placement,
generation, transportation, processing, construction, treatment, abatement,
removal, remediation, disposal, disposition or handling of any Hazardous
Material, and any corrective action or response action with respect to any of
the foregoing.
"HEDGE AGREEMENT" means any agreement with respect to any Derivative
Transaction between the Borrower or any Subsidiary and any other Person.
"HEDGING OBLIGATIONS" means, with respect to any Person, the obligations of
such Person under any Hedge Agreement, in each case designed to protect such
Person against fluctuations in currency exchange, interest rates or commodity
prices.
"HOLDINGS" has the meaning assigned to such term in the preamble to this
Agreement.
"IMMATERIAL SUBSIDIARY" means, as of any date, any Subsidiary whose total
assets, as of that date, are less than $100,000 and whose total revenues for the
most recent twelve-month period do not exceed $100,000; provided that the total
asset value and total revenues of all Subsidiaries designated as such shall not
exceed $500,000 in the aggregate.
27
"INDEBTEDNESS", as applied to any Person, means, without duplication, (i)
all indebtedness for borrowed money; (ii) that portion of obligations with
respect to Capital Leases that is properly classified as a liability on a
balance sheet in conformity with GAAP; (iii) notes payable and drafts accepted
representing extensions of credit whether or not representing obligations for
borrowed money; (iv) any obligation owed for all or any part of the deferred
purchase price of property or services (excluding any earn out obligation or
purchase price adjustment until such obligation becomes a liability on the
balance sheet in accordance with GAAP and any such obligations incurred under
ERISA), which purchase price is (a) due more than six months from the date of
incurrence of the obligation in respect thereof or twelve months in the case of
a bona fide trade payable or (b) evidenced by a note or similar written
instrument; (v) all indebtedness secured by any Lien on any property or asset
owned or held by that Person regardless of whether the indebtedness secured
thereby shall have been assumed by that Person or is nonrecourse to the credit
of that Person; (vi) the face amount of any letter of credit issued for the
account of that Person or as to which that Person is otherwise liable for
reimbursement of drawings; (vii) the direct or indirect guaranty, endorsement
(otherwise than for collection or deposit in the ordinary course of business),
co-making, discounting with recourse or sale with recourse by such Person of the
obligation of another; (viii) any obligation of such Person the primary purpose
or intent of which is to provide assurance to an obligee that the obligation of
the obligor thereof will be paid or discharged, or any agreement relating
thereto will be complied with, or the holders thereof will be protected (in
whole or in part) against loss in respect thereof; (ix) any liability of such
Person for the obligation of another through any agreement (contingent or
otherwise) (a) to purchase, repurchase or otherwise acquire such obligation or
any security therefor, or to provide funds for the payment or discharge of such
obligation (whether in the form of loans, advances, stock purchases, capital
contributions or otherwise) or (b) to maintain the solvency or any balance sheet
item, level of income or financial condition of another if, in the case of any
agreement described under subclause (a) or (b) of this clause (ix), the primary
purpose or intent thereof is as described in clause (viii) above; and (x) all
net obligations of such Person in respect of any Derivative Transaction,
including, without limitation, any Hedging Agreement, whether or not entered
into for hedging or speculative purposes; provided in no event shall obligations
under any Hedge Agreement be deemed "Indebtedness" for any calculation of the
Fixed Charge Coverage Ratio or the Interest Coverage Ratio under this Agreement.
"INDEMNIFIED TAXES" means Taxes other than Excluded Taxes.
"INFORMATION" has the meaning set forth in Section 3.11(a).
"INFORMATION MEMORANDUM" means the Confidential Information Memorandum
dated May, 2007, relating to the Borrower and the Transactions.
28
"INITIAL REVOLVING BORROWING" means one or more borrowings of Loans on the
Closing Date in an amount not to exceed the Permitted Initial Revolving Amount.
"INTERCREDITOR AGREEMENT" means the Lien Subordination and Intercreditor
Agreement dated as of the date hereof, among Holdings, the Borrower, the
Subsidiaries of the Borrower party from time to time thereto, the Collateral
Agent and the Term Loan Agent (as defined in the Intercreditor Agreement).
"INTEREST COVERAGE RATIO" means the ratio as of the last day of any Fiscal
Quarter of (i) Consolidated Adjusted EBITDA for the four-Fiscal Quarter period
then ended, to (ii) Consolidated Cash Interest Expense for such four-Fiscal
Quarter period plus the product of (a) all dividends, whether paid or accrued
and whether or not in cash, on any series of preferred stock of the Borrower or
any of its Subsidiaries, other than dividends on Capital Stock payable solely in
Capital Stock of the Borrower (other than Disqualified Capital Stock) or to the
Borrower or a Subsidiary of the Borrower, times (b) a fraction, the numerator of
which is one and the denominator of which is one minus the then current combined
federal, state and local statutory tax rate of the Borrower, expressed as a
decimal, in each case, determined on a consolidated basis in accordance with the
GAAP.
"INTEREST ELECTION REQUEST" means a request by the Borrower in the form of
Exhibit I hereto or such other form reasonably acceptable to the Administrative
Agent to convert or continue a Borrowing in accordance with Section 2.08.
"INTEREST PAYMENT DATE" means (a) with respect to any ABR Loan (including
any Swingline Loan), the last Business Day of each March, June, September and
December (commencing with the last Business Day of September 2007) and the
Maturity Date and (b) with respect to any LIBO Rate Loan, the last day of the
Interest Period applicable to the Borrowing of which such Loan is a part and, in
the case of a LIBO Rate Borrowing with an Interest Period of more than three
months' duration, each day that would have been an Interest Payment Date had
successive Interest Periods of three months' duration been applicable to such
Borrowing.
"INTEREST PERIOD" means (a) with respect to any LIBO Rate Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
(or, to the extent agreed by each Lender, nine or twelve months) thereafter, as
the Borrower may elect; provided that (i) if any Interest Period would end on a
day other than a Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless such next succeeding Business Day would fall
in the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day and (ii) any Interest Period that commences on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the last calendar month of
29
such Interest Period) shall end on the last Business Day of the last calendar
month of such Interest Period. For purposes hereof, the date of a Borrowing
initially shall be the date on which such Borrowing is made and thereafter shall
be the effective date of the most recent conversion or continuation of such
Borrowing.
"INVENTORY" has the meaning assigned to such term in the Pledge and
Security Agreement.
"INVENTORY COMPONENT" means the lesser of (a) 75% of Eligible Inventory and
Eligible In-Transit Inventory (in each case, net of Inventory Reserves), valued
at the lower of Cost and market value, and (b) 85% of Net Orderly Liquidation
Value of Eligible Inventory and Eligible In-Transit Inventory (in each case, net
of Inventory Reserves not already reflected in the determination of Net Orderly
Liquidation Value); provided that for purposes of determining the Inventory
Component the lower of Cost and market value of Eligible In-Transit Inventory
and the Net Orderly Liquidation Value of Eligible In-Transit Inventory shall not
in any case exceed $10,000,000.
"INVENTORY RESERVES" means (a) such reserves as may be established from
time to time by the Agents, in their Permitted Discretion, with respect to
changes in the determination of the saleability, at retail, of the Eligible
Inventory or which reflect such other factors as negatively affect the market
value of the Eligible Inventory and (b) Shrink Reserves.
"INVESTMENT" means (i) any direct or indirect purchase or other acquisition
by Holdings or any of its Subsidiaries of, or of a beneficial interest in, any
of the Securities of any other Person (other than the Borrower or a Subsidiary
Guarantor); (ii) any direct or indirect redemption, retirement, purchase or
other acquisition for value, by any Subsidiary of Holdings from any Person
(other than Holdings, the Borrower or any Subsidiary Guarantor), of any Capital
Stock of such Subsidiary; and (iii) any direct or indirect loan, advance (other
than advances to employees for moving, entertainment and travel expenses,
drawing accounts and similar expenditures in the ordinary course of business) or
capital contribution by Holdings or any of its Subsidiaries to any other Person
(other than Holdings, the Borrower or any Subsidiary Guarantor), including all
indebtedness and accounts receivable from that other Person that are not current
assets or did not arise from sales to that other Person in the ordinary course
of business. The amount of any Investment shall be the original cost of such
Investment plus the cost of all additions thereto, without any adjustments for
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment.
"ISSUING BANK" means Credit Suisse, Bank of America, N.A. and any other
Lender that, at the request of the Borrower and with the consent of the
Administrative Agent (not to be unreasonably withheld), agrees to become an
Issuing Bank and, solely with respect to any Existing Letter of Credit (and any
amendment, renewal or extension thereof in accordance with this Agreement), the
Lender or Affiliate of a Lender that issued such Existing Letter of Credit. Each
30
Issuing Bank may, in its discretion, arrange for one or more Letters of Credit
to be issued by Affiliates of such Issuing Bank, in which case the term "Issuing
Bank" shall include any such Affiliate with respect to Letters of Credit issued
by such Affiliate.
"JOINDER AGREEMENT" has the meaning assigned to such term in Section
5.12(a).
"LANDLORD LIEN" means any Lien of a landlord on the Borrower's or any
Subsidiary's property, granted by statute.
"LANDLORD LIEN RESERVE" means an amount equal to up to two months' rent for
all of the Loan Parties' leased locations where Eligible Inventory is located in
each Landlord Lien State, other than leased locations with respect to which the
Collateral Agent shall have received a landlord's waiver or subordination of
lien in form reasonably satisfactory to the Agents.
"LANDLORD LIEN STATE" means (a) each of Washington, Virginia and
Pennsylvania and (b) such other state(s) in which a landlord's claim for rent
has priority by operation of law over the Lien of the Collateral Agent in any of
the Collateral consisting of Eligible Inventory, as notified by the Agents to
the Borrower in writing.
"LC COLLATERAL ACCOUNT" has the meaning assigned to such term in Section
2.06(j).
"LC CREDIT EXTENSION" means, with respect to any Letter of Credit, the
issuance thereof (in the face amount thereof) or any increase in the face amount
thereof.
"LC DISBURSEMENT" means a payment made by an Issuing Bank pursuant to a
drawing on a Letter of Credit.
"LC EXPOSURE" means, at any time of determination, the sum of (a) the
aggregate undrawn amount of all outstanding Letters of Credit at such time, plus
(b) the aggregate amount of all LC Disbursements that have not yet been
reimbursed by or on behalf of the Borrower or any other Loan Party at such time,
less (c) the amount then on deposit in the LC Collateral Account. The LC
Exposure of any Revolving Lender at any time shall be its Applicable Percentage
of the total LC Exposure at such time.
"LENDERS" means the Persons listed on the Commitment Schedule and any other
Person that shall have become a party hereto pursuant to an Assignment and
Assumption, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Assumption. Unless the context otherwise requires, the term
"Lenders" includes the Swingline Lender.
31
"LETTER OF CREDIT" means any standby or commercial letter of credit issued
(or, in the case of an Existing Letter of Credit, deemed to be issued) pursuant
to this Agreement.
"LETTER OF CREDIT REQUEST" has the meaning assigned to such term in Section
2.06(b).
"LIBO RATE" means, with respect to any Interest Period, (a) the rate per
annum determined by the Administrative Agent at approximately 11:00 a.m., London
time, on the day that is two (2) Business Days prior to the first day of such
Interest Period by reference to the British Bankers' Association Interest
Settlement Rates for deposits in Dollars (for delivery on the first day of such
Interest Period and as set forth by Telerate, or if Telerate is unavailable, any
service selected by the Administrative Agent that has been nominated by the
British Bankers' Association as an authorized information vendor for the purpose
of displaying such rates) for a period equal to such Interest Period and (b) if
such rate is not available at such time for any reason, an interest rate per
annum reasonably determined by the Administrative Agent in good faith to be the
average of the rates per annum at which deposits in Dollars are offered for such
relevant Interest Period to major banks in the London interbank market in
London, England by the Administrative Agent at approximately 11:00 a.m. two (2)
Business Days prior to the commencement of such Interest Period.
"LIEN" means (i) any lien, mortgage, pledge, assignment, security interest,
charge or encumbrance of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement, and any
lease in the nature thereof) and any option, trust or other preferential
arrangement having the practical effect of any of the foregoing and (ii) in the
case of Securities, any purchase option, call or similar right of a third party
with respect to such Securities.
"LIQUIDATION" means the exercise by the Administrative Agent or Collateral
Agent of those rights and remedies accorded to such Agents under the Loan
Documents and applicable law as a creditor of the Loan Parties with respect to
the realization on the Collateral, including (after the occurrence and during
the continuation of an Event of Default) the conduct by the Loan Parties acting
with the consent of the Administrative Agent, of any public, private or going
out of business sale or other disposition of the Collateral for the purpose of
liquidating the Collateral. Derivations of the word "Liquidation" (such as
"LIQUIDATE") are used with like meaning in this Agreement.
"LIQUIDITY EVENT" means the determination by the Administrative Agent that
Excess Availability on any day is less than $20,000,000; provided that the
Administrative Agent has notified the Borrower thereof. For purposes of Section
2.21 only, the occurrence of a Liquidity Event shall be deemed continuing
notwithstanding that Excess Availability may thereafter exceed the amount set
forth in the preceding sentence unless and until Excess Availability exceeds
32
$20,000,000 for thirty (30) consecutive business days, in which event a
Liquidity Event shall no longer be deemed to be continuing for purposes of
Section 2.21; provided that a Liquidity Event may not be cured as contemplated
by this sentence more than two times in any four-fiscal-quarter period.
"LOAN DOCUMENTS" means this Agreement, any promissory notes issued pursuant
to the Agreement, any Letters of Credit or Letter of Credit applications, the
Collateral Documents and the Intercreditor Agreement. Any reference in this
Agreement or any other Loan Document to a Loan Document shall include all
appendices, exhibits or schedules thereto, and all amendments, restatements,
supplements or other modifications thereto.
"LOAN GUARANTOR" means each Loan Party (other than the Borrower).
"LOAN GUARANTY" means Article 10 of this Agreement.
"LOAN PARTIES" means Holdings, the Borrower, each Domestic Subsidiary of
the Borrower, and any other Person who becomes a party to this Agreement as a
Loan Party pursuant to a Joinder Agreement, and their respective successors and
assigns.
"LOANS" means Revolving Loans, Swingline Loans and Protective Advances.
"MANAGEMENT AGREEMENT" means the management agreement by and among
Berkshire Partners LLC, Weston Presidio Service LLC and the Borrower dated April
30, 2004 and any amendments made thereto.
"MANAGEMENT FEES" means the fees paid by the Borrower to Berkshire Partners
LLC and Weston Presidio Service LLC under the Management Agreement in exchange
for services provided to the Borrower under the Management Agreement.
"MARGIN STOCK" shall have the meaning assigned to such term in Regulation
U.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse change in the
condition (business, financial or otherwise), assets or results of operations of
Holdings or any of its Subsidiaries, taken as a whole, or (ii) the impairment
(other than as a result of circumstances of the type described in clause (i)
above) in any material respect of the ability of the Loan Parties, taken as a
whole, to perform, or of the Administrative Agent, Collateral Agent or the
Lenders to enforce, the Obligations.
"MATERIAL CONTRACT" means any contract or other arrangement to which the
Borrower or any of its Subsidiaries is a party (other than the Loan Documents or
other agreements evidencing or relating to Indebtedness) for which breach,
33
nonperformance, cancellation or failure to renew could reasonably be expected to
have a Material Adverse Effect.
"MATERIAL REAL ESTATE ASSET" means (i) any fee-owned Real Estate Asset
owned as of the Closing Date and (ii) any fee-owned Real Estate Asset acquired
by any Loan Party after the Closing Date having a fair market value in excess of
$2,000,000 as of the date of acquisition thereof shall be a "Material Real
Estate Asset".
"MATURITY DATE" means May 25, 2012 or any earlier date on which the
Aggregate Commitments are reduced to zero or otherwise terminated pursuant to
the terms hereof.
"MAXIMUM LIABILITY" has the meaning assigned to such term in Section 10.09.
"MAXIMUM RATE" has the meaning assigned to such term in Section 9.17.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc. and any successor to its
rating agency business.
"MORTGAGED PROPERTIES" means, initially, the owned real properties of the
Loan Parties specified on Schedule 1.01(b), and shall include each other parcel
of real property and improvements thereto with respect to which a Mortgage is
required to be granted pursuant to Section 5.12.
"MORTGAGES" means any mortgage, deed of trust or other agreement which
conveys or evidences a Lien in favor of the Collateral Agent, for the benefit of
the Collateral Agent and the Lenders, on owned real property of a Loan Party.
"MULTIEMPLOYER PLAN" means any Employee Benefit Plan which is a
"multiemployer plan" as defined in Section 3(37) of ERISA.
"NARRATIVE REPORT" means, with respect to the financial statements for
which such narrative report is required, a narrative report describing the
operations of Holdings and its Subsidiaries in the form prepared for
presentation to senior management thereof for the applicable Fiscal Quarter or
Fiscal Year and for the period from the beginning of the then current Fiscal
Year to the end of such period to which such financial statements relate.
"NET INSURANCE/CONDEMNATION PROCEEDS" means an amount equal to: (i) any
cash payments or proceeds (including Cash Equivalents) received by Holdings or
any of its Subsidiaries (a) under any casualty insurance policy in respect of a
covered loss thereunder of any assets of Holdings or any of its Subsidiaries or
(b) as a result of the taking of any assets of Holdings or any of its
Subsidiaries by any Person pursuant to the power of eminent domain, condemnation
or otherwise, or pursuant to a sale of any such assets to a purchaser
34
with such power under threat of such a taking, minus (ii) (a) any actual and
reasonable costs incurred by Holdings or any of its Subsidiaries in connection
with the adjustment, settlement or collection of any claims of Holdings or such
Subsidiary in respect thereof, (b) payment of the outstanding principal amount
of, premium or penalty, if any, and interest on any Indebtedness (other than the
Loans) that is secured by a Lien on the assets in question and that is required
to be repaid under the terms thereof as a result of such loss, taking or sale,
(c) amounts required to be prepaid pursuant to the mandatory prepayment
provisions under the Senior Secured Term Facility Credit Agreement in connection
therewith, (d) in the case of a taking, the reasonable costs of putting any
affected property in a safe and secure position and (e) any bona fide direct
costs incurred in connection with any sale of such assets as referred to in
clause (i)(b) of this definition, including income taxes payable as a result of
any gain recognized in connection therewith; provided, however, that, if the
Borrower shall deliver a certificate of a Financial Officer to the
Administrative Agent at the time of receipt thereof setting forth the Borrower's
intent to reinvest such proceeds in productive assets of a kind then used or
usable in the business of the Borrower and its Subsidiaries (or to acquire all
of the Equity Interests of a Person substantially all of whose assets are used
or useful in the business of the Borrower and its Subsidiaries) within 365 days
of receipt of such proceeds, such proceeds shall not constitute Net
Insurance/Condemnation Proceeds except to the extent not so used at the end of
such 365 day period, at which time such proceeds shall be deemed to be Net
Insurance/Condemnation Proceeds.
"NET ORDERLY LIQUIDATION VALUE" means, with respect to Inventory of any
Person, the orderly liquidation value thereof, net of all reasonable costs and
expenses of liquidation thereof, as based upon the most recent Inventory
appraisal conducted in accordance with this Agreement and expressed as a
percentage of Cost of such Inventory.
"NET PROCEEDS" means (a) with respect to any Asset Sale, the cash proceeds
(including Cash Equivalents and cash proceeds subsequently received (as and when
received) in respect of noncash consideration initially received), net of (i)
selling costs and expenses (including reasonable broker's fees or commissions,
legal fees, transfer and similar taxes and the Borrower's good faith estimate of
income taxes paid or payable in connection with such sale), (ii) amounts
provided as a reserve, in accordance with GAAP, against any liabilities under
any indemnification obligations or purchase price adjustment associated with
such Asset Sale (provided that, to the extent and at the time any such amounts
are released from such reserve, such amounts shall constitute Net Proceeds),
(iii) the principal amount, premium or penalty, if any, interest and other
amounts on any Indebtedness for borrowed money which is secured by the asset
sold in such Asset Sale and which is required to be repaid with such proceeds
(other than any such Indebtedness assumed by the purchaser of such asset), (iv)
cash escrows (until released from escrow to the Borrower or any of its
Subsidiaries) from the sale price for such Asset Sale and (v) amounts required
to
35
be prepaid pursuant to the mandatory prepayment provisions of the Senior Secured
Term Facility Credit Agreement resulting from such Asset Sale; provided,
however, that, if (x) the Borrower shall deliver a certificate of a Financial
Officer to the Administrative Agent at the time of receipt thereof setting forth
the Borrower's intent to reinvest such proceeds in productive assets of a kind
then used or usable in the business of the Borrower and its Subsidiaries (or to
acquire all of the Equity Interests of a Person substantially all of whose
assets are used or useful in the business of the Borrower and its Subsidiaries)
within 365 days of receipt of such proceeds and (y) no Event of Default shall
have occurred and shall be continuing at the time of such certificate, such
proceeds shall not constitute Net Proceeds except to the extent not so used at
the end of such 365 day period, at which time such proceeds shall be deemed to
be Net Proceeds; and (b) with respect to any issuance or incurrence of
Indebtedness, the cash proceeds thereof, net of all taxes and customary fees,
commissions, costs, underwriting discounts and other expenses incurred in
connection therewith.
"NON-CONSENTING LENDER" has the meaning assigned to such term in Section
9.02(e).
"NON-PAYING GUARANTOR" has the meaning assigned to such term in Section
10.10.
"OBLIGATED PARTY" has the meaning assigned to such term in Section 10.02.
"OBLIGATIONS" means all unpaid principal of and accrued and unpaid interest
(including interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans, all LC Exposure, all accrued and
unpaid fees and all expenses, reimbursements, indemnities and other obligations
of the Loan Parties to the Lenders or to any Lender, the Agents, any Issuing
Bank or any indemnified party arising under the Loan Documents.
"OFAC" has the meaning assigned to such term in Section 3.20.
"OFFICERS' CERTIFICATE" means, as applied to any corporation, a certificate
executed on behalf of such corporation by its chairman of the board (if an
officer) or its president or one of its vice presidents and by its chief
financial officer or its treasurer.
"ORGANIZATIONAL DOCUMENTS" means (i) with respect to any corporation, its
certificate or articles of incorporation or organization, as amended, and its
by-laws, as amended, (ii) with respect to any limited partnership, its
certificate of limited partnership, as amended, and its partnership agreement,
as amended, (iii) with respect to any general partnership, its partnership
agreement, as amended, and (iv) with respect to any limited liability company,
its articles of organization or certificate of formation, as amended, and its
operating agreement, as amended.
36
In the event any term or condition of this Agreement or any other Loan Document
requires any Organizational Document to be certified by a secretary of state or
similar governmental official, the reference to any such "Organizational
Document" shall only be to a document of a type customarily certified by such
governmental official.
"OTHER INFORMATION" has the meaning assigned to such term in Section
3.11(b).
"OTHER TAXES" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement, but not including, for the
avoidance of doubt, the Excluded Taxes.
"PARTICIPANT" has the meaning assigned to such term in Section 9.04.
"PAYING GUARANTOR" has the meaning assigned to such term in Section 10.10.
"PAYMENT CONDITIONS" means, at any time of determination, that (a) no
Default or Event of Default then exists or would arise as a result of the making
of the subject Specified Payment, (b) Excess Availability shall be not less than
$30,000,000 immediately after giving effect to the making of such Specified
Payment, (c) if the aggregate amount of Specified Payments is greater than
$30,000,000 (after giving effect to the then proposed Specified Payment) in the
thirty (30) day period preceding (and including) the date of the proposed
payment, prior to making the proposed Specified Payment, the Borrower shall have
delivered projections to the Administrative Agent reasonably satisfactory to the
Administrative Agent demonstrating that Projected Average Excess Availability on
the last day of each fiscal month during the six (6)-month period immediately
succeeding any such Specified Payment shall be not less than $30,000,000 and (d)
the Fixed Charge Coverage Ratio as of the end of the most recently ended
four-fiscal-quarter period shall be greater than or equal to 1:00 to 1:00 after
giving pro forma effect to such Specified Payment as if such Specified Payment
(if applicable to such calculation) had been made as of the first day of such
period.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"PENSION PLAN" means any Employee Benefit Plan, other than a Multiemployer
Plan, which is subject to Section 412 of the Internal Revenue Code or Section
302 of ERISA.
"PERFECTION CERTIFICATE" means a certificate in the form of Exhibit D to
the Pledge and Security Agreement or any other form approved by the Collateral
Agent.
37
"PERFECTION CERTIFICATE SUPPLEMENT" means a certificate supplement in the
form of Exhibit D-1 to the Pledge and Security Agreement or any other form
approved by Collateral Agent.
"PERMITTED ACQUISITION" means any acquisition by the Borrower or any of its
Subsidiaries, whether by purchase, merger or otherwise, of all or substantially
all of the assets of, all or substantially all of the Capital Stock of, or a
business line or unit or a division or any operating stores of, any Person;
provided that:
(i) immediately prior to, and after giving effect thereto, the Payment
Conditions shall have been satisfied; provided that this clause (i) shall not
apply to any acquisition that is less than $2,500,000;
(ii) all transactions in connection therewith shall be consummated, in all
material respects, in accordance with all applicable laws and in conformity with
all applicable Governmental Authorizations;
(iii) in the case of the acquisition of Capital Stock, all of the Capital
Stock (except for any such Securities in the nature of directors' qualifying
shares required pursuant to applicable law) acquired or otherwise issued by such
Person or any newly formed Subsidiary of the Borrower in connection with such
acquisition shall be owned by the Borrower or a Subsidiary thereof, and Company
shall have taken, or caused to be taken, as of the date such Person becomes a
Subsidiary of the Borrower, each of the actions set forth in Section 5.12, as
applicable;
(iv) the Borrower shall have delivered to the Administrative Agent at least
ten (10) Business Days prior to such acquisition, (A) all relevant financial
information with respect to such acquired assets, including, without limitation,
the aggregate consideration for such acquisition and any other information
required to demonstrate compliance with clause (iv) above and (B) an Officers'
Certificate stating that any related incurrence of Indebtedness is permitted
pursuant to this Agreement; provided that this clause (iv) shall not apply with
respect to any acquisition that is less than $5,000,000; and
(v) any Person or assets or division as acquired in accordance herewith
shall be in the same business or lines of business in which Holdings and/or its
Subsidiaries are engaged as of the Closing Date or similar or related
businesses.
"PERMITTED DISCRETION" means an Agent's commercially reasonable judgment,
exercised in good faith in accordance with customary business practices for
comparable asset based lending transactions, as to any factor which such Agent
reasonably determines: (a) will or reasonably could be expected to adversely
affect in any material respect the value of any Collateral, the enforceability
or priority of the Collateral Agent's Liens thereon or the amount which the
Agents, the Lenders or any Issuing Bank would be likely to receive
38
(after giving consideration to delays in payment and costs of enforcement) in
the liquidation of such Collateral or (b) evidences that any collateral report
or financial information delivered to an Agent by the Borrower or any of its
Subsidiaries is incomplete, inaccurate or misleading in any material respect. In
exercising such judgment, an Agent may consider, without duplication, such
factors already included in or tested by the definition of Eligible Trade
Receivables, Eligible Credit Card Receivables, Eligible Inventory or Eligible
In-Transit Inventory, as well as any of the following: (i) changes after the
Closing Date in any material respect in demand for, pricing of, or product mix
of Inventory; (ii) changes after the Closing Date in any material respect in any
concentration of risk with respect to the Borrower's Accounts or Inventory; and
(iii) any other factors arising after the Closing Date that change in any
material respect the credit risk of lending to the Borrower on the security of
the Borrower's Accounts or Inventory.
"PERMITTED ENCUMBRANCES" means Liens permitted to exist as set forth in
clauses Section 6.02(b) through Section 6.02(i) of Section 6.02.
"PERMITTED INITIAL REVOLVING AMOUNT" means $79,000,000 plus the aggregate
face amount of any Letters of Credit issued on the Closing Date to replace or
otherwise backstop the Existing Letters of Credit.
"PERMITTED LIENS" means each Lien permitted pursuant to Section 6.02.
"PERSON" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or any other entity.
"PLAN" means any employee pension benefit plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code
or Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"PLEDGE AND SECURITY AGREEMENT" means that certain Pledge and Security
Agreement, dated as of the date hereof, between the Loan Parties and the
Collateral Agent, for the benefit of the Collateral Agent and the Lenders.
"PREFERRED STOCK" means any Capital Stock with preferential rights of
payment of dividends or upon liquidation, dissolution, or winding up.
"PRIME RATE" means the rate of interest per annum determined from time to
time by Credit Suisse as its prime rate in effect at its principal office in New
York City and notified to the Borrower.
39
"PRO FORMA BASIS" means with respect to any determination of the Interest
Coverage Ratio or Fixed Charge Coverage Ratio after giving effect to Permitted
Acquisitions, Asset Sales or the incurrence or assumption of any Indebtedness
(each, a "Subject Transaction"), Consolidated Adjusted EBITDA shall be
calculated with respect to such period on a pro forma basis (including pro forma
adjustments arising out of events which are directly attributable to such
Subject Transactions or which are to be implemented by the business subject to
the Subject Transaction or by the Borrower and its Subsidiaries as a result of
the Subject Transaction, are factually supportable and are expected to have a
continuing impact, which would include cost savings resulting from head count
reduction, closure of facilities and similar restructuring charges and raw
material and other cost savings expected to be realized in connection with the
Subject Transaction, which pro forma adjustments are certified by an Officers'
Certificate and which are determined (i) on a basis consistent with Article 11
of Regulation S-X promulgated under the Securities Act and as interpreted by the
staff of the Securities and Exchange Commission or (ii) solely in the case of
additional pro forma adjustments to Consolidated Adjusted EBITDA not determined
in a manner consistent with clause (i) above (for all Subject Transactions
during the period of determination) not to exceed 5.0% of pro forma Consolidated
Adjusted EBITDA (as reformulated) and realizable within one year of the date of
determination for the period of determination, on such other basis as may be
certified by Officers' Certificate to be in compliance with the requirements of
this definition), using the historical financial statements of any business so
acquired or to be acquired or sold or to be sold and the consolidated financial
statements of the Borrower and its Subsidiaries which shall be reformulated as
if such Subject Transaction, and any Indebtedness incurred or repaid in
connection therewith, had been consummated or incurred or repaid at the
beginning of such period (and assuming that such Indebtedness bears interest
during any portion of the applicable measurement period prior to the relevant
acquisition at the weighted average of the interest rates applicable to
outstanding Loans incurred during such period).
For purposes of such calculations any Indebtedness incurred under Section
6.01(n) or otherwise incurred or assumed in connection with Permitted
Acquisitions subsequent to the beginning of the four quarter calculation period
shall be deemed to have been incurred or assumed at the beginning of such four
quarter calculation period. In addition, Permitted Acquisitions that have been
made or are being made by the Borrower or any of its Subsidiaries during the
four-quarter reference period or subsequent to such reference period and on or
prior to the calculation date (including through mergers or consolidations and
including any related financing transactions) shall be deemed to have occurred
on the first day of the four-quarter reference period.
"PROJECTED AVERAGE EXCESS AVAILABILITY" means the projected average Excess
Availability for each month during any six-month period as determined in good
faith by the Borrower and certified by a Financial officer of the Borrower.
40
"PROJECTIONS" means the projections of the Borrower and the Subsidiaries
included in the Information Memorandum (or a supplement thereto).
"PROTECTIVE ADVANCE" has the meaning assigned to such term in Section
2.04(a).
"QUALIFIED CAPITAL STOCK" of any Person means any Capital Stock of such
Person that is not Disqualified Capital Stock.
"QUALIFIED PROCEEDS" means assets that are used or useful in, or Capital
Stock of any Person engaged in, a Similar Business; provided that the fair
market value of any such assets or Capital Stock shall be determined by the
Borrower in good faith.
"REAL ESTATE ASSET" means, at any time of determination, any interest (fee,
leasehold or otherwise) in real property then owned by any Loan Party.
"REGISTER" has the meaning assigned to such term in Section 9.04.
"REGULATION T" means Regulation T of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof, and
any successor provision thereto.
"REGULATION U" means Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof, and
any successor provision thereto.
"REGULATION X" means Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof, and
any successor provision thereto.
"RELATED AGREEMENTS" means the Management Agreement and the Senior
Subordinated Notes Indenture.
"RELATED PARTIES" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, trustees, employees,
agents and advisors of such Person and such Person's Affiliates.
"RELEASE" means any release, spill, emission, leaking, pumping, pouring,
injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of any Hazardous Material into the indoor or outdoor environment
(including the abandonment or disposal of any barrels, containers or other
closed receptacles containing any Hazardous Material), including the movement of
any Hazardous Material through the air, soil, surface water or groundwater.
"REPORT" means reports prepared by the Agents or another Person showing the
results of appraisals, field examinations or audits pertaining to the Loan
Parties' assets from information furnished by or on behalf of the Loan
41
Parties, after the Agents have exercised their rights of inspection pursuant to
this Agreement, which Reports may be distributed to the Lenders by the Agents,
subject to the provisions of Section 9.12.
"REQUIRED LENDERS" means, at any time, Lenders having Revolving Exposure
and unused Commitments representing more than 50% of the sum of the total
Revolving Exposure and unused Commitments at such time; provided that the
Revolving Exposure and unused Commitments of any Defaulting Lender shall be
disregarded in the determination of the Required Lenders at any time.
"REQUIREMENTS OF LAW" means, with respect to any Person, collectively, the
Organizational Documents of such Person and the common law and all federal,
state, local, foreign, multinational or international laws, statutes, codes,
treaties, standards, rules and regulations, guidelines, ordinances, orders,
judgments, writs, injunctions, decrees (including administrative or judicial
precedents or authorities) and the interpretation or administration thereof by,
and other determinations, directives, requirements or requests of, any
Governmental Authority, in each case whether or not having the force of law and
that are applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"RESERVES" means all (if any) Inventory Reserves and Availability Reserves
(including Banking Services Reserves, Landlord Lien Reserves, Customer Credit
Liability Reserves and reserves for Secured Hedging Obligations) and any and all
other reserves which the Agents deem necessary in their Permitted Discretion to
maintain with respect to Eligible Inventory, Eligible In-Transit Inventory,
Eligible Trade Receivables, or Eligible Credit Card Receivables (without
duplication of amounts that already reduce the Borrowing Base by virtue of the
factors included in or tested by the eligibility criteria contained in the
foregoing definitions).
"RESPONSIBLE OFFICER" of any Person means the chief executive officer, the
president, any vice president, the chief operating officer or any Financial
Officer of such Person and any other officer or similar official thereof
responsible for the administration of the obligations of such Person in respect
of this Agreement, and, as to any document delivered on the Closing Date (but
subject to the express requirements set forth in Article 4), shall include any
secretary or assistant secretary of a Loan Party. Any document delivered
hereunder that is signed by a Responsible Officer of a Loan Party shall be
conclusively presumed to have been authorized by all necessary corporate,
partnership and/or other action on the part of such Loan Party and such
Responsible Officer shall be conclusively presumed to have acted on behalf of
such Loan Party.
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of Holdings
or the Borrower now or hereafter outstanding, except a dividend payable solely
in shares of that class of stock to the holders of that class; (ii) any
42
redemption, retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any shares of any class of stock
of Holdings or the Borrower now or hereafter outstanding; (iii) any payment made
to retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire shares of any class of stock of Holdings or the Borrower
now or hereafter outstanding; (iv) any payment or prepayment of principal of,
premium, if any, or interest on, or redemption, purchase, retirement, defeasance
(including in-substance or legal defeasance), sinking fund or similar payment
with respect to, Subordinated Indebtedness and (v) any payment of management or
similar fees to the Sponsor or any of its Affiliates.
"REVOLVING EXPOSURE" means, with respect to any Lender at any time, the sum
of (a) the outstanding principal amount of such Lender's Revolving Loans, (b)
its LC Exposure, (c) its Applicable Percentage of the aggregate principal amount
of Swingline Loans outstanding at such time and (d) its Applicable Percentage of
the aggregate principal amount of Protective Advances outstanding at such time.
"REVOLVING LENDER" means, as of any date of determination, a Lender with a
Commitment or, if the Commitments have terminated or expired, a Lender with
Revolving Exposure.
"REVOLVING LOAN" means a Loan made pursuant to Section 2.01.
"S&P" means Standard & Poor's Ratings Service, a division of the
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., and any successor to its rating agency business.
"SALE AND LEASE-BACK TRANSACTION" means any arrangement with any Person
providing for the leasing by the Borrower or any Subsidiary of any real or
tangible personal property, which property has been or is to be sold or
transferred by the Borrower or such Subsidiary to such Person in contemplation
of such leasing.
"SEC" means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any or all of its functions.
"SECOND PRIORITY LIEN" means any Lien on any asset of any Loan Party that
is granted under the Term Loan Security Documents and that, pursuant and subject
to the provisions of the Intercreditor Agreement, is junior in priority to the
Liens of the Collateral Agent in the Collateral.
"SECURED HEDGING OBLIGATIONS" means all Hedging Obligations under each
Hedge Agreement that (a) is in effect on the Closing Date with a counterparty
that is an Agent or a Lender or an Affiliate of an Agent or a Lender as of the
Closing Date or (b) is entered into after the Closing Date with any counterparty
that is an Agent or a Lender or an Affiliate of an Agent or a Lender at the time
such Hedge Agreement is entered into.
43
"SECURED OBLIGATIONS" means all Obligations, together with (a) Banking
Services Obligations and (b) all Secured Hedging Obligations.
"SECURITIES" means any stock, shares, partnership interests, voting trust
certificates, certificates of interest or participation in any profit-sharing
agreement or arrangement, options, warrants, bonds, debentures, notes, or other
evidences of indebtedness, secured or unsecured, convertible, subordinated or
otherwise, or in general any instruments commonly known as "securities" or any
certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing; provided that "Securities" shall not
include any earnout agreement or obligation or any employee bonus or other
incentive compensation plan or agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"SENIOR SECURED TERM FACILITY CREDIT AGREEMENT" means the Term Loan Credit
Agreement, dated as of the date hereof, among Holdings, the Borrower, the
subsidiaries of the Borrower from time to time party thereto, Credit Suisse, as
administrative agent and collateral agent, and the lenders from time to time
party thereto, as the same may be amended, restated, modified, refinanced,
replaced, extended, renewed or supplemented from time to time.
"SENIOR SECURED TERM LOAN FACILITY" means the $375,000,000 initial
aggregate principal amount senior secured term loan facility provided for under
the Senior Secured Term Facility Credit Agreement.
"SENIOR SUBORDINATED NOTE DOCUMENTS" means the indenture under which the
Senior Subordinated Notes are issued and all other instruments, agreements and
other documents evidencing the Senior Subordinated Notes or providing for any
Guarantee or other right in respect thereof.
"SENIOR SUBORDINATED NOTES" means the Borrower's 8.75% Senior Subordinated
Notes due 2014, in an original aggregate principal amount of $175,000,000.
"SENIOR SUBORDINATED NOTES INDENTURE" means the Indenture dated as of the
date hereof, among the Borrower, as issuer, certain of its subsidiaries and
Holdings, as guarantors, and The Bank of New York, as trustee, pursuant to which
the Senior Subordinated Notes are issued.
"SHRINK RESERVE" means an amount estimated by the Agents in their Permitted
Discretion to be equal to that amount which is required in order that the shrink
reflected in current stock ledger of the Borrower and its Subsidiaries would be
reasonably equivalent to the shrink calculated as part of the Borrower's most
recent physical inventory (it being understood and agreed that no Shrink Reserve
44
established by the Agents shall be duplicative of any shrink as so reflected in
the current stock ledger of the Borrower and its Subsidiaries or estimated by
the Borrower for purposes of computing the Borrowing Base other than at month's
end).
"SPC" has the meaning assigned to such term in Section 9.04(e).
"SPECIFIED PAYMENT" means (a) any Permitted Acquisition, and (b) any
Restricted Junior Payment pursuant to Section 6.05(e).
"SPONSOR" means collectively Berkshire and Weston.
"SPONSOR EQUITY CONTRIBUTIONS" means equity contributions made on or after
the Closing Date by Sponsor or its Affiliates and any other stockholder of
Holdings on the Closing Date to Holdings.
"STATED AMOUNT" means, at any time, the maximum amount for which a Letter
of Credit may be honored.
"SUBORDINATED INDEBTEDNESS" means (i) Indebtedness of the Borrower
evidenced by the Senior Subordinated Notes and (ii) any other Indebtedness of
the Borrower expressly subordinated in right of payment to the Obligations
pursuant to documentation containing maturities, amortization schedules,
covenants, defaults, remedies, subordination provisions and other material terms
in form and substance satisfactory to the Administrative Agent and Required
Lenders.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, limited liability company, association, joint venture or other
business entity of which more than 50% of the total voting power of shares of
stock or other ownership interests entitled (without regard to the occurrence of
any contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar functions)
having the power to direct or cause the direction of the management and policies
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other subsidiaries of that Person of a combination
thereof; provided, in determining the percentage of ownership interests of any
Person controlled by another Person, no ownership interest in the nature of a
"qualifying share" of the former Person shall be deemed to be outstanding.
"SUBSIDIARY" means any subsidiary of Holdings other than an Unrestricted
Subsidiary.
"SUBSIDIARY GUARANTOR" means each Subsidiary of the Borrower that is a Loan
Party and that executes this Agreement as a Loan Guarantor on the Closing Date
and each other Subsidiary of the Borrower that thereafter guarantees the Secured
Obligations pursuant to the terms of this Agreement.
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"SUPER MAJORITY LENDERS" means, at any time, Lenders having Revolving
Exposure and unused Commitments representing more than 66-2/3% of the sum of the
total Revolving Exposure and unused Commitments at such time; provided that the
Revolving Exposure and unused Commitments of any Defaulting Lender shall be
disregarded in the determination of the Super Majority Lenders at any time.
"SWINGLINE LENDER" means Credit Suisse, in its capacity as lender of
Swingline Loans hereunder.
"SWINGLINE LOAN" means a Loan made pursuant to Section 2.05.
"TAXES" means any and all present and future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"TERM LOAN SECURITY DOCUMENTS" has the meaning set forth in the
Intercreditor Agreement.
"TRADE RECEIVABLES COMPONENT" means the face amount of Eligible Trade
Receivables multiplied by 85%.
"TRANSACTION COSTS" means fees and expenses payable or otherwise borne by
Holdings, the Borrower and its subsidiaries in connection with the Transactions
and the transactions contemplated thereby.
"TRANSACTIONS" means, collectively, (a) the execution, delivery and
performance by the Loan Parties of the Loan Documents to which they are a party
and the making of the Borrowings hereunder, (b) the execution, delivery and
performance by Holdings, the Borrower and the Subsidiaries party thereto of the
Senior Secured Term Facility Credit Agreement and all other instruments,
agreements and other documents evidencing or governing the Senior Secured Term
Loan Facility or providing for any Guarantee or other right in respect thereof
and the making of borrowings thereunder, (c) the execution, delivery and
performance by all parties thereto of the Intercreditor Agreement, (d) the
Existing Debt Refinancing and (e) the payment of the Transaction Costs.
"TYPE", when used in reference to any Loan or Borrowing, refers to whether
the rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.
"UCC" means the Uniform Commercial Code as in effect from time to time in
the State of New York or any other state the laws of which are required to be
applied in connection with the issue of perfection of security interests.
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"UNLIQUIDATED OBLIGATIONS" means, at any time, any Secured Obligations (or
portion thereof) that are contingent in nature or unliquidated at such time,
including any Secured Obligation that is: (i) an obligation to reimburse a bank
for drawings not yet made under a letter of credit issued by it; (ii) any other
obligation (including any guarantee) that is contingent in nature at such time;
or (iii) an obligation to provide collateral to secure any of the foregoing
types of obligations; but excluding unripened or contingent obligations related
to indemnification under Section 9.03 for which no written demand has been made.
"UNRESTRICTED SUBSIDIARY" means any subsidiary of the Borrower designated
by the board of directors of the Borrower as an Unrestricted Subsidiary pursuant
to Section 9.19 subsequent to the Closing Date.
"USA PATRIOT ACT" means The Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
(Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)), as amended
or modified from time to time.
"WESTON" means Weston Presidio Service LLC and shall include any fund
affiliated with Weston Presidio Service LLC.
Section 1.02. Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Class (e.g., a "Revolving
Loan") or by Type (e.g., a "LIBO Rate Loan") or by Class and Type (e.g., a "LIBO
Rate Revolving Loan"). Borrowings also may be classified and referred to by
Class (e.g., a "Revolving Borrowing") or by Type (e.g., a "LIBO Rate Borrowing")
or by Class and Type (e.g., a "LIBO Rate Revolving Borrowing").
Section 1.03. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
amended and restated, supplemented or otherwise modified (subject to any
restrictions or qualifications on such amendments, amendment and restatements,
supplements or modifications set forth herein), (b) any reference herein to any
Person shall be construed to include such Person's successors and assigns, (c)
the words "herein", "hereof" and "hereunder", and words of similar import, shall
be construed to refer to this Agreement in its entirety and not to any
particular provision hereof, (d) all references herein to Articles, Sections,
Exhibits and Schedules shall be construed to refer to Articles and Sections of,
and Exhibits and Schedules to, this Agreement, (e) in the computation of periods
of time from a
47
specified date to a later specified date, the word "from" means "from and
including", the words "to and including" and (f) the words "asset" and
"property" shall be construed to have the same meaning and effect and to refer
to any and all tangible and intangible assets and properties, including cash,
securities, accounts and contract rights.
Section 1.04. Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all financial statements to be delivered pursuant to this
Agreement shall be prepared in accordance with GAAP as in effect from time to
time and all terms of an accounting or financial nature that are used in
calculating the Interest Coverage Ratio or the Fixed Charge Coverage Ratio shall
be construed and interpreted in accordance with GAAP, as in effect on the
Closing Date unless otherwise agreed to by the Borrower and the Required
Lenders.
Section 1.05. Effectuation of Transactions. Each of the representations and
warranties of the Loan Parties contained in this Agreement (and all
corresponding definitions) are made after giving effect to the Transactions,
unless the context otherwise requires.
Section 1.06. Timing of Payment of Performance. When payment of any
obligation or the performance of any covenant, duty or obligation is stated to
be due or performance required on a day which is not a Business Day, the date of
such payment (other than as described in the definition of Interest Period) or
performance shall extend to the immediately succeeding Business Day.
ARTICLE 2
THE CREDITS
Section 2.01. Commitments. (a) Subject to the terms and conditions set
forth herein, each Lender agrees, severally and not jointly, to make Revolving
Loans to the Borrower from time to time during the Availability Period in an
aggregate principal amount that will not result in:
(i) such Lender's Revolving Exposure exceeding such Lender's
Commitment, or
(ii) the total Revolving Exposures exceeding the lesser of (x) the
Aggregate Commitments and (y) the Borrowing Base.
Within the foregoing limits and subject to the terms and conditions set forth
herein (including the Administrative Agent's authority, in its sole discretion,
to make Protective Advances pursuant to the terms of Section 2.04), the Borrower
may borrow, repay and reborrow Revolving Loans.
(b) Each Lender, severally and not jointly with any other Lender, agrees,
upon the terms and subject to the conditions herein set forth, to make
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Loans to the Borrower on the Closing Date in a single drawing up to an amount
not to exceed such Lender's Applicable Percentage of the Permitted Initial
Revolving Amount.
Section 2.02. Loans and Borrowings. (a) Each Loan (other than a Swingline
Loan or a Protective Advance) shall be made as part of a Borrowing consisting of
Loans of the same Class and Type made by the Lenders ratably in accordance with
their respective Commitments of the applicable Class. Any Protective Advance and
any Swingline Loan shall be made in accordance with the procedures set forth in
Sections 2.04 and 2.05, respectively.
(b) Subject to Section 2.14, each Borrowing shall be comprised entirely of
ABR Loans or LIBO Rate Loans as the Borrower may request in accordance herewith.
Each Swingline Loan and each Protective Advance shall be an ABR Loan. Each
Lender at its option may make any LIBO Rate Loan by causing any domestic or
foreign branch or Affiliate of such Lender to make such Loan; provided that (i)
any exercise of such option shall not affect the obligation of the Borrower to
repay such Loan in accordance with the terms of this Agreement, (ii) such LIBO
Rate Loan shall be deemed to have been made and held by such Lender, and the
obligation of the Borrower to repay such LIBO Rate Loan shall nevertheless be to
such Lender for the account of such domestic or foreign branch or Affiliate of
such Lender, (iii) the making of such LIBO Rate Loan by such domestic or foreign
branch or Affiliate of such Lender shall not result in any additional tax
liability to the Borrower and (iv) in exercising such option, such Lender shall
use reasonable efforts to minimize any increase in the Adjusted LIBO Rate or
increased costs to the Borrower resulting therefrom (which obligation of such
Lender shall not require it to take, or refrain from taking, actions that it
determines would result in increased costs for which it will not be compensated
hereunder or that it otherwise determines would be disadvantageous to it and in
the event of such request for costs for which compensation is provided under
this Agreement, the provisions of Section 2.15 shall apply).
(c) At the commencement of each Interest Period for any LIBO Rate
Borrowing, such Borrowing shall comprise an aggregate principal amount that is
an integral multiple of $100,000 and not less than $1,000,000. Each ABR
Borrowing when made shall be in a minimum principal amount of $100,000; provided
that an ABR Borrowing may be made in a lesser aggregate amount that is equal to
the entire unused balance of the Aggregate Commitments, that is required to
finance the reimbursement of an LC Disbursement as contemplated by Section
2.06(e). Borrowings of more than one Type and Class may be outstanding at the
same time; provided that there shall not at any time be more than a total of ten
(10) different Interest Periods in effect for LIBO Rate Borrowings at any time
outstanding.
(d) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request, or to elect to convert or continue, any
49
Borrowing if the Interest Period requested with respect thereto would end after
the Maturity Date.
Section 2.03. Requests for Borrowings. To request a Borrowing, the Borrower
shall notify the Administrative Agent of such request either in writing by
delivery of a Borrowing Request (by hand or facsimile) signed by the Borrower or
by telephone (a) in the case of a LIBO Rate Borrowing, not later than 12:00
noon, New York City time, three (3) Business Days (or, in the case of a LIBO
Rate Borrowing to be made on the Closing Date, two (2) Business Days) before the
date of the proposed Borrowing or (b) in the case of an ABR Borrowing (including
any such notice of an ABR Borrowing to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.06(e)), not later than 12:00 noon, New
York City time, one Business Day prior to the date of the proposed Borrowing.
Each such telephonic Borrowing Request shall be irrevocable and shall be
confirmed promptly by hand delivery or facsimile to the Administrative Agent of
a written Borrowing Request signed by the Borrower. Each such telephonic and
written Borrowing Request shall specify the following information in compliance
with Section 2.01:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a LIBO Rate
Borrowing;
(iv) in the case of a LIBO Rate Borrowing, the initial Interest Period
to be applicable thereto, which shall be a period contemplated by the
definition of the term "Interest Period"; and
(v) the location and number of the Borrower's account or any other
designated account(s) to which funds are to be disbursed.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested LIBO Rate Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one month's duration. Promptly following
receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender's Loan to be made as part of the requested Borrowing.
Section 2.04. Protective Advances. (a) Subject to the limitations set
forth below (and notwithstanding anything to the contrary in Section 4.02), the
Administrative Agent is authorized by the Borrower and the Lenders, from time to
time in the Administrative Agent's sole discretion in the exercise of its
commercially reasonable judgment (but shall have absolutely no obligation to),
to make Loans to the Borrower,on behalf of all Lenders at any time that any
50
condition precedent set forth in Section 4.02 has not been satisfied or waived,
which the Administrative Agent, in its Permitted Discretion, deems necessary or
desirable (x) to preserve or protect the Collateral, or any portion thereof, (y)
to enhance the likelihood of, or maximize the amount of, repayment of the Loans
and other Obligations, or (z) to pay any other amount chargeable to or required
to be paid by the Borrower pursuant to the terms of this Agreement, including
payments of reimbursable expenses (including costs, fees, and expenses as
described in Section 9.03) and other sums payable under the Loan Documents (each
such Loan, a "PROTECTIVE ADVANCE"). Any Protective Advance may be made in a
principal amount that would cause the aggregate Revolving Exposure to exceed the
Borrowing Base; provided that no Protective Advance may be made to the extent
that, after giving effect to such Protective Advance (together with the
outstanding principal amount of any outstanding Protective Advances), the
aggregate principal amount of Protective Advances outstanding hereunder would
exceed five percent (5%) of the Borrowing Base as determined on the date of such
proposed Protective Advance; and provided further that, the aggregate amount of
Credit Extensions plus the aggregate amount of outstanding Protective Advances
shall not exceed the Aggregate Commitments and there shall not be more than
three Protective Advances during any twelve month period. No Protective Advance
may remain outstanding for more than forty-five (45) days without the consent of
the Required Lenders unless a Liquidation is taking place. Each Protective
Advance shall be secured by the Liens in favor of the Collateral Agent in and to
the Collateral and shall constitute Obligations hereunder. The Administrative
Agent's authorization to make Protective Advances may be revoked at any time by
the Required Lenders. Any such revocation must be in writing and shall become
effective prospectively upon the Administrative Agent's receipt thereof. The
making of a Protective Advance on any one occasion shall not obligate the
Administrative Agent to make any Protective Advance on any other occasion. At
any time that the conditions precedent set forth in Section 4.02 have been
satisfied or waived, the Administrative Agent may request the Revolving Lenders
to make a Revolving Loan to repay a Protective Advance. At any other time, the
Administrative Agent may require the Lenders to fund their risk participations
described in Section 2.04(b).
(b) Upon the making of a Protective Advance by the Administrative Agent
(whether before or after the occurrence of a Default), each Lender shall be
deemed, without further action by any party hereto, unconditionally and
irrevocably to have purchased from the Administrative Agent without recourse or
warranty, an undivided interest and participation in such Protective Advance in
proportion to its Applicable Percentage. From and after the date, if any, on
which any Lender is required to fund its participation in any Protective Advance
purchased hereunder, the Administrative Agent shall promptly distribute to such
Lender, such Lender's Applicable Percentage of all payments of principal and
interest and all proceeds of Collateral (if any) received by the Administrative
Agent in respect of such Protective Advance.
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Section 2.05. Swingline Loans. (a) Subject to the terms and conditions set
forth herein, the Swingline Lender agrees to make Swingline Loans to the
Borrower from time to time during the Availability Period, in an aggregate
principal amount at any time outstanding that will not result in (i) the
aggregate principal amount of outstanding Swingline Loans exceeding $10,000,000,
or (ii) the total Revolving Exposures exceeding the lesser of the Aggregate
Commitments and the Borrowing Base; provided that the Swingline Lender shall not
be required to make a Swingline Loan to refinance an outstanding Swingline Loan.
Each Swingline Loan shall be in an integral multiple of $100,000 and not less
than $500,000. Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrower may borrow, prepay and reborrow
Swingline Loans. To request a Swingline Loan, the Borrower shall notify the
Swingline Lender (with a copy to the Administrative Agent) of such request by
telephone (confirmed by facsimile), not later than 2:00 p.m., New York City
time, on the day of a proposed Swingline Loan. Each such notice shall be
irrevocable and shall specify the requested date (which shall be a Business Day)
and amount of the requested Swingline Loan and the location and number of the
Borrower's account or other designated account(s) to which funds are to be
disbursed. The Swingline Lender shall make each Swingline Loan available to the
Borrower by means of a credit to the Funding Account or otherwise in accordance
with the instructions of the Borrower (including, in the case of a Swingline
Loan made to finance the reimbursement of an LC Disbursement as provided in
Section 2.06(e), by remittance to the applicable Issuing Bank, and in the case
of repayment of another Loan or fees or expenses as provided by Section 2.18(c),
by remittance to the Administrative Agent to be distributed to the Lenders) on
the requested date of such Swingline Loan.
(b) The Swingline Lender may by written notice given to the Administrative
Agent not later than 2:00 p.m., New York City time, on any Business Day require
the Lenders to acquire participations on such Business Day in all or a portion
of the Swingline Loans outstanding. Such notice shall specify the aggregate
amount of Swingline Loans in which Lenders will participate. Promptly upon
receipt of such notice, the Administrative Agent will give notice thereof to
each Lender, specifying in such notice such Lender's Applicable Percentage of
such Swingline Loan or Loans. Each Lender hereby absolutely and unconditionally
agrees, upon receipt of notice as provided above, to pay to the Administrative
Agent, for the account of the Swingline Lender, such Lender's Applicable
Percentage of such Swingline Loan or Loans. Each Lender acknowledges and agrees
that its obligation to acquire participations in Swingline Loans pursuant to
this paragraph is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or reduction or termination of the Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever. Each
Lender shall comply with its obligation under this paragraph by wire transfer of
immediately available funds, in the same manner as provided in Section 2.07 with
respect to Loans made by such Lender (and Section
52
2.07 shall apply, mutatis mutandis, to the payment obligations of the Lenders),
and the Administrative Agent shall promptly pay to the Swingline Lender the
amounts so received by it from the Lenders. The Administrative Agent shall
notify the Borrower of any participations in any Swingline Loan acquired
pursuant to this paragraph, and thereafter payments in respect of such Swingline
Loan shall be made to the Administrative Agent and not to the Swingline Lender.
Any amounts received by the Swingline Lender from the Borrower (or other party
on behalf of the Borrower) in respect of a Swingline Loan after receipt by the
Swingline Lender of the proceeds of a sale of participations therein shall be
promptly remitted to the Administrative Agent; any such amounts received by the
Administrative Agent shall be promptly remitted by the Administrative Agent to
the Lenders that shall have made their payments pursuant to this paragraph and
to the Swingline Lender, as their interests may appear; provided that any such
payment so remitted shall be repaid to the Swingline Lender or to the
Administrative Agent, as applicable, if and to the extent such payment is
required to be refunded to the Borrower for any reason. The purchase of
participations in a Swingline Loan pursuant to this paragraph shall not relieve
the Borrower of any default in the payment thereof..
(c) If Swingline Loans are outstanding as of the close of business on any
Monday, the Swingline Lender shall deliver written notice to the Administrative
Agent not later than 12:00 p.m., New York City time, on the following Business
Day requiring that the Lenders make Revolving Loans that are ABR Loans on such
Business Day in an amount equal to the amount of such Swingline Loans (the
"REFUNDED SWINGLINE LOANS") outstanding as of the close of business on such
Monday and based upon their Applicable Percentages; provided, however, that the
Lenders shall not be required to make such Revolving Loans to the extent (but
only to the extent) that such Loans would cause the Aggregate Credit Extensions
to exceed the Commitments. Notwithstanding anything herein to the contrary, (i)
the proceeds of such Revolving Loans made by the Lenders shall be immediately
delivered by the Administrative Agent to the Swingline Lender and applied to
repay a corresponding portion of the Refunded Swingline Loans and (ii) on the
day such Revolving Loans are made, such portion of the Refunded Swingline Loans
paid shall no longer be outstanding as Swingline Loans.
Section 2.06. Letters of Credit. (a) General. On and after the Closing
Date, each Existing Letter of Credit shall be deemed to be a Letter of Credit
issued hereunder for all purposes of this Agreement and the other Loan Documents
and for all purposes hereof will be deemed to have been issued on the Closing
Date. Subject to the terms and conditions set forth herein, (i) each Issuing
Bank agrees, in reliance upon the agreements of the other Revolving Lenders set
forth in this Section 2.06, (A) from time to time on any Business Day during the
period from the Closing Date to but not including the 30th day prior to the
Maturity Date, upon the request of the Borrower, to issue Letters of Credit
denominated in Dollars only and issued on sight basis only for the account of
the
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Borrower (or any Subsidiary of the Borrower so long as the Borrower is a joint
and several co-applicant, and references to "the Borrower" in this Section 2.06
shall be deemed to include reference to such Subsidiary) and to amend or renew
Letters of Credit previously issued by it, in accordance with Section 2.06(b),
and (B) to honor drafts under the Letters of Credit, and (ii) the Revolving
Lenders severally agree to participate in the Letters of Credit issued pursuant
to Section 2.06(d).
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions.
To request the issuance of a Letter of Credit (or the amendment, renewal or
extension of an outstanding Letter of Credit), the Borrower shall hand deliver
or facsimile (or transmit by electronic communication, if arrangements for doing
so have been approved by the applicable Issuing Bank) to the applicable Issuing
Bank and the Administrative Agent, at least two (2) Business Days in advance of
the requested date of issuance (or such shorter period as is acceptable to the
applicable Issuing Bank), a request to issue a Letter of Credit, which shall
specify that it is being issued under this Agreement, in the form of Exhibit F
attached hereto (each a "LETTER OF CREDIT REQUEST"). To request an amendment,
extension or renewal of a Letter of Credit, the Borrower shall submit such a
request on its letterhead, addressed to the applicable Issuing Bank (with a copy
to the Administrative Agent) at least two (2) Business Days in advance of the
requested date of amendment, extension or renewal, identifying the Letter of
Credit to be amended, renewed or extended, and specifying the proposed date
(which shall be a Business Day) and other details of the amendment, extension or
renewal. Requests for issuance, amendment, renewal or extension must be
accompanied by such other information as shall be necessary to issue, amend,
renew or extend such Letter of Credit. If requested by the applicable Issuing
Bank, the Borrower also shall submit a letter of credit application on such
Issuing Bank's standard form in connection with any request for a Letter of
Credit. In the event of any inconsistency between the terms and conditions of
this Agreement and the terms and conditions of any form of letter of credit
application or other agreement submitted by the Borrower to, or entered into by
the Borrower with, the applicable Issuing Bank relating to any Letter of Credit,
the terms and conditions of this Agreement shall control. A Letter of Credit
shall be issued, amended, renewed or extended only if (and on issuance,
amendment, renewal or extension of each Letter of Credit the Borrower shall be
deemed to represent and warrant that), after giving effect to such issuance,
amendment, renewal or extension (i) the LC Exposure shall not exceed
$25,000,000, and (ii) the aggregate amount of Credit Extensions shall not exceed
the lesser of the Commitments and the Borrowing Base. Promptly after the
delivery of any Letter of Credit or any amendment to a Letter of Credit to an
advising bank with respect thereto or to the beneficiary thereof, the applicable
Issuing Bank will also deliver to the Borrower and the Administrative Agent a
true and complete copy of such Letter of Credit or amendment. Upon receipt of
such Letter of Credit or amendment, the Administrative Agent shall notify the
Lenders, in writing, of such Letter of Credit or amendment, and if so requested
by a Lender, the
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Administrative Agent will provide such Lender with copies of such Letter of
Credit or amendment. With respect to commercial Letters of Credit, each Issuing
Bank shall on the first Business Day of each week submit to the Administrative
Agent, by facsimile, a report detailing the daily aggregate total of commercial
Letters of Credit for the previous calendar week.
(c) Expiration Date. Each standby Letter of Credit shall expire not later
than the earlier of (i) the date one year after the date of the issuance of such
Letter of Credit and (ii) the date that is five (5) Business Days prior to the
Maturity Date; provided that any standby Letter of Credit may provide for the
automatic extension thereof for any number of additional periods each of up to
one year in duration (none of which, in any event, shall extend beyond the date
referred to in clause (ii) of this paragraph (c)). Each commercial Letter of
Credit shall expire on the earlier of (i) 180 days after the date of the
issuance of such Letter of Credit and (ii) the date that is five (5) days prior
to the Maturity Date.
(d) Participations. By the issuance of a Letter of Credit (or an amendment
to a Letter of Credit increasing the amount thereof) and without any further
action on the part of the applicable Issuing Bank or the Lenders, the applicable
Issuing Bank hereby grants to each Lender, and each Lender hereby acquires from
such Issuing Bank, a participation in such Letter of Credit equal to such
Lender's Applicable Percentage of the aggregate amount available to be drawn
under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender hereby absolutely and unconditionally agrees to pay to
the Administrative Agent, for the account of the applicable Issuing Bank, such
Lender's Applicable Percentage of each LC Disbursement made by such Issuing Bank
and not reimbursed by the Borrower on the date due as provided in paragraph (e)
of this Section, or of any reimbursement payment required to be refunded to the
Borrower for any reason. Each Lender acknowledges and agrees that its obligation
to acquire participations pursuant to this paragraph in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever. Notwithstanding the
terms of Section 2.02, if any Letters of Credit remain outstanding upon the
termination of the Commitments, to the extent the Commitments exceed the Credit
Extensions (the "EXCESS AMOUNT") upon such termination of the Commitments, the
Lenders shall be deemed to have sold to each Lender, and each Lender shall be
deemed unconditionally and irrevocably to have so purchased from the Lenders,
without recourse or warranty, an undivided interest and participation, to the
extent of such Lender's Applicable Percentage in the lesser of (x) such Excess
Amount and (y) such undivided interest and participation of each Lender in such
outstanding Letters of Credit, each drawing thereunder and the obligations of
the Borrower under this Agreement and the other Loan Documents with respect
thereto.
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(e) Reimbursement. If the applicable Issuing Bank shall make any LC
Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such
LC Disbursement by paying to the Administrative Agent (or, in the case of
documentary Letters of Credit, the applicable Issuing Bank) an amount equal to
such LC Disbursement not later than 12:00 noon, New York City time, on the
Business Day immediately following the date the Borrower receives notice under
paragraph (g) of this Section of such LC Disbursement; provided that the
Borrower may, subject to the conditions to borrowing set forth herein, request
in accordance with Section 2.03 or 2.05 that such payment be financed with an
ABR Borrowing or Swingline Loan in an equivalent amount and, to the extent so
financed, the Borrower's obligation to make such payment shall be discharged and
replaced by the resulting ABR Borrowing or Swingline Loan. If the Borrower fails
to make such payment when due, the Administrative Agent shall notify each Lender
of the applicable LC Disbursement, the payment then due from the Borrower in
respect thereof and such Lender's Applicable Percentage thereof. Promptly
following receipt of such notice, each Lender shall pay to the Administrative
Agent its Applicable Percentage of the payment then due from the Borrower, in
the same manner as provided in Section 2.07 with respect to Loans made by such
Lender (and Section 2.07 shall apply, mutatis mutandis, to the payment
obligations of the Lenders), and the Administrative Agent shall promptly pay to
the applicable Issuing Bank the amounts so received by it from the Lenders.
Promptly following receipt by the Administrative Agent of any payment from the
Borrower pursuant to this paragraph, the Administrative Agent shall distribute
such payment to the applicable Issuing Bank or, to the extent that Lenders have
made payments pursuant to this paragraph to reimburse such Issuing Bank, then to
such Lenders and such Issuing Bank as their interests may appear.
(f) Obligations Absolute. The Borrower's obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the applicable Issuing Bank under a
Letter of Credit against presentation of a draft or other document that does not
comply with the terms of such Letter of Credit, or (iv) any other event or
circumstance whatsoever, whether or not similar to any of the foregoing, that
might, but for the provisions of this Section, constitute a legal or equitable
discharge of, or provide a right of setoff against, the Borrower's obligations
hereunder. Neither the Administrative Agent, the Revolving Lenders nor any
Issuing Bank, nor any of their Related Parties, shall have any liability or
responsibility by reason of or in connection with the issuance or transfer of
any Letter of Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the
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preceding sentence), or any error, omission, interruption, loss or delay in
transmission or delivery of any draft, notice or other communication under or
relating to any Letter of Credit (including any document required to make a
drawing thereunder), any error in interpretation of technical terms or any
consequence arising from causes beyond the control of such Issuing Bank;
provided that the foregoing shall not be construed to excuse such Issuing Bank
from liability to the Borrower to the extent of any direct damages (as opposed
to consequential damages, claims in respect of which are hereby waived by the
Borrower to the extent permitted by applicable law) suffered by the Borrower
that are caused by such Issuing Bank's failure to exercise care when determining
whether drafts and other documents presented under a Letter of Credit comply
with the terms thereof. The parties hereto expressly agree that, in the absence
of gross negligence or willful misconduct on the part of applicable Issuing Bank
(as finally determined by a court of competent jurisdiction), such Issuing Bank
shall be deemed to have exercised care in each such determination. In
furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented which appear on their
face to be in substantial compliance with the terms of a Letter of Credit, the
applicable Issuing Bank may, in its sole discretion, either accept and make
payment upon such documents without responsibility for further investigation,
regardless of any notice or information to the contrary, or refuse to accept and
make payment upon such documents if such documents are not in strict compliance
with the terms of such Letter of Credit.
(g) Disbursement Procedures. The applicable Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. Such Issuing Bank shall promptly
notify the Administrative Agent and the Borrower by telephone (confirmed by
facsimile) of such demand for payment and whether such Issuing Bank has made or
will make an LC Disbursement thereunder; provided that any failure to give or
delay in giving such notice shall not relieve the Borrower of its obligation to
reimburse such Issuing Bank and the Revolving Lenders with respect to any such
LC Disbursement.
(h) Interim Interest. If an Issuing Bank shall make any LC Disbursement,
then, unless the Borrower shall reimburse such LC Disbursement in full on the
date such LC Disbursement is made, the unpaid amount thereof shall bear
interest, for each day from and including the date such LC Disbursement is made
to but excluding the date that the Borrower reimburses such LC Disbursement, at
the rate per annum then applicable to Loans that are ABR Loans; provided that,
if the Borrower fails to reimburse such LC Disbursement when due pursuant to
paragraph (e) of this Section, then Section 2.13(c) shall apply. Interest
accrued pursuant to this paragraph shall be for the account of the applicable
Issuing Bank, except that interest accrued on and after the date of payment by
any Lender pursuant to paragraph (e) of this Section to reimburse
57
such Issuing Bank shall be for the account of such Lender to the extent of such
payment.
(i) Replacement of an Issuing Bank. An Issuing Bank may be replaced with
the consent of the Administrative Agent (not to be unreasonably withheld or
delayed) at any time by written agreement among the Borrower, the Administrative
Agent and the successor Issuing Bank. The Administrative Agent shall notify the
Revolving Lenders of any such replacement of an Issuing Bank. At the time any
such replacement shall become effective, the Borrower shall pay all unpaid fees
accrued for the account of the replaced Issuing Bank pursuant to Section
2.12(b). From and after the effective date of any such replacement, (i) the
successor Issuing Bank shall have all the rights and obligations of the replaced
Issuing Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed
to refer to such successor or to any previous Issuing Bank, or to such successor
and all previous Issuing Banks, as the context shall require. After the
replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain
a party hereto and shall continue to have all the rights and obligations of an
Issuing Bank under this Agreement with respect to Letters of Credit issued by it
prior to such replacement, but shall not be required to issue additional Letters
of Credit.
(j) Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Lenders with LC Exposure representing greater
than 50% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, upon such demand, the Borrower shall deposit, in an
interest-bearing account with the Collateral Agent, in the name of the
Collateral Agent and for the benefit of the Revolving Lenders (the "LC
COLLATERAL ACCOUNT"), an amount in cash equal to 101.5% of the LC Exposure as of
such date; provided that the obligation to deposit such cash collateral shall
become effective immediately, and such deposit shall become immediately due and
payable, without demand or other notice of any kind, upon the occurrence of any
Event of Default with respect to the Borrower described in clause Section
7.01(f) or Section 7.01(g) of Section 7.01. Such deposit shall be held by the
Collateral Agent as collateral for the payment and performance of the Secured
Obligations in accordance with the provisions of this paragraph (j). The
Collateral Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account and the Borrower hereby grants
the Collateral Agent a security interest in the LC Collateral Account. Other
than any interest earned on the investment of such deposits, which investments
shall be made at the option and sole discretion of the Collateral Agent, such
deposits shall not bear interest. Interest or profits, if any, on such
investments shall accumulate in such account. Moneys in such account shall be
applied by the Administrative Agent to reimburse the applicable Issuing Bank for
LC Disbursements for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction
58
of the reimbursement obligations of the Borrower for the LC Exposure at such
time or, if the maturity of the Loans has been accelerated (but subject to the
consent of Revolving Lenders with LC Exposure representing greater than 50% of
the total LC Exposure), be applied to satisfy other Secured Obligations. If the
Borrower is required to provide an amount of cash collateral hereunder as a
result of the occurrence of an Event of Default, such amount (together with all
interest and other earnings with respect thereto, to the extent not applied as
aforesaid) shall be returned promptly to the Borrower but in no event later than
three (3) Business Days after such Event of Default has been cured or waived.
Section 2.07. Funding of Borrowings. (a) Each Lender and each Lender shall
make each Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds by 2:30 p.m., New York City time, to the
account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders in an amount equal to such Lender's respective
Applicable Percentage; provided that, Swingline Loans shall be made as provided
in Section 2.05. The Administrative Agent will make such Loans available to the
Borrower by promptly crediting the amounts so received, in like funds, to the
Funding Account or as otherwise directed by the Borrower; provided that ABR
Revolving Loans made to finance the reimbursement of (i) an LC Disbursement as
provided in Section 2.06(e) shall be remitted by the Administrative Agent to the
applicable Issuing Bank and (ii) a Protective Advance shall be retained by the
Administrative Agent to be applied as contemplated by Section 2.04 (and the
Administrative Agent shall, upon the request of the Borrower, deliver to the
Borrower a reasonably detailed accounting of such application).
(b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrower severally agree to pay to the Administrative
Agent forthwith on demand (without duplication) such corresponding amount with
interest thereon, for each day from and including the date such amount is made
available to the Borrower to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation or (ii) in
the case of the Borrower, the interest rate applicable to Loans that are ABR
Loans. If such Lender pays such amount to the Administrative Agent, then such
amount shall constitute such Lender's Loan included in such Borrowing. Nothing
herein shall be deemed to relieve any Lender from its obligation to fulfill its
Commitment or to prejudice any rights which the Administrative Agent or the
59
Borrower or any other Loan Party may have against any Lender as a result of any
default by such Lender hereunder.
Section 2.08. Type; Interest Elections. (a) Each Borrowing initially shall
be of the Type specified in the applicable Borrowing Request and, in the case of
a LIBO Rate Borrowing, shall have an initial Interest Period as specified in
such Borrowing Request. Thereafter, the Borrower may elect to convert such
Borrowing to a different Type or to continue such Borrowing and, in the case of
a LIBO Rate Borrowing, may elect Interest Periods therefor, all as provided in
this Section. The Borrower may elect different options with respect to different
portions of the affected Borrowing, in which case each such portion shall be
allocated ratably among the Lenders, based upon their Applicable Percentages and
the Loans comprising each such portion shall be considered a separate Borrowing.
This Section shall not apply to Swingline Borrowings or Protective Advances,
which may not be converted or continued.
(b) To make an election pursuant to this Section, the Borrower shall notify
the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Borrowing of the Type resulting from such election to be made on
the effective date of such election. Each such telephonic Interest Election
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
facsimile to the Administrative Agent of a written Interest Election Request in
a form approved by the Administrative Agent and signed by the Borrower.
(c) Each telephonic and written Interest Election Request shall specify the
following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request applies and,
if different options are being elected with respect to different portions
thereof, the portions thereof to be allocated to each resulting Borrowing
(in which case the information to be specified pursuant to clauses (iii)
and (iv) below shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a
LIBO Rate Borrowing; and
(iv) if the resulting Borrowing is a LIBO Rate Borrowing, the Interest
Period to be applicable thereto after giving effect to such election, which
shall be a period contemplated by the definition of the term "Interest
Period".
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If any such Interest Election Request requests a LIBO Rate Borrowing but
does not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election Request
with respect to a LIBO Rate Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default
has occurred and is continuing and the Administrative Agent, at the request of
the Required Lenders, so notifies the Borrower, then, so long as an Event of
Default is continuing (i) no outstanding Borrowing may be converted to or
continued as a LIBO Rate Borrowing and (ii) unless repaid, each LIBO Rate
Borrowing shall be converted to an ABR Borrowing at the end of the then-current
Interest Period applicable thereto.
Section 2.09. Termination and Reduction of Commitments. (a) Unless
previously terminated, all Commitments shall terminate on the Maturity Date.
(b) Upon delivering the notice required by Section 2.09(d), the Borrower
may at any time terminate the Commitments upon (i) the payment in full of all
outstanding Loans, together with accrued and unpaid interest thereon, (ii) the
cancellation and return of all outstanding Letters of Credit (or alternatively,
with respect to each such Letter of Credit, the furnishing to the Administrative
Agent of a cash deposit (or at the discretion of the Administrative Agent a
backup standby letter of credit reasonably satisfactory to the Administrative
Agent) equal to 101.5% of the LC Exposure as of such date) and (iii) the payment
in full of all accrued and unpaid fees and all reimbursable expenses and other
Obligations then due, together with accrued and unpaid interest thereon.
(c) Upon delivering the notice required by Section 2.09(d), the Borrower
may from time to time reduce the Commitments; provided that (i) each reduction
of the Commitments shall be in an amount that is an integral multiple of
$1,000,000 and not less than $1,000,000 and (ii) the Borrower shall not reduce
the Commitments if, after giving effect to any concurrent prepayment of the
Revolving Loans in accordance with Section 2.10 or Section 2.11, the sum of the
Revolving Exposures would exceed the Aggregate Commitments.
(d) The Borrower shall notify the Administrative Agent of any election to
terminate or reduce the Commitments under paragraph (b) or (c) of this Section
at least three (3) Business Days prior to the effective date of such termination
or reduction, specifying such election and the effective date thereof. Promptly
61
following receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by the Borrower pursuant
to this Section shall be irrevocable; provided that a notice of termination of
the Commitments delivered by the Borrower may state that such notice is
conditioned upon the effectiveness of other transactions, in which case such
notice may be revoked by the Borrower (by notice to the Administrative Agent on
or prior to the specified effective date) if such condition is not satisfied.
Any termination or reduction of the Commitments pursuant to this Section 2.09
shall be permanent. Upon any reduction of the Commitments, the Commitment of
each Lender shall be reduced by such Lender's Applicable Percentage of such
reduction amount.
Section 2.10. Repayment of Loans; Evidence of Debt. (a) The Borrower hereby
unconditionally promises to pay (i) to the Administrative Agent for the account
of each Lender the then unpaid principal amount of each Revolving Loan on the
Maturity Date, (ii) to the Administrative Agent the then unpaid amount of each
Protective Advance on the earlier of the Maturity Date and demand by the
Administrative Agent and (iii) to the Swingline Lender the then unpaid principal
amount of each Swingline Loan on the Maturity Date; provided that on each date
that a Revolving Loan is made while any Protective Advance is outstanding, the
Borrower shall repay all Protective Advances with the proceeds of such Revolving
Loan then outstanding.
(b) At all times after the occurrence and during the continuance of a
Liquidity Event and notification thereof by the Administrative Agent to the
Borrower (subject to the provisions of Section 2.18(b) and to the terms of the
Pledge and Security Agreement), on each Business Day, at or before 1:00 p.m.,
New York City time, the Administrative Agent shall apply all immediately
available funds credited to the Collateral Agent Account, first to pay any fees
or expense reimbursements then due to the Agent, the Issuing Banks and the
Lenders (other than in connection with Banking Services or Secured Hedging
Obligations), pro rata, second to pay interest due and payable in respect of any
Revolving Loans (including Swingline Loans) and any Protective Advances that may
be outstanding, pro rata, third to prepay the principal of any Protective
Advances that may be outstanding, pro rata, fourth to prepay the principal of
the Loans (including Swingline Loans) and to cash collateralize outstanding LC
Exposure, pro rata, and fifth as the Borrower may direct.
(c) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.
(d) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Class and Type thereof
and the Interest Period (if any) applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to
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each Lender hereunder and (iii) the amount of any sum received by the
Administrative Agent hereunder for the account of the Lenders and each Lender's
share thereof.
(e) The entries made in the accounts maintained pursuant to paragraph (c)
or (d) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein (absent manifest error); provided
that the failure of any Lender or the Administrative Agent to maintain such
accounts or any manifest error therein shall not in any manner affect the
obligation of the Borrower to repay the Loans in accordance with the terms of
this Agreement.
(f) Any Lender may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrower shall prepare, execute and deliver
to such Lender a promissory note payable to such Lender and its registered
assigns and in substantially the form of Exhibit H hereto. Thereafter, the Loans
evidenced by such promissory note and interest thereon shall at all times
(including after assignment pursuant to Section 9.04) be represented by one or
more promissory notes in such form payable to the payee named therein and its
registered assigns.
Section 2.11. Prepayment of Loans. (a) Upon prior notice in accordance with
paragraph (c) of this Section, the Borrower shall have the right at any time and
from time to time to prepay any Borrowing in whole or in part without premium or
penalty (but subject to Section 2.16). Prepayments made pursuant to this Section
2.11(a), first, shall be applied ratably to the Swingline Loans and to
outstanding LC Disbursements and second, shall be applied ratably to the
outstanding Loans.
(b) Except for Protective Advances permitted under Section 2.04, in the
event and on each Business Day on which the total Revolving Exposure exceeds the
lesser of (i) the Aggregate Commitments and (ii) the Borrowing Base, the
Borrower shall prepay the Revolving Loans or Swingline Loans and/or reduce LC
Exposure, in an aggregate amount equal to such excess by taking any of the
following actions as it shall determine at its sole discretion: (1) prepayment
of Revolving Loans or Swingline Loans or (2) deposit of cash in the LC
Collateral Account; provided, that if the circumstances described in this clause
(b) are the result of the imposition of or increase in a Reserve, the Borrower
shall not be required to make the initial prepayment or deposit until the fifth
Business Day following the date on which either Agent notifies the Borrower of
such imposition or increase.
(c) The Borrower shall notify the Administrative Agent (and, in the case of
prepayment of a Swingline Loan, the Swingline Lender) by telephone (confirmed by
facsimile) of any prepayment hereunder (i) in the case of prepayment of a LIBO
Rate Borrowing, not later than 12:00 p.m., New York City time, three (3)
Business Days before the date of prepayment, (ii) in the case of prepayment of
an ABR Borrowing, not later than 12:00 p.m., New York City
63
time, on the day of prepayment, or (iii) in the case of prepayment of a
Swingline Loan, not later than 12:00 p.m., New York City time, on the date of
prepayment. Each such notice shall be irrevocable and shall specify the
prepayment date and the principal amount of each Borrowing or portion thereof to
be prepaid; provided that, if a notice of prepayment is given in connection with
a conditional notice of termination of the Commitments as contemplated by
Section 2.09, then such notice of prepayment may be revoked if such notice of
termination is revoked in accordance with Section 2.09. Promptly following
receipt of any such notice relating to a Borrowing, the Administrative Agent
shall advise the Lenders of the contents thereof. Each partial prepayment of any
Borrowing shall be in an amount that would be permitted in the case of an
advance of a Borrowing of the same Type as provided in Section 2.02. Each
prepayment of a Borrowing pursuant to this Section shall be applied as provided
in paragraph (a) of this Section.
Section 2.12. Fees. (a) The Borrower agrees to pay to the Administrative
Agent for the account of each Lender a commitment fee, which shall accrue at a
rate equal to the Commitment Fee Rate per annum on the average daily amount of
the Available Commitment of such Lender during the period from and including the
Closing Date to but excluding the date on which the Lenders' Commitments
terminate; provided that any commitment fee accrued with respect to the
Commitment of a Defaulting Lender during the period prior to the time such
Lender became a Defaulting Lender and unpaid at such time shall not be payable
by the Borrower so long as such Lender shall be a Defaulting Lender except to
the extent that such commitment fee shall otherwise have been due and payable by
the Borrower prior to such time; and provided further, that no commitment fee
shall accrue on the Commitment of a Defaulting Lender so long as such Lender
shall be a Defaulting Lender. Accrued commitment fees shall be payable in
arrears on the last Business Day of each March, June, September and December and
on the date on which the Commitments terminate, commencing with the last
Business Day of September 2007. All commitment fees shall be computed on the
basis of a year of 360 days and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day). For purposes of
calculating the commitment fees only, no portion of the Commitments shall be
deemed utilized as a result of outstanding Swingline Loans.
(b) The Borrower agrees to pay (i) to the Administrative Agent for the
account of each Revolving Lender a participation fee with respect to its
participations in Letters of Credit, which shall accrue at the same Applicable
Rate used to determine the interest rate applicable to LIBO Rate Loans on the
daily amount of such Lender's LC Exposure (excluding any portion thereof
attributable to unreimbursed LC Disbursements), during the period from and
including the Closing Date to but excluding the later of the date on which such
Lender's Commitment terminates and the date on which such Revolving Lender
ceases to have any LC Exposure, and (ii) to each Issuing Bank, for its own
account, a fronting fee, in respect of each Letter of Credit issued by such
Issuing Bank for
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the period from the date of issuance of such Letter of Credit through the
expiration date of such Letter of Credit (or if terminated on an earlier date,
to the termination date of such Letter of Credit), computed at a rate equal to
0.125% per annum of the daily stated amount of such Letter of Credit, as well as
such Issuing Bank's standard fees with respect to the issuance, amendment,
renewal or extension of any Letter of Credit or processing of drawings
thereunder. Participation fees and fronting fees accrued to but excluding the
last Business Day of each March, June, September and December shall be payable
on the first Business Day following such last day, commencing with the last
Business Day of September 2007; provided that all such fees shall be payable on
the date on which the Commitments terminate and any such fees accruing after the
date on which the Commitments terminate shall be payable on demand. Any other
fees payable to any Issuing Bank pursuant to this paragraph shall be payable
within ten (10) days after demand (accompanied by reasonable back-up
documentation therefor). All participation fees and fronting fees shall be
computed on the basis of a year of 360 days and shall be payable for the actual
number of days elapsed.
(c) The Borrower agrees to pay to the Agents, for their own accounts, the
agency and administration fees set forth in the Fee Letters, payable in the
amounts and at the times specified therein or as so otherwise agreed upon by the
Borrower and the Agents, or such agency fees as may otherwise be separately
agreed upon by the Borrower and either or both of the Agents in writing.
(d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the applicable
Issuing Bank, in the case of fees payable to it) for distribution, in the case
of commitment fees and participation fees, to the Lenders. Fees paid shall not
be refundable under any circumstances.
Section 2.13. Interest. (a) The Loans comprising each ABR Borrowing
(including each Swingline Loan and each Protective Advance) shall bear interest
at the Alternate Base Rate plus the Applicable Rate.
(b) The Loans comprising each LIBO Rate Borrowing shall bear interest at
the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus
the Applicable Rate.
(c) Notwithstanding the foregoing, if any principal of or interest on any
Loan or any fee or other amount payable by the Borrower hereunder is not paid
when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraphs
of this Section, or (ii) in the case of any other amount, 2% plus the rate
applicable to Loans that are ABR Loans as provided in paragraph (a) of this
Section.
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(d) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and upon termination of the Commitments;
provided that (i) interest accrued pursuant to paragraph (c) of this Section
shall be payable on demand, (ii) in the event of any repayment or prepayment of
any Loan (other than a prepayment of an ABR Loan prior to the end of the
Availability Period), accrued interest on the principal amount repaid or prepaid
shall be payable on the date of such repayment or prepayment and (iii) in the
event of any conversion of any LIBO Rate Loan prior to the end of the current
Interest Period therefor, accrued interest on such Loan shall be payable on the
effective date of such conversion.
(e) All interest hereunder shall be computed on the basis of a year of 360
days, except that interest computed by reference to the Alternate Base Rate at
times when the Alternate Base Rate is based on the Prime Rate shall be computed
on the basis of a year of 365 days (or 366 days in a leap year), and in each
case shall be payable for the actual number of days elapsed (including the first
day but excluding the last day). The applicable Alternate Base Rate, Adjusted
LIBO Rate or LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.
Section 2.14. Alternate Rate of Interest. If prior to the commencement of
any Interest Period for a LIBO Rate Borrowing:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable,
for such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders that the
Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period
will not adequately and fairly reflect the cost to such Lenders of making or
maintaining their Loans included in such Borrowing for such Interest Period;
then the Administrative Agent shall promptly give notice thereof to the Borrower
and the Lenders by telephone or facsimile as promptly as practicable thereafter
and, until the Administrative Agent notifies the Borrower and the Lenders that
the circumstances giving rise to such notice no longer exist, which the
Administrative Agent agrees promptly to do, (i) any Interest Election Request
that requests the conversion of any Borrowing to, or continuation of any
Borrowing as, a LIBO Rate Borrowing shall be ineffective and such Borrowing
shall be converted to an ABR Borrowing on the last day of the Interest Period
applicable thereof, and (ii) if any Borrowing Request requests a LIBO Rate
Borrowing, such Borrowing shall be made as an ABR Borrowing.
Section 2.15. Increased Costs. (a) If any Change in Law shall:
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(i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of,
or credit extended by, any Lender (except any such reserve requirement
reflected in the Adjusted LIBO Rate) or Issuing Bank; or
(ii) impose on any Lender or Issuing Bank or the London interbank
market any other condition affecting this Agreement or LIBO Rate Loans made
by such Lender or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any LIBO Rate Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or Issuing
Bank hereunder (whether of principal, interest or otherwise), then, following
delivery of the certificate contemplated by paragraph (c) of this Section, the
Borrower will pay to such Lender or Issuing Bank, as applicable, such additional
amount or amounts as will compensate such Lender or Issuing Bank, as applicable,
for such additional costs incurred or reduction suffered (except for any Taxes,
which shall be dealt with exclusively pursuant to Section 2.17); provided,
however, that the Borrower shall not be liable for such compensation if (i) the
relevant Change in Law occurs on a date prior to the date such Lender becomes a
party hereto, or (ii) the Lender invokes Section 2.20.
(b) If any Lender or Issuing Bank determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lender's or Issuing Bank's capital or on the capital of such
Lender's or Issuing Bank's holding company, if any, as a consequence of this
Agreement or the Loans made by, or participations in Letters of Credit held by,
such Lender, or the Letters of Credit issued by such Issuing Bank, to a level
below that which such Lender or such Issuing Bank or such Lender's or such
Issuing Bank's holding company could have achieved but for such Change in Law
other than due to Taxes, which shall be dealt with exclusively pursuant to
Section 2.17 (taking into consideration such Lender's or such Issuing Bank's
policies and the policies of such Lender's or such Issuing Bank's holding
company with respect to capital adequacy), then from time to time following
delivery of the certificate contemplated by paragraph (c) of this Section the
Borrower will pay to such Lender or such Issuing Bank, as applicable, such
additional amount or amounts as will compensate such Lender or such Issuing Bank
or such Lender's or such Issuing Bank's holding company for any such reduction
suffered.
(c) A certificate of a Lender or an Issuing Bank setting forth the amount
or amounts necessary to compensate such Lender or Issuing Bank or its holding
company, as applicable, as specified in paragraph (a) or (b) of this Section and
setting forth in reasonable detail the manner in which such amount or amounts
was determined shall be delivered to the Borrower and shall be conclusive absent
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manifest error. The Borrower shall pay such Lender or Issuing Bank, as
applicable, the amount shown as due on any such certificate within ten (10) days
after receipt thereof.
(d) Failure or delay on the part of any Lender or Issuing Bank to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender's or Issuing Bank's right to demand such compensation; provided that the
Borrower shall not be required to compensate a Lender or an Issuing Bank
pursuant to this Section for any increased costs or reductions incurred more
than 180 days prior to the date that such Lender or Issuing Bank, as applicable,
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender's or Issuing Bank's intention to claim
compensation therefor; provided further that, if the Change in Law giving rise
to such increased costs or reductions is retroactive, then the 180-day period
referred to above shall be extended to include the period of retroactive effect
thereof.
Section 2.16. Break Funding Payments. In the event of (a) the payment of
any principal of any LIBO Rate Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default but
except as provided in Section 2.20), (b) the conversion of any LIBO Rate Loan
other than on the last day of the Interest Period applicable thereto, (c) the
failure to borrow, convert, continue or prepay any LIBO Rate Loan on the date
specified in any notice delivered pursuant hereto (regardless of whether such
notice may be revoked under Section 2.09(d) and is revoked in accordance
therewith), or (d) the assignment of any LIBO Rate Loan other than on the last
day of the Interest Period applicable thereto as a result of a request by the
Borrower pursuant to Section 2.19, then, in any such event, the Borrower shall
compensate each Lender for the loss, cost and expense attributable to such event
(other than loss of profit). In the case of a LIBO Rate Loan, such loss, cost or
expense to any Lender shall be deemed to be the amount reasonably determined by
such Lender to be the excess, if any, of (i) the amount of interest which would
have accrued on the principal amount of such Loan had such event not occurred,
at the Adjusted LIBO Rate that would have been applicable to such Loan, for the
period from the date of such event to the last day of the then current Interest
Period therefor (or, in the case of a failure to borrow, convert or continue,
for the period that would have been the Interest Period for such Loan), over
(ii) the amount of interest which would accrue on such principal amount for such
period at the interest rate which such Lender would bid were it to bid, at the
commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the eurodollar market. A certificate of any Lender
setting forth any amount or amounts that such Lender is entitled to receive
pursuant to this Section and the basis therefor and setting forth in reasonable
detail the manner in which such amount or amounts was determined shall be
delivered to the Borrower and shall be conclusive absent manifest error. The
Borrower shall pay such Lender the amount shown as due on any such certificate
within ten (10) Business Days after receipt thereof.
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Section 2.17. Taxes. (a) Any and all payments by or on account of any
obligation of any Loan Party hereunder shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes; provided that if a
Loan Party shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent, Lender or
any Issuing Bank (as applicable) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) such Loan Party shall make
such deductions and (iii) such Loan Party shall timely pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
law. If at any time a Loan Party is required by applicable law to make any
deduction or withholding from any sum payable hereunder, such Loan Party shall
promptly notify the relevant Lender, Administrative Agent or Issuing Bank upon
becoming aware of the same. In addition, each Lender, the Administrative Agent
or Issuing Bank shall promptly notify a Loan Party upon becoming aware of any
circumstances as a result of which a Loan Party is or would be required to make
any deduction or withholding from any sum payable hereunder.
(b) In addition, the Loan Parties shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
(c) Each Loan Party shall indemnify each Agent, each Lender and each
Issuing Bank, within ten (10) days after written demand therefor, for the full
amount of any Indemnified Taxes or Other Taxes paid by such Agent, such Lender
or such Issuing Bank, as applicable, on or with respect to any payment by or on
account of any obligation of such Loan Party hereunder (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable
under this Section) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority, provided that if the Loan Party reasonably believes that
such Taxes were not correctly or legally asserted, the Agent, Lender or Issuing
Bank, as applicable, will use reasonable efforts to cooperate with the Loan
Party to obtain a refund of such Taxes (which shall be repaid to the Loan Party
in accordance with Section 2.17(f) so long as such efforts would not, in the
sole determination of such Agent, Lender or Issuing Bank result in any
additional costs, expenses or risks or be otherwise disadvantageous to it;
provided, further, that the Loan Party shall not be required to compensate any
Agent, Lender or Issuing Bank pursuant to this Section 2.17 for any amounts
incurred in any fiscal year or which such Agent, Lender or Issuing Bank does not
furnish notice of such claim within six months from the end of such fiscal year;
provided, further, that if the circumstances giving rise to such claim have a
retroactive effect (e.g., in connection with the audit of a prior tax year),
then the beginning of such six-month period shall be extended to include such
period of retroactive effect. A certificate as to the amount of such payment or
liability
69
delivered to the Borrower by a Lender or an Issuing Bank, or by an Agent on its
own behalf or on behalf of a Lender or an Issuing Bank, shall be conclusive
absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or Other
Taxes by a Loan Party to a Governmental Authority, such Loan Party shall deliver
to the Administrative Agent the original or a certified copy of a receipt issued
by such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.
(e) (i) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law, such properly completed and executed documentation prescribed by applicable
law or reasonably requested by the Borrower as will permit such payments to be
made without withholding or at a reduced rate.
(ii) Each Lender that is a "United States person" within the meaning
of Section 7701(a)(30) of the Code agrees to deliver to the Borrower a duly
completed and executed copy of Internal Revenue Service Form W-9 or
successor form establishing that such U.S. Lender is a United States person
that is not subject to U.S. backup withholding tax.
(f) If the Administrative Agent or a Lender determines, in its sole
discretion, that it has received a refund of any Indemnified Taxes or Other
Taxes as to which it has been indemnified by a Loan Party or with respect to
which such Loan Party has paid additional amounts pursuant to this Section 2.17,
it shall pay over such refund to such Loan Party (but only to the extent of
indemnity payments made, or additional amounts paid, by such Loan Party under
this Section 2.17 with respect to the Taxes or Other Taxes giving rise to such
refund), net of all out-of-pocket expenses of the Administrative Agent or such
Lender (including any Taxes imposed with respect to such refund) as is
determined by the Administrative Agent or such Lender in good faith in its
reasonable discretion, and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund); provided, that
such Loan Party, upon the request of the Administrative Agent or such Lender,
agrees to repay the amount paid over to such Loan Party (plus any penalties,
interest or other charges imposed by the relevant Governmental Authority) to the
Administrative Agent or such Lender in the event the Administrative Agent or
such Lender is required to repay such refund to such Governmental Authority.
This Section shall not be construed to require the Administrative Agent or any
Lender to make available its tax returns (or any other information relating to
its taxes which it deems confidential) to such Loan Party or any other Person.
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Section 2.18. Payments Generally; Allocation of Proceeds; Sharing of
Set-offs. (a) Unless otherwise specified, the Borrower shall make each payment
required to be made by it hereunder (whether of principal, interest, fees or
reimbursement of LC Disbursements, or of amounts payable under Section 2.15,
2.16 or 2.17, or otherwise) prior to 1:30 p.m., New York City time, on the date
when due, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent to the applicable account designated
to the Borrower by the Administrative Agent, except payments to be made directly
to the applicable Issuing Bank or the Swingline Lender as expressly provided
herein and except that payments pursuant to Sections 2.15, 2.16 or 2.17 and 9.03
shall be made directly to the Persons entitled thereto. The Administrative Agent
shall distribute any such payments received by it for the account of any other
Person to the appropriate recipient promptly following receipt thereof. Except
as provided in Section 2.05 with respect to Swingline Loans, in Section 2.04
with respect to Protective Advances and in Section 2.20, each Borrowing, each
payment or prepayment of principal of any Borrowing, each payment of interest on
the Loans, each payment of the commitment fees, each reduction of the
Commitments and each conversion of any Borrowing to or continuation of any
Borrowing as a Borrowing of any Type shall be allocated pro rata among the
Lenders in accordance with their respective applicable Commitments (or, if such
Commitments shall have expired or been terminated, in accordance with the
respective principal amounts of their outstanding Loans). Each Lender agrees
that in computing such Lender's portion of any Borrowing to be made hereunder,
the Administrative Agent may, in its discretion, round each Lender's percentage
of such Borrowing to the next higher or lower whole dollar amount. If any
payment hereunder shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding Business Day, and, in the case
of any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments hereunder shall be made in Dollars. Any
payment required to be made by the Administrative Agent hereunder shall be
deemed to have been made by the time required if the Administrative Agent shall,
at or before such time, have taken the necessary steps to make such payment in
accordance with the regulations or operating procedures of the clearing or
settlement system used by the Administrative Agent to make such payment. At all
times that full cash dominion is in effect pursuant to Section 2.21(d), solely
for purposes of determining the amount of Loans available for borrowing
purposes, checks and cash or other immediately available funds from collections
of items of payment and proceeds of any Collateral shall be applied in whole or
in part against the Obligations, on the day of receipt, subject to actual
collection.
(b) Subject in all respects to the provisions of the Intercreditor
Agreement, all proceeds of Collateral received by the Agents after an Event of
Default has occurred and is continuing and all or any portion of the Loans shall
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have been accelerated hereunder pursuant to Section 7.01, shall upon election by
the Agents or at the direction of the Required Lenders be applied, first, to,
ratably, pay any fees, indemnities, or expense reimbursements then due to the
Agents or any Issuing Bank from the Borrower (other than in connection with
Banking Services or Secured Hedging Obligations), second, ratably, to pay any
fees or expense reimbursements then due to the Lenders from the Borrower (other
than in connection with Banking Services or Secured Hedging Obligations), third,
to pay interest due and payable in respect of any Revolving Loans, Swingline
Loans and any Protective Advances, ratably, fourth, to pay the principal of the
Protective Advances, fifth, to prepay principal on the Loans (other than the
Protective Advances) and unreimbursed LC Disbursements, ratably, sixth, to pay
an amount to the Administrative Agent equal to 101.5% of the LC Exposure on such
date, to be held in the LC Collateral Account as cash collateral for such
Obligations, seventh, to pay any amounts owing with respect to Banking Services
to the extent they constitute Secured Obligations and Secured Hedging
Obligations, ratably, eighth, to the payment of any other Secured Obligation due
to the Agents or any Lender by the Borrower, ninth, as provided for under the
Intercreditor Agreement, and tenth, to the Borrower or as the Borrower shall
direct.
(c) If any Lender shall, by exercising any right of set-off or counterclaim
or otherwise, obtain payment in respect of any principal of or interest on any
of its Loans or participations in LC Disbursements, Swingline Loans or
Protective Advances resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Loans and participations in LC
Disbursements, Swingline Loans or Protective Advances and accrued interest
thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Loans and participations in LC Disbursements, Swingline
Loans and Protective Advances of other Lenders at such time outstanding to the
extent necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans and participations in LC
Disbursements, Swingline Loans and Protective Advances; provided that (i) if any
such participations are purchased and all or any portion of the payment giving
rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans or
participations in LC Disbursements, Swingline Loans or Protective Advances to
any assignee or participant, other than to the Borrower or any subsidiary or
Affiliate thereof (as to which the provisions of this paragraph shall apply).
The Borrower consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of set-off and counterclaim with respect to
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such participation as fully as if such Lender were a direct creditor of the
Borrower in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or the applicable Issuing Bank hereunder
that the Borrower will not make such payment, the Administrative Agent may
assume that the Borrower has made such payment on such date in accordance
herewith and may, in reliance upon such assumption, distribute to the Lenders or
the applicable Issuing Bank, as applicable, the amount due. In such event, if
the Borrower has not in fact made such payment, then each of the Lenders or the
applicable Issuing Bank, as applicable, severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender or Issuing Bank with interest thereon, for each day from and including
the date such amount is distributed to it to but excluding the date of payment
to the Administrative Agent, at the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to be made by it
pursuant to Section 2.04(b), Section 2.05(b), Section 2.06(d) or (e), Section
2.07(b), Section 2.18(c) or Section 9.03(c), then the Administrative Agent may,
in its discretion (notwithstanding any contrary provision hereof), apply any
amounts thereafter received by the Administrative Agent for the account of such
Lender to satisfy such Lender's obligations under such Sections until all such
unsatisfied obligations are fully paid.
Section 2.19. Mitigation Obligations; Replacement of Lenders. (a) If any
Lender requests compensation under Section 2.15 or such Lender determines it can
no longer make or maintain LIBO Rate Loans pursuant to Section 2.20, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.17,
then such Lender shall use reasonable efforts to designate a different lending
office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the reasonable judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17, as
applicable, in the future and (ii) would not subject such Lender to any material
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender in any material respect. The Borrower hereby agrees to pay all reasonable
costs and expenses incurred by any Lender in connection with any such
designation or assignment.
(b) If any Lender requests compensation under Section 2.15 or such Lender
determines it can no longer make or maintain LIBO Rate Loans pursuant to Section
2.20, or if the Borrower is required to pay any additional amount to any Lender
or any Governmental Authority for the account of any Lender pursuant to
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Section 2.17, or is a Defaulting Lender, then the Borrower may, at its sole
expense and effort, upon notice to such Lender and the Administrative Agent,
replace such Lender by requiring such Lender to assign and delegate (and such
Lender shall be obligated to assign and delegate), without recourse (in
accordance with and subject to the restrictions contained in Section 9.04), all
its interests, rights and obligations under this Agreement to an assignee that
shall assume such obligations (which assignee may be another Lender, if a Lender
accepts such assignment); provided that (i) the Borrower shall have received the
prior written consent of the Administrative Agent and each Issuing Bank, which
consent in each case shall not unreasonably be withheld, (ii) such Lender shall
have received payment of an amount equal to the outstanding principal of its
Revolving Loans and participations in LC Disbursements, Swingline Loans and
Protective Advances, accrued interest thereon, accrued fees and all other
amounts payable to it hereunder, from the assignee (to the extent of such
outstanding principal and accrued interest and fees) or the Borrower (in the
case of all other amounts) and (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.15 or payments required
to be made pursuant to Section 2.17, such assignment will result in a reduction
in such compensation or payments. A Lender (other than a Defaulting Lender)
shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances
entitling the Borrower to require such assignment and delegation cease to apply.
Nothing in this Section 2.19 shall be deemed to prejudice any rights that the
Borrower may have against any Lender that is a Defaulting Lender. Each Lender
agrees that if it is replaced pursuant to Section 2.19, it shall execute and
deliver to the Administrative Agent an Assignment and Assumption to evidence
such sale and purchase and shall deliver to the Administrative Agent any Note
(if the assigning Lender's Loans are evidenced by Notes) subject to such
Assignment and Assumption; provided that the failure of any Lender replaced
pursuant to this Section 2.19 to execute an Assignment and Assumption shall not
render such sale and purchase (and the corresponding assignment) invalid.
Section 2.20. Illegality. If any Lender reasonably determines that any
Change in Law has made it unlawful, or that any Governmental Authority has
asserted after the Closing Date that it is unlawful, for such Lender or its
applicable lending office to make or maintain any LIBO Rate Loans, then, on
notice thereof by such Lender to the Borrower through the Administrative Agent,
any obligations of such Lender to make or continue LIBO Rate Loans or to convert
ABR Borrowings to LIBO Rate Borrowings shall be suspended until such Lender
notifies the Administrative Agent and the Borrower that the circumstances giving
rise to such determination no longer exist. Upon receipt of such notice, the
Borrower shall upon demand from such Lender (with a copy to the Administrative
Agent), either convert all LIBO Rate Borrowings of such Lender to ABR
Borrowings, either on the last day of the Interest Period therefor, if such
Lender may lawfully continue to maintain such LIBO Rate Borrowings to such day,
or immediately, if such Lender may not lawfully continue to maintain such Loans
(in
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which case the Borrower shall not be required to make payments pursuant to
Section 2.16 in connection with such payment). Upon any such prepayment or
conversion, the Borrower shall also pay accrued interest on the amount so
prepaid or converted. Each Lender agrees to designate a different lending office
if such designation will avoid the need for such notice and will not, in the
determination of such Lender, otherwise be disadvantageous to it.
Section 2.21. Cash Receipts. (a) Annexed hereto as Schedule 2.21(a) is a
schedule of all DDAs (including any payroll, trust, VEBA and tax withholding
accounts), that, to the knowledge of the Responsible officers of the Loan
Parties, are maintained by the Loan Parties as of the Closing Date, which
Schedule includes, with respect to each depository, in each case as of the
Closing Date, (i) the name and address of such depository and (ii) the account
number(s) maintained with such depository.
(b) Annexed hereto as Schedule 2.21(b) is a list describing all
arrangements to which any Loan Party is a party as of the date hereof with
respect to the payment to such Loan Party of the proceeds of all credit card
charges for sales by such Loan Party.
(c) Each Loan Party shall (i) deliver to the Agents notifications, in form
reasonably satisfactory to the Agents, executed on behalf of such Loan Party and
addressed to such Loan Party's credit card clearinghouses and processors (each,
a "CREDIT CARD NOTIFICATION"); (ii) as soon as reasonably practicable but in any
event within 30 days after the Closing Date (or such longer period as the Agents
may agree in their sole discretion) deliver to the Agents notifications, in form
reasonably satisfactory to the Agents, executed on behalf of such Loan Party to
each depository institution with which any DDA is maintained (other than ▇▇▇▇▇
cash accounts) of the Collateral Agent's interest in such DDA (each, a "DDA
NOTIFICATION"); (iii) as soon as reasonably practicable but in any event within
30 days after the Closing Date (or such longer period as the Agents may agree in
their sole discretion) instruct each such depository institution for a DDA to
cause all amounts on deposit and available at the close of each Business Day in
such DDA (net of such minimum balance, not to exceed $20,000, as may be required
to be maintained in the subject DDA by the depository institution at which such
DDA is maintained), to be swept to one of the Loan Parties' concentration
accounts no less frequently than on a daily basis, such instructions to be
irrevocable unless otherwise agreed to by the Agents; and (iv) within sixty (60)
days after the Closing Date (or such longer period as the Agents may agree to in
their sole discretion), enter into a blocked account agreement with respect to
each of the Loan Parties' concentration accounts (each, a "BLOCKED ACCOUNT
AGREEMENT"), in form reasonably satisfactory to the Agents, with the Collateral
Agent and any bank with which such Loan Party maintains a concentration account
into which the DDAs are swept (collectively, the "BLOCKED ACCOUNTS"), which
concentration accounts as of the Closing Date are listed on Schedule 2.21(c)
annexed hereto.
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(d) Each Credit Card Notification and Blocked Account Agreement shall
require, after the delivery of notice of an Event of Default or a Liquidity
Event from the Administrative Agent to the Borrower and the other parties to
such instrument or agreement, (which the Administrative Agent may, or upon the
request of the Required Lenders shall, provide upon its becoming aware of such
an Event of Default or Liquidity Event), the ACH or wire transfer no less
frequently than once per Business Day (unless the Commitments have been
terminated and the Obligations have been paid in full), of all available cash
balances and cash receipts, including the then contents or then entire ledger
balance of each Blocked Account (net of such minimum balance, not to exceed
$15,000, as may be required to be maintained in the subject Blocked Account by
the bank at which such Blocked Account is maintained), to an account maintained
by the Collateral Agent (the "COLLATERAL AGENT ACCOUNT"). Subject to the terms
of the Pledge and Security Agreement, all amounts received in the Collateral
Agent Account shall be applied (and allocated) by the Administrative Agent in
accordance with Section 2.10(b); provided, that if the circumstances described
in Section 2.18(b) are applicable, all such amounts shall be applied in
accordance with such Section 2.18(b). Each Loan Party agrees that it will not
cause any proceeds of any Blocked Account to be otherwise redirected.
(e) The Loan Parties may close DDAs or Blocked Accounts and/or open new
DDAs or Blocked Accounts, subject (in the case of opening any new DDAs or
Blocked Accounts) to the contemporaneous (or such longer period as the Agents
may agree) execution and delivery to the Agents of a DDA Notification or Blocked
Account Agreement, as applicable, consistent with the provisions of this Section
2.21 and otherwise reasonably satisfactory to the Agents (it being understood
and agreed that the Loan Parties will furnish to the Agents written notice of
the opening of any new payroll, trust, VEBA and tax withholding accounts in a
timely manner). Unless consented to in writing by the Agents, the Loan Parties
shall not enter into any agreements with credit card processors other than the
ones listed on Schedule 2.21(b) unless contemporaneously therewith (or such
longer period as the Agents may agree), a Credit Card Notification is executed
and a copy thereof is delivered to the Agents.
(f) The Collateral Agent Account shall at all times be under the sole
dominion and control of the Collateral Agent. Each Loan Party hereby
acknowledges and agrees that (i) such Loan Party has no right of withdrawal from
the Collateral Agent Account, (ii) the funds on deposit in the Collateral Agent
Account shall at all times continue to be collateral security for all of the
Secured Obligations, and (iii) the funds on deposit in the Collateral Agent
Account shall be applied as provided in this Agreement and the Intercreditor
Agreement. In the event that, notwithstanding the provisions of this Section
2.21, any Loan Party receives or otherwise has dominion and control of any
proceeds or collections required to be transferred to the Collateral Agent
Account pursuant to Section 2.21(d), such proceeds and collections shall be held
in trust by such Loan Party for the Collateral Agent, shall not be commingled
with any of such Loan Party's
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other funds or deposited in any account of such Loan Party and shall promptly be
deposited into the Collateral Agent Account or dealt with in such other fashion
as such Loan Party may be instructed by the Agents.
(g) So long as no Event of Default or Liquidity Event has occurred and is
continuing in respect of which the Administrative Agent has delivered notice
thereof as contemplated by paragraph (d) of this Section 2.21, the Loan Parties
may direct, and shall have sole control over, the manner of disposition of funds
in the Blocked Accounts.
(h) Any amounts held or received in the Collateral Agent Account (including
all interest and other earnings with respect thereto, if any) at any time (x)
when all of the Secured Obligations (other than Unliquidated Obligations and
other contingent indemnification obligations for which no claim has been made)
have been satisfied, (y) no Credit Extensions are outstanding (or, if Letters of
Credit are the only Credit Extensions outstanding, such Letters of Credit have
been fully cash collateralized in a manner that is reasonably satisfactory to
the Administrative Agent) or (z) all Events of Default and Liquidity Events have
been cured, shall (subject in the case of clause (x) to the provisions of the
Intercreditor Agreement) be remitted to an account of the Borrower designated by
the Borrower.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Each Loan Party represents and warrants to the Lenders that:
Section 3.01. Organization; Powers. Each of the Loan Parties and each of
its Subsidiaries is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, has all requisite power and
authority to own its property and assets and to carry on its business as now
conducted and, except where the failure to do so, individually or in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect, is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required.
Section 3.02. Authorization; Enforceability. The Transactions are within
each applicable Loan Party's corporate or other organizational powers and have
been duly authorized by all necessary corporate or other organizational action
of such Loan Party. Each Loan Document to which each Loan Party is a party has
been duly executed and delivered by such Loan Party and is a legal, valid and
binding obligation of such Loan Party, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and to general principles of equity.
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Section 3.03. Governmental Approvals; No Conflicts. The Transactions (a)
do not require any consent or approval of, registration or filing with, or any
other action by, any Governmental Authority, except (i) such as have been
obtained or made and are in full force and effect and (ii) for filings necessary
to perfect Liens created pursuant to the Loan Documents and the Term Loan
Security Documents, (b) will not violate any Requirements of Law applicable to
any Loan Party or any of its Subsidiaries, (c) will not violate or result in a
default under any Contractual Obligation of any of the Loan Parties which could
reasonably be expected to result in a Material Adverse Effect and (d) will not
result in the creation or imposition of any Lien on any asset of any Loan Party
or any of its Subsidiaries, except Liens created pursuant to the Loan Documents
and the Term Loan Security Documents.
Section 3.04. Financial Condition; No Material Adverse Change. (a) The
Borrower has heretofore furnished to the Lenders its consolidated balance sheet
and related consolidated statements of operations and cash flows and
stockholders' equity as of and for (i) the fiscal years ended December 31, 2005
and December 31, 2006, each reported on by Ernst & Young LLP, independent public
accountants, and (ii) the fiscal quarter ended on March 31, 2007, certified by
its chief financial officer. Such financial statements present fairly, in all
material respects, the financial position and results of operations and cash
flows of the Borrower and its consolidated Subsidiaries as of such dates and for
such periods in accordance with GAAP, subject to the absence of footnotes and
normal year-end adjustments in the case of the statements referred to in clause
(ii).
(b) The Borrower has heretofore delivered to the Lenders its unaudited pro
forma consolidated balance sheet and related pro forma consolidated statements
of operations and cash flows and stockholders' equity as of March 31, 2007,
prepared giving effect to the Transactions as if they had occurred, with respect
to such balance sheet, on such date and, with respect to such other financial
statements, on the first day of the 12-month period ending on such date. Such
pro forma financial statements have been prepared in good faith by the Borrower,
based on the assumptions used to prepare the pro forma financial information
contained in the Information Memorandum (which assumptions are believed by the
Borrower on the Closing Date to be reasonable), are based on the best
information available to the Borrower as of the date of delivery thereof,
accurately reflect all adjustments required to be made to give effect to the
Transactions and present fairly in all material respects on a pro forma basis
the estimated consolidated financial position of the Borrower and its
consolidated Subsidiaries as of such date and for such period, assuming that the
Transactions had actually occurred at such date or at the beginning of such
period, as the case may be.
(c) No event, change or condition has occurred that has had, or would
reasonably be expected to have, a Material Adverse Effect, since December 31,
2006.
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Section 3.05. Properties. (a) As of the date of this Agreement, the
Perfection Certificate sets forth the address of each parcel of real property
(or each set of parcels that collectively comprise one operating property) that
is owned or leased by each Loan Party.
(b) Each of the Borrower and each of the Subsidiaries has good fee simple
title to, or valid leasehold interests in, or easements or other limited
property interests in, all its Real Estate Assets (including any Mortgaged
Properties) and has good and marketable title to its personal property and
assets, in each case, except for defects in title that do not materially
interfere with its ability to conduct its business as currently conducted or to
utilize such properties and assets for their intended purposes and except where
the failure to have such title would not reasonably be expected to have a
Material Adverse Effect. All such properties and assets are free and clear of
Liens, other than (i) Permitted Liens, (ii) Liens arising by operation of law
and (iii) minor defects in title that do not materially interfere with the
ability of Holdings and its Subsidiaries to conduct their businesses.
(c) As of the Closing Date, no Responsible Officer of Holdings, the
Borrower or any Subsidiary has received any written notice of, nor has any
knowledge of, any pending or contemplated condemnation proceeding affecting any
of the Mortgaged Properties or any sale or disposition thereof in lieu of
condemnation.
(d) To the knowledge of each Responsible Officer of the Borrower, as of the
Closing Date, none of the Borrower or any Subsidiary is obligated under any
right of first refusal, option or other contractual right to sell, assign or
otherwise dispose of any Mortgaged Property or any interest therein.
(e) To the knowledge of each Responsible Officer of the Borrower, each of
the Borrower and each of the Subsidiaries has complied with all obligations
under all leases to which it is a party, except where the failure to comply
would not reasonably be expected to have a Material Adverse Effect, and all such
leases are in full force and effect, except leases in respect of which the
failure to be in full force and effect would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
(f) Each of the Borrower and the Subsidiaries owns or possesses, or is
licensed to use, all patents, trademarks, service marks, trade names and
copyrights and all licenses and rights with respect to the foregoing, necessary
for the present conduct of its business, without any conflict with the rights of
others, and free from any burdensome restrictions on the present conduct of its
business, except where such failure to own, possess or hold pursuant to a
license or such conflicts and restrictions would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.
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Section 3.06. Litigation and Environmental Matters. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of any Loan Party, threatened
against or affecting the Loan Parties or any of their Subsidiaries (i) which
would reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect or (ii) that involve any Loan Documents or the
Transactions.
(b) Except for any matters that, individually or in the aggregate, would
not reasonably be expected to result in a Material Adverse Effect (i) no Loan
Party nor any of its Subsidiaries has received notice of any claim with respect
to any Environmental Liability or knows of any basis for any Environmental
Liability and (ii) no Loan Party nor any of its Subsidiaries (A) has failed to
comply with any Environmental Law or to obtain, maintain or comply with any
permit, license or other approval required under any Environmental Law or (B)
has become subject to any Environmental Liability.
Section 3.07. Compliance with Laws and Agreements; Licenses and Permits.
(a) Each Loan Party is in compliance with all Requirements of Law applicable to
it or its property and all indentures, agreements and other instruments binding
upon it or its property, except, in each case, where the failure to do so,
individually or in the aggregate, would not reasonably be expected to result in
a Material Adverse Effect.
(b) Each Loan Party and its Subsidiaries has obtained and holds in full
force and effect, all franchises, licenses, leases, permits, certificates,
authorizations, qualifications, easements, rights of way and other rights and
approvals which are necessary or advisable for the operation of its businesses
as presently conducted and as proposed to be conducted, except where the failure
to have so obtained or hold or to be in force, individually or in the aggregate,
would not reasonably be expected to result in a Material Adverse Effect. No Loan
Party or any of its Subsidiaries is in violation of the terms of any such
franchise, license, lease, permit, certificate, authorization, qualification,
easement, right of way, right or approval, except where any such violation,
individually or in the aggregate, would not reasonably be expected to result in
a Material Adverse Effect.
Section 3.08. Investment Company Status. No Loan Party is an "investment
company" as defined in, or is required to be registered under, the Investment
Company Act of 1940.
Section 3.09. Taxes. Each Loan Party and its Subsidiaries has timely filed
or caused to be filed all Tax returns and reports required to have been filed
and has paid or caused to be paid all Taxes required to have been paid by it,
except (a) Taxes that are being contested in good faith by appropriate
proceedings and for which such Loan Party or such Subsidiary, as applicable, has
set aside on its books adequate reserves in accordance with GAAP or (b) to the
extent that the
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failure to do so, individually or in the aggregate, would not reasonably be
expected to result in a Material Adverse Effect.
Section 3.10. ERISA. No ERISA Event has occurred in the five (5)-year
period prior to the date on which this representation is made or deemed made and
is continuing or is reasonably expected to occur that, when taken together with
all other such ERISA Events for which liability is reasonably expected to occur,
would reasonably be expected to result in a Material Adverse Effect. Except as
would not reasonably be expected to have a Material Adverse Effect, the present
value of all accumulated benefit obligations under all Pension Plans (based on
the assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed the fair market value of the assets of such
Pension Plans, in the aggregate.
Section 3.11. Disclosure. (a) All written information (other than the
Projections and the pro forma financial statements and estimates and information
of a general economic nature) concerning Holdings, the Borrower, the
Subsidiaries, the Transactions and any other transactions contemplated hereby
included in the Information Memorandum or otherwise prepared by or on behalf of
the foregoing or their representatives and made available to any Lender or the
Administrative Agent in connection with the Transactions on or before the date
hereof (the "INFORMATION"), when taken as a whole, as of the date such
Information was furnished to the Lenders and as of the Closing Date, did not
contain any untrue statement of a material fact as of any such date or omit to
state a material fact necessary in order to make the statements contained
therein not materially misleading in light of the circumstances under which such
statements were made.
(b) The Projections and pro forma financial statements prepared by or on
behalf of the Borrower or any of its representatives and that have been made
available to any Lenders or the Administrative Agent in connection with the
Transactions on or before the date hereof (the "OTHER INFORMATION") (i) have
been prepared in good faith based upon assumptions believed by the Borrower to
be reasonable as of the date thereof (it being understood that actual results
may vary materially from the Other Information), and (ii) as of the Closing
Date, have not been modified in any material respect by the Borrower.
Section 3.12. Material Contracts. No Loan Party is in default in any
material respect in the performance, observance or fulfillment of any of its
obligations contained in (i) any Material Contract to which it is a party or
(ii) any agreement or instrument to which it is a party evidencing or governing
Indebtedness, with an aggregate principal amount in excess of $10,000,000,
except, in any case, where any such default would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
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Section 3.13. Solvency. (a) Immediately after the consummation of the
Transactions to occur on the Closing Date and immediately following the making
of each Loan and after giving effect to the application of the proceeds of each
Loan, (i) the fair value of the assets of the Loan Parties on a consolidated
basis, at a fair valuation, will exceed the debts and liabilities, direct,
subordinated, contingent or otherwise, of the Loan Parties on a consolidated
basis; (ii) the present fair saleable value of the property of the Loan Parties
on a consolidated basis will be greater than the amount that will be required to
pay the probable liability of the Loan Parties on a consolidated basis, on their
debts and other liabilities, direct, subordinated, contingent or otherwise, as
such debts and other liabilities become absolute and matured; (iii) the Loan
Parties on a consolidated basis will be able to pay their debts and liabilities,
direct, subordinated, contingent or otherwise, as such debts and liabilities
become absolute and matured; and (iv)the Loan Parties on a consolidated basis
will not have unreasonably small capital with which to conduct the businesses in
which they are engaged as such businesses are now conducted and are proposed to
be conducted following the Closing Date.
(b) The Loan Parties do not intend to incur debts beyond their ability to
pay such debts as they mature, taking into account the timing and amounts of
cash to be received by the Loan Parties and the timing and amounts of cash to be
payable by the Loan Parties on or in respect of their Indebtedness.
Section 3.14. Insurance. Schedule 3.14 sets forth a true, complete and
correct description of all insurance maintained by or on behalf of the Loan
Parties and the Subsidiaries as of the Closing Date. As of the Closing Date, all
such insurance is in full force and effect and all premiums in respect of such
insurance have been duly paid. The Borrower believes that the insurance
maintained by or on behalf of the Borrower and the Subsidiaries is adequate and
is in accordance with normal industry practice for similar companies engaged in
the same business as the Borrower and its Subsidiaries located in similar
countries.
Section 3.15. Capitalization and Subsidiaries. Schedule 3.15 sets forth,
in each case as of the Closing Date, (a) a correct and complete list of the name
and relationship to the Borrower of each and all of the Borrower's Subsidiaries,
(b) a true and complete listing of each class of each of the Borrower's
authorized Capital Stock, of which all of such issued shares are validly issued,
outstanding, fully paid and non-assessable, and owned beneficially and of record
by the Persons identified on Schedule 3.15, and (c) the type of entity of the
Borrower and each of its Subsidiaries. All of the issued and outstanding Capital
Stock of the Subsidiaries owned by any Loan Party have been (to the extent such
concepts are relevant with respect to such ownership interests) duly authorized
and issued and are fully paid and non-assessable free and clear of all Liens
(other than Liens created under the Loan Documents, the Term Loan Security
Documents and non-consensual Permitted Liens).
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Section 3.16. Security Interest in Collateral. The provisions of this
Agreement and the other Loan Documents create legal and valid Liens on all the
Collateral of the type in which a security interest can be created under Article
9 of the UCC in favor of the Collateral Agent, for the benefit of the Collateral
Agent and the Lenders; and upon the proper filing of UCC financing statements
required pursuant to Section 4.01(p) and any Mortgages with respect to any
Mortgaged Properties, such Liens constitute perfected and continuing Liens on
the Collateral (to the extent a security interest in such Collateral and any
proceeds of any item of Collateral can be perfected through the filing of UCC
financing statements), securing the Secured Obligations, enforceable against the
applicable Loan Party and all third parties, and having priority over all other
Liens on the Collateral except in the case of (a) Permitted Encumbrances, to the
extent any such Permitted Encumbrances would have priority over the Liens in
favor of the Collateral Agent pursuant to any applicable law, (b) Liens
perfected only by possession (including possession of any certificate of title)
to the extent the Collateral Agent has not obtained or does not maintain
possession of such Collateral and (c) subject to and as provided for under the
terms of the Intercreditor Agreement, the Liens granted under the Term Loan
Security Documents.
Section 3.17. Labor Disputes. As of the Closing Date, except as,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect: (a) there are no strikes, lockouts or slowdowns against
any Loan Party pending or, to the knowledge of the Borrower, threatened, (b) the
hours worked by and payments made to employees of the Loan Parties and the
Subsidiaries have not been in violation of the Fair Labor Standards Act or any
other applicable Federal, state, local or foreign law dealing with such matters
and (c) all payments due from any Loan Party or any Subsidiary, on account of
wages and employee health and welfare insurance and other benefits, have been
paid or accrued as a liability on the books of the Loan Party or such Subsidiary
to the extent required by GAAP. Except as, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect, the
consummation of the Transactions will not give rise to a right of termination or
right of renegotiation on the part of any union under any collective bargaining
agreement to which Holdings, the Borrower or any of the Subsidiaries (or any
predecessor) is a party or by which Holdings, the Borrower or any of the
Subsidiaries (or any predecessor) is bound.
Section 3.18. Federal Reserve Regulations. (a) On the Closing Date, none
of the Collateral is Margin Stock.
(b) None of Holdings, the Borrower and the Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of buying or carrying Margin Stock.
(c) No part of the proceeds of any Loan or any Letter of Credit will be
used, whether directly or indirectly, and whether immediately, incidentally or
83
ultimately, for any purpose that entails a violation of, or that is inconsistent
with, the provisions of Regulation T, U or X.
Section 3.19. Senior Debt. The Obligations constitute "SENIOR DEBT" and
"DESIGNATED SENIOR DEBT" under and as defined in the Senior Subordinated Note
Documents.
Section 3.20. Sanctioned Persons. None of Holdings, the Borrower or any
Subsidiary nor, to the knowledge of the Borrower, any director, officer, agent,
employee or Affiliate of Holdings, the Borrower or any Subsidiary is currently
subject to any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department ("OFAC"); and the Borrower will not
directly or indirectly use the proceeds of the Loans or the Letters of Credit or
otherwise make available such proceeds to any person, for the purpose of
financing the activities of any person currently subject to any U.S. sanctions
administered by OFAC.
ARTICLE 4
CONDITIONS
Section 4.01. Closing Date. The obligations of the Lenders to make Loans
and of any Issuing Bank to issue Letters of Credit hereunder shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 9.02):
(a) Credit Agreement and Loan Documents. The Administrative Agent (or its
counsel) shall have received (i) from each party hereto either (A) a counterpart
of this Agreement signed on behalf of such party or (B) written evidence
reasonably satisfactory to the Administrative Agent (which may include facsimile
transmission of a signed signature page of this Agreement) that such party has
signed a counterpart of this Agreement and (ii) duly executed copies of the Loan
Documents and such other certificates, documents, instruments and agreements as
the Administrative Agent shall reasonably request in connection with the
transactions contemplated by this Agreement and the other Loan Documents,
including any promissory notes requested by a Lender at least three (3) Business
Days prior to the Closing Date pursuant to Section 2.10.
(b) Legal Opinions. The Administrative Agent shall have received, on behalf
of itself, the Lenders and each Issuing Bank on the Closing Date, a favorable
written opinion of (i) Ropes & ▇▇▇▇ LLP, counsel for Holdings and the Borrower,
in form and substance reasonably satisfactory to the Administrative Agent and
(ii) local or other counsel reasonably satisfactory to the Administrative Agent
as specified on Schedule 4.01(b), in each case (A) dated the Closing Date, (B)
addressed to each Issuing Bank on the Closing Date, the Agents and the Lenders
and (C) in form and substance reasonably satisfactory to the Administrative
Agent and covering such other matters relating to the Loan
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Documents and the Transactions as the Administrative Agent shall reasonably
request.
(c) Financial Statements and Pro Forma Financial Statements. The
Administrative Agent shall have received the financial statements and pro forma
financial statements referred to in Section 3.04(a) and (b).
(d) Closing Certificates; Certified Certificate of Incorporation; Good
Standing Certificates. The Administrative Agent shall have received (i) a
certificate of each Loan Party, dated the Closing Date and executed by its
Secretary or Assistant Secretary, which shall (A) certify the resolutions of its
board of directors, members or other body authorizing the execution, delivery
and performance of the Loan Documents to which it is a party, (B) identify by
name and title and bear the signatures of the officers of such Loan Party
authorized to sign the Loan Documents to which it is a party, and (C) contain
appropriate attachments, including the certificate or articles of incorporation
or organization of each Loan Party certified by the relevant authority of the
jurisdiction of organization of such Loan Party and a true and correct copy of
its by-laws or operating, management or partnership agreement, and (ii) a good
standing certificate as of a recent date for each Loan Party from its
jurisdiction of organization.
(e) No Default Certificate. The Administrative Agent shall have received a
certificate, signed by the chief financial officer or vice president of finance
of the Borrower, dated the Closing Date, (i) stating that no Default has
occurred and is continuing and (ii) stating that the representations and
warranties contained in Article 3 are true and correct in all material respects
as of such date.
(f) Fees. The Agents shall have received all fees required to be paid by
the Borrower, and all expenses for which invoices have been presented (including
the reasonable fees and expenses of legal counsel), on or before the Closing
Date.
(g) Lien and Judgment Searches. The Administrative Agent shall have
received the results of recent lien and judgment searches reasonably required by
the Administrative Agent, and such search shall reveal no material judgments and
no liens on any of the assets of the Loan Parties except for Permitted Liens or
Liens discharged on or prior to the Closing Date pursuant to a pay-off letter or
other documentation reasonably satisfactory to the Administrative Agent.
(h) Pay-off Letter. The Administrative Agent shall have received a pay-off
letter reasonably satisfactory to it in respect of the repayment of all amounts
outstanding under or in respect of the Existing Credit Agreement, confirming
that all Liens upon any of the property of the Loan Parties constituting
Collateral arising under the Existing Credit Agreements, if any, have been or
will be terminated concurrently with such payment and all letters of credit
issued or guaranteed as part of such Indebtedness shall have been cash
collateralized or supported by a Letter of Credit.
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(i) Funding Account. The Administrative Agent shall have received a notice
setting forth the deposit account of the Borrower (the "Funding Account") to
which the Administrative Agent is authorized by the Borrower to transfer the
proceeds of any Borrowings requested or authorized pursuant to this Agreement.
(j) Credit Card Notifications. The Loan Parties shall have used
commercially reasonable efforts to deliver to the Agents each Credit Card
Notification required to be provided pursuant to Section 2.21.
(k) Solvency. The Administrative Agent shall have received a customary
certificate from the chief financial officer or vice president of finance of the
Borrower certifying that Holdings and its Subsidiaries, on a consolidated basis
after giving effect to the Transactions to occur on the Closing Date, are
solvent (within the meaning of Section 3.13).
(l) Borrowing Base Certificate. The Administrative Agent shall have
received prior to the Closing Date a Borrowing Base Certificate which calculates
the Borrowing Base as of the last day of the month most recently ended at least
15 days prior to the Closing Date.
(m) Closing Excess Availability. After giving effect to all Borrowings to
be made on the Closing Date and the issuance of any Letters of Credit on the
Closing Date, Excess Availability shall be not less than $50,000,000. The
Borrower shall have delivered projections to the Administrative Agent, prepared
in good faith and based upon reasonable assumptions, showing that Excess
Availability during the twelve-month period following the Closing Date will not
at any time be less than $50,000,000.
(n) Minimum EBTIDA. After giving effect to the Transactions, the
Consolidated Adjusted EBITDA of the Borrower and its Subsidiaries, on a pro
forma basis for the twelve months ending March 31, 2007 shall be no less than
$120,000,000.
(o) Pledged Stock; Stock Powers; Pledged Notes. The Collateral Agent (or
its bailee) shall have received (i) the certificates representing the Capital
Stock pledged pursuant to the Pledge and Security Agreement, together with an
undated stock or similar power for each such certificate executed in blank by a
duly authorized officer of the pledgor thereof, and (ii) each promissory note
(if any) pledged to the Collateral Agent (or its bailee) pursuant to the Pledge
and Security Agreement endorsed (without recourse) in blank (or accompanied by
an executed transfer form in blank) by the pledgor thereof.
(p) Perfection Certificate; Filings, Registrations and Recordings. The
Administrative Agent shall have received a completed Perfection Certificate
dated the Closing Date and signed by a Responsible Officer of the Borrower,
together with all attachments contemplated thereby. Each document (including any
UCC financing statement) required by the Collateral Documents (except for the
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Mortgages) or under law or reasonably requested by the Agents to be filed,
registered or recorded in order to create in favor of the Collateral Agent, for
the benefit of the Lenders, a perfected Lien on the Collateral described
therein, prior and superior in right to any other Person (other than with
respect to Permitted Liens), shall be in proper form for filing, registration or
recordation. The Collateral Agent, on behalf of the Lenders, shall have a
security interest in the Collateral of the type and priority described in the
Collateral Documents (except for the Mortgages) (subject to Permitted Liens and,
subject to the terms of the Intercreditor Agreement, the Liens granted under the
Term Loan Security Documents).
(q) Other Indebtedness. After giving effect to the Transactions and the
other transactions contemplated hereby, Holdings, the Borrower and the
Subsidiaries shall not have any outstanding Indebtedness or preferred stock
other than (a) the Obligations, (b) Indebtedness under the Senior Secured Term
Loan Facility, (c) the Senior Subordinated Notes and (d) Indebtedness permitted
under Section 6.01.
(r) Insurance. The Administrative Agent shall have received evidence of
insurance coverage in compliance with the terms of Sections 5.05 hereof and
Section 4.10 of the Pledge and Security Agreement.
(s) Other Financing. The Borrower shall have received gross cash proceeds
of not less than $375,000,000 from the borrowings under the Senior Secured Term
Loan Facility. The terms and conditions of the Senior Secured Term Loan Facility
shall be reasonably satisfactory to the Administrative Agent.
(t) Field Examination, Appraisal. The Agents shall have received (i) the
results of a completed field examination with respect to the Collateral to be
included in calculating the Borrowing Base and of the relevant accounting
systems, policies and procedures of Holdings and its Subsidiaries and (ii) an
appraisal of the Net Orderly Liquidation Value of Inventory in form and
substance reasonably satisfactory to the Agents. The Agents shall be reasonably
satisfied with the Borrower's cash management system.
(u) Intercreditor Agreement. The Intercreditor Agreement shall have been
duly executed and delivered by each party thereto, and shall be in full force
and effect.
(v) USA PATRIOT Act. The Administrative Agent shall have received all
documentation and other information reasonably requested by it that is required
by regulatory authorities under applicable "know your customer" and anti-money
laundering rules and regulations, including the USA PATRIOT Act.
Section 4.02. Each Credit Event. The obligation of each Lender to make a
Loan on the occasion of any Borrowing, and of any Issuing Bank to issue,
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amend, renew or extend any Letter of Credit, is subject to the satisfaction of
the following conditions:
(a) The Administrative Agent shall have received, in the case of a
Borrowing, a Borrowing Request as required by Section 2.03 or, in the case of
the issuance of a Letter of Credit, the applicable Issuing Bank and the
Administrative Agent shall have received a notice requesting the issuance of
such Letter of Credit as required by Section 2.06(b) or, in the case of a
Swingline Borrowing, the Swingline Lender and the Administrative Agent shall
have received a request as required by Section 2.05(a).
(b) The representations and warranties of the Borrower set forth in this
Agreement shall be true and correct in all material respects on and as of the
date of such Borrowing or the date of issuance, amendment, renewal or extension
of such Letter of Credit (other than an amendment, extension or renewal of a
Letter of Credit without any increase in the stated amount of such Letter of
Credit), as applicable, with the same effect as though made on and as of such
date, except to the extent such representations and warranties expressly relate
to an earlier date (in which case such representations and warranties shall be
true and correct in all material respects as of such earlier date).
(c) At the time of and immediately after giving effect to such Borrowing or
the issuance, amendment, renewal or extension of such Letter of Credit (other
than an amendment, extension or renewal of a Letter of Credit without any
increase in the stated amount of such Letter of Credit), as applicable, no Event
of Default or Default shall have occurred and be continuing.
(d) After giving effect to any Borrowing or the issuance of any Letter of
Credit, Excess Availability shall be not less than zero.
Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrower on the date thereof as to the matters specified in paragraphs (b), (c)
and (d) of this Section.
ARTICLE 5
AFFIRMATIVE COVENANTS
Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees, expenses and other amounts payable under any
Loan Document (other than contingent indemnification obligations for which no
claim has been made) have been paid in full in cash and all Letters of Credit
have expired or terminated (or have been collateralized in a manner reasonably
satisfactory to the Administrative Agent and the Issuing Banks) and all LC
Disbursements shall have been reimbursed, the Loan Parties covenant and agree,
jointly and severally, with the Lenders that:
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Section 5.01. Financial Statements and Other Reports. The Borrower will
deliver to the Administrative Agent for delivery to each Lender:
(a) Monthly Reports. As soon as available, and in any event within
thirty-five (35) days after the end of each fiscal month ending after the
Closing Date (or within forty-five (45) days after the end of each month (x)
which ends a Fiscal Quarter or (y) for the first six months after the Closing
Date), the consolidated balance sheet of the Borrower and its Subsidiaries as at
the end of such month and the related consolidated statements of income,
stockholders' equity and cash flows of the Borrower and its Subsidiaries for
such month and for the period from the beginning of the then current Fiscal Year
to the end of such month, setting forth in each case in comparative form the
corresponding figures for the corresponding periods of the previous Fiscal Year
and the corresponding figures from the Financial Plan for the current Fiscal
Year, to the extent prepared on a monthly basis, all in reasonable detail,
together with a Financial Officer Certification with respect thereto;
(b) Quarterly Financial Statements. As soon as available, and in any event
within forty-five (45) days after the end of each of the first three Fiscal
Quarters of each Fiscal Year (or any later date by which under applicable
Securities and Exchange Commission rules the Borrower is required to file its
Quarterly Report on Form 10-Q) the consolidated balance sheet of the Borrower
and its Subsidiaries as at the end of such Fiscal Quarter and the related
consolidated (including with respect to statements of income, a breakdown
between wholesale and retail operations) statements of income, stockholders'
equity and cash flows of the Borrower and its Subsidiaries for such Fiscal
Quarter and for the period from the beginning of the then current Fiscal Year to
the end of such Fiscal Quarter, setting forth in each case in comparative form
the corresponding figures for the corresponding periods of the previous Fiscal
Year and the corresponding figures from the Financial Plan for the current
Fiscal Year, all in reasonable detail, together with a Financial Officer
Certification and a Narrative Report with respect thereto;
(c) Annual Financial Statements. As soon as available, and in any event
within ninety (90) days after the end of each Fiscal Year (or any later date by
which under applicable Securities and Exchange Commission rules the Borrower is
required to file its Annual Report on Form 10-K), (i) the consolidated balance
sheet of the Borrower and its Subsidiaries as at the end of such Fiscal Year and
the related consolidated (with respect to statements of income, a breakdown
between wholesale and retail operations) statements of income, stockholders'
equity and cash flows of the Borrower and its Subsidiaries for such Fiscal Year,
setting forth in each case in comparative form the corresponding figures for the
previous Fiscal Year and the corresponding figures from the Financial Plan for
the Fiscal Year covered by such financial statements, in reasonable detail,
together with a Financial Officer Certification and a Narrative Report with
respect thereto; and (ii) with respect to such consolidated financial statements
a report thereon of Ernst & Young LLP or other independent certified public
accountants of
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recognized national standing selected by the Borrower, and reasonably
satisfactory to the Administrative Agent (which report shall be unqualified as
to going concern and scope of audit, and shall state that such consolidated
financial statements fairly present, in all material respects, the consolidated
financial position of the Borrower and its Subsidiaries as at the dates
indicated and the results of their operations and their cash flows for the
periods indicated in conformity with accounting principles generally accepted in
the United States and that the examination by such accountants in connection
with such consolidated financial statements has been made in accordance with
generally accepted auditing standards) together with a written statement by the
independent certified public accountants giving the report thereon (a) stating
that their audit examination has included a review of the terms of this
Agreement and the other Loan Documents as they relate to accounting matters, (b)
stating whether, in connection with their audit examination, any condition or
event that constitutes an Event of Default or Default has come to their
attention and, if such a condition or event has come to their attention,
specifying the nature and period of existence thereof; provided that such
accountants shall not be liable by reason of any failure to obtain knowledge of
any such Event of Default or Default that would not be disclosed in the course
of their audit examination, and (c) stating that based on their audit
examination nothing has come to their attention that causes them to believe
either or both that the information contained in the certificates delivered
therewith pursuant to this Section 5.01(c) above is not correct or that the
matters set forth in the Compliance Certificates delivered therewith pursuant to
Section 5.01(d) for the applicable Fiscal Year are not stated in accordance with
the terms of this Agreement;
(d) Compliance Certificate. Together with each delivery of financial
statements of the Borrower and its Subsidiaries pursuant to Section 5.01(b) and
5.01(c), (i) a duly executed and completed Compliance Certificate (x)
demonstrating in reasonable detail compliance during and at the end of the
applicable accounting periods with the restrictions contained in Article 6, in
each case to the extent compliance with such restrictions is required to be
tested at the end of the applicable accounting period and (y) setting forth, in
the case of the financial statements delivered under clause (a) or (b),
reasonably detailed calculations of the Fixed Charge Coverage Ratio (but only if
a Liquidity Event then exists) as of the end of the period to which such
financial statements relate, and (ii) pro forma financial statements reflecting
the adjustments necessary to eliminate the accounts of Unrestricted Subsidiaries
(if any) from such financial statements;
(e) Statements of Reconciliation After Change in Accounting Principles. If,
as a result of any change in accounting principles and policies from those used
in the preparation of the consolidated financial statements of the Borrower and
its Subsidiaries for the Fiscal Year ended December 31, 2006, the consolidated
financial statements of the Borrower and its Subsidiaries delivered pursuant to
Section 5.01(b) or 5.01(c) will differ in any material respect from the
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consolidated financial statements that would have been delivered pursuant to
such subdivisions had no such change in accounting principles and policies been
made, then, together with the first delivery of such financial statements after
such change, one or more statements of reconciliation in form and substance
reasonably satisfactory to the Administrative Agent;
(f) Notice of Default. Promptly upon any officer of Holdings or the
Borrower obtaining knowledge (i) of any condition or event that constitutes a
Default or an Event of Default or that notice has been given to the Borrower
with respect thereto; (ii) that any Person has given any notice to the Borrower
or any of its Subsidiaries or taken any other action with respect to any event
or condition set forth in Section 7.01(b); or (iii) of the occurrence of any
event or change that has caused or evidences, either in any case or in the
aggregate, a Material Adverse Effect, an Officers Certificate specifying the
nature and period of existence of such condition, event or change, or specifying
the notice given or action taken by any such Person and the nature of such
claimed Event of Default, Default, default, event or condition, and what action
the Borrower has taken, is taking and proposes to take with respect thereto;
(g) Notice of Litigation. Promptly upon any officer of Holdings or the
Borrower obtaining knowledge of (i) the institution of, or non-frivolous threat
of, any Adverse Proceeding not previously disclosed in writing by the Borrower
to the Lenders, or (ii) any material development in any Adverse Proceeding that,
in the case of either (i) or (ii) if adversely determined, could be reasonably
expected to have a Material Adverse Effect, or seeks to enjoin or otherwise
prevent the consummation of, or to recover any damages or obtain relief as a
result of, the transactions contemplated hereby, written notice thereof together
with such other information as may be reasonably available to the Borrower to
enable the Lenders and their counsel to evaluate such matters;
(h) ERISA. (i) Promptly upon becoming aware of the occurrence of any ERISA
Event, a written notice specifying the nature thereof, and (ii) upon reasonable
prior request and with reasonable promptness, copies of (1) each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) filed by the
Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates
with the Internal Revenue Service with respect to each Pension Plan; (2) all
notices received by the Borrower or any of its Subsidiaries from a Multiemployer
Plan sponsor or ERISA Affiliate concerning an ERISA Event; and (3) copies of
such other documents or governmental reports or filings relating to any Employee
Benefit Plan as the Administrative Agent shall reasonably request;
(i) Financial Plan. As soon as practicable and in any event no later than
forty-five (45) days after the beginning of each Fiscal Year, a consolidated
plan and financial forecast for such Fiscal Year and each Fiscal Year (or
portion thereof) through the final maturity date of the Loans (a "FINANCIAL
PLAN"), including (i) a forecasted consolidated balance sheet and forecasted
consolidated statements of income and cash flows of the Borrower and its
Subsidiaries for each
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such Fiscal Year, together with pro forma Compliance Certificates for each such
Fiscal Year and an explanation of the assumptions on which such forecasts are
based, and (ii) forecasted consolidated statements of income and cash flows of
the Borrower and its Subsidiaries for each month of the first such Fiscal Year;
(j) Insurance Report. Together with the financial statements required by
Section 5.01(c) for each Fiscal Year, a report in form and substance
satisfactory to the Administrative Agent outlining all material insurance
coverage maintained as of the date of such report by the Borrower and its
Subsidiaries and all material insurance coverage planned to be maintained by the
Borrower and its Subsidiaries in the immediately succeeding Fiscal Year;
(k) Notice of Change in Board of Directors. With reasonable promptness,
written notice of any change in the board of directors (or similar governing
body) of Holdings;
(l) Notice Regarding Material Contracts. Promptly, and in any event within
ten (10) Business Days after any Material Contract of the Borrower or any of its
Subsidiaries is terminated or amended in a manner that is materially adverse to
the Borrower or such Subsidiary, as the case may be;
(m) Information Regarding Collateral. The Borrower will furnish to the
Collateral Agent prompt written notice of any change (i) in any Loan Party's
corporate name, (ii) in any Loan Party's identity or corporate structure, (iii)
in any Loan Party's jurisdiction of organization (to the extent permitted by the
Pledge and Security Agreement) or (iv) in any Loan Party's Federal Taxpayer
Identification Number or organizational identification number. The Borrower
agrees not to effect or permit any change referred to in the preceding sentence
unless all filings have been made under the Uniform Commercial Code or otherwise
that are required in order for the Collateral Agent to continue at all times
following such change to have a valid, legal and perfected security interest in
all the Collateral as contemplated in the Collateral Documents. The Borrower
also agrees promptly to notify the Collateral Agent if any material portion of
the Collateral is damaged or destroyed;
(n) Annual Collateral Verification. Each year, at the time of delivery of
annual financial statements with respect to the preceding Fiscal Year pursuant
to Section 5.01(c), the Borrower shall deliver to the Collateral Agent a
Perfection Certificate Supplement either confirming that there has been no
change in such information since the date of the Perfection Certificate
delivered on the Closing Date or the date of the most recent certificate
delivered pursuant to this Section and/or identifying such changes;
(o) Other Information. (A) Promptly upon their becoming available, copies
of (i) all financial statements, reports, notices and proxy statements sent or
made available generally by the Borrower to its security holders acting in such
capacity or by any Subsidiary of the Borrower to its security holders other than
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the Borrower or another Subsidiary of the Borrower, (ii) all regular and
periodic reports and all registration statements (other than on Form S-8 or
similar form) and prospectuses, if any, filed by the Borrower or any of its
Subsidiaries with any securities exchange or with the Securities and Exchange
Commission or any governmental or private regulatory authority, (iii) all press
releases and other statements made available generally by the Borrower or any of
its Subsidiaries to the public concerning material developments in the business
of the Borrower or any of its Subsidiaries, and (B) such other information and
data with respect to the Borrower or any of its Subsidiaries as from time to
time may be reasonably requested by the Administrative Agent or any Lender;
(p) Auditor Certificates. Concurrently with any delivery of financial
statements under clause (d) above with respect to a period during which a
Liquidity Event existed, a certificate of the accounting firm that reported on
such financial statements stating whether they obtained knowledge during the
course of their examination of such financial statements of any Default or Event
of Default under Section 6.13 (which certificate may be limited to the extent
required by accounting rules or guidelines);
(q) Borrowing Base Certificate. As soon as available but in any event on or
prior to the 15th calendar day after the later of (x) the last day of each
calendar month and (y) the last day of each retail month (based on the
Borrower's 52/53 week year end) (or more frequently as the Borrower may elect),
a Borrowing Base Certificate as of the close of business on the last day of the
immediately preceding fiscal month (or in the case of a voluntary delivery of a
Borrowing Base Certificate at the election of the Borrower, a subsequent date),
together with such supporting information in connection therewith as the Agents
may reasonably request, which may include, without limitation, (i) Inventory
reports by category and location, together with a reconciliation to the
corresponding Borrowing Base Certificate, (ii) a reasonably detailed calculation
of Eligible Inventory, (iii) a reconciliation of the Loan Parties' Inventory
between the amounts shown in the Borrower's stock ledger and any Inventory
reports delivered pursuant to clause (i) above, (iv) a reasonably detailed
calculation of Eligible Trade Receivables, and (v) a reasonably detailed aging
of the Loan Parties' Accounts and a reconciliation to the corresponding
Borrowing Base Certificate; provided that upon the occurrence and during the
continuance of an Event of Default or if Excess Availability is at any time less
than $20,000,000, the Borrower shall deliver a Borrowing Base Certificate and
such supporting information as is reasonably practicable to provide on a weekly
basis on Wednesday of each week (or if Wednesday is not a Business Day, on the
next succeeding Business Day), as of the close of business on the immediately
preceding Saturday and provided further, that any Borrowing Base Certificate
delivered other than with respect to month's end may be based on such estimates
by the Borrower of shrink and other amounts as the Borrower may deem necessary.
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Documents required to be delivered pursuant to this Section 5.01 may be
delivered electronically and if so delivered, shall be deemed to have been
delivered on the date (i) on which the Borrower posts such documents, or
provides a link thereto on the Borrower's website on the Internet at the website
address listed on Schedule 9.01; (ii) on which such documents are posted on the
Borrower's behalf on IntraLinks/SyndTrak or another relevant website, if any, to
which each Lender and the Administrative Agent have access (whether a
commercial, third-party website or whether sponsored by the Administrative
Agent); or (iii) the date on which executed certificates or other documents are
faxed to the Administrative Agent (or electronically mailed to an address
provided by the Administrative Agent); provided that: (i) upon written request
by the Administrative Agent, the Borrower shall deliver paper copies of such
documents to the Administrative Agent for further distribution to each Lender
until a written request to cease delivering paper copies is given by the
Administrative Agent and (ii) the Borrower shall notify (which may be by
facsimile or electronic mail) the Administrative Agent of the posting of any
such documents and provide to the Administrative Agent by electronic mail
electronic versions (i.e., soft copies) of such documents.
Section 5.02. Existence. Except as otherwise permitted under Section 6.08,
each Loan Party will, and will cause each of its Subsidiaries to, at all times
preserve and keep in full force and effect its existence and all rights and
franchises, licenses and permits material to its business except to the extent
failure to do so could not reasonably be expected to result in a Material
Adverse Effect; provided, no Loan Party or any of its Subsidiaries shall be
required to preserve any such existence, right or franchise, licenses and
permits if such Person's board of directors (or similar governing body) shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of such Person, and that the loss thereof is not disadvantageous in
any material respect to such Person or to the Lenders.
Section 5.03. Payment of Taxes and Claims. Each Loan Party will, and will
cause each of its Subsidiaries to, pay all material Taxes imposed upon it or any
of its properties or assets or in respect of any of its income, businesses or
franchises before any penalty or fine accrues thereon, and all claims (including
claims for labor, services, materials and supplies) for sums that have become
due and payable and that by law have or may become a Lien upon any of its
properties or assets, prior to the time when any penalty or fine shall be
incurred with respect thereto; provided, no such Tax or claim need be paid if
(i) it is being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted, so long as (a) adequate reserve or other
appropriate provision, as shall be required in conformity with GAAP, shall have
been made therefor, and (b) in the case of a Tax or claim which has or may
become a Lien against any of the Collateral, such contest proceedings
conclusively operate to stay the sale of any portion of the Collateral to
satisfy such Tax or claim or (ii) failure to pay or discharge the same could not
reasonably be expected to result in a Material
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Adverse Effect. No Loan Party will, nor will it permit any of its Subsidiaries
to, file or consent to the filing of any consolidated income tax return with any
Person (other than Holdings or any of its Subsidiaries).
Section 5.04. Maintenance of Properties. Each Loan Party will, and will
cause each of its Subsidiaries to, maintain or cause to be maintained in good
repair, working order and condition, ordinary wear and tear excepted, all
material properties used in the business of the Borrower and its Subsidiaries
and from time to time will make or cause to be made all appropriate repairs,
renewals and replacements thereof except where the failure to maintain such
properties could not reasonably be expected to have a Material Adverse Effect.
Section 5.05. Insurance. Holdings will maintain or cause to be maintained,
with financially sound and reputable insurers, such public liability insurance,
third party property damage insurance, business interruption insurance and
casualty insurance with respect to liabilities, losses or damage in respect of
the assets, properties and businesses of Holdings and its Subsidiaries as may
customarily be carried or maintained under similar circumstances by Persons of
established reputation engaged in similar businesses, in each case in such
amounts (giving effect to self-insurance), with such deductibles, covering such
risks and otherwise on such terms and conditions as shall be customary for such
Persons. Without limiting the generality of the foregoing, the Borrower will
maintain or cause to be maintained (a) flood insurance with respect to each
Flood Hazard Property that is located in a community that participates in the
National Flood Insurance Program, in each case in compliance with any applicable
regulations of the Board of Governors of the Federal Reserve System, and (b)
replacement value casualty insurance on the Collateral under such policies of
insurance, with such insurance companies, in such amounts, with such
deductibles, and covering such risks as are at all times carried or maintained
under similar circumstances by Persons of established reputation engaged in
similar businesses. Each such policy of insurance shall (i) name the Collateral
Agent, on behalf of the Lenders as an additional insured thereunder as its
interests may appear and (ii) in the case of each casualty insurance policy,
contain a loss payable clause or endorsement, satisfactory in form and substance
to the Collateral Agent, that names the Collateral Agent, on behalf of the
Lenders as the loss payee thereunder for any covered loss in excess of
$1,500,000 and provides for at least thirty (30) days' prior written notice to
the Collateral Agent of any modification or cancellation of such policy.
Section 5.06. Inspections. (a) Each Loan Party will, and will cause each
of its Subsidiaries to, permit any authorized representatives designated by any
Agent to visit and inspect any of the properties of any Loan Party and any of
its respective Subsidiaries, to inspect, copy and take extracts from its and
their financial and accounting records, and to discuss its and their affairs,
finances and accounts with its and their officers and independent public
accountants (provided that the Borrower may, if it so chooses, be present at or
participate in any such discussion), all upon reasonable notice and at such
reasonable times during
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normal business hours and as often as may reasonably be requested; provided,
that, excluding such visits and inspections during the continuation of an Event
of Default, only the Administrative Agent on behalf of the Lenders may exercise
the rights of the Administrative Agent and the Lenders under this Section
5.06(a) and the Administrative Agent shall not exercise such rights more often
than two (2) times during any calendar year, absent the existence of an Event of
Default and only one (1) such time shall be at the Borrower's expense; provided
further that when an Event of Default exists, the Administrative Agent or any
Lender (or any of their respective representatives or independent contractors)
may do any of the foregoing at the expense of the Borrower at any time during
normal business hours and upon reasonable advance notice.
(b) At reasonable times during normal business hours and upon reasonable
prior notice that the Agents request, independently of or in connection with the
visits and inspections provided for in clause (a) above, the Borrower and the
Subsidiaries will grant access to the Agents (including employees of an Agent or
any consultants, accountants, lawyers and appraisers retained by the Agents) to
such Person's books, records, accounts and Inventory so that the Agents or an
appraiser retained by the Agents may conduct an inventory appraisal. In addition
to, and not in limitation of, the foregoing, from time to time the Agents may
conduct (or engage third parties to conduct) such field examinations,
verifications and evaluations as the Agents may deem necessary or appropriate;
provided, that, absent the existence and continuance of an Event of Default or a
Liquidity Event as to which the Administrative Agent has provided notice to the
Borrower, (i) the Agents may conduct no more than one inventory appraisal in any
calendar year, and (ii) the Agents may conduct no more than two such field
examinations in any calendar year; provided further, that if Excess Availability
is or has been greater than $40,000,000 for a period of three consecutive months
prior to the second field examination, only one field examination shall be
performed in a calendar year. All such appraisals, field examinations and other
verifications and evaluations shall be at the sole expense of the Loan Parties
and the Agents shall provide the Borrower with a reasonably detailed accounting
of all such expenses.
(c) The Loan Parties acknowledge that the Agents, after exercising their
rights of inspection, may prepare and distribute to the Lenders certain Reports
pertaining to the Loan Parties' assets for internal use by the Agents and the
Lenders, subject to the provisions of Section 9.12 hereof.
Section 5.07. Lenders Meetings. The Borrower will, upon the request of the
Administrative Agent or Required Lenders, participate in a meeting of the
Administrative Agent and the Lenders once during each Fiscal Year to be held at
the Borrower's corporate offices (or at such other location as may be agreed to
by the Borrower and the Administrative Agent) at such time as may be agreed to
by the Borrower and the Administrative Agent.
Section 5.08. Compliance with Laws. Each Loan Party will comply, and shall
cause each of its Subsidiaries and all other Persons, if any, on or occupying
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any Facilities to comply, with the requirements of all applicable laws, rules,
regulations and orders of any Governmental Authority (including all
Environmental Laws), noncompliance with which could reasonably be expected to
have a Material Adverse Effect.
Section 5.09. Environmental.
(a) Environmental Disclosure. The Borrower will deliver to the
Administrative Agent and the Lenders:
(i) as soon as practicable following receipt thereof, copies of all
environmental audits, investigations, analyses and reports of any kind or
character, whether prepared by personnel of the Borrower or any of its
Subsidiaries or by independent consultants, governmental authorities or any
other Persons, with respect to significant environmental matters at any
Facility or with respect to any Environmental Claims that might reasonably
be expected to have a Material Adverse Effect;
(ii) promptly upon the occurrence thereof, written notice describing
in reasonable detail (1) any Release required to be reported by the
Borrower or any of its Subsidiaries to any federal, state or local
governmental or regulatory agency under any applicable Environmental Laws,
(2) any remedial action taken by the Borrower or any of its Subsidiaries or
any other Persons of which the Borrower has knowledge in response to (A)
any Hazardous Materials Activities the existence of which has a reasonable
possibility of resulting in one or more Environmental Claims having,
individually or in the aggregate, a Material Adverse Effect, or (B) any
Environmental Claims that, individually or in the aggregate, have a
reasonable possibility of resulting in a Material Adverse Effect, and (3)
the Borrower's discovery of any occurrence or condition on any real
property adjoining or in the vicinity of any Facility that reasonably could
be expected to cause such Facility or any part thereof to be subject to any
material restrictions on the ownership, occupancy, transferability or use
thereof under any Environmental Laws;
(iii) as soon as practicable following the sending or receipt thereof
by the Borrower or any of its Subsidiaries, a copy of any and all written
communications with respect to (1) any Environmental Claims that,
individually or in the aggregate, have a reasonable possibility of giving
rise to a Material Adverse Effect, (2) any Release required to be reported
by the Borrower or any of its Subsidiaries to any federal, state or local
governmental or regulatory agency, and (3) any request made to the Borrower
or any of its Subsidiaries for information from any governmental agency
that suggests such agency is investigating whether the Borrower or any of
its Subsidiaries may be potentially responsible for any Hazardous Materials
Activity which is reasonably expected to have a Material Adverse Effect;
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(iv) prompt written notice describing in reasonable detail (1) any
proposed acquisition of stock, assets, or property by the Borrower or any
of its Subsidiaries that could reasonably be expected to (A) expose the
Borrower or any of its Subsidiaries to, or result in, Environmental Claims
that could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect or (B) result in the Borrower or any
of its Subsidiaries failing to maintain in full force and effect all
material Governmental Authorizations required under any Environmental Law
for their respective operations and (2) any proposed action to be taken by
the Borrower or any of its Subsidiaries to modify current operations in a
manner that could reasonably be expected to subject the Borrower or any of
its Subsidiaries to any additional material obligations or requirements
under any Environmental Law; and
(v) with reasonable promptness, such other documents and information
as from time to time may be reasonably requested by the Administrative
Agent in relation to any matters disclosed pursuant to this Section
5.09(a).
(b) Hazardous Materials Activities, Etc. Each Loan Party shall promptly
take, and shall cause each of its Subsidiaries promptly to take, any and all
actions necessary to (i) cure any violation of applicable Environmental Laws by
such Loan Party or its Subsidiaries that could reasonably be expected to have a
Material Adverse Effect, and (ii) make an appropriate response to any
Environmental Claim against such Loan Party or any of its Subsidiaries and
discharge any obligations it may have to any Person thereunder where failure to
do so could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
Section 5.10. Maintenance of Ratings. Holdings and the Borrower shall use
their commercially reasonable efforts to (i) maintain a corporate rating of the
Borrower from S&P and a corporate family rating of the Borrower from ▇▇▇▇▇'▇ and
(ii) cause the credit facility provided for herein to be continuously rated by
S&P and ▇▇▇▇▇'▇.
Section 5.11. Use of Proceeds. The proceeds of the Loans will be used only
for the purposes specified in the introductory statement to this Agreement. No
part of the proceeds of any Loan and no Letter of Credit will be used, whether
directly or indirectly, for any purpose that would entail a violation of
Regulations T, U or X.
Section 5.12. Additional Collateral; Further Assurances. (a) Subject to
applicable law, the Borrower and each Subsidiary that is a Loan Party shall
cause each of its Domestic Subsidiaries formed or acquired after the date of
this Agreement to become a Loan Party as promptly thereafter as reasonably
practicable by executing a Joinder Agreement in substantially the form set forth
as Exhibit E hereto (the "JOINDER AGREEMENT"). Upon execution and delivery
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thereof, each such Person (i) shall automatically become a Loan Guarantor
hereunder and thereupon shall have all of the rights, benefits, duties, and
obligations in such capacity under the Loan Documents and (ii) will
simultaneously therewith or as soon as practicable thereafter grant Liens to the
Collateral Agent, for the benefit of the Collateral Agent and the Lenders and
each other Secured Party, in each case to the extent required by the terms
thereof, in any property (subject to the limitations with respect to Capital
Stock set forth in paragraph (b) of this Section 5.12, the limitations with
respect to real property set forth in paragraph (e) of this Section 5.12, and
any other limitations set forth in the Pledge and Security Agreement) of such
Loan Party which constitutes Collateral, on such terms as may be required
pursuant to the terms of the Collateral Documents and in such priority as may be
required pursuant to the terms of the Intercreditor Agreement.
(b) The Borrower and each Subsidiary that is a Loan Party will cause (i)
100% of the issued and outstanding Equity Interests of each of its Domestic
Subsidiaries, other than any Domestic Subsidiary taxed as a partnership for
Federal income tax purposes that holds Capital Stock of a Foreign Subsidiary
whose Capital Stock pledged pursuant to clause (ii) below, and (ii) 65% of the
issued and outstanding Equity Interests entitled to vote (within the meaning of
Treas. Reg. Section 1.956-2(c)(2)) and 100% of the issued and outstanding Equity
Interests not entitled to vote (within the meaning of Treas. Reg. Section
1.956-2(c)(2)) in each Foreign Subsidiary directly owned by the Borrower or any
Subsidiary that is a Loan Party to be subject at all times to a first priority
(subject to Permitted Liens and the Intercreditor Agreement) perfected Lien in
favor of the Collateral Agent pursuant to the terms and conditions of the Loan
Documents or other security documents as the Agents shall reasonably request.
(c) Without limiting the foregoing, each Loan Party will, and will cause
each Subsidiary that is a Loan Party to, execute and deliver, or cause to be
executed and delivered, to the Agents such documents, agreements and
instruments, and will take or cause to be taken such further actions (including
the filing and recording of financing statements, fixture filings, mortgages,
deeds of trust and other documents and such other actions or deliveries of the
type required by Article 4, as applicable, which the Agents may, from time to
time, reasonably request to carry out the terms and conditions of this Agreement
and the other Loan Documents and to ensure perfection and priority of the Liens
created or intended to be created by the Collateral Documents (to the extent
required therein), all at the expense of the Loan Parties.
(d) Subject to the limitations set forth or referred to in this Section
5.12, if any Material Real Estate Assets are acquired by any Loan Party after
the Closing Date (other than assets constituting Collateral under the Pledge and
Security Agreement that become subject to the Lien in favor of the Collateral
Agent upon acquisition thereof), the Borrower will notify the Administrative
Agent and the Lenders thereof, and, if requested by the Administrative Agent or
the Required Lenders, the Borrower will cause such assets to be subjected to a
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Lien securing the Secured Obligations and will take, and cause the Loan Parties
that are Subsidiaries to take, such actions as shall be necessary or reasonably
requested by the Administrative Agent to grant and perfect such Liens, including
actions described in paragraph (c) of this Section, all at the expense of the
Loan Parties.
Notwithstanding anything to the contrary in this Section 5.12, real
property required to be mortgaged under this Section 5.12, shall be limited to
Material Real Estate Assets (provided that the cost of perfecting such Lien is
not unreasonable in relation to the benefits to the Lenders of the security
afforded thereby in the Administrative Agent's reasonable judgment after
consultation with the Borrower).
Section 5.13. Post-closing Items. Holdings and the Borrower shall, and the
Borrower shall cause each Subsidiary to, take all necessary actions to satisfy
the following requirements: (a) take each of the actions required by Section
2.21(c) within the time periods therein specified and (b) within 30 days
following the Closing Date (or 90 days in the case of the Mortgage covering the
▇▇▇▇▇▇▇ Distribution Center) cause the Mortgages to be recorded and in
connection therewith deliver title insurance policies (including any
endorsements thereto), surveys, local counsel opinions and other documentation
that the Agents shall reasonably require.
ARTICLE 6
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees, expenses and other amounts payable under any
Loan Document (other than contingent indemnification obligations for which no
claim has been made) have been paid in full in cash and all Letters of Credit
have expired or terminated (or have been collateralized in a manner that is
reasonably satisfactory to the Administrative Agent and the Issuing Banks) and
all LC Disbursements shall have been reimbursed, the Loan Parties covenant and
agree, jointly and severally, with the Lenders that:
Section 6.01. Indebtedness. No Loan Party shall, nor shall it permit any
of its Subsidiaries to, directly or indirectly, create, incur, assume or
guaranty, or otherwise become or remain directly or indirectly liable with
respect to any Indebtedness, except:
(a) the Obligations;
(b) (i) Indebtedness of any Subsidiary Guarantor to the Borrower or to any
other Subsidiary Guarantor, or of the Borrower to any Subsidiary Guarantor;
provided (A) all such Indebtedness shall be evidenced by intercompany promissory
notes and all such notes shall be subject to a First Priority Lien
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pursuant to the Pledge and Security Agreement, and (B) all such Indebtedness
shall be unsecured and subordinated in right of payment to the Obligations
pursuant to the terms of the applicable intercompany promissory notes or an
intercompany subordination agreement that in any such case is reasonably
satisfactory to the Administrative Agent and (ii) any Indebtedness owed by a
Foreign Subsidiary to a Loan Party; provided that (A) all such Indebtedness
shall be evidenced by intercompany promissory notes and all such notes shall be
subject to a First Priority Lien pursuant the Pledge and Security Agreement and
(B) the aggregate outstanding principal amount of Indebtedness of, and the
aggregate amount of Investments in, Foreign Subsidiaries pursuant to this
Section 6.01(b)(ii), Section 6.01(j), Section 6.01(q)and Section 6.07(g) shall
not exceed $30,000,000;
(c) the Senior Subordinated Notes;
(d) Indebtedness incurred by the Borrower or any of its Subsidiaries
arising from agreements providing for indemnification, adjustment of purchase
price or similar obligations, contingent earnout obligations incurred in
connection with Asset Sales or other sales or purchases of assets, or from
guaranties or letters of credit, surety bonds or performance bonds securing the
performance of the Borrower or any such Subsidiary pursuant to such agreements,
in connection with Permitted Acquisitions or permitted dispositions of any
business, assets or Subsidiary of the Borrower or any of its Subsidiaries;
(e) Indebtedness which may be deemed to exist pursuant to any guaranties or
performance, surety, statutory, appeal or similar obligations incurred in the
ordinary course of business;
(f) Indebtedness in respect of Banking Services Obligations and other
netting services, overdraft protections and otherwise in connection with Deposit
Accounts;
(g) guaranties of the obligations of suppliers, customers, franchisees and
licensees by the Borrower and its Subsidiaries in the ordinary course of
business and consistent with past practice;
(h) guaranties by the Borrower of Indebtedness or other obligations of a
Subsidiary Guarantor or guaranties by a Subsidiary of the Borrower of
Indebtedness or other obligations of the Borrower or a Subsidiary Guarantor with
respect, in each case, to Indebtedness otherwise permitted to be incurred
pursuant to this Section 6.01 or obligations not prohibited by this Agreement;
(i) Indebtedness described in Schedule 6.01(i);
(j) The Borrower's Foreign Subsidiaries may become and remain liable with
respect to Indebtedness; provided that the aggregate outstanding principal
amount of Indebtedness of, and the aggregate amount of Investments in, Foreign
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Subsidiaries pursuant to Section 6.01(b)(ii), Section 6.01(j), Section 6.01(q)
and Section 6.07(g) shall not exceed $30,000,000;
(k) Indebtedness of the Borrower and its Subsidiaries with respect to the
▇▇▇▇▇▇▇ Distribution Center Permanent Financing;
(l) Indebtedness consisting of (i) the financing of insurance premiums or
(ii) take-or-pay obligations contained in supply arrangements, in each case, in
the ordinary course of business;
(m) Indebtedness with respect to Capital Leases and purchase money
Indebtedness, in each case incurred within 180 days of the acquisition or
completion of construction or installation of the assets acquired in connection
with the incurrence of such Indebtedness in an aggregate amount not to exceed at
any time $25,000,000 (including any Indebtedness acquired in connection with a
Permitted Acquisition); provided any such Indebtedness (i) shall be secured only
to the asset acquired in connection with the incurrence of such Indebtedness and
(ii) shall constitute not less than 50% of the aggregate consideration paid with
respect to such asset;
(n) Indebtedness of a Person that becomes a Subsidiary or other
Indebtedness assumed in connection with a Permitted Acquisition after the
Closing Date; provided that (i) such Indebtedness existed at the time such
Person became a Subsidiary and was not created in anticipation thereof and (ii)
the aggregate amount of such Indebtedness shall not exceed $25,000,000 at any
time outstanding;
(o) Indebtedness of Holdings owed to stockholders to repurchase stock or
options from such stockholders; provided that (i) such Indebtedness shall be
subordinated in right of payment to the Obligations on terms and conditions
satisfactory to the Administrative Agent and the Arrangers, (ii) matures after
the Maturity Date, (iii) requires no scheduled payment of principal or cash
interest payments prior to its maturity and (iv) the aggregate amount of such
Indebtedness shall not exceed $10,000,000 in any Fiscal Year and $25,000,000 in
the aggregate from the Closing Date to the date of determination;
(p) the Borrower and its Subsidiaries may become and remain liable for any
Indebtedness replacing or refinancing any Indebtedness permitted under clauses
(i), (j), (k), (m), (n), (u) and (v) of this Section 6.01; provided that (i) the
principal amount of such Indebtedness does not exceed the principal amount of
the Indebtedness being refinanced or replaced, (ii) such Indebtedness has a
final maturity on or later than the final maturity of the Indebtedness being
refinanced or replaced and a weighted average life to maturity equal to or
greater than the weighted average life to maturity of the Indebtedness being
refinanced or replaced, (iii) the interest rate (or, where applicable, interest
rate margin) and fees applicable to such Indebtedness are not higher than those
applicable to the Indebtedness being refinanced or replaced, (iv) the covenants,
defaults and
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prepayment provisions, taken as a whole, are not more burdensome or restrictive
on the Borrower and its Subsidiaries than those applicable to the Indebtedness
being refinanced or replaced, (v) such Indebtedness is secured only by Liens
permitted under Section 6.02 for the Indebtedness being refinanced or replaced,
(vi) such Indebtedness is incurred by the Borrower or the Subsidiary that is the
obligor on the Indebtedness being refinanced or replaced, (vii) if the
Indebtedness being refinanced or replaced is subordinated to the Obligations,
such Indebtedness is subordinated to the Obligations on terms not less favorable
to the Lenders than those applicable to the Indebtedness being refinanced or
replaced and (viii) Indebtedness of the Borrower or a Subsidiary shall not
refinance Indebtedness of an Unrestricted Subsidiary;
(q) Foreign Subsidiaries may become and remain liable with respect to
Indebtedness in respect of other commercial letters of credit obtained in the
ordinary course of business; provided that the aggregate outstanding principal
amount of Indebtedness of, and the aggregate amount of Investments in, Foreign
Subsidiaries pursuant to Section 6.01(b)(ii), Section 6.01(j), this Section
6.01(q)and Section 6.07(g) shall not exceed $30,000,000;
(r) guaranties by the Borrower of Indebtedness of a Foreign Subsidiary that
is permitted to be incurred pursuant to Section 6.01(j);
(s) Indebtedness under any Hedge Agreements entered into for the purpose of
hedging risks associated with Holdings' and its Subsidiaries' operations and not
for speculative purposes;
(t) contingent obligations in respect of corporate leases assigned, sold or
otherwise transferred to a franchisee (i) set forth on Schedule 6.01(t); and
(ii) incurred or created after the date hereof in connection with the sale of
retail stores; provided that in the case of clause (ii) above all such
contingent obligations shall be unsecured and shall not permit a cross-default
to this Agreement;
(u) other Indebtedness of the Borrower and its Subsidiaries in an aggregate
amount not to exceed at any time $30,000,000;
(v) other unsecured Indebtedness if the Interest Coverage Ratio is at least
2.00 to 1.00, determined on a Pro Forma basis after giving effect to the
incurrence of such other Indebtedness;
(w) Indebtedness incurred pursuant to the Senior Secured Term Facility Term
Loan Credit Agreement by the Borrower on the Closing Date in an aggregate
principal amount that does not exceed $375,000,000 plus up to an additional
$100,000,000 incurred thereunder after the Closing Date in the form of
"Incremental Term Loans" thereunder;
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(x) Indebtedness incurred in connection with Sale-Leaseback Transactions
permitted pursuant to Section 6.10; and
(y) without duplications of any other Indebtedness, non-cash accruals of
interest, accretion or amortization of original issue discount and
payment-in-kind interest with respect to Indebtedness hereunder.
Section 6.02. Liens. No Loan Party shall, nor shall it permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of Holdings or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the UCC of any State or under any similar recording or notice
statute, except:
(a) Liens granted pursuant to the Collateral Documents to secure the
Secured Obligations;
(b) Liens for Taxes not then due or if due obligations with respect to such
Taxes that are not at such time required to be paid pursuant to Section 5.03 or
which are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted;
(c) statutory Liens of landlords, banks (and rights of set-off), carriers,
warehousemen, mechanics, repairmen, workmen and materialmen, and other Liens
imposed by law (other than any such Lien imposed pursuant to Section 401(a)(29)
or 412(n) of the Internal Revenue Code or by ERISA), in each case incurred in
the ordinary course of business (i) for amounts not yet overdue or (ii) for
amounts that are overdue and that (in the case of any such amounts overdue for a
period in excess of thirty days) are being contested in good faith by
appropriate proceedings, so long as such reserves or other appropriate
provisions, if any, as shall be required by GAAP shall have been made for any
such contested amounts;
(d) Liens incurred (i) in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other types of social
security, or (ii) in the ordinary course of business to secure the performance
of tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, trade contracts, performance and return-of-money bonds and
other similar obligations (exclusive of obligations for the payment of borrowed
money or other Indebtedness), or (iii) pledges and deposits in the ordinary
course of business securing liability for reimbursement or indemnification
obligations of (including obligations in respect of letters of credit or bank
guarantees for the benefit of) insurance carriers providing property, casualty
or liability insurance to Holdings and its Subsidiaries;
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(e) easements, rights-of-way, restrictions, encroachments, and other minor
defects or irregularities in title, in each case which do not and could not
reasonably be expected to have a Material Adverse Effect;
(f) any (i) interest or title of a lessor or sublessor under any lease of
real estate permitted hereunder, (ii) landlord liens permitted by the terms of
any lease; (iii) restriction or encumbrance that the interest or title of such
lessor or sublessor may be subject to or (iv) subordination of the interest of
the lessee or sublessee under such lease to any restriction or encumbrance
referred to in the preceding clause (iii);
(g) Liens solely on any ▇▇▇▇ ▇▇▇▇▇▇▇ money deposits made by the Borrower or
any of its Subsidiaries in connection with any letter of intent or purchase
agreement permitted hereunder;
(h) purported Liens evidenced by the filing of precautionary UCC financing
statements relating solely to operating leases of personal property entered into
in the ordinary course of business;
(i) Liens in favor of customs and revenue authorities arising as a matter
of law to secure payment of customs duties in connection with the importation of
goods;
(j) any zoning, building or similar law or right reserved to or vested in
any governmental office or agency to control or regulate the use of any or
dimensions of real property or the structure thereon;
(k) (i) licenses of patents, trademarks and other intellectual property
rights granted by the Borrower or any of its Subsidiaries in the ordinary course
of business and not interfering in any material respect with the ordinary
conduct of the business of the Borrower or such Subsidiary and (ii) leases or
subleases granted by Holdings or any of its Subsidiaries to third parties in
respect of surplus property that the Borrower determines is not necessary to the
operation of the business in the ordinary course of business; provided that such
leases and subleases are on arm's-length commercial terms and are otherwise
satisfactory to the Administrative Agent;
(l) Liens described in Schedule 6.02 and any modifications, replacements,
renewals or extensions thereof; provided that (i) the Lien does not extend to
any additional property other than (A) after-acquired property that is affixed
or incorporated into the property covered by such Lien or financed by
Indebtedness permitted under Section 6.01, and (B) proceeds and products
thereof, and (ii) the renewal, extension or refinancing of the obligations
secured or benefited by such Liens is permitted by Section 6.01;
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(m) Liens on the ▇▇▇▇▇▇▇ Distribution Center Collateral securing the
▇▇▇▇▇▇▇ Distribution Center Permanent Financing; provided that such Liens attach
only to the ▇▇▇▇▇▇▇ Distribution Center Collateral;
(n) (i) Liens securing Indebtedness permitted pursuant to Sections 6.01(k)
and (m); provided that any such Lien shall encumber only the asset acquired with
the proceeds of such Indebtedness; and (ii) Liens securing Indebtedness
permitted pursuant to Section 6.01(p) (solely with respect to the permitted
refinancing of Indebtedness permitted pursuant to Sections 6.01(k) and (m));
provided that any such Lien not extend to any asset not covered by the Lien
securing the Indebtedness that is refinanced;
(o) (i) Indebtedness incurred pursuant to Section 6.01(n) may be secured by
Liens on assets acquired or financed through the incurrence of such Indebtedness
or on the assets of the newly acquired Subsidiary; provided that such
Indebtedness was not created in contemplation of the acquisition of such
Subsidiary by the Borrower or one of its Subsidiaries; and (ii) Liens securing
Indebtedness incurred pursuant to Section 6.01(p) (solely with respect to the
permitted refinancing of Indebtedness permitted pursuant to Section 6.01(n));
provided that such Lien shall not extend to any asset not covered by the Lien
securing the Indebtedness that is refinanced;
(p) Liens that are contractual rights of setoff relating to the
establishment of depositary relations with banks not given in connection with
the issuance of Indebtedness;
(q) Liens on foreign assets securing Indebtedness permitted pursuant to
Section 6.01(j);
(r) Liens securing obligations (other than obligations representing
Indebtedness for borrowed money) under operating, reciprocal easement or similar
agreements entered into in the ordinary course of business of the Borrower and
its Subsidiaries;
(s) Liens disclosed in a title report delivered on the Closing Date with
respect to any Mortgaged Property reasonably acceptable to the Collateral Agent;
(t) Liens securing the Indebtedness incurred pursuant to Section 6.01(w)
and subject to the Intercreditor Agreement;
(u) other Liens on assets securing Indebtedness in an aggregate amount not
to exceed $7,500,000 at any time outstanding;
(v) Liens securing judgments for the payment of money not constituting an
Event of Default under Section 7.01(h);
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(w) leases, licenses, subleases or sublicenses granted to others in the
ordinary course of business which do not (i) interfere in any material respect
with the business of Holdings and its Subsidiaries (other than an Immaterial
Subsidiary), or (ii) secure any Indebtedness;
(x) Liens on property (i) of any Foreign Subsidiary that is not a Loan
Party and (ii) that does not constitute Collateral, which Liens secure
Indebtedness of the applicable Foreign Subsidiary permitted under Section 6.01;
(y) Liens existing on property (other than Inventory and Accounts) at the
time of its acquisition or existing on the property of any Person at the time
such Person becomes a Subsidiary Guarantor in each case after the date hereof
(other than Liens on the Capital Stock of any Person that becomes a Subsidiary
Guarantor); provided that (i) such Lien was not created in contemplation of such
acquisition or such Person becoming a Subsidiary Guarantor, and (ii) such Lien
does not extend to or cover any other assets or property (other than the
proceeds or products thereof and accessions or additions thereto);
(z) Liens arising out of conditional sale, title retention, consignment or
similar arrangements for sale of goods entered into by Holdings or any of its
Subsidiaries in the ordinary course of business permitted by this Agreement; and
(aa) Liens placed on the Capital Stock of any non-wholly owned Subsidiary
in the form of a transfer restriction, purchase option, call or similar right of
a third party joint venture partner.
Section 6.03. Equitable Lien. If any Loan Party or any of its Subsidiaries
shall create or assume any Lien upon any of its properties or assets, whether
now owned or hereafter acquired, other than Permitted Liens, it shall make or
cause to be made effective provisions whereby the Obligations will be secured by
such Lien equally and ratably with any and all other Indebtedness secured
thereby as long as any such Indebtedness shall be so secured; provided,
notwithstanding the foregoing, this covenant shall not be construed as a consent
by Required Lenders to the creation or assumption of any such Lien not otherwise
permitted hereby.
Section 6.04. No Further Negative Pledges. Except with respect to (a)
specific property encumbered to secure payment of particular Indebtedness or to
be sold pursuant to an executed agreement with respect to a permitted Asset
Sale; (b) restrictions contained in agreements with respect to Indebtedness
incurred by Foreign Subsidiaries or in accordance with this Agreement (provided
that such restrictions are limited to the property or assets of such Foreign
Subsidiary and its Subsidiaries); (c) restrictions contained in the Senior
Subordinated Notes Indenture or the Senior Secured Term Facility Credit
Agreement; (d) restrictions by reason of customary provisions restricting
assignments, subletting or other transfers contained in leases, licenses and
similar agreements entered into in the ordinary course of business (provided
that such restrictions are limited to the property or assets secured by such
Liens or the property or assets subject to such
107
leases, licenses or similar agreements, as the case may be); (e) Liens permitted
to be incurred under Section 6.02 and restrictions in the agreements relating
thereto that limit the right of the Borrower or any of its Subsidiaries to
dispose of or transfer the assets subject to such Liens; (f) provisions limiting
the disposition or distribution of assets or property in joint venture
agreements, sale-leaseback agreements, stock sale agreements and other similar
agreements, which limitation is applicable only to the assets that are the
subject of such agreements; (g) any encumbrance or restriction in connection
with an acquisition of property, so long as such encumbrance or restriction
relates solely to the property so acquired and was not created in connection
with or in anticipation of such acquisition; (h) restrictions imposed by
customary provisions in partnership agreements, limited liability company
organizational governance documents, joint venture agreements and other similar
agreements that restrict the transfer of ownership interests in such
partnership, limited liability company, joint venture or similar Person and (i)
restrictions on cash or other deposits imposed by customers under contracts
entered into in the ordinary course of business, no Loan Party nor any of its
Subsidiaries shall enter into any agreement prohibiting the creation or
assumption of any Lien upon any of its properties or assets, whether now owned
or hereafter acquired.
Section 6.05. Restricted Junior Payments. No Loan Party shall, nor shall
it permit any of its Subsidiaries or Affiliates through any manner or means or
through any other Person to, directly or indirectly, declare, order, pay, make
or set apart, or agree to declare, order, pay, make or set apart, any sum for
any Restricted Junior Payment, except that (a) the Borrower may make regularly
scheduled payments of interest in respect of any Subordinated Indebtedness in
accordance with the terms of, and only to the extent required by, and subject to
the subordination provisions contained in, the indenture or other agreement
pursuant to which such Subordinated Indebtedness was issued as such indenture or
other agreement may be amended from time to time to the extent permitted under
Section 6.14; (b) so long as no Default or Event of Default shall have occurred
and be continuing or shall be caused thereby, the Borrower may make Restricted
Junior Payments (i) in an aggregate amount not to exceed $500,000 in any Fiscal
Year, to the extent necessary to permit Holdings to pay general administrative
costs and expenses and (ii) to the extent necessary to permit Holdings to
discharge the consolidated tax liabilities of Holdings and its Subsidiaries, in
each case so long as Holdings applies the amount of any such Restricted Junior
Payment for such purpose; (c) so long as no Default or Event of Default shall
have occurred and be continuing or be caused thereby, Holdings may repurchase
stock and options from any stockholder (x) in exchange for notes issued pursuant
to Section 6.01(o), (y) in exchange for Capital Stock of Holdings or (z) in
exchange for Cash and Cash Equivalents (and the Borrower may make Restricted
Junior Payments to Holdings) in an amount not to exceed $10,000,000 in any
Fiscal Year; $25,000,000 in the aggregate from the Closing Date to the date of
determination; (d) the Borrower may make payments in respect of Management Fees
not to exceed $2,500,000 in any Fiscal Year; and (e) the
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Borrower may make Restricted Junior Payments (and Holdings may itself make
Restricted Junior Payments with any such Restricted Junior Payments received by
it from the Borrower); provided that at the time it is paid by the Borrower,
before and after giving effect to such Restricted Junior Payments, the Payment
Conditions are satisfied.
Section 6.06. Restrictions on Subsidiary Distributions. Except as provided
herein, in the Senior Subordinated Note Indenture, the Senior Secured Term
Facility Credit Agreement or (with respect to encumbrances or restrictions on
the ability of any Foreign Subsidiary only) in any documentation evidencing the
Indebtedness of Foreign Subsidiaries expressly permitted by Section 6.01(j) and
Section 6.01(q), no Loan Party shall, nor shall it permit any of its
Subsidiaries to, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of any Subsidiary of the Borrower to (a) pay dividends or make any other
distributions on any of such Subsidiary's Capital Stock owned by the Borrower or
any other Subsidiary of the Borrower, (b) repay or prepay any Indebtedness owed
by such Subsidiary to the Borrower or any other Subsidiary of the Borrower, (c)
make loans or advances to the Borrower or any other Subsidiary of the Borrower,
or (d) transfer any of its property or assets to the Borrower or any other
Subsidiary of the Borrower other than restrictions (i) in agreements evidencing
Indebtedness permitted by Section 6.01(k), (l), (m), (n) or (p) (solely with
respect to the permitted refinancing of Indebtedness permitted pursuant to
Section 6.01(k), (l), (m), or (n)) or (w) that impose restrictions on the
property so acquired; (ii) by reason of customary provisions restricting
assignments, subletting or other transfers contained in leases, licenses, joint
venture agreements and similar agreements entered into in the ordinary course of
business; (iii) that are or were created by virtue of any transfer of, agreement
to transfer or option or right with respect to any property, assets or Capital
Stock not otherwise prohibited under this Agreement; (iv) in any instrument
governing Indebtedness or Capital Stock of a Person acquired by the Borrower or
any of its Subsidiaries as in effect at the time of such acquisition (except to
the extent such Indebtedness or Capital Stock was incurred in connection with or
in contemplation of such acquisition),which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired; provided that,
in the case of Indebtedness, such Indebtedness was permitted by Section 6.01 to
be incurred; (v) in any agreement for the sale or other disposition of a
Subsidiary that restricts distributions by that Subsidiary pending the sale or
other disposition; and (vi) in provisions in agreements or instruments which
prohibit the payment of dividends or the making of other distributions with
respect to any class of Capital Stock of a Person other than on a pro rata
basis.
Section 6.07. Investments. No Loan Party shall, nor shall it permit any of
its Subsidiaries to, directly or indirectly, make or own any Investment in any
Person except:
(a) Cash Equivalents;
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(b) equity Investments owned as of the Closing Date in any Subsidiary and
Investments made after the Closing Date in Subsidiaries that are Loan Parties;
(c) Investments in (i) any Securities received in satisfaction or partial
satisfaction thereof from financially troubled account debtors and (ii)
deposits, prepayments and other credits to suppliers, in each case received or
made in the ordinary course of business consistent with the past practices of
the Borrower and its Subsidiaries;
(d) intercompany loans to the extent permitted under Section 6.01(b)(i) and
intercompany guaranties to the extent permitted under Sections 6.01(h) and (r);
(e) Investments in any Person organized under the laws of the United States
of America, any state thereof or the District of Columbia of which at least 80%
of the capital stock and voting stock thereof will be owned by the Borrower or
any Subsidiary Guarantor after giving effect to such Investment; provided that
the amount of all such Investments does not exceed $20,000,000 in the aggregate
for all such Investments since the Closing Date;
(f) Investments made in connection with Permitted Acquisitions permitted
pursuant to Section 6.08;
(g) the Borrower and its wholly-owned Domestic Subsidiaries may make
additional Investments in their respective Foreign Subsidiaries; provided that
the aggregate outstanding principal amount of Indebtedness of, and the aggregate
amount of Investments in, Foreign Subsidiaries pursuant to Section 6.01(b)(ii),
Section 6.01(j) and Section 6.01(q) and this Section 6.07(g) shall not exceed
$30,000,000;
(h) Investments described in Schedule 6.07 and Investments to the extent
permitted under Section 6.01(t)(ii);
(i) Investments received in lieu of Cash in connection with Asset Sales
expressly permitted by Section 6.08;
(j) Investments in any Person organized under the laws of the United States
of America, any state thereof or the District of Columbia in an aggregate amount
not to exceed at any time $25,000,000;
(k) Investments in Unrestricted Subsidiaries not to exceed $50,000,000 plus
amounts that at the time of the Investment thereof could have been paid as a
Restricted Junior Payment pursuant to Section 6.05 but were not so paid but were
used to make an Investment in an Unrestricted Subsidiary;
(l) loans or advances to officers, directors and employees of the Holdings
and its Subsidiaries (i) for reasonable and customary business-related
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travel, entertainment, relocation and analogous ordinary business purposes and
(ii) to the extent permitted by Requirements of Law, in connection with such
Person's purchase of Capital Stock of Holdings, provided that the amount of such
loans and advances shall be contributed to the Borrower in cash as common
equity, or paid to the Borrower in connection with such purchase of Capital
Stock, in an aggregate principal amount outstanding not to exceed $5,000,000 at
any one time outstanding;
(m) Investments consisting of extensions of credit in the nature of
accounts receivable or notes receivable arising from the grant of trade credit
in the ordinary course of business, and Investments received in satisfaction or
partial satisfaction thereof from financially troubled account debtors and other
credits to suppliers in the ordinary course of business;
(n) Investments consisting of Indebtedness permitted under Section 6.01 or
Restricted Junior Payments permitted under Section 6.05;
(o) Investments in the ordinary course of business consisting of
endorsements for collection or deposit and customary trade arrangements with
customers consistent with past practices;
(p) Investments (including debt obligations and Capital Stock) received in
connection with the bankruptcy or reorganization of suppliers and customers or
in settlement of delinquent obligations of, or other disputes with, customers
and suppliers arising in the ordinary course of business or upon the foreclosure
with respect to any secured Investment or other transfer of title with respect
to any secured Investment;
(q) advances of payroll payments to employees in the ordinary course of
business;
(r) Investments to the extent that payment for such Investments is made
solely with Capital Stock of Holdings not resulting in a Change of Control;
(s) Investments of a Subsidiary Guarantor acquired after the Closing Date
or of a Person merged into or amalgamated with the Borrower or merged,
amalgamated or consolidated with a Subsidiary Guarantor in accordance with
Section 6.08 after the Closing Date to the extent that such Investments were not
made in contemplation of or in connection with such acquisition, merger,
amalgamation, or consolidation and were in existence on the date of such
acquisition, merger, amalgamation, or consolidation; and
(t) Consolidated Capital Expenditures (without regard to the exclusions
listed in the definition thereof) permitted hereby.
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Notwithstanding the foregoing, in no event shall any Loan Party make any
Investment which results in or facilitates in any manner any Restricted Junior
Payment not otherwise permitted under the terms of Section 6.05.
Section 6.08. Fundamental Changes; Disposition of Assets; Acquisitions. No
Loan Party shall, nor shall it permit any of its Subsidiaries to, enter into any
transaction of merger or consolidation, or liquidate, wind up or dissolve itself
(or suffer any liquidation or dissolution), or convey, sell, lease or sublease
(as lessor or sublessor), transfer or otherwise dispose of, in one transaction
or a series of transactions, all or any part of its business, assets or property
of any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible, whether now owned or hereafter acquired, or acquire by purchase or
otherwise (other than purchases or other acquisitions of inventory, materials,
supplies and equipment in the ordinary course of business) the business,
property or fixed assets of, or stock or other evidence of beneficial ownership
of, any Person or any division or line of business or other business unit of any
Person, except:
(a) any Subsidiary of Holdings may be merged with or into the Borrower or
any Subsidiary Guarantor, or be liquidated, wound up or dissolved, or all or any
part of its business, property or assets may be conveyed, sold, leased,
transferred or otherwise disposed of, in one transaction or a series of
transactions, to the Borrower or any Subsidiary Guarantor; provided, in the case
of such a merger, the Borrower or such Subsidiary Guarantor, as applicable,
shall be the continuing or surviving Person and the Lien on and security
interest in such Collateral granted or to be granted in favor of the Collateral
Agent under the Collateral Documents shall be maintained or created in
accordance with Section 5.12;
(b) any Foreign Subsidiary of the Borrower may be merged with or into any
other Foreign Subsidiary of the Borrower, or be liquidated, wound up or
dissolved, or all or any part of its business, property or assets may be
conveyed, sold, leased, transferred or otherwise disposed of, in one transaction
or a series of transactions to the Borrower or any wholly-owned Subsidiary;
provided, in the case of such a merger, a wholly-owned Subsidiary shall be the
continuing or surviving Person; provided, further, in the case of a merger of a
Foreign Subsidiary with or into a Domestic Subsidiary, a Domestic Subsidiary
shall be the continuing or surviving Person;
(c) sales or other dispositions of assets that do not constitute Asset
Sales;
(d) Asset Sales, the proceeds of which (valued at the principal amount
thereof in the case of non-Cash proceeds consisting of notes or other debt
Securities and valued at fair market value in the case of other non-Cash
proceeds), when aggregated with the proceeds of all other Asset Sales permitted
only pursuant to this Section 6.08(d) within the same Fiscal Year, are less than
$15,000,000; provided (1) the consideration received for such assets shall be in
an
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amount at least equal to the fair market value thereof (determined in good
faith by the board of directors of the Borrower (or similar governing body)) and
(2) no less than 75% thereof shall be paid in Cash or Cash Equivalents;
(e) disposals of obsolete, worn out or property and any assets acquired in
connection with the acquisition of another Person or a division or line of
business of such Person which the Borrower reasonably determines are surplus
assets;
(f) Permitted Acquisitions; provided that such Permitted Acquisitions shall
be financed in whole or in part with (i) Cash, Cash Equivalents and Indebtedness
in an amount not to exceed $100,000,000 in the aggregate in any Fiscal Year,
(ii) Qualified Capital Stock of Holdings (or in the case of a Foreign Subsidiary
that acquires all or any part of another foreign entity, the Capital Stock of
such Foreign Subsidiary) issued or transferred to the seller and/or (iii)
proceeds of additional cash Sponsor Equity Contributions to Holdings; provided
that immediately following any Permitted Acquisition, the Payment Conditions
shall be satisfied;
(g) other acquisitions, dispositions or expenditures that constitute
Investments that are permitted to be made pursuant to Section 6.07;
(h) any Subsidiary Guarantor may merge or amalgamate with any other Person
in order to effect an Investment permitted pursuant to Section 6.07; provided
that the continuing or surviving Person shall be a Subsidiary Guarantor, which
shall have complied with the requirements of Section 5.12;
(i) to the extent that (i) such property is exchanged for credit against
the purchase price of similar replacement property or (ii) the proceeds of such
disposition are promptly applied to the purchase price of such replacement
property;
(j) to the Borrower or to a Subsidiary Guarantor; provided that if the
transferor of such property is a Loan Party the transferee thereof must either
be a Borrower or a Subsidiary Guarantor, in which event the Collateral Agent
shall retain its perfected Lien on the property so disposed of, subject to the
same priority as existed prior to such disposition;
(k) sales, discounting or forgiveness of Accounts in the ordinary course of
business or in connection with the collection or compromise thereof;
(l) leases, subleases, licenses or sublicenses (including the provision of
software under an open source license), in each case in the ordinary course of
business and which (i) do not materially interfere with the business of the
Holdings and it Subsidiaries, or (ii) relate to closed stores;
(m) termination of leases in the ordinary course of business;
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(n) transfers of property subject to casualty, eminent domain or
condemnation;
(o) licenses for the conduct of licensed departments within the Loan
Parties' stores in the ordinary course of business;
(p) as long as no Event of Default hereof then exists or would arise
therefrom, and no Protective Advance would result therefrom, bulk sales or other
dispositions of the Loan Parties' Inventory not in the ordinary course of
business in connection with store closings, at arm's length, provided that (i)
such store closures and related Inventory dispositions shall not exceed, in any
Fiscal Year 10% of the number of the Loan Parties' stores as of the beginning of
such Fiscal Year (net of store relocations (i) occurring substantially
contemporaneously, but in no event later than 10 Business Days after the related
store closure date, or (ii) wherein a binding lease has been entered into prior
to the related store closure date), and (ii) as of any date after the Closing
Date, the aggregate number of such store closures since the Closing Date shall
not exceed 20% of the greater of (x) the number of the Loan Parties' stores in
existence as of the Closing Date or (y) the number of the Loan Parties' stores
as of the first day of any Fiscal Year beginning after the Closing Date (net of
store relocations (i) occurring substantially contemporaneously, but in no event
later than 10 Business Days after the related store closure date or (ii) wherein
a binding lease has been entered into prior to the related store closure date),
provided that all sales of Inventory in connection with store closings in a
transaction or series of related transactions shall be in accordance with
liquidation agreements and with professional liquidators reasonably acceptable
to the Administrative Agent; provided further that all Net Proceeds received in
connection therewith are applied to the Obligations, if then required in
accordance with this Agreement;
(q) sales of non-core assets acquired in connection with a Permitted
Acquisition and sales of Real Estate Assets acquired in a Permitted Acquisition
which, within thirty days of the date of the acquisition, are designated in
writing to the Administrative Agent as being held for sale and not for the
continued operation of a store;
(r) exchanges or swaps, including, without limitation, transactions covered
by Section 1031 of the Code, of Real Estate Assets of the Loan Parties so long
as the exchange or swap is made for fair value and on an arm's length basis,
provided that upon the consummation of such exchange or swap, (x) the Collateral
Agent has a perfected Lien having the same priority as any Lien held on the Real
Estate Assets so exchanged or swapped and (y) the Net Proceeds, if any, received
in connection with any such exchange or swap are applied to the Obligations if
then required in accordance with this Agreement;
(s) Sale-Leaseback Transactions permitted by Section 6.10; and
(t) Restricted Payments permitted by Section 6.05.
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Section 6.09. Disposal of Subsidiary Interests. Except for any sale of all
of its interests in the Capital Stock of any of its Subsidiaries in compliance
with the provisions of Section 6.08 and except for issuances of Capital Stock by
Foreign Subsidiaries to make Permitted Acquisitions pursuant to Section 6.08(g)
and except for Liens created under the Senior Secured Term Loan Credit Facility
and subject to the Intercreditor Agreement, no Loan Party shall, nor shall it
permit any of its Subsidiaries to, directly or indirectly sell, assign, pledge
or otherwise encumber or dispose of any Capital Stock of any of its
Subsidiaries, except (i) to qualify directors if required by applicable law, or
(ii) to another Loan Party (subject to the restrictions on such disposition
otherwise imposed hereunder).
Section 6.10. Sales and Lease-backs. No Loan Party shall, nor shall it
permit any of its Subsidiaries to, directly or indirectly, become or remain
liable as lessee or as a guarantor or other surety with respect to any lease of
any property (whether real, personal or mixed), whether now owned or hereafter
acquired, which such Loan Party (a) has sold or transferred or is to sell or to
transfer to any other Person (other than the Borrower or any of its
Subsidiaries), or (b) intends to use for substantially the same purpose as any
other property which has been or is to be sold or transferred by such Loan Party
to any Person (other than the Borrower or any of its Subsidiaries) in connection
with such lease; provided that a Sale and Lease-Back Transaction shall be
permitted so long as (a) such Sale and Lease-Back Transaction is either (x)
permitted by Section 6.01(m), or (y) (i) is made for cash consideration in an
amount not less than the fair value of the applicable property, (ii) is pursuant
to a lease on market terms, (iii) is consummated within two hundred and seventy
(270) days after such Loan Party acquires or completes the construction of the
applicable property and (iv) the net proceeds received from such Sale and
Lease-Back Transaction, when combined with the net proceeds of all other Sale
and Lease-Back Transactions permitted hereunder, does not exceed $15,000,000,
and (b) the Borrower shall have used commercially reasonable efforts to deliver
to the Collateral Agent a Collateral Access Agreement from the purchaser or
transferee on terms and conditions reasonably satisfactory to the Agents.
Section 6.11. Transactions with Shareholders and Affiliates. No Loan Party
shall, nor shall it permit any of its Subsidiaries to, directly or indirectly,
enter into or permit to exist any transaction (including the purchase, sale,
lease or exchange of any property or the rendering of any service) with any
Affiliate of the Borrower or of any such holder on terms that are less favorable
to the Borrower or that Subsidiary, as the case may be, than those that might be
obtained at the time from a Person who is not such a holder or Affiliate;
provided that the foregoing restriction shall not apply to (a) any transaction
between or among (x) the Borrower and/or one or more Subsidiary Guarantors or
(y) one or more Foreign Subsidiaries; (b) reasonable and customary fees paid to
members of the board of directors (or similar governing body) of Holdings and
its Subsidiaries; (c) compensation arrangements (including severance) for
officers and other employees of Holdings and its Subsidiaries entered into in
the ordinary course of
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business; (d) transactions permitted in Sections 6.01(o) and 6.05(b), (c) and
(d); (e) the transaction described on Schedule 6.11; (f) commercial transactions
between or among the Borrower and/or one or more Subsidiaries in the ordinary
course of business and consistent with past practices; (g) the payment of fees
and expenses relating to the Transaction, including Transaction Expenses, (h)
payments due pursuant to the Management Agreement, (i) equity issuances,
repurchases, retirements or other acquisitions or retirements of Capital Stock
of Holdings permitted under Section 6.05, (j) loans and other transactions by
the Loan Parties to the extent permitted under this Article 6, (k) the payment
of customary fees, compensation, and reasonable out of pocket costs to, and
indemnities provided on behalf of, directors, officers and employees of the Loan
Parties in the ordinary course of business to the extent attributable to the
ownership or operation of the Loan Parties, and (l) dividends, redemptions and
repurchases permitted under Section 6.05.
Section 6.12. Conduct of Business. From and after the Closing Date, no
Loan Party shall, nor shall it permit any of its Subsidiaries to, engage in any
material line of business other than (i) the businesses engaged in by any Loan
Party on the Closing Date and similar or related businesses and (ii) such other
lines of business as may be consented to by Required Lenders.
Section 6.13. Amendments or Waivers of Certain Related Agreements. Except
as set forth in Section 6.14, no Loan Party shall, nor shall it permit any of
its Subsidiaries to, agree to any material amendment, restatement, supplement or
other modification to, or waiver of, any of its material rights under any
Related Agreement, in each case in a manner that is materially adverse to the
Lenders, in each case after the Closing Date without in each case obtaining the
prior written consent of Required Lenders to such amendment, restatement,
supplement or other modification or waiver.
Section 6.14. Amendments of or Waivers with Respect to Certain
Indebtedness. No Loan Party shall, nor shall it permit any of its Subsidiaries
to, amend or otherwise change the terms of (i) any Subordinated Indebtedness, or
make any payment consistent with an amendment thereof or change thereto, if the
effect of such amendment or change is to increase the interest rate on such
Subordinated Indebtedness, change (to earlier dates) any dates upon which
payments of principal or interest are due thereon, change any event of default
or condition to an event of default with respect thereto (other than to
eliminate any such event of default or increase any grace period related
thereto), change the redemption, prepayment or defeasance provisions thereof or
change the subordination provisions of such Subordinated Indebtedness (or of any
guaranty thereof), or if the effect of such amendment or change, together with
all other amendments or changes made, is to increase materially the obligations
of the obligor thereunder or to confer any additional rights on the holders of
such Subordinated Indebtedness (or a trustee or other representative on their
behalf) which would be adverse to any Loan Party or the Lenders or (ii) the
Senior
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Secured Term Loan Credit Facility other than in accordance with the
Intercreditor Agreement.
Section 6.15. Fiscal Year. No Loan Party shall, nor shall it permit any of
its Subsidiaries to, change its Fiscal Year-end to a date other than December 31
or the Saturday closest to December 31.
Section 6.16. Permitted Activities of Holdings. Holdings shall not (a)
incur, directly or indirectly, any Indebtedness or any other obligation or
liability whatsoever other than the Indebtedness and obligations under the
Related Agreements, the Senior Secured Term Loan Facility and as may be
permitted under Section 6.01; (b) create or suffer to exist any Lien upon any
property or assets now owned or hereafter acquired by it other than the Liens
created under the Collateral Documents or, subject to the Intercreditor
Agreement, the Senior Secured Term Loan Credit Facility to which it is a party
or permitted to it pursuant to Section 6.2; (c) engage in any business or
activity or own any assets other than (i) holding 100% of the Capital Stock of
the Borrower, (ii) performing its obligations and activities incidental thereto
under the Loan Documents and the Senior Secured Term Loan Facility, and to the
extent not inconsistent therewith, the Related Agreements and (iii) making
Restricted Junior Payments and Investments to the extent permitted to it by this
Agreement; (d) consolidate with or merge with or into, or convey, transfer or
lease all or substantially all its assets to, any Person; (e) sell or otherwise
dispose of any Capital Stock of the Borrower; (f) create or acquire any
Subsidiary or make or own any Investment in any Person other than the Borrower;
or (g) fail to hold itself out to the public as a legal entity separate and
distinct from all other Persons.
Section 6.17. Consolidated Capital Expenditures. (a) The Borrower will
not, nor will it permit any Subsidiary to, incur or make Consolidated Capital
Expenditures in an aggregate amount for the Borrower and the Subsidiaries during
any period set forth below in an amount exceeding the amount set forth below for
such period:
Period
(Fiscal Year) Amount
------------- -----------
2007 $40,000,000
2008 $42,500,000
2009 $45,000,000
2010 $45,000,000
2011 $45,000,000
2012 $45,000,000
(b) The amount of permitted Consolidated Capital Expenditures set forth
above in respect of any fiscal year commencing with the fiscal year ending on
December 31, 2007 shall be increased by an amount equal to 100% of the
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amount of unused permitted Consolidated Capital Expenditures for the immediately
preceding fiscal year (without giving effect to any carryover amount)
Section 6.18. Fixed Charge Coverage Ratio. Upon the occurrence and during
the continuance of a Liquidity Event, the Borrower will not permit the Fixed
Charge Coverage Ratio to be less than 1.0 to 1.0. For the purposes of this
Section 6.18, the Fixed Charge Coverage Ratio shall be calculated on the date of
the occurrence of any Liquidity Event and, during the continuance thereof, on
the date that financial statements are required to be delivered pursuant to
Section 5.01, in each case, as of the end of the most recently completed twelve
month period for which such financial statements have been required to be
delivered.
ARTICLE 7
EVENTS OF DEFAULT
Section 7.01. Events of Default. If any of the following events ("EVENTS
OF DEFAULT") shall occur:
(a) Failure To Make Payments When Due. Failure by the Borrower to pay (i)
when due any installment of principal of any Loan, whether at stated maturity,
by acceleration, by notice of voluntary prepayment, by mandatory prepayment or
otherwise; or (ii) any interest on any Loan or any fee or any other amount due
hereunder within five (5) days after the date due; or
(b) Default in Other Agreements. (i) Failure of any Loan Party or any of
their respective Subsidiaries to pay when due any principal of or interest on or
any other amount payable in respect of one or more items of Indebtedness (other
than Indebtedness referred to in (a) above) with an aggregate principal amount
of $10,000,000 or more, in each case beyond the grace period, if any, provided
therefor; or (ii) breach or default by any Loan Party with respect to any other
material term of (1) one or more items of Indebtedness in the individual or
aggregate principal amounts referred to in clause (i) above or (2) any loan
agreement, mortgage, indenture or other agreement relating to such item(s) of
Indebtedness, in each case beyond the grace period, if any, provided therefor,
if the effect of such breach or default is to cause, or to permit the holder or
holders of that Indebtedness (or a trustee on behalf of such holder or holders)
to cause, that Indebtedness to become or be declared due and payable (or
redeemable) prior to its stated maturity or the stated maturity of any
underlying obligation, as the case may be; or
(c) Breach of Certain Covenants. Failure of any Loan Party to perform or
comply with any term or condition contained in Section 5.01(q), Section 5.12 or
Article 6; or
(d) Breach of Representations, Etc. Any representation, warranty,
certification or other statement made or deemed made by any Loan Party in any
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Loan Document or in any statement or certificate at any time given by any Loan
Party or any of its Subsidiaries in writing pursuant hereto or thereto or in
connection herewith or therewith shall be false in any material respect as of
the date made or deemed made; or
(e) Other Defaults Under Loan Documents. Any Loan Party shall default in
the performance of or compliance with any term contained herein or any of the
other Loan Documents, other than any such term referred to in any other Section
of this Article 7, and such default shall not have been remedied or waived
within thirty (30) days after the earlier of (i) an executive officer of such
Loan Party becoming aware of such default or (ii) receipt by the Borrower of
notice from the Administrative Agent or any Lender of such default; or
(f) Involuntary Bankruptcy; Appointment of Receiver, Etc. (i) A court of
competent jurisdiction shall enter a decree or order for relief in respect of
Holdings or any of its Subsidiaries (other than an Immaterial Subsidiary) in an
involuntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, which decree
or order is not stayed; or any other similar relief shall be granted under any
applicable federal or state law; or (ii) an involuntary case shall be commenced
against Holdings or any of its Subsidiaries (other than an Immaterial
Subsidiary) under the Bankruptcy Code or under any other applicable bankruptcy,
insolvency or similar law now or hereafter in effect; or a decree or order of a
court having jurisdiction in the premises for the appointment of a receiver,
liquidator, sequestrator, trustee, custodian or other officer having similar
powers over Holdings or any of its Subsidiaries other than its Immaterial
Subsidiaries, or over all or a substantial part of its property, shall have been
entered; or there shall have occurred the involuntary appointment of an interim
receiver, trustee or other custodian of Holdings or any of its Subsidiaries
other than its Immaterial Subsidiaries for all or a substantial part of its
property; or a warrant of attachment, execution or similar process shall have
been issued against any substantial part of the property of Holdings or any of
its Subsidiaries other than its Immaterial Subsidiaries, and any such event
described in this clause (ii) shall continue for sixty (60) days without having
been dismissed, bonded or discharged; or
(g) Voluntary Bankruptcy; Appointment of Receiver, Etc. (i) Holdings or any
of its Subsidiaries (other than an Immaterial Subsidiary) shall have an order
for relief entered with respect to it or shall commence a voluntary case under
the Bankruptcy Code or under any other applicable bankruptcy, insolvency or
similar law now or hereafter in effect, or shall consent to the entry of an
order for relief in an involuntary case, or to the conversion of an involuntary
case to a voluntary case, under any such law, or shall consent to the
appointment of or taking possession by a receiver, trustee or other custodian
for all or a substantial part of its property; or Holdings or any of its
Subsidiaries (other than an Immaterial Subsidiary) shall make any assignment for
the benefit of creditors; or (ii) Holdings or any of its Subsidiaries (other
than an Immaterial Subsidiary) shall be unable, or shall fail generally, or
shall admit in writing its inability, to pay its
119
debts as such debts become due; or the board of directors (or similar governing
body) of Holdings or any of its Subsidiaries (other than an Immaterial
Subsidiary) (or any committee thereof) shall adopt any resolution or otherwise
authorize any action to approve any of the actions referred to herein or in
Section 7.01(f); or
(h) Judgments and Attachments. Any one or more money judgments, writs or
warrants of attachment or similar process involving in the aggregate at any time
an amount in excess of $10,000,000 (in either case to the extent not adequately
covered by insurance as to which a solvent and unaffiliated insurance company
has acknowledged coverage) shall be entered or filed against the Borrower or any
of its Subsidiaries or any of their respective assets and shall remain
undischarged, unvacated, unbonded or unstayed for a period of sixty (60) days
(or in any event later than five days prior to the date of any proposed sale
thereunder); or
(i) Dissolution. Any order, judgment or decree shall be entered against any
Loan Party decreeing the dissolution or split up of such Loan Party and such
order shall remain undischarged or unstayed for a period in excess of thirty
(30) days; or
(j) Employee Benefit Plans. (i) There shall occur one or more ERISA Events
which individually or in the aggregate results in liability of Holdings or any
of its Subsidiaries in excess of $10,000,000 during the term hereof; or (ii)
there shall occur the imposition of a Lien or security interest under Section
412(n) of the Internal Revenue Code or under ERISA; or
(k) Change of Control. A Change of Control shall occur; or
(l) Guaranties, Collateral Documents and Other Loan Documents. At any time
after the execution and delivery thereof, (i) any guaranty set forth in Article
10 for any reason, other than the satisfaction in full of all Obligations, shall
cease to be in full force and effect (other than in accordance with its terms)
or shall be declared to be null and void or any Guarantor shall repudiate its
obligations thereunder, (ii) this Agreement or any Collateral Document ceases to
be in full force and effect (other than by reason of a release of Collateral in
accordance with the terms hereof or thereof or the satisfaction in full of the
Obligations in accordance with the terms hereof or any other termination of such
Collateral Document in accordance with the terms thereof) or shall be declared
null and void, or the Collateral Agent shall not have or shall cease to have a
valid and perfected Lien in any Collateral purported to be covered by the
Collateral Documents with the priority required by the relevant Collateral
Document, in each case for any reason other than the failure of the Collateral
Agent or any Secured Party to take any action within its control or (iii) any
Loan Party shall contest the validity or enforceability of any Loan Document in
writing or deny in writing that it has any further liability, including with
respect to future advances by the Lenders, under any Loan Document to which it
is a party; or
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(m) Subordination. The Obligations shall cease to constitute senior
indebtedness under the subordination provisions of any document or instrument
evidencing any permitted Subordinated Indebtedness (including the Indebtedness
under the Senior Subordinated Notes as evidenced by the Senior Subordinated Note
Documents) or such subordination provision shall be invalidated or otherwise
cease, for any reason, to be valid, binding and enforceable obligations of the
parties thereto;
then, and in every such event (other than an event with respect to any Loan
Party described in clause (f) or (g) of this Article), and at any time
thereafter during the continuance of such event, the Administrative Agent may,
and at the request of the Required Lenders shall, by notice to the Borrower,
take any of the following actions, at the same or different times: (i) terminate
the Commitments, and thereupon the Commitments shall terminate immediately, (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Borrower accrued hereunder, shall become due
and payable immediately, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Borrower; and (iii) require that
the Borrower deposit in the LC Collateral Account an amount in cash equal to
101.5% of the then outstanding LC Exposure; provided that upon the occurrence of
an event with respect to any Loan Party described in clause (f) or (g) of this
Article, the Commitments shall automatically terminate and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
other obligations of the Borrower accrued hereunder, shall automatically become
due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower, and the obligation of the
Borrower to cash collateralize the outstanding Letters of Credit as aforesaid
shall automatically become effective, in each case without further action of the
Administrative Agent or any Lender. Upon the occurrence and the continuance of
an Event of Default, the Agents may, and at the request of the Required Lenders
shall, exercise any rights and remedies provided to the Agents under the Loan
Documents or at law or equity, including all remedies provided under the UCC.
ARTICLE 8
THE AGENTS
Each of the Lenders and the Issuing Banks hereby irrevocably appoints the
Administrative Agent and the Collateral Agent as its agents and authorizes the
Agents to take such actions on its behalf, including execution of the other Loan
Documents, and to exercise such powers as are delegated to the Agents by the
terms of the Loan Documents, together with such actions and powers as are
reasonably incidental thereto.
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Each Person serving as an Agent hereunder shall have the same rights and
powers in its capacity as a Lender as any other Lender and may exercise the same
as though it were not an Agent, and such Person and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
the Loan Parties or any subsidiary of a Loan Party or other Affiliate thereof as
if it were not an Agent hereunder.
The Agents shall not have any duties or obligations except those expressly
set forth in the Loan Documents. Without limiting the generality of the
foregoing, (a) neither Agent shall be subject to any fiduciary or other implied
duties, regardless of whether a Default has occurred and is continuing, (b)
neither Agent shall have any duty to take any discretionary action or exercise
any discretionary powers, except discretionary rights and powers expressly
contemplated by the Loan Documents that the applicable Agent is required to
exercise in writing as directed by the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 9.02), and (c) except as expressly set forth in the Loan
Documents, the Agents shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to any Loan Party
or any of its Subsidiaries that is communicated to or obtained by the Person
serving as an Agent or any of its Affiliates in any capacity. Neither Agent
shall be liable for any action taken or not taken by it with the consent or at
the request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section
9.02) or in the absence of its own gross negligence or willful misconduct.
Neither Agent shall be deemed to have knowledge of any Default unless and until
written notice thereof is given to such Agent by the Borrower or a Lender, and
the Agents shall not be responsible for or have any duty to ascertain or inquire
into (i) any statement, warranty or representation made in or in connection with
any Loan Document, (ii) the contents of any certificate, report or other
document delivered hereunder or in connection with any Loan Document, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth in any Loan Document, (iv) the validity, enforceability,
effectiveness or genuineness of any Loan Document or any other agreement,
instrument or document, (v) the creation, perfection or priority of Liens on the
Collateral or the existence of the Collateral, or (vi) the satisfaction of any
condition set forth in Article 4 or elsewhere in any Loan Document, other than
to confirm receipt of items expressly required to be delivered to the Agents.
The Agents shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. Each Agent also may rely
upon any statement made to it orally or by telephone and believed by it to be
made by the proper Person, and shall not incur any liability for relying
thereon. Each Agent may consult with legal counsel (who may be counsel for the
Borrower), independent accountants
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and other experts selected by it, and shall not be liable for any action taken
or not taken by it in accordance with the advice of any such counsel,
accountants or experts.
Each Agent may perform any and all its duties and exercise its rights and
powers by or through any one or more sub-agents appointed by such Agent. Each
Agent and any such sub-agent may perform any and all its duties and exercise its
rights and powers through their respective Related Parties. The exculpatory
provisions of the preceding paragraphs shall apply to any such sub-agent and to
the Related Parties of the Agents and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Agent.
Subject to the appointment and acceptance of a successor Agent as provided
in this paragraph, each Agent may resign at any time by notifying the other
Agent, the Lenders, the Issuing Banks and the Borrower. Upon any such
resignation, the Required Lenders shall have the right, with the consent (not to
be unreasonably withheld or delayed) of the Borrower, to appoint a successor
Agent; provided that, during the existence and continuation of an Event of
Default, no consent of the Borrower shall be required. If no successor shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within thirty (30) days after the retiring Agent gives notice of its
resignation, then the retiring Agent may, on behalf of the other Agent, the
Lenders and the Issuing Banks, appoint a successor Agent which shall be a
commercial bank or an Affiliate of any such commercial bank reasonably
acceptable to the Borrower. Upon the acceptance of its appointment as an Agent
hereunder by a successor, such successor shall succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations hereunder.
The fees payable by the Borrower to a successor Agent shall be the same as those
payable to its predecessor unless otherwise agreed between the Borrower and such
successor. After an Agent's resignation hereunder, the provisions of this
Article and Section 9.03 shall continue in effect for the benefit of such
retiring Agent, its sub-agents and their respective Related Parties in respect
of any actions taken or omitted to be taken by any of them while it was acting
as an Agent.
Each Lender acknowledges that it has, independently and without reliance
upon either Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon either Agent or any other Lender
and based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any other Loan Document or related agreement
or any document furnished hereunder or thereunder.
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Each Lender hereby agrees that (a) it has requested a copy of each Report
prepared by or on behalf of the Agents; (b) neither Agent (i) makes any
representation or warranty, express or implied, as to the completeness or
accuracy of any Report or any of the information contained therein or any
inaccuracy or omission contained in or relating to a Report and (ii) shall be
liable for any information contained in any Report; (c) the Reports are not
comprehensive audits or examinations, and that any Person performing any field
examination will inspect only specific information regarding the Loan Parties
and will rely significantly upon the Loan Parties' books and records, as well as
on representations of the Loan Parties' personnel and that the Agents undertake
no obligation to update, correct or supplement the Reports; (d) it will keep all
Reports confidential and strictly for its internal use, not share the Report
with any Loan Party or any other Person except as otherwise permitted pursuant
to this Agreement; and (e) without limiting the generality of any other
indemnification provision contained in this Agreement, it will pay and protect,
and indemnify, defend, and hold the Agents and any such other Person preparing a
Report harmless from and against, the claims, actions, proceedings, damages,
costs, expenses, and other amounts (including reasonable attorneys' fees)
incurred by either Agent or such other Person as the direct or indirect result
of any third parties who might obtain all or part of any Report through the
indemnifying Lender.
The Arrangers, the joint bookrunners, co-syndication agents and the
codocumentation agents shall not have any right, power, obligation, liability,
responsibility or duty under this Agreement other than those applicable to all
Lenders as such.
ARTICLE 9
MISCELLANEOUS
Section 9.01. Notices. (a) Except in the case of notices and other
communications expressly permitted to be given by telephone (and subject to
paragraph (b) below), all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by facsimile, as follows:
(i) if to any Loan Party, to the Borrower at:
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with copy to:
Ropes & ▇▇▇▇ LLP
▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, III, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to Credit Suisse, as the Administrative Agent, an Issuing Bank
or the Swingline Lender, at:
Eleven Madison Avenue, OMA-2
New York, NY 10010
Attn: Agency Group
Fax.: (▇▇▇) ▇▇▇-▇▇▇▇
(iii) if to Bank of America N.A., as the Collateral Agent, at:
Bank of America Retail Group
MA5-505-10-01
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(iv) if to any other Lender, to it at its address or facsimile number
set forth in its Administrative Questionnaire.
All such notices and other communications (i) sent by hand or overnight courier
service, or mailed by certified or registered mail, shall be deemed to have been
given when received or (ii) sent by facsimile shall be deemed to have been given
when sent and when receipt has been confirmed by telephone; provided that if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next Business Day for the
recipient.
(b) Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications (including e-mail and
Internet or intranet websites) pursuant to procedures approved by the
Administrative Agent; provided that the foregoing shall not apply to notices
pursuant to Article 2 or to compliance and no Event of Default certificates
delivered pursuant to Section 5.01(f) unless otherwise agreed by the
Administrative Agent and the applicable Lender. Each Agent or the Borrower (on
behalf of the Loan Parties) may, in its discretion, agree to accept notices and
other communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications. All such notices and other
communications (i) sent to an e-mail address shall be deemed received upon the
sender's receipt of an acknowledgement from the intended recipient (such as by
the "return receipt requested" function, as available, return e-mail or other
written acknowledgement); provided that if not given during the normal business
hours of
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the recipient, such notice or communication shall be deemed to have been given
at the opening of business on the next Business Day for the recipient, and (ii)
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (b)(i) of notification that such notice or communication is
available and identifying the website address therefor.
(c) Any party hereto may change its address or facsimile number for notices
and other communications hereunder by notice to the other parties hereto.
Section 9.02. Waivers; Amendments. (a) No failure or delay by any Agent,
Issuing Bank or Lender in exercising any right or power hereunder or under any
other Loan Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Agents, the Issuing Banks and the Lenders hereunder and
under any other Loan Document are cumulative and are not exclusive of any rights
or remedies that they would otherwise have. No waiver of any provision of any
Loan Document or consent to any departure by any Loan Party therefrom shall in
any event be effective unless the same shall be permitted by paragraph (b) of
this Section, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without limiting the
generality of the foregoing, to the extent permitted by law, the making of a
Loan or issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether any Agent, Lender or Issuing Bank may have had
notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any other Loan Document nor any provision
hereof or thereof may be waived, amended or modified except (i) in the case of
this Agreement, pursuant to an agreement or agreements in writing entered into
by the Borrower and the Required Lenders (or the Administrative Agent with the
consent of the Required Lenders), or (ii) in the case of any other Loan Document
(other than any such amendment to effectuate any modification thereto expressly
contemplated by the terms of such other Loan Documents), pursuant to an
agreement or agreements in writing entered into by the Administrative Agent or
the Collateral Agent and the Loan Party or Loan Parties that are parties
thereto, with the consent of the Required Lenders; provided that no such
agreement shall (A) increase the Commitment of any Lender without the written
consent of such Lender; it being understood that a waiver of any condition
precedent set forth in Article 4 or the waiver of any Default, mandatory
prepayment or mandatory reduction of the Commitments, or the making of any
Protective Advance, so long as in compliance with the provisions of Section
2.04, shall not constitute an increase of any Commitment of any Lender; provided
that any change to the second proviso to the second sentence of Section 2.04(a)
shall require the written consent of each Lender, (B) reduce or forgive the
principal amount of any Loan or LC Disbursement or reduce the rate of interest
thereon, or
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reduce or forgive any interest or fees payable hereunder, without the written
consent of each Lender directly affected thereby; provided that only the consent
of the Required Lenders shall be necessary to amend the provisions of Section
2.13(c) providing for the default rate of interest, or to waive any obligations
of the Borrower to pay interest at such default rate, (C) postpone any scheduled
date of payment of the principal amount of any Loan or LC Disbursement, or any
date for the payment of any interest, fees or other Obligations payable
hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment, without the written
consent of each Lender directly affected thereby; provided that only the consent
of the Required Lenders shall be necessary to amend the provisions of Section
2.13(c) providing for the default rate of interest, or to waive any obligations
of the Borrower to pay interest at such default rate, (D) change Section
2.18(a), (b) or (c) or Section 2.10(b) in a manner that would alter the manner
in which payments are shared, without the written consent of each Lender, (E)
change the definition of the term "Borrowing Base", or any component definition
thereof if as a result thereof the amounts available to be borrowed by the
Borrower would be increased (provided that the foregoing shall not limit the
discretion of the Agents to change, establish or eliminate any Reserves without
the consent of any Lenders), or reduce the Dollar amount set forth in the
definition of "Liquidity Event", in each case without the written consent of the
Super Majority Lenders, (F) change any of the provisions of this Section or the
definition of "Required Lenders" or the definition of "Super Majority Lenders"
or any other provision of any Loan Document specifying the number or percentage
of Lenders (or Lenders of any Class) required to waive, amend or modify any
rights thereunder or make any determination or grant any consent thereunder,
without the written consent of each Lender, (G) release all or substantially all
of the value of the Loan Guaranties (except as otherwise permitted herein or in
the other Loan Documents, including pursuant to Section 10.12 hereof), without
the written consent of each Lender, or (H) except as provided in clause (c) or
(d) of this Section or in any Collateral Document, release all or substantially
all of the Collateral, without the written consent of each Lender; provided
further that no such agreement shall amend, modify or otherwise affect the
rights or duties of any Agent, any Issuing Bank or the Swingline Lender
hereunder without the prior written consent of such Agent, such Issuing Bank or
the Swingline Lender, as the case may be. The Administrative Agent may also
amend the Commitment Schedule to reflect assignments entered into pursuant to
Section 9.04. Notwithstanding anything to the contrary herein, no Defaulting
Lender shall have any right to approve or disapprove any amendment, waiver or
consent hereunder, except that the Commitment of such Lender may not be
increased without the consent of such Lender (it being understood that any
Commitment or Loan held or deemed held by any Defaulting Lender shall be
excluded from a vote of the Lenders hereunder requiring any consent of the
Lenders).
(c) The Lenders hereby irrevocably agree that the Liens granted to the
Collateral Agent by the Loan Parties on any Collateral shall be automatically
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released (i) upon the termination of the Commitments, payment and satisfaction
in full in cash of all Secured Obligations (other than Unliquidated
Obligations), the termination, expiration or, to the extent effected in a manner
reasonably acceptable to the relevant Issuing Banks or as otherwise provided for
herein, cash collateralization or back-stopping of all outstanding Letters of
Credit, (ii) upon the sale or other disposition of the property constituting
such Collateral (including as part of or in connection with any other sale or
other disposition permitted hereunder) to any Person other than another Loan
Party, to the extent such sale or other disposition is made in compliance with
the terms of this Agreement (and the Agents may rely conclusively on a
certificate to that effect provided to it by any Loan Party upon its reasonable
request without further inquiry), (iii) provided that such release would not
result in a release of all or substantially all of the Collateral, if the
release of such Lien is approved, authorized or ratified in writing by the
Required Lenders, (iv) to the extent the property constituting such Collateral
is owned by any Loan Guarantor, upon the release of such Loan Guarantor from its
obligations under its Loan Guaranty in accordance with the provisions of this
Agreement, (v) as required to effect any sale or other disposition of such
Collateral in connection with any exercise of remedies of the Agents and the
Lenders pursuant to the Collateral Documents or (vi) as required pursuant to the
terms of the Intercreditor Agreement. Any such release shall not in any manner
discharge, affect, or impair the Obligations or any Liens (other than those
expressly being released) upon (or obligations of the Loan Parties in respect
of) all interests retained by the Loan Parties, including the proceeds of any
sale, all of which shall continue to constitute part of the Collateral to the
extent required under the provisions of the Loan Documents.
(d) Notwithstanding anything to the contrary contained in this Section
9.02, pledge agreements and related documents (if any) executed by Foreign
Subsidiaries in connection with this Agreement may be in a form reasonably
determined by the Administrative Agent and may be amended and waived with the
consent of the Administrative Agent at the request of the Borrower without the
need to obtain the consent of any other Lenders if such amendment or waiver is
delivered in order (i) to comply with local law or advice of local counsel, (ii)
to cure ambiguities or defects or (iii) to cause such pledge agreement or other
document to be consistent with this Agreement and the other Loan Documents.
(e) If, in connection with any proposed amendment, waiver or consent
requiring the consent of "each Lender" or "each Lender directly affected
thereby", the consent of the Required Lenders is obtained, but the consent of
other necessary Lenders is not obtained (any such Lender whose consent is
necessary but not obtained being referred to herein as a "NON-CONSENTING
LENDER"), then the Borrower may elect to replace a Non- Consenting Lender as a
Lender party to this Agreement (it being understood and agreed that, if any
consent, amendment, waiver or other modification affects one Class of Lenders
without affecting another Class of Lenders, the Borrower may replace such Non-
Consenting Lender only with respect to the Class of Revolving Loans or
Commitments so
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affected); provided that, concurrently with such replacement, (i) another bank
or other entity which is a Lender or is reasonably satisfactory to the Borrower
and the Administrative Agent shall agree, as of such date, to purchase for cash
the Loans and other Obligations due to the Non-Consenting Lender pursuant to an
Assignment and Assumption and to become a Lender for all purposes under this
Agreement and to assume all obligations of the Non-Consenting Lender to be
terminated as of such date and to comply with the requirements of Section
9.04(b) whereupon the Non-Consenting Lender being replaced shall be released
from such obligations, (ii) the Borrower or replacement Lender shall pay the
processing and recordation fee referred to in Section 9.04(b)(ii)(C), if
applicable, in accordance with the terms of such Section, (iii) the replacement
Lender shall grant its consent with respect to the applicable proposed
amendment, waiver or consent and (iv) the Borrower shall pay to such
Non-Consenting Lender in same day funds on the day of such replacement (1) all
interest, fees and other amounts then accrued but unpaid to such Non-Consenting
Lender by the Borrower hereunder to and including the date of termination,
including, without limitation, payments due to such Non- Consenting Lender under
Section 2.15 and 2.17, and (2) an amount, if any, equal to the payment which
would have been due to such Lender on the day of such replacement under Section
2.16 had the Loans of such Non-Consenting Lender been prepaid on such date
rather than sold to the replacement Lender. Each Lender agrees that if it is
replaced pursuant to this Section 9.02(e), it shall execute and deliver to the
Administrative Agent an Assignment and Assumption to evidence such sale,
purchase, assignment, assumption and release and shall deliver to the
Administrative Agent any Note (if the assigning Lender's Loans are evidenced by
Notes) subject to such Assignment and Assumption; provided that the failure of
any Lender replaced pursuant to this Section 9.02(e) to execute an Assignment
and Assumption shall not render such sale, purchase, assignment, assumption and
release invalid.
Section 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower shall
pay (i) all reasonable out-of-pocket expenses incurred by the Agents and their
Affiliates, including the reasonable fees, charges and disbursements of ▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Agents, in connection with the syndication and
distribution (including, without limitation, via the Internet or through a
service such as Intralinks) of the credit facilities provided for herein, the
preparation of the Loan Documents and related documentation, (ii) all reasonable
out-of-pocket expenses incurred by the Agents and their Affiliates, including
the reasonable fees, charges and disbursements of one outside legal counsel to
the Agents, in connection with any amendments, modifications or waivers of the
provisions of any Loan Documents (whether or not the transactions contemplated
thereby shall be consummated), (iii) all reasonable out-of-pocket expenses
incurred by the Agents, Issuing Banks or the Lenders, including the reasonable
fees, charges and disbursements of any counsel for the Agents and for one law
firm retained by the Lenders (unless the interests of any group of Lenders are
sufficiently materially divergent, in which case one (1) additional counsel for
such group of Lenders may be retained), in connection with the enforcement,
collection or protection of its
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rights in connection with the Loan Documents, including its rights under this
Section, or in connection with the Loans made or Letters of Credit issued
hereunder, including all such reasonable out-of-pocket expenses incurred during
any workout, restructuring or related negotiations in respect of such Loans of
Letters of Credit, and (iv) subject to any other provisions of this Agreement,
of the Loan Documents or of any separate agreement entered into by the Borrower
and the Administrative Agent with respect thereto, all reasonable out-of-pocket
expenses incurred by the Administrative Agent in the administration of the Loan
Documents. Expenses reimbursable by the Borrower under this Section include,
without limiting the generality of the foregoing, subject to any other
applicable provision of any Loan Document, reasonable out-of-pocket costs and
expenses incurred in connection with:
(v) appraisals;
(vi) field examinations and the preparation of Reports based on the
fees charged by a third party retained by the Agents or (notwithstanding
any reference to "out-of-pocket" above in this Section 9.03) the internally
allocated fees for each Person employed by the Agents with respect to each
field examination;
(vii) lien and title searches and title insurance;
(viii) taxes, fees and other charges for recording the Mortgages,
filing financing statements and continuations, and other actions to
perfect, protect, and continue the Collateral Agent's Liens; and
(ix) forwarding loan proceeds and costs and expenses of preserving and
protecting the Collateral.
Other than to the extent required to be paid on the Closing Date, all amounts
due under this paragraph (a) shall be payable by the Borrower within ten (10)
Business Days of receipt of an invoice relating thereto and setting forth such
expenses in reasonable detail.
(b) The Borrower shall indemnify each Agent, each Issuing Bank and each
Lender, and each Related Party of any of the foregoing Persons (each such Person
being called an "INDEMNITEE") against, and hold each Indemnitee harmless from,
any and all losses, claims, damages, penalties, liabilities and related
expenses, including the fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of (i) the execution or delivery of the Loan
Documents or any agreement or instrument contemplated thereby, the performance
by the parties hereto of their respective obligations thereunder or the
consummation of the Transactions or any other transactions contemplated hereby,
(ii) any Loan or Letter of Credit or the use of the proceeds therefrom
(including any refusal by an Issuing Bank to honor a demand for payment under a
Letter of
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Credit if the documents presented in connection with such demand do not strictly
comply with the terms of such Letter of Credit), (iii) any Environmental
Liability related in any way to the Borrower or any of its Subsidiaries or to
any property currently or formerly owned or operated by the Borrower or any of
its Subsidiaries, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory and regardless of whether any Indemnitee is a
party thereto (and regardless of whether such matter is initiated by a third
party or by the Borrower, any other Loan Party or any of their respective
Affiliates); provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, penalties,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee or, to the extent such
judgment finds such Indemnitee in breach of the Loan Documents and the
proceeding was initiated by Holdings, the Borrower or any of the Borrower's
Subsidiaries directly against such Indemnitee for breach of the Loan Documents.
(c) To the extent that the Borrower fails to pay any amount required to be
paid by it to an Agent, an Issuing Bank or the Swingline Lender under paragraph
(a) or (b) of this Section, each Lender severally agrees to pay to such Agent,
such Issuing Bank or the Swingline Lender, as the case may be, such Lender's
Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim, damage,
penalty, liability or related expense, as the case may be, was incurred by or
asserted against such Agent, such Issuing Bank or the Swingline Lender in its
capacity as such.
(d) To the extent permitted by applicable law, no party to this Agreement
shall assert, and each hereby waives, any claim against any other party hereto
or any Related Party thereof, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, the Transactions, any Loan or
Letter of Credit or the use of the proceeds thereof.
(e) All amounts due under this Section shall be paid promptly after written
demand therefor.
Section 9.04. Successors and Assigns. (a) The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby (including any Affiliate of
an Issuing Bank that issues any Letter of Credit), except that (i) the Borrower
may not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of each Lender (and any attempted assignment
or transfer by the Borrower without such consent shall be null and void) and
(ii)
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no Lender may assign or otherwise transfer its rights or obligations hereunder
except in accordance with this Section (any attempted assignment or transfer not
complying with the terms of this Section shall be null and void). Nothing in
this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby (including any Affiliate of an Issuing Bank that issues any
Letter of Credit), Participants (to the extent provided in paragraph (c) of this
Section) and, to the extent expressly contemplated hereby, the Related Parties
of each of the Agents, the Issuing Banks and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.
(b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any
Lender may assign to one or more Eligible Assignees all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it) with the prior written consent
(such consent not to be unreasonably withheld or delayed) of:
(A) the Borrower; provided that no consent of the Borrower shall
be required for an assignment to another Lender, an Affiliate of a
Lender, an Approved Fund or, if an Event of Default has occurred and
is continuing, any other Eligible Assignee and provided further that
no consent of the Borrower shall be required for an assignment during
the primary syndication of the Loans to Persons identified in writing
by the Administrative Agent to the Borrower on or prior to the Closing
Date and reasonably acceptable to the Borrower;
(B) the Administrative Agent;
(C) the Swingline Lender; and
(D) each Issuing Bank.
(ii) Assignments shall be subject to the following additional
conditions:
(A) except in the case of an assignment to another Lender, an
Affiliate of a Lender or an Approved Fund or an assignment of the
entire remaining amount of the assigning Lender's Commitment or Loans
of any Class, the amount of the Commitment or the principal amount of
Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Assumption with respect
to such assignment is delivered to the Administrative Agent and
determined on an aggregate basis in the event of concurrent
assignments to Related Funds or by Related Funds (as defined below))
shall not be less
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than $2,500,000 unless each of the Borrower and the Administrative
Agent otherwise consent;
(B) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender's rights and
obligations under this Agreement (except that this clause (B) shall
not limit the right of a Lender to assign all or any portion of either
its Commitment (without the necessity of assigning a proportionate
portion of both));
(C) the parties to each assignment shall execute and deliver to
the Administrative Agent an Assignment Agreement via an electronic
settlement system acceptable to the Administrative Agent (or, if
previously agreed with the Agent, manually), and shall pay to the
Administrative Agent a processing and recordation fee of $3,500 (which
fee may be waived or reduced in the sole discretion of the
Administrative Agent); and
(D) the assignee, if it shall not be a Lender, shall deliver on
or prior to the effective date of such assignment, to the
Administrative Agent (1) an Administrative Questionnaire and (2) if
applicable, any Internal Revenue Service forms required under Section
2.17.
The term "RELATED FUNDS" shall mean with respect to any Lender that is an
Approved Fund, any other Approved Fund that is managed by the same investment
advisor as such Lender or by an Affiliate of such investment advisor.
(iii) Subject to acceptance and recording thereof pursuant to
paragraph (b)(iv) of this Section, from and after the effective date
specified in each Assignment and Assumption the assignee thereunder shall
be a party hereto and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Assumption, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Assumption covering all of the assigning Lender's rights and
obligations under this Agreement, such Lender shall cease to be a party
hereto but shall continue to be entitled to the benefits of Sections 2.15,
2.16, 2.17 and 9.03 with respect to facts and circumstances occurring on or
prior to the effective date of such assignment). Any assignment or transfer
by a Lender of rights or obligations under this Agreement that does not
comply with this Section 9.04 shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (c) of this Section.
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(iv) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices a copy of each
Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders and their respective
successors and assigns, and the Commitment of, and principal amount of and
interest on the Loans and LC Disbursements owing to, each Lender pursuant
to the terms hereof from time to time (the "REGISTER"). The entries in the
Register shall be conclusive, absent manifest error, and the Borrower, the
Agents, the Issuing Banks and the Lenders may treat each Person whose name
is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by the Borrower,
the Issuing Banks and any Lender, at any reasonable time and from time to
time upon reasonable prior notice.
(v) Upon its receipt of a duly completed Assignment and Assumption
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire and tax certifications required by Section
9.04(b)(ii)(D)(2) (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b)
of this Section, if applicable, and any written consent to such assignment
required by paragraph (b) of this Section, the Administrative Agent shall
promptly accept such Assignment and Assumption and record the information
contained therein in the Register; provided that if either the assigning
Lender or the assignee shall have failed to make any payment required to be
made by it pursuant to Section 2.05(d), 2.06(d) or (e), 2.07(b), 2.18(c) or
9.03(c), the Administrative Agent shall have no obligation to accept such
Assignment and Assumption and record the information therein in the
Register unless and until such payment shall have been made in full,
together with all accrued interest thereon. No assignment shall be
effective for purposes of this Agreement unless it has been recorded in the
Register as provided in this paragraph.
(vi) By executing and delivering an Assignment and Assumption, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as
follows: (i) such assigning Lender warrants that it is the legal and
beneficial owner of the interest being assigned thereby free and clear of
any adverse claim and that its Commitment, and the outstanding balances of
its Revolving Loans, in each case without giving effect to assignments
thereof which have not become effective, are as set forth in such
Assignment and Assumption, (ii) except as set forth in (i) above, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement, or the
execution, legality, validity, enforceability, genuineness, sufficiency or
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value of this Agreement, any other Loan Document or any other instrument or
document furnished pursuant hereto, or the financial condition of the
Borrower or any Subsidiary or the performance or observance by the Borrower
or any Subsidiary of any of its obligations under this Agreement, any other
Loan Document or any other instrument or document furnished pursuant
hereto; (iii) such assignee represents and warrants that it is an Eligible
Assignee, legally authorized to enter into such Assignment and Assumption;
(iv) such assignee confirms that it has received a copy of this Agreement
and the Intercreditor Agreement, together with copies of the most recent
financial statements referred to in Section 3.04(a) or delivered pursuant
to Section 5.01 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Assumption; (v) such assignee will independently and without
reliance upon the Agents, such assigning Lender or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking
action under this Agreement; (vi) such assignee appoints and authorizes
each Agent to take such action as agent on its behalf and to exercise such
powers under this Agreement as are delegated to such Agent, by the terms
hereof, together with such powers as are reasonably incidental thereto; and
(vii) such assignee agrees that it will perform in accordance with their
terms all the obligations which by the terms of this Agreement are required
to be performed by it as a Lender.
(c) (i) Any Lender may, without the consent of the Borrower, the
Administrative Agent, the Issuing Banks, the Swingline Lender or any other
Lender, sell participations to one or more banks or other entities (a
"PARTICIPANT") in all or a portion of such Lender's rights and obligations under
this Agreement (including all or a portion of its Commitment and the Loans owing
to it); provided that (A) such Lender's obligations under this Agreement shall
remain unchanged, (B) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (C) the Borrower, the
Agents, the Issuing Banks and the other Lenders shall continue to deal solely
and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.02(b) that affects such Participant.
Subject to paragraph (c)(ii) of this Section, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section. To the extent permitted by
law, each Participant also shall be entitled to the benefits
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of Section 9.08 as though it were a Lender; provided such Participant agrees to
be subject to Section 2.18(c) as though it were a Lender.
(ii) A Participant shall not be entitled to receive any greater
payment under Section 2.15, 2.16 or 2.17 than the applicable Lender would
have been entitled to receive with respect to the participation sold to
such Participant, unless the sale of the participation to such Participant
is made with the Borrower's prior written consent. A Participant that would
be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 2.17 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 2.17(e) as though it were a
Lender.
(d) Any Lender may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement to secure obligations of such
Lender, including without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.
(e) Notwithstanding anything to the contrary contained herein, any Lender
(a "GRANTING LENDER") may grant to a special purpose funding vehicle (an "SPC"),
identified as such in writing from time to time by the Granting Lender to the
Administrative Agent and the Borrower, the option to provide to the Borrower all
or any part of any Loan that such Granting Lender would otherwise be obligated
to make to the Borrower pursuant to this Agreement; provided that (i) nothing
herein shall constitute a commitment by any SPC to make any Loan and (ii) if an
SPC elects not to exercise such option or otherwise fails to provide all or any
part of such Loan, the Granting Lender shall be obligated to make such Loan
pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall
utilize the Commitment of the Granting Lender to the same extent, and as if,
such Loan were made by such Granting Lender. Each party hereto hereby agrees
that (i) neither the grant to any SPC nor the exercise by any SPC of such option
shall increase the costs or expenses or otherwise increase or change the
obligations of the Borrower under this Agreement (including its obligations
under Section 2.15, 2.16 or 2.17) and no SPC shall be entitled to any greater
amount under Section 2.13, 2.14 or 2.15 or any other provision of this Agreement
or any other Loan Document that the Granting Lender would have been entitled to
receive, (ii) no SPC shall be liable for any indemnity or similar payment
obligation under this Agreement (all liability for which shall remain with the
Granting Lender) and (iii) the Granting Lender shall for all purposes including
approval of any amendment, waiver or other modification of any provision of the
Loan Documents, remain the Lender of record hereunder. In furtherance of the
foregoing, each party hereto hereby agrees (which agreement shall survive the
termination of this Agreement) that, prior to the date that is one year and one
day
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after the payment in full of all outstanding commercial paper or other senior
indebtedness of any SPC, it will not institute against, or join any other Person
in instituting against, such SPC any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings under the laws of the United States or any
State thereof; provided, however, that (i) in the case of the Borrower, such
SPC's Granting Lender is in compliance in all material respects with its
obligations to the Borrower hereunder and (ii) each Lender designating any SPC
hereby agrees to indemnify, save and hold harmless each other party hereto for
any loss, cost, damage or expense arising out of its inability to institute such
a proceeding against such SPC during such period of forbearance. In addition,
notwithstanding anything to the contrary contained in this Section 9.04, any SPC
may (i) with notice to, but without the prior written consent of, the Borrower
or the Administrative Agent and without paying any processing fee therefor,
assign all or a portion of its interests in any Loans to the Granting Lender or
to any financial institutions (consented to by the Borrower and Administrative
Agent) providing liquidity and/or credit support to or for the account of such
SPC to support the funding or maintenance of Loans and (ii) disclose on a
confidential basis any non-public information relating to its Loans to any
rating agency, commercial paper dealer or provider of any surety, guarantee or
credit or liquidity enhancement to such SPC.
(f) In the event that any Lender shall become a Defaulting Lender or S&P,
▇▇▇▇▇'▇ and ▇▇▇▇▇▇▇▇'▇ BankWatch (or InsuranceWatch Ratings Service, in the case
of Lenders that are insurance companies (or Best's Insurance Reports, if such
insurance company is not rated by Insurance Watch Ratings Service)) shall
downgrade the long-term certificate deposit ratings of such Lender, and the
resulting ratings shall be below BBB-, Baa3 and C (or BB, in the case of a
Lender that is an insurance company (or B, in the case of an insurance company
not rated by InsuranceWatch Ratings Service)) (or, with respect to any Lender
that is not rated by any such ratings service or provider, the Issuing Banks or
the Swingline Lender shall have reasonably determined that there has occurred a
material adverse change in the financial condition of any such Lender, or a
material impairment of the ability of any such Lender to perform its obligations
hereunder, as compared to such condition or ability as of the date that any such
Lender became a Lender) then an Issuing Bank or the Swingline Lender shall have
the right, but not the obligation, at its own expense, upon notice to such
Lender and the Administrative Agent, to replace such Lender with an assignee (in
accordance with and subject to the restrictions contained in paragraph (b)
above), and such Lender hereby agrees to transfer and assign without recourse
(in accordance with and subject to the restrictions contained in paragraph (b)
above) all its interests, rights and obligations in respect of its Commitment to
such assignee; provided, however, that (i) no such assignment shall conflict
with any law, rule and regulation or order of any Governmental Authority and
(ii) such Issuing Bank or the Swingline Lender, as applicable, or such assignee,
as the case may be, shall pay to such Lender in immediately available funds on
the date of such assignment the principal of and interest accrued to the date of
payment on the Loans made by
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such Lender hereunder and all other amounts accrued for such Lender's account or
owed to it hereunder.
Section 9.05. Survival. All covenants, agreements, representations and
warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that an Agent, an Issuing Bank or any
Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid or any Letter of Credit is outstanding and
so long as the Commitments have not expired or terminated. The provisions of
Sections 2.15, 2.16, 2.17 and 9.03 and Article 8 shall survive and remain in
full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Letters of Credit and the Commitments or the termination of this
Agreement or any provision hereof.
Section 9.06. Counterparts; Integration; Effectiveness. This Agreement may
be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents and the Fee Letters and any separate letter agreements with
respect to fees payable to the Agents constitute the entire contract among the
parties relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Agents and when the
Administrative Agent shall have received counterparts hereof which, when taken
together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by facsimile shall be effective as
delivery of a manually executed counterpart of this Agreement.
Section 9.07. Severability. To the extent permitted by law, any provision
of any Loan Document held to be invalid, illegal or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity, illegality or unenforceability without affecting the validity,
legality and enforceability of the remaining provisions thereof; and the
invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.
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Section 9.08. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations at any time owing
by such Lender or Affiliate to or for the credit or the account of the Borrower
or any Loan Guarantor against any of and all the Secured Obligations held by
such Lender, irrespective of whether or not such Lender shall have made any
demand under the Loan Documents and although such obligations may be unmatured.
The applicable Lender shall notify the Borrower and the Administrative Agent of
such set-off or application; provided that any failure to give or any delay in
giving such notice shall not affect the validity of any such set-off or
application under this Section. The rights of each Lender under this Section are
in addition to other rights and remedies (including other rights of setoff)
which such Lender may have. NOTWITHSTANDING THE FOREGOING, AT ANY TIME THAT ANY
OF THE SECURED OBLIGATIONS SHALL BE SECURED BY REAL PROPERTY LOCATED IN
CALIFORNIA, NO LENDER SHALL EXERCISE A RIGHT OF SETOFF, LENDER'S LIEN OR
COUNTERCLAIM OR TAKE ANY COURT OR ADMINISTRATIVE ACTION OR INSTITUTE ANY
PROCEEDING TO ENFORCE ANY PROVISION OF THIS AGREEMENT OR ANY LOAN DOCUMENT
UNLESS IT IS TAKEN WITH THE CONSENT OF THE LENDERS REQUIRED BY SECTION 9.02 OF
THIS AGREEMENT, IF SUCH SETOFF OR ACTION OR PROCEEDING WOULD OR MIGHT (PURSUANT
TO SECTIONS 580a, 580b, 580d AND 726 OF THE CALIFORNIA CODE OF CIVIL PROCEDURE
OR SECTION 2924 OF THE CALIFORNIA CIVIL CODE, IF APPLICABLE, OR OTHERWISE)
AFFECT OR IMPAIR THE VALIDITY, PRIORITY, OR ENFORCEABILITY OF THE LIENS GRANTED
TO THE COLLATERAL AGENT PURSUANT TO THE COLLATERAL DOCUMENTS OR THE
ENFORCEABILITY OF THE OBLIGATIONS HEREUNDER, AND ANY ATTEMPTED EXERCISE BY ANY
LENDER OR ANY SUCH RIGHT WITHOUT OBTAINING SUCH CONSENT OF THE PARTIES AS
REQUIRED ABOVE, SHALL BE NULL AND VOID. THIS PARAGRAPH SHALL BE SOLELY FOR THE
BENEFIT OF EACH OF THE LENDERS.
Section 9.09. Governing Law; Jurisdiction; Consent to Service of Process.
(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN LETTERS OF CREDIT
AND AS EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. EACH LETTER
OF CREDIT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE
LAWS OR RULES DESIGNATED IN SUCH LETTER OF CREDIT, OR IF NO SUCH LAWS OR RULES
ARE DESIGNATED, THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS MOST
RECENTLY PUBLISHED AND IN EFFECT, ON THE DATE SUCH LETTER OF CREDIT
139
WAS ISSUED, BY THE INTERNATIONAL CHAMBER OF COMMERCE (THE "UNIFORM CUSTOMS")
AND, AS TO MATTERS NOT GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF THE STATE OF
NEW YORK.
(b) Each party hereto hereby irrevocably and unconditionally submits, for
itself and its property, to the exclusive jurisdiction of any U.S. Federal or
New York State court sitting in the Borough of Manhattan, New York, New York in
any action or proceeding arising out of or relating to any Loan Documents, or
for recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
(c) Each party hereto hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or any other Loan Document in any
court referred to in paragraph (b) of this Section. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
(d) To the extent permitted by law, each party to this Agreement hereby
irrevocably waives personal service of any and all process upon it and agrees
that all such service of process may be made by registered mail (return receipt
requested) directed to it at its address for notices as provided for in Section
9.01. Nothing in this Agreement or any other Loan Document will affect the right
of any party to this Agreement to serve process in any other manner permitted by
law.
Section 9.10. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT
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BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
Section 9.11. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
Section 9.12. Confidentiality. Each Agent, each Issuing Bank and each
Lender agrees (and each Lender agrees to cause its SPC, if any) to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliates' directors, officers, employees
and agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent required by any regulatory,
governmental or administrative authority, (c) to the extent required by law or
by any subpoena or similar legal process; provided, that unless specifically
prohibited by applicable law, reasonable efforts shall be made to notify the
Borrower of any such request, (d) to any other party to this Agreement, (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or any other Loan Document or the
enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to (i)
any assignee of or Participant in, or any prospective assignee of or Participant
in, any of its rights or obligations under this Agreement, including, without
limitation, any SPC, (ii) any pledgee referred to in Section 9.04(d) or (iii)
any actual or prospective counterparty (or its advisors) to any swap or
derivative transaction relating to the Loan Parties and their obligations, (g)
with the prior written consent of the Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section by such Person or (ii) becomes available to an Agent, an Issuing
Bank or any Lender on a nonconfidential basis other than as a result of a breach
of this Section from a source other than the Borrower. For the purposes of this
Section, "INFORMATION" means all information received from any Loan Party
relating to the Loan Parties or their businesses, the Sponsor or the
Transactions other than any such information that is available to any Agent, any
Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by any
Loan Party.
Section 9.13. Several Obligations; Violation of Law. The respective
obligations of the Lenders hereunder are several and not joint and the failure
of any Lender to make any Loan or perform any of its obligations hereunder shall
not relieve any other Lender from any of its obligations hereunder. Anything
contained in this Agreement to the contrary notwithstanding, neither the Issuing
Banks nor any Lender shall be obligated to extend credit to the Borrower in
violation of any Requirement of Law.
141
Section 9.14. USA PATRIOT Act. Each Lender that is subject to the
requirements of the USA PATRIOT Act hereby notifies the Borrower that pursuant
to the requirements of the USA PATRIOT Act, it is required to obtain, verify and
record information that identifies the Borrower, which information includes the
name and address of the Borrower and other information that will allow such
Lender to identify the Borrower in accordance with the USA PATRIOT Act.
Section 9.15. Disclosure. Each Loan Party and each Lender hereby
acknowledges and agrees that the Agents and/or their Affiliates from time to
time may hold investments in, make other loans to or have other relationships
with any of the Loan Parties and their respective Affiliates. In addition, each
Loan Party and each Lender hereby acknowledges that the Agents and/or their
Affiliates may make a loan to the Borrower under the Senior Secured Term Loan
Facility.
Section 9.16. Appointment for Perfection. Each Lender hereby appoints each
other Lender as its agent for the purpose of perfecting Liens, for the benefit
of the Collateral Agent and the Lenders, in assets which, in accordance with
Article 9 of the UCC or any other applicable law can be perfected only by
possession. Should any Lender (other than the Collateral Agent) obtain
possession of any such Collateral, such Lender shall notify the Collateral Agent
thereof, and, promptly upon the Collateral Agent's request therefor shall
deliver such Collateral to the Collateral Agent or otherwise deal with such
Collateral in accordance with the Collateral Agent's instructions.
Section 9.17. Interest Rate Limitation. Notwithstanding anything herein to
the contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts which are treated as interest on such
Loan under applicable law (collectively the "CHARGES"), shall exceed the maximum
lawful rate (the "MAXIMUM RATE") which may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
Section 9.18. Intercreditor Agreement. REFERENCE IS MADE TO THE
INTERCREDITOR AGREEMENT. EACH LENDER HEREUNDER (A) CONSENTS TO THE SUBORDINATION
OF LIENS PROVIDED FOR IN THE INTERCREDITOR AGREEMENT, (B) AGREES THAT IT WILL BE
BOUND BY AND WILL TAKE NO ACTIONS CONTRARY TO THE PROVISIONS OF THE
INTERCREDITOR AGREEMENT AND (C)
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AUTHORIZES AND INSTRUCTS THE COLLATERAL AGENT TO ENTER INTO THE INTERCREDITOR
AGREEMENT AS REVOLVING FACILITY AGENT AND ON BEHALF OF SUCH LENDER. THE
FOREGOING PROVISIONS ARE INTENDED AS AN INDUCEMENT TO THE LENDERS UNDER THE
SENIOR SECURED TERM FACILITY CREDIT AGREEMENT TO EXTEND CREDIT AND SUCH LENDERS
ARE INTENDED THIRD PARTY BENEFICIARIES OF SUCH PROVISIONS AND THE PROVISIONS OF
THE INTERCREDITOR AGREEMENT.
Section 9.19. Designation Of Subsidiaries. (a) The board of directors of
the Borrower may at any time designate any subsidiary of the Borrower as an
Unrestricted Subsidiary or any Unrestricted Subsidiary as a Subsidiary; provided
that (i) immediately before and after such designation, no Default shall have
occurred and be continuing, (ii) after giving effect to such designation, the
Payment Conditions shall have been satisfied, (iii) the Borrower may not be
designated as an Unrestricted Subsidiary, (iv) no subsidiary may be designated
as an Unrestricted Subsidiary if it is a "Subsidiary" for the purpose of the
Senior Secured Term Loan Facility, (v) no Subsidiary may be designated as an
Unrestricted Subsidiary if it was previously designated an Unrestricted
Subsidiary, (vi) no Unrestricted Subsidiary shall own any Capital Stock in the
Borrower or its Subsidiaries, (vii) no Unrestricted Subsidiary shall hold any
Indebtedness of, or any Lien on any property of, the Borrower or its
Subsidiaries, (viii) the holder of any Indebtedness of any Unrestricted
Subsidiary shall not have any recourse to the Borrower or its Subsidiaries with
respect to such Indebtedness, except as permitted pursuant to this Agreement,
(ix) no Unrestricted Subsidiary shall be a party to any transaction or
arrangement with the Borrower or its Subsidiaries that would not be permitted by
Section 6.11, and (x) none of Holdings or any of its Subsidiaries shall have any
obligation to subscribe for additional Capital Stock of any Unrestricted
Subsidiary or to preserve or maintain the financial condition of any
Unrestricted Subsidiary if such obligation would result in a Default. The
designation of any subsidiary as an Unrestricted Subsidiary shall constitute an
Investment by the Borrower therein at the date of designation in an amount equal
to the net book value of the Borrower's investment therein (and such designation
shall only be permitted to the extent such Investment is permitted under Section
6.07). The designation of any Unrestricted Subsidiary as a Subsidiary shall
constitute the incurrence at the time of designation of any Indebtedness or
Liens of such Subsidiary existing at such time.
ARTICLE 10
LOAN GUARANTY
Section 10.01. Guaranty. Each Loan Guarantor hereby agrees that it is
jointly and severally liable for, and, as primary obligor and not merely as
surety, and absolutely and unconditionally guarantees to the Lenders the prompt
payment
143
when due, whether at stated maturity, upon acceleration or otherwise, and at all
times thereafter, of the Secured Obligations (collectively the "GUARANTEED
OBLIGATIONS"). Each Loan Guarantor further agrees that the Guaranteed
Obligations may be extended or renewed in whole or in part without notice to or
further assent from it, and that it remains bound upon its guarantee
notwithstanding any such extension or renewal.
Section 10.02. Guaranty of Payment. This Loan Guaranty is a guaranty of
payment and not of collection. Each Loan Guarantor waives any right to require
any Agent, any Issuing Bank or any Lender to ▇▇▇ the Borrower, any Loan
Guarantor, any other guarantor, or any other Person obligated for all or any
part of the Guaranteed Obligations (each, an "OBLIGATED PARTY"), or otherwise to
enforce its rights in respect of any collateral securing all or any part of the
Guaranteed Obligations.
Section 10.03. No Discharge or Diminishment of Loan Guaranty. (a) Except
as otherwise provided for herein, the obligations of each Loan Guarantor
hereunder are unconditional and absolute and not subject to any reduction,
limitation, impairment or termination for any reason (other than the payment in
full in cash of the Guaranteed Obligations), including: (i) any claim of waiver,
release, extension, renewal, settlement, surrender, alteration, or compromise of
any of the Guaranteed Obligations, by operation of law or otherwise; (ii) any
change in the corporate existence, structure or ownership of the Borrower or any
other guarantor of or other Person liable for any of the Guaranteed Obligations;
(iii) any insolvency, bankruptcy, reorganization or other similar proceeding
affecting any Obligated Party, or their assets or any resulting release or
discharge of any obligation of any Obligated Party; or (iv) the existence of any
claim, setoff or other rights which any Loan Guarantor may have at any time
against any Obligated Party, any Agent, any Issuing Bank, any Lender, or any
other Person, whether in connection herewith or in any unrelated transactions.
(b) Except for termination of a Loan Party's obligations hereunder or as
expressly permitted by Section 10.12, the obligations of each Loan Guarantor
hereunder are not subject to any defense or setoff, counterclaim, recoupment, or
termination whatsoever by reason of the invalidity, illegality, or
unenforceability of any of the Guaranteed Obligations or otherwise, or any
provision of applicable law or regulation purporting to prohibit payment by any
Obligated Party, of the Guaranteed Obligations or any part thereof.
(c) Further, the obligations of any Loan Guarantor hereunder are not
discharged or impaired or otherwise affected by: (i) the failure of any Agent,
any Issuing Bank or any Lender to assert any claim or demand or to enforce any
remedy with respect to all or any part of the Guaranteed Obligations; (ii) any
waiver or modification of or supplement to any provision of any agreement
relating to the Guaranteed Obligations; (iii) any release, non-perfection, or
invalidity of any indirect or direct security for the obligations of the
Borrower for all or any part of the Guaranteed Obligations or any obligations of
any other
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guarantor of or other Person liable for any of the Guaranteed Obligations; (iv)
any action or failure to act by any Agent, any Issuing Bank or any Lender with
respect to any collateral securing any part of the Guaranteed Obligations; or
(v) any default, failure or delay, willful or otherwise, in the payment or
performance of any of the Guaranteed Obligations, or any other circumstance,
act, omission or delay that might in any manner or to any extent vary the risk
of such Loan Guarantor or that would otherwise operate as a discharge of any
Loan Guarantor as a matter of law or equity (other than the payment in full in
cash of the Guaranteed Obligations).
Section 10.04. Defenses Waived. To the fullest extent permitted by
applicable law, and except for termination of a Loan Party's obligations
hereunder or as expressly permitted by Section 10.12, each Loan Guarantor hereby
waives any defense based on or arising out of any defense of the Borrower or any
Loan Guarantor or the unenforceability of all or any part of the Guaranteed
Obligations from any cause, or the cessation from any cause of the liability of
the Borrower or any Loan Guarantor, other than the payment in full in cash of
the Guaranteed Obligations. Without limiting the generality of the foregoing,
each Loan Guarantor irrevocably waives acceptance hereof, presentment, demand,
protest and, to the fullest extent permitted by law, any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
Person against any Obligated Party, or any other Person. The Collateral Agent
may, at its election, foreclose on any Collateral held by it by one or more
judicial or nonjudicial sales, accept an assignment of any such Collateral in
lieu of foreclosure or otherwise act or fail to act with respect to any
collateral securing all or a part of the Guaranteed Obligations, and the
Administrative Agent may, at its election, compromise or adjust any part of the
Guaranteed Obligations, make any other accommodation with any Obligated Party or
exercise any other right or remedy available to it against any Obligated Party,
without affecting or impairing in any way the liability of such Loan Guarantor
under this Loan Guaranty except to the extent the Guaranteed Obligations have
been fully paid in cash. To the fullest extent permitted by applicable law, each
Loan Guarantor waives any defense arising out of any such election even though
that election may operate, pursuant to applicable law, to impair or extinguish
any right of reimbursement or subrogation or other right or remedy of any Loan
Guarantor against any Obligated Party or any security.
Section 10.05. Rights of Subrogation. No Loan Guarantor will assert any
right, claim or cause of action, including, without limitation, a claim of
subrogation, contribution or indemnification that it has against any Obligated
Party, or any collateral, until payment in full in cash of the Guaranteed
Obligations (other than contingent indemnification obligations for which no
claim has been made).
Section 10.06. Reinstatement; Stay of Acceleration. If at any time any
payment of any portion of the Guaranteed Obligations is rescinded or must
otherwise be restored or returned upon the insolvency, bankruptcy, or
145
reorganization of the Borrower or otherwise, each Loan Guarantor's obligations
under this Loan Guaranty with respect to that payment shall be reinstated at
such time as though the payment had not been made. If acceleration of the time
for payment of any of the Guaranteed Obligations is stayed upon the insolvency,
bankruptcy or reorganization of the Borrower, all such amounts otherwise subject
to acceleration under the terms of any agreement relating to the Guaranteed
Obligations shall nonetheless be payable by the Loan Guarantors forthwith on
demand by the Administrative Agent.
Section 10.07. Information. Each Loan Guarantor assumes all responsibility
for being and keeping itself informed of the Borrower's financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Guaranteed Obligations and the nature, scope and extent of the risks that
each Loan Guarantor assumes and incurs under this Loan Guaranty, and agrees that
none of any Agent, any Issuing Bank or any Lender shall have any duty to advise
any Loan Guarantor of information known to it regarding those circumstances or
risks.
Section 10.08. Taxes. All payments of the Guaranteed Obligations will be
made by each Loan Guarantor free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if any Loan Guarantor shall be
required to deduct any Indemnified Taxes or Other Taxes from such payments, then
(i) the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section) the applicable Agent, Lender or Issuing Bank (as the case
may be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) such Loan Guarantor shall make such deductions and
(iii) such Loan Guarantor shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
Section 10.09. Maximum Liability. The provisions of this Loan Guaranty are
severable, and in any action or proceeding involving any state corporate law, or
any state, Federal or foreign bankruptcy, insolvency, reorganization or other
law affecting the rights of creditors generally, if the obligations of any Loan
Guarantor under this Loan Guaranty would otherwise be held or determined to be
avoidable, invalid or unenforceable on account of the amount of such Loan
Guarantor's liability under this Loan Guaranty, then, notwithstanding any other
provision of this Loan Guaranty to the contrary, the amount of such liability
shall, without any further action by the Loan Guarantors or the Lenders, be
automatically limited and reduced to the highest amount that is valid and
enforceable as determined in such action or proceeding (such highest amount
determined hereunder being the relevant Loan Guarantor's "MAXIMUM LIABILITY").
This Section with respect to the Maximum Liability of each Loan Guarantor is
intended solely to preserve the rights of the Lenders to the maximum extent not
subject to avoidance under applicable law, and no Loan Guarantor nor any other
Person or entity shall have any right or claim under this Section with respect
to such Maximum Liability, except to the extent necessary so that the
146
obligations of any Loan Guarantor hereunder shall not be rendered voidable under
applicable law. Each Loan Guarantor agrees that the Guaranteed Obligations may
at any time and from time to time exceed the Maximum Liability of each Loan
Guarantor without impairing this Loan Guaranty or affecting the rights and
remedies of the Lenders hereunder; provided that nothing in this sentence shall
be construed to increase any Loan Guarantor's obligations hereunder beyond its
Maximum Liability.
Section 10.10. Contribution. In the event any Loan Guarantor (a "PAYING
GUARANTOR") shall make any payment or payments under this Loan Guaranty or shall
suffer any loss as a result of any realization upon any collateral granted by it
to secure its obligations under this Loan Guaranty, each other Loan Guarantor
(each a "NON-PAYING GUARANTOR") shall contribute to such Paying Guarantor an
amount equal to such Non-Paying Guarantor's "Guarantor Percentage" of such
payment or payments made, or losses suffered, by such Paying Guarantor. For
purposes of this Article 10, each Non-Paying Guarantor's "GUARANTOR PERCENTAGE"
with respect to any such payment or loss by a Paying Guarantor shall be
determined as of the date on which such payment or loss was made by reference to
the ratio of (i) such Non- Paying Guarantor's Maximum Liability as of such date
(without giving effect to any right to receive, or obligation to make, any
contribution hereunder) or, if such Non-Paying Guarantor's Maximum Liability has
not been determined, the aggregate amount of all monies received by such
Non-Paying Guarantor from the Borrower after the date hereof (whether by loan,
capital infusion or by other means) to (ii) the aggregate Maximum Liability of
all Loan Guarantors hereunder (including such Paying Guarantor) as of such date
(without giving effect to any right to receive, or obligation to make, any
contribution hereunder), or to the extent that a Maximum Liability has not been
determined for any Loan Guarantor, the aggregate amount of all monies received
by such Loan Guarantors from the Borrower after the date hereof (whether by
loan, capital infusion or by other means). Nothing in this provision shall
affect any Loan Guarantor's several liability for the entire amount of the
Guaranteed Obligations (up to such Loan Guarantor's Maximum Liability). Each of
the Loan Guarantors covenants and agrees that its right to receive any
contribution under this Loan Guaranty from a Non-Paying Guarantor shall be
subordinate and junior in right of payment to the payment in full in cash of the
Guaranteed Obligations. This provision is for the benefit of the Agents, the
Issuing Banks, the Lenders and the Loan Guarantors and may be enforced by any
one, or more, or all of them in accordance with the terms hereof.
Section 10.11. Liability Cumulative. The liability of each Loan Party as a
Loan Guarantor under this Article 10 is in addition to and shall be cumulative
with all liabilities of each Loan Party to the Agents, the Issuing Banks and the
Lenders under this Agreement and the other Loan Documents to which such Loan
Party is a party or in respect of any obligations or liabilities of the other
Loan Parties, without any limitation as to amount, unless the instrument or
agreement evidencing or creating such other liability specifically provides to
the contrary.
147
Section 10.12. Release of Loan Guarantors. Notwithstanding anything in
Section 9.02(b) to the contrary (i) a Loan Guarantor that is a Subsidiary shall
automatically be released from its obligations hereunder and its Loan Guaranty
shall be automatically released (A) upon the consummation of any transaction
permitted hereunder if as a result thereof such Loan Guarantor would no longer
be required to provide a guarantee of the Obligations pursuant to Section 5.12
or (B) upon the termination of the Commitments, payment and satisfaction in full
in cash of all Secured Obligations (other than Unliquidated Obligations), the
termination, expiration or, to the extent effected in a manner reasonably
acceptable to the relevant Issuing Banks or as otherwise provided for herein,
cash collateralization or back-stopping of all outstanding Letters of Credit. In
connection with any such release, the Agents shall promptly execute and deliver
to any Loan Guarantor that is a Subsidiary, at such Loan Guarantor's expense,
all documents that such Loan Guarantor shall reasonably request to evidence
termination or release. Any execution and delivery of documents pursuant to the
preceding sentence of this Section 10.12 shall be without recourse to or
warranty by the Agents.
148
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
AMSCAN HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
AAH HOLDINGS CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
AMSCAN INC.
PA ACQUISITION CORP.
PARTY AMERICA FRANCHISING, INC.
PARTY CITY CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President and Treasurer
ANAGRAM INTERNATIONAL HOLDINGS, INC.
ANAGRAM INTERNATIONAL, INC.
JCS PACKAGING, INC.
M&D INDUSTRIES, INC.
SSY REALTY CORP.
TRISAR, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Assistant Treasurer
ABL Credit Agreement
AM-SOURCE, LLC
ANAGRAM EDEN PRAIRIE PROPERTY HOLDINGS
LLC
By: Amscan Holdings, Inc., Sole Member
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
ANAGRAM INTERNATIONAL, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Manager
ABL Credit Agreement
CREDIT SUISSE, CAYMAN ISLANDS BRANCH,
individually and as Administrative
Agent, Issuing Bank and Swingline
Lender
By: /s/ ▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇
Title: Vice President
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Associate
BANK OF AMERICA, N.A., individually, and
as Issuing Bank and Collateral Agent
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Vice President
UPS CAPITAL CORPORATION, as Lender
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION,
as Lender
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ABL Credit Agreement
▇▇▇▇▇ FARGO RETAIL FINANCE, LLC,
as Lender
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
▇▇▇▇▇▇▇ BUSINESS CREDIT CORPORATION,
as Lender
By:
------------------------------------
Name: ▇▇▇▇▇▇ ▇. Klapkaoski
Title: VP - Authorized Signatory
▇▇▇▇▇▇▇ ▇▇▇▇▇ CAPITAL, a Division of
▇▇▇▇▇▇▇ ▇▇▇▇▇ Business Financial
Services Inc., as Lender
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Lender
By:
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Director
152
_____________________________, as Lender
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
153
COMMITMENT SCHEDULE
Lender Commitment
------ ----------
Credit Suisse $ 20.0
Bank of America $ 35.0
Wachovia $ 35.0
▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital $ 35.0
▇▇▇▇▇ Fargo Retail Finance $ 35.0
UPS Capital Corporation $ 20.0
▇▇▇▇▇▇▇ Business Credit $ 10.0
GE Capital- Commercial Finance $ 10.0
------
Total $200.0
======
154