CFP GROUP, INC.
CFP HOLDINGS, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT is dated as of May 15, 1997
and entered into by and among CFP HOLDINGS, INC., a Delaware corporation
("Borrower"), CFP GROUP, INC., a Delaware corporation ("Parent"), THE FINANCIAL
INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF (each individually referred to
herein as a "Lender" and collectively as "Lenders"), NATIONSBANK OF TEXAS, N.A.
("NATIONSBANK"), as administrative agent for Lenders (in such capacity,
"Administrative Agent"), NATIONSBANC CAPITAL MARKETS, INC. ("NCMI"), as
arranging agent (in such capacity, "Arranging Agent") and as syndication agent
(in such capacity, "Syndication Agent"), and FLEET NATIONAL BANK, as
Documentation Agent (in such capacity, "Documentation Agent").
R E C I T A L S
WHEREAS, Borrower, Parent, the Lenders identified therein, NationsBank
of Texas, N.A., as Administrative Agent, NationsBanc Capital Markets, Inc., as
Arranging Agent and Syndication Agent, and Fleet National Bank, as Documentation
Agent have entered into that certain Credit Agreement dated as of December 31,
1996 (the "Existing Agreement");
WHEREAS, on the Closing Date (this and other capitalized terms used
herein without definition shall have the meanings assigned to those terms in
subsection 1.1), Lenders extended certain credit facilities to Borrower under
the Existing Agreement, the proceeds of which were used (i) together with the
proceeds of the Bridge Financing, to fund (1) the purchase price payable in
connection with the Acquisition, (2) the refinancing of certain indebtedness,
(3) the repurchase of certain preferred stock of Parent, and (4) the payment of
the Transaction Costs, and (ii) to provide financing for general corporate
purposes of Borrower and its Subsidiaries;
WHEREAS, a number of events contemplated under the Existing Agreement
have occurred, including, without limitation, (x) Borrower purchased
substantially all of the outstanding limited partnership interests in Quality
Foods, L.P. and all of the outstanding shares of capital stock of QF Acquisition
and QF Management pursuant to the Acquisition Agreement, (y) the remaining
limited partnership interests in Quality Foods, L.P. were exchanged for capital
stock of Parent and all limited
partnership interests of Quality Foods, L.P. were contributed to QF Acquisition
and (z) immediately upon the consummation of the Acquisition, (i) QF Management
was merged with and into QF Acquisition with QF Acquisition being the surviving
corporationin such merger, (ii) Quality Foods, L.P. transferred all of its
assets and liabilities to QF Acquisition and (iii) Quality Foods, L.P. was
liquidated and dissolved;
WHEREAS, on January 28, 1997, Senior Guaranteed Notes were issued as
contemplated by the Existing Agreement;
WHEREAS, Borrower applied the Net Securities Proceeds from the issuance
of the Senior Guaranteed Notes to (i) repay all obligations of Borrower under
the Bridge Notes, (ii) fund the Distribution Transaction in an amount not
exceeding $16,000,000, (iii) prepay those certain "Tranche A Term Loans" and
"Tranche B Term Loans" made on the Closing Date under the Existing Agreement and
(iv) to the extent of any remaining proceeds, prepay Revolving Loans to the full
extent thereof;
WHEREAS, the parties to the Existing Agreement desire to amend and
restate the Existing Agreement in order to delete certain provisions relating to
events which have occurred, modify certain provisions to reflect changed facts
and to make certain other amendments to the Existing Agreement;
WHEREAS, Borrower desires to secure all of the Obligations hereunder
and under the other Loan Documents by granting to Administrative Agent, on
behalf of Lenders, a first priority Lien on substantially all of its real,
personal and mixed property, including without limitation a pledge of all of the
capital stock of each of its Subsidiaries;
WHEREAS, Parent and all of the Subsidiaries of Borrower have agreed to
guarantee the Obligations hereunder and under the other Loan Documents and to
secure their guaranties by granting to Administrative Agent, on behalf of
Lenders, a first priority Lien on substantially all of their respective real,
personal and mixed property, including without limitation a pledge of all of the
capital stock of each of their respective Subsidiaries; and
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Borrower, Parent, Lenders,
Administrative Agent, Arranging Agent and Syndication Agent, and Documentation
Agent agree to amend and restate the Existing Agreement as follows:
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Section 1. DEFINITIONS
1.1 Certain Defined Terms.
The following terms used in this Agreement shall have the following
meanings:
"Accounts Receivable" means, as at any date of determination, the
unpaid portion of the obligations (which, if an invoice has been issued, shall
be as stated on the respective invoice issued to a customer) with respect to (a)
Inventory sold and shipped in the ordinary course of business by any Operating
Subsidiary and (b) services provided in the ordinary course of business by any
Operating Subsidiary.
"Acquisition" means the acquisition by Borrower of all of the
outstanding limited partnership interests in Quality Foods, L.P. and all of the
outstanding shares of capital stock of QF Acquisition and QF Management, and the
other transactions contemplated by the Acquisition Agreement.
"Acquisition Agreement" means that certain Securities Purchase
Agreement by and among Quality Foods, L.P., the partners of Quality Foods, L.P.,
the stockholders of QF Acquisition and QF Management and Borrower dated as of
December 31, 1996, in the form delivered to Administrative Agent and Lenders
prior to the Closing Date and as such agreement may be amended from time to time
thereafter to the extent permitted under subsection 7.13A.
"Acquisition Documents" means the Acquisition Agreement and all
material agreements and documents entered into in connection with the
Acquisition (including the Assignment and Assumption Agreement between Quality
Foods, L.P. and QF Acquisition), in each case, in the form delivered to
Administrative Agent and Lenders prior to the Closing Date as any such
Acquisition Document may be amended from time to time thereafter to the extent
permitted under subsection 7.13A.
"Adjusted Eurodollar Rate" means, for any Interest Rate Determination
Date with respect to an Interest Period for a Eurodollar Rate Loan, the rate per
annum obtained by dividing (i) the offered quotation (rounded upward to the
nearest 1/16 of one percent) to first class banks in the London interbank market
by NationsBank for U.S. dollar deposits of amounts in same day funds comparable
to the principal amount of the Eurodollar Rate Loan of NationsBank for which the
Adjusted Eurodollar Rate is then being determined (which principal amount shall
be deemed to be $1,000,000 in the event NationsBank is not making, converting to
or continuing such a Eurodollar Rate Loan) with maturities comparable to such
Interest Period as of approximately 11:00 a.m. (London time) on such Interest
Rate Determination Date by (ii) a percentage equal to 100% minus the stated
maximum rate of all reserve requirements (including, without limitation, any
marginal, emergency, supplemental, special or other reserves) applicable on such
Interest Rate Determination Date to any member bank of the Federal
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Reserve System in respect of "Eurocurrency liabilities" as defined in Regulation
D (or any successor category of liabilities under Regulation D).
"Administrative Agent" has the meaning assigned to that term in the
introduction to this Agreement and also means and includes any successor
Administrative Agent appointed pursuant to subsection 9.5A.
"Affected Lender" has the meaning assigned to that term in subsection
2.6C.
"Affected Loan" has the meaning assigned to that term in subsection
2.6C.
"Affiliate" means, with respect to any specified Person, (a) any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person or (b) any executive officer
or director of any such specified Person or other Person or, with respect to any
natural Person, any Person having a relationship with such Person by blood,
marriage or adoption not more remote than first cousin. For the purposes of this
definition, "control", when used with respect to any specified Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling", "controlled" and "under common control" have
meanings correlative to the foregoing.
"Agreement" means this Amended and Restated Credit Agreement dated as
of May 15, 1997, as it may be amended, supplemented or otherwise modified from
time to time.
"Applicable Margin" means the following:
(i) for Term Loans (1) from the date hereof until delivery of
financial statements for the period ending December 31, 1997 as
required pursuant to subsec tion 6.1(ii), 2% per annum for Base Rate
Loans and 3% per annum for Eurodollar Rate Loans, and (2) thereafter,
the percentage per annum determined by reference to the applicable
Level set forth below:
Eurodollar Base
Level Rate Loans Rate Loans
==================== ======================= ==========================
Level I 3.00% 2.00%
-------------------- ----------------------- --------------------------
Level II 2.75% 1.75%
-------------------- ----------------------- --------------------------
Level III 2.50% 1.50%
-------------------- ----------------------- --------------------------
Level IV 2.25% 1.25%
==================== ======================= ==========================
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(ii) for Revolving Loans (1) from the Closing Date until
delivery of financial statements for the period ending December 31,
1997 as required pursuant to subsection 6.1(ii), 1.25% per annum for
Base Rate Loans and 2.5% per annum for Eurodollar Rate Loans, and (2)
thereafter, the percentage per annum determined by reference to the
applicable Level set forth below:
Eurodollar Base
Level Rate Loans Rate Loans
==================== ======================= ==========================
Level I 2.50% 1.25%
-------------------- ----------------------- --------------------------
Level II 2.25% 1.25%
-------------------- ----------------------- --------------------------
Level III 2.00% 1.00%
-------------------- ----------------------- --------------------------
Level IV 1.75% 0.75%
==================== ======================= ==========================
The Level with respect to the Applicable Margin shall be
determined as of each Measurement Date and shall be the basis for
determining the Applicable Margin until the next succeeding Measurement
Date; provided, however, that the Applicable Margin for each Loan shall
be the percentage per annum determined by reference to Level I for such
Loan, for so long as Borrower has not submitted to the Administrative
Agent the information necessary for determining the applicable Level as
and when required under subsection 6.1(ii) and 6.1(iv).
"Applied Amount" has the meaning assigned to that term in subsection
2.4B(iv)(b).
"Asset Sale" means the sale by Parent or any of its Subsidiaries to any
Person other than Borrower or any of its Subsidiaries of (i) any of the stock of
Borrower or any of Borrower's Subsidiaries, (ii) all or substantially all of the
assets of any division or line of business of Parent or any of its Subsidiaries,
or (iii) any other assets (whether tangible or intangible) of Parent or any of
its Subsidiaries outside of the ordinary course of business (other than (a)
inventory sold in the ordinary course of business and (b) any such other assets
to the extent that the aggregate value of such assets sold in any single
transaction or related series of transactions does not exceed $250,000 and in
all transactions during any twelve month period does not exceed $1,000,000).
"Assignment Agreement" means an Assignment Agreement in substantially
the form of Exhibit XII annexed hereto.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
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"Base Rate" means, at any time, the higher of (x) the Prime Rate or (y)
the rate which is 1/2 of 1% in excess of the Federal Funds Effective Rate.
"Base Rate Loans" means Loans bearing interest at rates determined by
reference to the Base Rate as provided in subsection 2.2A.
"Borrower" means CFP Holdings, Inc., a Delaware corporation.
"Borrower Pledge Agreement" means the Borrower Pledge Agreement
executed and delivered by Borrower on the Closing Date, substantially in the
form of Exhibit XVII annexed hereto, as such Borrower Pledge Agreement may
thereafter be amended, supplemented or otherwise modified from time to time.
"Borrower Security Agreement" means the Borrower Security Agreement
executed and delivered by Borrower on the Closing Date, substantially in the
form of Exhibit XVIII annexed hereto, as such Borrower Security Agreement may
thereafter be amended, supplemented or otherwise modified from time to time.
"Borrowing Base" means, as of any date of determination, the sum of 85%
of Eligible Accounts Receivable plus 60% of Eligible Inventory in which
Administrative Agent, for the benefit of itself and Lenders, holds a fully
perfected First Priority security interest, plus, from the Closing Date until
the second anniversary of the Closing Date, an amount equal to $750,000 less any
proceeds of PIDC Loans (up to $750,000) received after the Closing Date
(provided that such amount shall not exceed $375,000 from the first anniversary
of the Closing Date to the second anniversary of the Closing Date), as
calculated pursuant to the most recent Borrowing Base Certificate and otherwise
in accordance with the provisions of subsection 6.12.
"Borrowing Base Certificate" means a certificate substantially in the
form annexed hereto as Exhibit XXVIII delivered by Borrower pursuant to
subsection 6.1(xviii).
"Bridge Financing" means the loans obtained from the issuance by
Borrower of the Bridge Notes.
"Bridge Financing Documents" means all of the Bridge Notes, the note
purchase agreements and related agreements and documents delivered to
Administrative Agent and Lenders on the Closing Date pursuant to which the
Bridge Financing was made.
"Bridge Notes" means the promissory notes of Borrower in the initial
principal amount of $25,000,000 issued on the Closing Date.
"Business Day" means (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which is a
legal holiday under
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the laws of the State of New York or is a day on which banking institutions
located in such state are authorized or required by law or other governmental
action to close, and (ii) with respect to all notices, determinations, fundings
and payments in connection with the Adjusted Eurodollar Rate or any Eurodollar
Rate Loans, any day that is a Business Day described in clause (i) above and
that is also a day for trading by and between banks in Dollar deposits in the
London interbank market.
"Capital Lease", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Cash" means money, currency or a credit balance in a Deposit Account
of Parent or any of its Subsidiaries.
"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, the highest rating
obtainable from either Standard & Poor's Ratings Group ("S&P") or ▇▇▇▇▇'▇
Investors Service, Inc. ("Moody's"); (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
Moody's; (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 under the laws of the United States of America or any
state thereof or the District of Columbia that (a) is at least "adequately
capitalized" (as defined in the regulations of its primary Federal banking
regulator) and (b) has Tier 1 capital (as defined in such regulations) of not
less than $100,000,000; and (v) shares of any money market mutual fund that (a)
has at least 95% 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
$500,000,000, and (c) has the highest rating obtainable from either S&P or
Moody's.
"Certificate re Non-Bank Status" means a certificate substantially in
the form of Exhibit XIV annexed hereto delivered by a Lender to Administrative
Agent pursuant to subsection 2.7B(iii).
"Change of Control" means the occurrence of any of the following
events:
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(i) prior to an Initial Public Offering, Atlantic Equity
Partners, L.P. and/or its Affiliates shall cease to beneficially own
and control (x) at least 66-2/3% of the number of shares of equity
Securities (excluding the Series A Preferred Stock owned by Atlantic
Equity Partners, L.P. and its Affiliates) of Parent (as such number of
shares may be adjusted to take into account stock splits, reverse stock
splits, dividends payable in share of capital stock and similar
transactions) beneficially owned and controlled by such Persons as of
the Closing Date and (y) a majority of the issued and outstanding
Voting Stock of Parent;
(ii) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), other than Atlantic
Equity Partners, L.P., its Affiliates and/or management employees of
Parent or any of its Subsidiaries is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of more than 50% of voting power of all classes of Voting
Stock of Parent;
(iii) Parent, either individually or in conjunction with one
or more Subsidiar ies, sells, assigns, conveys, transfers, leases or
otherwise disposes of, or the Subsidiaries sell, assign, convey,
transfer, lease or otherwise dispose of, all or substantially all of
the properties of Parent and the Subsidiaries, taken as a whole (either
in one transaction or a series of related transactions), including
capital stock of the Subsidiaries, to any person (other than Borrower
or a Subsidiary);
(iv) during any consecutive two-year period, individuals who
at the beginning of such period constituted the Board of Directors of
Parent (together with any new directors whose election by such Board of
Directors or whose nomination for election by the stockholders of
Parent was approved by a vote of a majority of the directors then still
in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the Board of Directors
of Parent then in office; or
(v) Parent or Borrower is liquidated or dissolved or adopts a
plan of liquidation or dissolution (other than as a result of a merger,
liquidation or dissolution of Borrower into Parent or Parent into
Borrower).
"Closing Date" means December 31, 1996, the date on which the initial
Loans were made and that certain Acquisition Letter of Credit was issued.
"Collateral" means, collectively, all of the real, personal and mixed
property (including capital stock) in which Liens are purported to be granted
pursuant to the Collateral Documents as security for the Obligations.
8
"Collateral Account" has the meaning assigned to that term in the
Collateral Account Agreement.
"Collateral Account Agreement" means the Collateral Account Agreement
executed and delivered by Borrower and Administrative Agent on the Closing Date,
substantially in the form of Exhibit XVI annexed hereto, as such Collateral
Account Agreement may hereafter be amended, supplemented or otherwise modified
from time to time.
"Collateral Documents" means the Parent Pledge Agreement, the Borrower
Pledge Agreement, the Parent Security Agreement, the Borrower Security
Agreement, the Collateral Account Agreement, the Subsidiary Pledge Agreements,
the Subsidiary Security Agreements, the Subsidiary Patent Security Agreements,
the Subsidiary Trademark Security Agreements, the Mortgages, the MELF
Intercreditor Agreement and all other instruments or documents delivered by any
Loan Party pursuant to the Existing Agreement, this Agreement or any of the
other Loan Documents in order to grant to Administrative Agent, on behalf of
Lenders, a Lien on any real, personal or mixed property of that Loan Party as
security for the Obligations.
"Commitments" means the commitments of Lenders to make Loans as set
forth in subsection 2.1A.
"Compliance Certificate" means a certificate substantially in the form
of Exhibit IX annexed hereto delivered to Administrative Agent and Lenders by
Borrower pursuant to subsection 6.1(iv).
"Conforming Leasehold Interest" means any Recorded Leasehold Interest
as to which the lessor has agreed in writing for the benefit of Administrative
Agent (which writing has been delivered to Administrative Agent), whether under
the terms of the applicable lease, under the terms of a Landlord Consent and
Estoppel, or otherwise, to the matters described in the definition of "Landlord
Consent and Estoppel", which interest, if a subleasehold or sub-subleasehold
interest, is not subject to any contrary restrictions contained in a superior
lease or sublease.
"Consolidated Adjusted EBITDA" means, for any period, the sum of the
amounts for such period of (i) Consolidated Net Income, (ii) Consolidated
Interest Expense, (iii) provi sions for taxes based on income, (iv) total
depreciation expense, (v) total amortization expense, (vi) total Transaction
Costs (to the extent deducted in arriving at Consolidated Net Income), (vii)
non-recurring non-operating costs and non-recurring adjustments reducing
Consolidated Net Income, in each case, as mutually acceptable to Borrower and
Administrative Agent (after consultation with Lenders), and (viii) other
non-cash items reducing Consolidated Net Income less other non-cash items
increasing Consolidated Net Income, all of the foregoing as determined on a
consolidated basis for Parent and its Subsidiaries in conformity with GAAP.
9
"Consolidated Adjusted Net Income" means Consolidated Net Income in any
Fiscal period adjusted for the after-tax effect, on a cumulative basis from the
Closing Date, of (i) purchase accounting adjustments including, but not limited
to, amortization of acquired intangibles and step-up depreciation, (ii) the
amount of all fees and expenses incurred, expensed, written off, or amortized in
conjunction with the Acquisition, the Restructuring, the Distribution
Transaction and subsequent refinancings, and (iii) other non-cash expenses
incurred including accretion of warrant value and compensation costs resulting
from exercise and disposition of, or accretion in value of employee stock
options.
"Consolidated Adjusted Net Worth" means Consolidated Net Worth at the
time of determination, adjusted for the after-tax effect, on a cumulative basis
from the Closing Date, of (i) purchase accounting adjustments including, but not
limited to, amortization of acquired intangibles, step-up depreciation and
write-up and/or write-down of inventory and accounts receivable, (ii) the amount
of all fees and expenses incurred, expensed, written-off, or amortized in
conjunction with the Acquisition, the Restructuring, the Distribution
Transaction and subsequent refinancings, and (iii) other non-cash expenses
incurred including accretion of warrant value and compensation costs resulting
from exercise and disposition of, or accretion in value of employee stock
options.
"Consolidated Capital Expenditures" means, for any period, the sum of
(i) the aggregate of all expenditures (whether paid in cash or other
consideration or accrued as a liability and including that portion of Capital
Leases which is capitalized on the consolidated balance sheet of Parent and its
Subsidiaries) by Parent and its Subsidiaries during such period that, in
conformity with GAAP, are included in "additions to property, plant or
equipment" or comparable items reflected in the consolidated statement of cash
flows of Parent and its Subsidiaries plus (ii) to the extent not covered by
clause (i) of this definition, the aggregate of all expenditures by Parent and
its Subsidiaries during that period to acquire (by purchase or otherwise) the
business, property or fixed assets of any Person, or the stock or other evidence
of beneficial ownership of any Person that, as a result of such acquisition,
becomes a Subsidiary of Parent minus the sum of all Net Asset Sale Proceeds and
proceeds of sales of assets pursuant to clause (b) of the definition of "Asset
Sale"; provided that expenditures made in order to consummate acquisitions
pursuant to subsection 7.7(vi) shall not be included in the defined term
Consolidated Capital Expenditures.
"Consolidated Cash Interest Expense" means, for any period,
Consolidated Interest Expense for such period excluding, however, any interest
expense not payable in Cash (including amortization of discount, amortization of
debt issuance costs and accretion of value of warrants or non-cash charges with
respect to warrants).
"Consolidated Current Assets" means, as at any date of determination,
the total assets of Parent and its Subsidiaries on a consolidated basis which
may properly
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be classified as current assets in conformity with GAAP, excluding Cash and Cash
Equivalents.
"Consolidated Current Liabilities" means, as at any date of
determination, the total liabilities of Parent and its Subsidiaries on a
consolidated basis which may properly be classified as current liabilities in
conformity with GAAP, excluding any current portion of any long term liabilities
and any other liabilities for borrowed money payable in one year or less from
the date of incurrence.
"Consolidated Excess Cash Flow" means, for any period, an amount (if
positive) equal to (i) the sum, without duplication, of the amounts for such
period of (a) Consolidated Adjusted EBITDA and (b) the Consolidated Working
Capital Adjustment minus (ii) the sum, without duplication, of the amounts for
such period of (a) voluntary and scheduled repayments of Consolidated Total Debt
(excluding repayments of Revolving Loans except to the extent the Revolving Loan
Commitments are permanently reduced in connection with such repayments), (b)
Consolidated Capital Expenditures and expenditures made to consummate
acquisitions in accordance with the provisions of subsection 7.7(vi) (net of any
proceeds of any related financings with respect to such expenditures), (c)
Consolidated Cash Interest Expense, (d) the provision for current taxes based on
income of Parent and its Subsidiaries and payable in cash with respect to such
period and (e) non-recurring and non operating costs referred to in clause (vii)
of the definition of Consolidated Adjusted EBITDA with respect to such period.
"Consolidated Fixed Charges" means, for any period, the sum (without
duplication) of the amounts for such period of (i) Consolidated Interest
Expense, (ii) all scheduled principal payments on Consolidated Total Debt
(including the principal portion of Capitalized Leases), (iii) actual payments
of taxes, and (iv) to the extent not included in Consolidated Adjusted EBITDA,
all Restricted Junior Payments (excluding the Distribution Transactions, the
Preferred Stock Redemption and any payments made to First Atlantic, Ltd. or any
of its Affiliates in respect of management consulting or other services to
Parent and/or its Subsidiaries), all of the foregoing as determined on a
consolidated basis for Parent and its Subsidiaries in conformity with GAAP.
"Consolidated Interest Expense" means, for any period, total interest
expense (including that portion attributable to Capital Leases in accordance
with GAAP and capitalized interest and Operating Lease payments to the extent
not deducted in calculating Consolidated Net Income) of Parent and its
Subsidiaries on a consolidated basis with respect to all outstanding
Indebtedness of Parent and its Subsidiaries, including, without limitation, all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing and net costs under Interest Rate
Agreements, but excluding, however, any amounts referred to in subsection 2.3
payable to Administrative Agent and Lenders on or before the Closing Date.
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"Consolidated Net Income" means, for any period, the net income (or
loss) of Parent 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 (i) the income (or loss) of any Person (other than
a Subsidiary of Parent) in which any other Person (other than Parent or any of
its Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Parent or any of its
Subsidiaries by such Person during such period, (ii) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of Parent or is merged
into or consolidated with Parent or any of its Subsidiaries or that Person's
assets are acquired by Parent or any of its Subsidiaries, (iii) the income of
any Subsidiary of Parent 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, (iv) any after-tax gains or losses attributable
to Asset Sales or returned surplus assets of any Pension Plan, (v) (to the
extent not included in clauses (i) through (iv) above) any net extraordinary
gains or net non-cash extraordinary losses and (vi) the after-tax effect of
purchase accounting adjustments related to the write-up and/or write-down of
inventory and accounts receivable.
"Consolidated Net Worth" means, as at any date of determination, the
sum of the capital stock and additional paid-in capital plus retained earnings
(or minus accumulated deficits) of Parent and its Subsidiaries on a consolidated
basis determined in conformity with GAAP.
"Consolidated Rental Payments" means, for any period, the aggregate
amount of all rents paid or payable by Parent and its Subsidiaries on a
consolidated basis during that period under all Operating Leases to which Parent
or any of its Subsidiaries is a party as lessee (net of sublease income).
"Consolidated Total Debt" means, as at any date of determination, the
aggregate stated balance sheet amount of all Indebtedness of Parent and its
Subsidiaries less Cash and Cash Equivalents, determined on a consolidated basis
in accordance with GAAP.
"Consolidated Working Capital" means, as at any date of determination,
the excess of Consolidated Current Assets over Consolidated Current Liabilities.
"Consolidated Working Capital Adjustment" means, for any period on a
consolidated basis, the amount (which may be a negative number) by which
Consolidated Working Capital as of the beginning of such period exceeds (or is
less than) Consolidated Working Capital as of the end of such period, excluding
the effect of
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purchase accounting adjustments related to the write-up and/or write-down of
inventory and accounts receivable.
"Contingent Obligation", as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person (i) with respect to
any Indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect thereof, (ii)
with respect to any letter of credit issued for the account of that Person or
under acceptance or similar facilities or as to which that Person is otherwise
liable for reimbursement of drawings, or (iii) under Hedge Agreements.
Contingent Obligations shall include, without limitation, (a) 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, (b) the obligation to make
take-or-pay or similar payments if required regardless of non-performance by any
other party or parties to an agreement, and (c) any liability of such Person for
the obligation of another through any agreement (contingent or otherwise) (X) 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 (Y) 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 subclauses (X) or (Y) of this sentence, the primary purpose or
intent thereof is as described in the preceding sentence. The amount of any
Contingent Obligation shall be equal to the amount of the obligation so
guaranteed or otherwise supported or, if less, the amount to which such
Contingent Obligation is specifically limited.
"Contractual Obligation", as applied to any Person, means any provision
of any Security issued by that Person or of any indenture, mortgage, deed of
trust, contract, undertaking, agreement or other instrument relating to the
issuance of such Security 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.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement, futures contract, option contract, synthetic cap or other similar
agreement or arrangement to which Parent or any of its Subsidiaries is a party.
"Custom Foods" means Custom Food Products, Inc., a California
corporation.
"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.
13
"Distribution Transaction" means the declaration and payment by
Borrower of a distribution to Parent and the subsequent declaration and payment
of a distribution by Parent, in an aggregate amount not exceeding $16,000,000,
on and with respect to Parent's Class A (Voting and Nonvoting) Common Stock.
"Dollars" and the sign "$" mean the lawful money of the United States
of America.
"Eligible Accounts Receivable" means, at any date of determination,
except as hereinafter provided in this definition, the face amount of all
Accounts Receivable of any Operating Subsidiary payable in Dollars, reduced
(without duplication for the amounts referred to in clauses (i) through (xv)
below) by the amount of all returns, discounts, claims, credits, charges or
other allowances. Unless otherwise approved in writing by Administra tive Agent,
no Account Receivable shall be deemed to be an Eligible Account Receivable if:
(i) it arises out of a sale made by any Operating Subsidiary
to an Affiliate (other than a Subsidiary of Borrower) unless made on an
arms length basis in accordance with past practice; or
(ii) the Account Receivable is unpaid more than 75 days after
its due date or more than 105 days after the date of the original
invoice with respect thereto; or
(iii) it is from the same account debtor (or any Affiliate
thereof) and 50% or more, in face amount, of all Accounts Receivable
from such account debtor (or any Affiliate thereof) are ineligible
pursuant to clause (ii) above; or
(iv) it is from (a) an account debtor (other than a Major
Customer) the aggregate Accounts Receivable of which, at the date of
determination, exceed 10% of the aggregate amount of all Accounts
Receivable at such date of determination or (b) any Major Customer or
any Affiliate thereof the aggregate Accounts
Receivable of which, at the date of determination, exceed 40% of the
aggregate amount of all Accounts Receivable at such date of
determination, but in each case under (a) or (b) only to the extent of
such excess; or
(v) the account debtor has disputed in writing its liability
on, or the account debtor has made any claim with respect to, such
Account Receivable or any other Account Receivable due from such
account debtor to the applicable Operating Subsidiary, which has not
been resolved within 90 days, to the extent of the amount of such
dispute or claim; or
(vi) the account debtor has commenced a voluntary case under
the federal bankruptcy laws, as now constituted or hereafter amended,
or made an
14
assignment for the benefit of creditors, or if a decree or order for
relief has been entered by a court having jurisdiction over the account
debtor in an involuntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or if any other petition or other
application for relief under the federal bankruptcy laws has been filed
by or against the account debtor, or if the account debtor has filed a
certificate of dissolution under applicable law or shall be liquidated,
dissolved or wound-up, or shall authorize or commence any action or
proceeding for dissolution, winding-up or liquidation, or if the
account debtor has failed, suspended business, declared itself to be
insolvent, is generally not paying its debts as they become due or has
consented to or suffered a receiver, trustee, liquidator or custodian
to be appointed for it or for all or a significant portion of its
assets or affairs; unless (a) the payment of Accounts Receivable from
such account debtor is secured in a manner reasonably satisfactory to
Administrative Agent and Administrative Agent does not notify Borrower
in writing within 10 days of receipt of notice with respect thereto
that such security is not reasonably satisfactory or (b) the Account
Receivable from such account debtor arises subsequent to a decree or
order for relief with respect to such account debtor under the federal
bankruptcy laws as now or hereafter in effect and Agent notifies
Borrower in writing that it has determined that the timely payment and
collection of such Account Receivable will not be impaired; or
(vii) the sale is to an account debtor outside of the
continental United States or Canada, unless (a) the account debtor
thereon has supplied Borrower or the applicable Operating Subsidiary
with an irrevocable letter of credit in form and substance reasonably
satisfactory to Administrative Agent, issued by a financial institution
reasonably satisfactory to Administrative Agent and which has been duly
transferred to Administrative Agent (together with sufficient
documentation to permit direct draws by Administrative Agent) and
Administrative Agent does not notify Borrower in writing within 10 days
of receipt that such security is not reasonably satisfactory or (b)
payment of the Accounts Receivable is unconditionally guarantied by an
Affiliate of such account debtor located in the United States or Canada
(and, at Administrative Agent's reasonable request, Administrative
Agent shall have received reasonable assurance of the enforceability of
such guaranty) or secured by a letter of credit or other arrangement
that is, in each case, upon terms and conditions reasonably
satisfactory to Administrative Agent; or
(viii) Administrative Agent determines in its reasonable
discretion based upon standard practices in the banking industry
consistent with past determinations made by Administrative Agent
pursuant to this Agreement that collection of such Account Receivable
is unlikely or that such Account Receivable may not be paid by reason
of the account debtor's financial inability to pay and notifies
Borrower in writing to such effect; or
15
(ix) the account debtor is the United States of America or any
department, agency or instrumentality thereof, unless the applicable
Operating Subsidiary duly assigns its rights to payment of such Account
Receivable to Agent pursuant to the Assignment of Claims Act of 1940,
as amended (31 U.S.C. ss.3727 et seq.); or
(x) the goods giving rise to such Account Receivable have not
been shipped to the account debtor or the services giving rise to such
Account Receivable have not been performed by the applicable Operating
Subsidiary and accepted by the account debtor or the Account Receivable
otherwise does not represent a final sale or is on a guarantied sale,
sale-and-return, sale on approval or consignment basis or made pursuant
to any other written agreement providing for repurchase or return; or
(xi) Administrative Agent does not have a valid and perfected
First Priority security interest in such Account Receivable or the
Account Receivable does not otherwise materially conform to the
representations and warranties contained in this Agreement or the other
Loan Documents; or
(xii) the Accounts Receivable arises out of a service contract
or other contract other than with respect to Inventory sold to an
account debtor or pursuant to co-packing or other commodity processing
arrangements; or
(xiii) any Accounts Receivable against which the account
debtor or any Person obligated to make payment thereon asserts in
writing any defense, offset, counterclaim, or other right to avoid or
reduce the liability represented by such Accounts Receivable, other
than discounts in the ordinary course of business (but only to the
extent thereof); or
(xiv) the Account Receivable is not based upon an actual and
bona fide sale and shipment or delivery of goods to customers, or upon
the provision of services to customers, in either case made by the
Operating Subsidiaries in the ordinary course of business; or
(xv) the Account Receivable does not meet such additional
standards of eligibility for Eligible Accounts Receivable as shall be
imposed by Administrative Agent in its reasonable discretion based upon
standard practices in the banking industry consistent with past
determinations made by Administrative Agent pursuant to this Agreement
and of which Borrower has been notified in advance in writing.
"Eligible Assignee" means (A) (i) a commercial bank organized under the
laws of the United States or any state thereof; (ii) a savings and loan
association or savings bank organized under the laws of the United States or any
state thereof; (iii) a commercial bank organized under the laws of any other
country or a political
16
subdivision thereof; provided that (x) such bank is acting through a branch or
agency located in the United States or (y) such bank is organized under the laws
of a country that is a member of the Organization for Economic Cooperation and
Development or a political subdivision of such country; and (iv) any other
entity which is an "accredited investor" (as defined in Regulation D under the
Securities Act) which extends credit or buys loans as one of its businesses
including, but not limited to, insurance companies, mutual funds and lease
financing companies; and (B) any Lender and any Affiliate of any Lender;
provided that no Affiliate of Borrower shall be an Eligible Assignee.
"Eligible Inventory" means, as at any date of determination, the Dollar
value valued at the lower of cost or market value of all of each Operating
Subsidiary's Inventory, excluding the following:
(a) any Inventory which is not owned solely by an Operating
Subsidiary free and clear of all Liens except the security interests
granted pursuant to the Collateral Documents;
(b) any Inventory which is (i) not located on an Operating
Subsidiary's owned premises or (ii) not located on premises leased by
an Operating Subsidiary with respect to which a Landlord's Consent and
Estoppel has been obtained, or (iii) is in transit to a location other
than an Operating Subsidiary's owned premises or premises leased by an
Operating Subsidiary with respect to which a Landlord's Consent and
Estoppel has been obtained, or (iv) in any case, not located in the
United States of America or other locations approved by Administrative
Agent;
(c) any Inventory which is on lease or consignment from any
Person to an Operating Subsidiary;
(d) any Inventory which is packaging material or supplies;
(e) any Inventory which is obsolete, damaged, unsalable or
otherwise unfit for its intended use or sale; and
(f) to the extent not already excluded from or reflected in
the value of Eligible Inventory, any reserves required by the
Administrative Agent in its discretion for special order goods, market
value declines and ▇▇▇▇-and-hold (deferred shipment) sales in
accordance with standard practices in the banking industry consistent,
as applicable, with past determinations made by Administrative Agent
pursuant to this Agreement for the evaluation of Inventory.
17
"Employee Benefit Plan" means any "employee benefit plan" as defined in
Section 3(3) of ERISA which is or was maintained or contributed to by 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 Materials or any actual or alleged Hazardous Materials Activity, or
(iii) in 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 statutes,
ordinances, orders, rules, regulations, guidance documents, judgments,
Governmental Authorizations, or any other requirements of governmental
authorities 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 Parent or any of its
Subsidiaries or any Facility, including the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. ss. 9601 et seq.), the
Hazardous Materials Transportation Act (49 U.S.C. ss. 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), the Federal
Water Pollution Control Act (33 U.S.C. ss. 1251 et seq.), the Clean Air Act (42
U.S.C. ss. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. ss. 2601
et seq.), the Federal Insec ticide, Fungicide and Rodenticide Act (7 U.S.C.
ss.136 et seq.), the Occupational Safety and Health Act (29 U.S.C. ss. 651 et
seq.), the Oil Pollution Act (33 U.S.C. ss. 2701 et seq) and the Emergency
Planning and Community Right-to-Know Act (42 U.S.C. ss. 11001 et seq.), each as
amended or supplemented, any analogous present or future state or local statutes
or laws, and any regulations promulgated pursuant to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, the rules and regulations promulgated thereunder from
time to time in effect, 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;
(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; and (iii)
any member of an affiliated service group within the meaning of Section 414(m)
or (o) of the Internal Revenue Code of which that Person, any corporation
described in clause (i) above or any trade or business described in clause (ii)
above is a member. Any former ERISA Affiliate of
18
Parent or any of its Subsidiaries shall continue to be considered an ERISA
Affiliate of Parent or such Subsidiary within the meaning of this definition
with respect to the period such entity was an ERISA Affiliate of Parent or such
Subsidiary and with respect to liabilities arising after such period for which
Parent or such Subsidiary could be liable under the Internal Revenue Code or
ERISA.
"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 provision for 30-day notice to the
PBGC has been waived by regulation); (ii) the failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code with respect to any
Pension Plan (whether or not waived in accordance with Section 412(d) of the
Internal Revenue Code) or the failure to make by its due date a required
installment under Section 412(m) of the Internal Revenue Code with respect to
any Pension Plan or the failure to make any required contribution to a
Multiemployer Plan; (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 Parent, 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 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
might constitute grounds under ERISA for the termination of, or the appointment
of a trustee to administer, any Pension Plan; (vi) the imposition of liability
on Parent, 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 Parent, 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 Multi employer Plan if there is any potential liability therefor, or the
receipt by Parent, 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 give rise to the imposition on
Parent, 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; (ix) the assertion of a
material claim (other than routine claims for benefits) against any Employee
Benefit Plan other than a Multiemployer Plan or the assets thereof, or against
Parent, any of its Subsidiaries or any of their respective ERISA Affiliates in
connection with any Employee Benefit Plan; (x) receipt from the Internal Revenue
Service of notice of the failure of any Pension Plan (or any other Employee
Benefit Plan intended to be qualified under Section 401(a) of the Internal
Revenue Code) to qualify under Section 401(a) of the Internal Revenue Code, or
the failure of any trust forming part of any Pension Plan to qualify for
exemption from taxation under Section
19
501(a) of the Internal Revenue Code; or (xi) 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.
"Escrow Funds" shall mean any and all Cash held in escrow as provided
in the Acquisition Agreement.
"Eurodollar Rate Loans" means Loans bearing interest at rates
determined by reference to the Adjusted Eurodollar Rate as provided in
subsection 2.2A.
"Event of Default" means each of the events set forth in Section 8.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.
"Existing Agreement" has the meaning assigned to that term in the
Recitals hereto.
"Facilities" means any and all real property (including, without
limitation, all buildings, fixtures or other improvements located thereon) now,
hereafter or heretofore owned, leased, operated or used by Parent or any of its
Subsidiaries or any of their respective predecessors.
"Federal Funds Effective Rate" means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by Administrative Agent from three Federal funds brokers
of recognized standing selected by Administrative Agent.
"Financial Plan" has the meaning assigned to that term in subsection
6.1(xiii).
"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 most senior Lien (other than Permitted Liens to the extent not perfected by
filing of any UCC financing statements) to which such Collateral is subject.
"Fiscal Quarter" means a fiscal quarter of any Fiscal Year.
20
"Fiscal Year" means the fiscal year of Parent and its Subsidiaries
ending on September 30 (provided that at Borrower's election the Fiscal Year of
Parent and its Subsidiaries may be changed on or prior to September 30, 1997 to
any date from December 31 through March 31 of each calendar year) except that,
in the case of Quality Foods, L.P., QF Management and QF Acquisition for any
period prior to the Closing Date, "Fiscal Year" means the fiscal year of such
Persons ending on December 31 of each calendar year. For purposes of this
Agreement, any particular Fiscal Year shall be designated by reference to the
calendar year in which such Fiscal Year ends.
"Flood Hazard Property" means a Mortgaged Property or an Additional
Mortgaged Property located in an area designated by the Federal Emergency
Management Agency as having special flood or mud slide hazards.
"Funding and Payment Office" means (i) the office of Administrative
Agent and Swing Line Lender located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ or
(ii) such other office of Administrative Agent and Swing Line Lender as may from
time to time hereafter be designated as such in a written notice delivered by
Administrative Agent and Swing Line Lender to Borrower and each Lender.
"Funding Date" means the date of the funding of a Loan.
"GAAP" means, subject to the limitations on the application thereof set
forth in subsection 1.2, generally accepted accounting principles set forth in
opinions and pro nouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, in each case as the same are applicable to the circumstances as of
the date of determination.
"Governmental Acts" has the meaning assigned to that term in subsection
3.5A.
"Governmental Authorization" means any permit, license, authorization,
plan, directive, consent order or consent decree of or from any federal, state
or local governmen tal authority, agency or court.
"Guaranties" means the Parent Guaranty and the Subsidiary Guaranty.
"Hazardous Materials" means (i) any chemical, material or substance at
any time defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous waste", acutely
hazardous waste, "radioactive waste", "biohazardous waste", "pollutant", "toxic
pollutant", "contaminant", "restricted hazardous waste", "infectious waste",
"toxic substances", or any other term or expression intended to define, list or
classify substances by reason of properties harmful to
21
health, safety or the indoor or outdoor environment (including harmful
properties such as ignitability, corrosivity, reactivity, carcinogenicity,
toxicity, reproductive toxicity, "TCLP toxicity" or "EP toxicity" or words of
similar import under any applicable Environmental Laws); (ii) any oil,
petroleum, petroleum fraction or petroleum derived substance; (iii) any drilling
fluids, produced waters and other wastes associated with the exploration,
development or production of crude oil, natural gas or geothermal resources;
(iv) any flammable substances or explosives; (v) any radioactive materials; (vi)
any asbestos- containing materials; (vii) urea formaldehyde foam insulation;
(viii) electrical equipment which contains any oil or dielectric fluid
containing polychlorinated biphenyls; (ix) pesticides; and (x) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any governmental authority or which may or could pose a hazard to
the health and safety of the owners, occupants or any Persons in the vicinity of
any Facility or to the indoor or outdoor environment.
"Hazardous Materials Activity" means any past, current, proposed or
threatened activity, event or occurrence involving any Hazardous Materials,
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
Materials, and any corrective action or response action with respect to any of
the foregoing.
"Hedge Agreement" means an Interest Rate Agreement or a Currency
Agreement designed to hedge against fluctuations in interest rates or currency
values, respectively.
"Indebtedness", as applied to any Person, means (i) all indebtedness
for borrowed money, (ii) that portion of obligations of such Person as lessee
under 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 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 (b) evidenced by a note or
similar written instrument, and (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. Obligations under Interest Rate
Agreements and Currency Agreements shall constitute (X) in the case of Hedge
Agreements, Contingent Obligations and (Y) in all other cases, Investments, and
in neither case constitute Indebtedness.
"Indemnitee" has the meaning assigned to that term in subsection 10.3.
22
"Initial Public Offering" means a public offering of the capital stock
of Parent that first results in the capital stock of Parent becoming listed for
trading on the New York Stock Exchange, the American Stock Exchange or the
NASDAQ National Market.
"Intellectual Property" means all patents, trademarks, tradenames,
copyrights, technology, know-how and processes used in or necessary for the
conduct of the business of Borrower and its Subsidiaries as currently conducted
that are material to the condition (financial or otherwise), business or
operations of Borrower and its Subsidiaries, taken as a whole.
"Interest Payment Date" means (i) with respect to any Base Rate Loan,
each March 31, June 30, September 30 and December 31 of each year, commencing on
March 31, 1997, and (ii) with respect to any Eurodollar Rate Loan, the last day
of each Interest Period applicable to such Loan; provided that in the case of
each Interest Period of longer than three months "Interest Payment Date" shall
also include each date that is three months, or an integral multiple thereof,
after the commencement of such Interest Period.
"Interest Period" has the meaning assigned to that term in subsection
2.2B.
"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement to which Borrower or any of its Subsidiaries is a
party.
"Interest Rate Determination Date" means, with respect to any Interest
Period, the second Business Day prior to the first day of such Interest Period.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter, and any successor
statute.
"Inventory" means, with respect to any Person as of any date of
determination, all goods, merchandise and other personal property which are then
held by such Person for sale or lease, including raw materials and work in
process.
"Investment" means (i) any direct or indirect purchase or other
acquisition by Parent or any Subsidiary of Parent of, or of a beneficial
interest in, any Securities of any other Person (including any Subsidiary of
Parent), (ii) any direct or indirect redemption, retirement, purchase or other
acquisition for value, by Parent or any Subsidiary of Parent from any Person
other than Parent or any of its Subsidiaries, of any equity Securities of such
Loan Party, (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 Parent or any of its Subsidiaries to, or any
23
other investment by Parent or any of its Subsidiaries in, any other Person,
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, or (iv) Interest Rate Agreements or Currency
Agreements not constituting Hedge Agreements. 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.
"IP Collateral" means, collectively, the Collateral under the
Subsidiary Trademark Security Agreements and the Subsidiary Patent Security
Agreements.
"IRB Debt" means the Indebtedness evidenced by the Taxable Development
Revenue Bonds, 1995 Series D issued by PEDFA on December 27, 1995 in the
original aggregate principal amount of $4,400,000.
"IRB Letter of Credit" means the PNC Letter of Credit attached hereto
as Schedule 9.2 and any replacement letter of credit issued by the Issuing
Lender as set forth in subsection 9.2A.
"IRB Reimbursement Advance" means any amounts paid or payable by the
Issuing Lender under the IRB Reimbursement Agreement.
"IRB Reimbursement Agreement" means the Participation and Reimbursement
Agreement and the Pledge, Security and Indemnification Agreement, in each case,
dated as of December 30, 1996 between NationsBank and PNC Bank, National
Association, substantially in the form of Exhibit XXIX annexed hereto, as such
Participation and Reimbursement Agreement or Pledge, Security and
Indemnification Agreement may be amended, supplemented or otherwise modified
from time to time, together with the any replacement agreements having
substantially the same terms.
"IRB Trust Indenture" means that certain Trust Indenture dated as of
December 1, 1995 between PEDFA and Mellon Bank, N.A., as in effect on the
Closing Date.
"Issuing Lender" means NationsBank in its capacity as the issuer of a
Letter of Credit or in its capacity as the "Participation Bank" under the IRB
Reimbursement Agreement, as applicable.
"Joint Venture" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided
that in no event shall any corporate Subsidiary of any Person be considered to
be a Joint Venture to which such Person is a party.
24
"Landlord Consent and Estoppel" means, with respect to any Leasehold
Property, a letter, certificate or other instrument in writing from the lessor
under the related lease, substantially in the form of either Exhibit XXIIIA or
Exhibit XXIIIB.
"Leasehold Property" means any leasehold interest of any Loan Party as
lessee under any lease of real property, other than any such leasehold interest
designated from time to time by Administrative Agent in its sole discretion as
not being required to be included in the Collateral.
"Lender" and "Lenders" means the persons identified as "Lenders" and
listed on the signature pages of this Agreement, together with their successors
and permitted assigns pursuant to subsection 10.1, and the term "Lenders" shall
include Swing Line Lender unless the context otherwise requires; provided that
the term "Lenders", when used in the context of a particular Commitment, shall
mean Lenders having that Commitment.
"Letter of Credit" or "Letters of Credit" means the Revolving Letters
of Credit.
"Level" means Level I, Level II or Level III, as applicable.
"Level I" means the existence, as of any Measurement Date, of a
Leverage Ratio for the twelve consecutive month period ending on the last day of
the period covered by the financial statements relating to such Measurement Date
of greater than or equal to 3.70 to 1.00; provided that for purposes of
determining the Applicable Margin for Term Loans, Level I means the existence of
a Leverage Ratio of greater than or equal to 4.40 to 1.00.
"Level II" means the existence, as of any Measurement Date, of a
Leverage Ratio for the twelve consecutive month period ending on the last day of
the period covered by the financial statements relating to such Measurement Date
of less than 3.70 to 1.00 but greater than or equal to 3.00 to 1.00; provided
that for purposes of determining the Applicable Margin for Term Loans, Level II
means the existence of a Leverage Ratio of less than 4.40 to 1.00 but greater
than or equal to 3.80 to 1.00.
"Level III" means the existence, as of any Measurement Date, of a
Leverage Ratio for the twelve consecutive month period ending on the last day of
the period covered by the financial statements relating to such Measurement Date
of less than 3.00 to 1.00 but greater than or equal to 2.30 to 1.00; provided
that for purposes of determining the Applicable Margin for Term Loans, Level III
means the existence of a Leverage Ratio of less than 3.80 to 1.00 but greater
than or equal to 3.00 to 1.00.
25
"Level IV" means the existence, as of any Measurement Date, of a
Leverage Ratio for the twelve consecutive month period ending on the last day of
the twelve consecutive month period ending on the last day of the period covered
by the financial statements relating to such measurement Date of less than 2.30
to 1.00; provided that for purposes of determining the Applicable Margin for
Term Loans, Level IV means the existence of a Leverage Ratio of less than 3.00
to 1.00.
"Leverage Ratio" has the meaning set forth in subsection 7.6C.
"Lien" means any lien, mortgage, pledge, assignment, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest) and any option, trust or other preferential arrangement
having the practical effect of any of the foregoing.
"Loan" or "Loans" means one or more of the Term Loans, Revolving Loans
or Swing Line Loans or any combination thereof.
"Loan Documents" means this Agreement, the Notes and the Letters of
Credit (and any applications for, or reimbursement agreements or other documents
or certificates executed by Borrower in favor of Issuing Lender relating to the
Letters of Credit), the Guaranties, IRB Reimbursement Agreement and the
Collateral Documents.
"Loan Party" means each of Parent, Borrower and any of Borrower's
Subsidiaries from time to time executing a Loan Document, and "Loan Parties"
means all such Persons, collectively.
"Major Customer" means any of (i) Chef America, Inc., (ii) Sysco Corp.,
(iii) Arby's, together with all of its distributors, franchisees, buying
cooperatives and company-owned stores, and (iv) Subway, together with all of its
distributors, franchisees, buying cooperatives and company-owned stores.
"Management Consulting Agreement" means that certain Management
Consulting Agreement dated as of December 30, 1996, by and between First
Atlantic Capital, Ltd. and Parent.
"Margin Stock" has the meaning assigned to that term in Regulation U of
the Board of Governors of the Federal Reserve System as in effect from time to
time.
"Material Adverse Effect" means any change or changes, or effect or
effects, that have occurred or are threatened, and that individually or in the
aggregate could be reasonably likely to be materially adverse to (a) the
business, operations, assets, prospects or condition (financial or otherwise) of
Borrower individually or
26
Parent together with its Subsidiaries taken as a whole, or (b) the legality,
validity, binding nature or enforceability against Borrower of any Loan Document
or any Material Contract to which it is a party or pursuant to which it has any
obligation.
"Material Contract" means any contract or other arrangement to which
Parent or any of its Subsidiaries is a party (other than the Loan Documents and
the Related Agreements), or by which any of their assets or properties are
bound, for which breach, nonperformance, cancellation or failure to renew would
have a Material Adverse Effect.
"Material Leasehold Property" means a Leasehold Property reasonably
determined by Administrative Agent to be of material value as Collateral or of
material importance to the operations of Borrower or any of its Subsidiaries;
provided, however that a Leasehold Property with respect to which the aggregate
amount of all rents payable during any one Fiscal Year does not exceed $350,000
shall not be a "Material Leasehold Property".
"Material Subsidiary" means Custom Foods, QF Acquisition and each
Subsidiary of Borrower or Parent now existing or hereafter acquired or formed by
Borrower which, on a consolidated basis for such Subsidiary and its
Subsidiaries, (i) for the most recent Fiscal Year accounted for more than 7.5%
of the consolidated revenues of Borrower and its Subsidiaries or (ii) as at the
end of such Fiscal Year, was the owner of more than 7.5% of the consolidated
assets of Borrower and its Subsidiaries.
"Maximum Exposure Under IRB Reimbursement Agreement" means, as of the
date of determination, the maximum exposure of Issuing Lender under the IRB
Reimbursement Agreement, including possible exposure for reimbursement payments,
interest, fees, expenses, increased costs and indemnification claims, all as
determined in good faith by Issuing Lender.
"Measurement Date" means the third Business Day following receipt by
Lenders of the financial statements required to be delivered pursuant to
subsection 6.1(ii) and the Compliance Certificate required to be delivered by
subsection 6.1(iv)(b) with respect to the accounting period covered by such
financial statements.
"MELF" means the Commonwealth of Pennsylvania, acting through the
Department of Commerce Machinery and Equipment Loan Fund.
"MELF Intercreditor Agreement" means the Intercreditor Agreement
executed and delivered by Administrative Agent and MELF on the Closing Date,
substantially in the form of Exhibit XXX annexed hereto, as such Intercreditor
Agreement may be amended, supplemented or otherwise modified from time to time.
27
"Mortgage" means (i) a security instrument (whether designated as a
deed of trust or a mortgage or by any similar title) executed and delivered by
any Loan Party, substantially in the form of Exhibit XXVII annexed hereto or in
such other form as may be approved by Administrative Agent in its sole
discretion, in each case with such changes thereto as may be recommended by
Administrative Agent's local counsel based on local laws or customary local
mortgage or deed of trust practices, or (ii) at Administrative Agent's option,
in the case of an Additional Mortgaged Property (as defined in subsection 6.9),
an amendment to an existing Mortgage, in form satisfactory to Administrative
Agent, adding such Additional Mortgaged Property to the Real Property Assets
encumbered by such existing Mortgage, in either case as such security instrument
or amendment may be amended, supplemented or otherwise modified from time to
time. "Mortgages" means all such instruments, including the fully executed and
notarized Mortgages and any Additional Mortgages (as defined in subsection 6.9),
collectively.
"Mortgaged Property" means the property located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or an Additional Mortgaged Property (as defined
in subsection 6.9).
"Multiemployer Plan" means any Employee Benefit Plan which is a
"multiemployer plan" as defined in Section 3(37) of ERISA.
"NationsBank" has the meaning assigned to that term in the introduction
to this Agreement.
"Net Asset Sale Proceeds" means, with respect to any Asset Sale, Cash
payments (including any Cash received by way of deferred payment pursuant to, or
by monetization of, a note receivable or otherwise, but only as and when so
received) received by Parent or any of its Subsidiaries from such Asset Sale,
net of any bona fide direct costs incurred in connection with such Asset Sale,
including without limitation (i) taxes reasonably estimated to be actually
payable in connection with such Asset Sale, (ii) payment of liabilities relating
to assets sold at the time of, or within 30 days after the date of such Asset
Sale, (iii) pay ment 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 stock or assets in question and that is required to be repaid
under the terms thereof as a result of such Asset Sale and (iv) reasonable and
customary fees, commissions and expenses, other costs paid by Parent or any of
its Subsidiaries to any Person (other than an Affiliate of Parent) in connection
with such Asset Sale.
"Net Insurance/Condemnation Proceeds" means any Cash payments or
proceeds received by Parent or any of its Subsidiaries (i) under any business
interruption or casualty insurance policy in respect of a covered loss
thereunder or (ii) as a result of the taking of any assets of Parent or any of
its Subsidiaries by any Person pursuant
28
to the power of eminent domain, condemnation or otherwise, or pursuant to a sale
of any such assets to a purchaser with such power under threat of such a taking,
in each case net of any actual and reasonable documented costs incurred by
Parent or any of its Subsidiaries in connection with the adjustment or
settlement of any claims of Parent or such Subsidiary in respect thereof.
"Net Pension Proceeds" has the meaning assigned to that term in
subsection 2.4B(iii)(c).
"Net Securities Proceeds" means, with respect to any sale or issuance
of any Indebtedness or capital stock or other ownership or profit interest, any
securities convertible into or exchangeable for capital stock or other ownership
or profit interest or any warrants, rights, options or other securities to
acquire capital stock or other ownership or profit interest or any other
Securities by any Person, the aggregate amount of Cash received from time to
time (whether as initial consideration or through payment or disposition of
deferred consideration) by or on behalf of such Person in connection with such
transaction after deducting therefrom only (without duplication) (a) reasonable
and customary brokerage commissions, underwriting fees and discounts, legal
fees, finder's fees and other similar fees and commissions and (b) the amount of
taxes payable in connection with or as a result of such transaction, in each
case to the extent, but only to the extent, that the fees, commissions and other
amounts so deducted are, at the time of receipt of such Cash, actually paid to a
Person pursuant to an arm's-length transaction on commercially reasonable terms
to Parent and/or its Subsidiaries and are properly attributable to such
transaction or to the asset that is the subject thereof.
"Notes" means one or more of the Term Notes, Revolving Notes or Swing
Line Note or any combination thereof.
"Notice of Borrowing" means a notice substantially in the form of
Exhibit I annexed hereto delivered by Borrower to Administrative Agent pursuant
to subsection 2.1B with respect to a proposed borrowing.
"Notice of Conversion/Continuation" means a notice substantially in the
form of Exhibit II annexed hereto delivered by Borrower to Administrative Agent
pursuant to subsection 2.2D with respect to a proposed conversion or
continuation of the applicable basis for determining the interest rate with
respect to the Loans specified therein.
"Notice of Issuance of Letter of Credit" means a notice substantially
in the form of Exhibit III annexed hereto delivered by Borrower to
Administrative Agent pursuant to subsection 3.1B(i) with respect to the proposed
issuance of a Letter of Credit.
29
"Obligations" means all obligations of every nature of each Loan Party
from time to time owed to Administrative Agent, Lenders or any of them under the
Loan Documents, whether for principal, interest, reimbursement of amounts drawn
under Letters of Credit or the IRB Reimbursement Agreement, fees, expenses,
indemnification or otherwise.
"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; provided that every Officers' Certificate
with respect to the compliance with a condition precedent to the making of any
Loans hereunder shall include (i) a statement that the officer or officers
making or giving such Officers' Certificate have read such condition and any
definitions or other provisions contained in this Agreement relating thereto,
(ii) a statement that, in the opinion of the signers, they have made or have
caused to be made such examination or investigation as is necessary to enable
them to express an informed opinion as to whether or not such condition has been
complied with, and (iii) a statement as to whether, in the opinion of the
signers, such condition has been complied with; provided further that no officer
of any Loan Party executing and delivering an Officer's Certificate in good
faith shall be personally liable under such Officer's Certificate, except to the
extent of fraud, gross negligence or willful misconduct.
"Operating Lease" means, as applied to any Person, any lease
(including, without limitation, leases that may be terminated by the lessee at
any time) of any property (whether real, personal or mixed) that is not a
Capital Lease other than any such lease under which that Person is the lessor.
"Operating Subsidiary" means each Subsidiary of Parent other than
Borrower, and "Operating Subsidiaries" means all such Subsidiaries collectively.
"Parent" means CFP Group, Inc., a Delaware corporation.
"Parent Guaranty" means the Parent Guaranty executed and delivered by
Parent on the Closing Date, substantially in the form of Exhibit XXIV annexed
hereto, as such Parent Guaranty may thereafter be amended, supplemented or
otherwise modified from time to time.
"Parent Pledge Agreement" means the Parent Pledge Agreement executed
and delivered by Parent on the Closing Date, substantially in the form of
Exhibit XXV annexed hereto, as such Parent Pledge Agreement may thereafter be
amended, supplemented or otherwise modified from time to time.
"Parent Security Agreement" means the Parent Security Agreement
executed and delivered by Parent on the Closing Date, substantially in the form
of Exhibit XXVI
30
annexed hereto, as such Parent Security Agreement may thereafter be amended,
supplemented or otherwise modified from time to time.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"PEDFA" means the Pennsylvania Economic Development Financing
Authority, a public instrumentality and body corporate and politic of the
Commonwealth of Pennsylvania.
"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.
"Permitted Encumbrances" means the following types of Liens (excluding
any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal
Revenue Code or by ERISA, any such Lien relating to or imposed in connection
with any Environmental Claim, and any such Lien expressly prohibited by any
applicable terms of any of the Collateral Documents):
(i) Liens for taxes, assessments or governmental charges or
claims the payment of which is not, at the time, required by subsection
6.3;
(ii) statutory Liens of landlords, statutory Liens of banks
and rights of set-off, statutory Liens of carriers, warehousemen,
mechanics, repairmen, workmen and materialmen, and other Liens imposed
by law, in each case incurred in the ordinary course of business (a)
for amounts not yet overdue or (b) for amounts that are overdue and
that (in the case of any such amounts overdue for a period in excess of
5 days) are being contested in good faith by appropriate proceedings,
so long as (1) such reserves or other appropriate provisions, if any,
as shall be required by GAAP shall have been made for any such
contested amounts, and (2) in the case of a Lien with respect to any
portion of the Collateral, such contest proceedings conclusively
operate to stay the sale of any portion of the Collateral on account of
such Lien;
(iii) Liens incurred or deposits made in the ordinary course
of business in connection with workers' compensation, unemployment
insurance and other types of social security, or 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), so long as no
foreclosure, sale or similar proceedings have been commenced with
respect to any portion of the Collateral on account thereof;
31
(iv) any attachment or judgment Lien not constituting an Event
of Default under subsection 8.8;
(v) leases or subleases granted to third parties in accordance
with any applicable terms of the Collateral Documents and not
interfering in any material respect with the ordinary conduct of the
business of Borrower or any of its Subsidi aries or resulting in a
material diminution in the value of any Collateral as security for the
Obligations;
(vi) easements, rights-of-way, restrictions, encroachments,
and other minor defects or irregularities in title, in each case which
do not and will not interfere in any material respect with the ordinary
conduct of the business of Borrower or any of its Subsidiaries or
result in a material diminution in the value of any Collateral as
security for the Obligations and exceptions to title set forth on title
reports delivered to Administrative Agent on the Closing Date;
(vii) any (a) interest or title of a lessor or sublessor under
any lease, (b) restriction or encumbrance that the interest or title of
such lessor or sublessor may be subject to, or (c) subordination of the
interest of the lessee or sublessee under such lease to any restriction
or encumbrance referred to in the preceding clause (b), so long as the
holder of such restriction or encumbrance agrees to recognize the
rights of such lessee or sublessee under such lease;
(viii) Liens arising from filing UCC financing statements
relating solely to leases permitted by this Agreement;
(ix) 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;
(x) any zoning or similar law or right reserved to or vested
in any governmental office or agency to control or regulate the use of
any real property;
(xi) 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 Borrower and its Subsidiaries; and
(xii) licenses of patents, trademarks and other intellectual
property rights granted by 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 Borrower or such
Subsidiary.
32
"Permitted Liens" means the Liens permitted pursuant to subsection
7.2A.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, Joint Ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments (whether federal,
state or local, domestic or foreign, and including political subdivisions
thereof) and agencies or other administrative or regulatory bodies thereof.
"PIDA Loan" means the loans in the aggregate principal amount of
$1,750,000 to be made by the Pennsylvania Industrial Development Authority after
the Closing Date, in form and substance reasonably satisfactory to
Administrative Agent and the Requisite Lenders.
"PIDC Loan" means the loans in the aggregate principal amount of at
least $750,000 to be made by the Pennsylvania Industrial Development Corporation
after the Closing Date, in form and substance reasonably satisfactory to
Administrative Agent and the Requisite Lenders.
"Pledged Collateral" means, collectively, the "Pledged Collateral" as
defined in the Parent Pledge Agreement, Borrower Pledge Agreement and the
Subsidiary Pledge
Agreements.
"Potential Event of Default" means a condition or event that, after
notice or lapse of time or both, would constitute an Event of Default.
"Preferred Stock Redemption" means the redemption or repurchase by
Parent of up to 3,528 shares of the Series A Preferred Stock of Parent, in
accordance with Parent's Certificate of Incorporation on or prior to June 30,
1997 for an aggregate amount not to exceed $1,225,000.
"Prepayment Date" has the meaning assigned to that term in subsection
2.4B(iv)(c).
"Prepayment Notice" has the meaning assigned to that term in subsection
2.4B(iv)(c).
"Prime Rate" means the rate that NationsBank announces from time to
time as its prime lending rate, as in effect from time to time. The Prime Rate
is a reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. NationsBank or any other Lender may make
commercial loans or other loans at rates of interest at, above or below the
Prime Rate.
33
"Pro Rata Share" means (i) with respect to all payments, computations
and other matters relating to the Term Loans Commitment or Term Loans of any
Lender, the percentage obtained by dividing (x) the outstanding principal amount
of the Term Loans of that Lender by (y) the aggregate principal amount of all
Term Loans of all Lenders, (ii) with respect to all payments, computations and
other matters relating to the Revolving Loan Commitment or the Revolving Loans
of any Lender or any Letters of Credit issued or participations therein
purchased by any Lender or the IRB Reimbursement Agreement or any participations
in any Swing Line Loans purchased by any Lender, the percentage obtained by
dividing (x) the Revolving Loan Exposure of that Lender by (y) the aggregate
Revolving Loan Exposure of all Lenders, and (iii) for all other purposes with
respect to each Lender, the percentage obtained by dividing (x) the sum of the
Term Loans of that Lender plus the Revolving Loan Exposure of that Lender by (y)
the sum of the aggregate Term Loans of all Lenders plus the aggregate Revolving
Loan Exposure of all Lenders, in any such case as the applicable percentage may
be adjusted as a result of assignments permitted pursuant to subsection 10.1.
The initial Pro Rata Share of each Lender for purposes of each of clauses (i),
(ii) and (iii) of the preceding sentence is set forth opposite the name of that
Lender in Schedule 2.1 annexed hereto.
"PTO" means the United States Patent and Trademark Office or any
successor or substitute office in which filings are necessary or, in the opinion
of Administrative Agent, desirable in order to create or perfect Liens on any IP
Collateral.
"Purchase Price Adjustment Payments" means any and all Cash received by
Borrower or any other Loan Party pursuant to the purchase price adjustment
provisions of the Acquisition Agreement.
"QF Acquisition" means QF Acquisition Corp., a Delaware corporation.
"QF Management" means QF Management Corp., a Delaware corporation.
"Quality Foods, L.P." means Quality Foods, L.P., a Delaware limited
partnership.
"Real Property Asset" means, at any time of determination, any interest
then owned by any Loan Party in any real property.
"Recorded Leasehold Interest" means a Leasehold Property with respect
to which a Record Document (as hereinafter defined) has been recorded in all
places necessary or desirable, in Administrative Agent's reasonable judgment, to
give constructive notice of such Leasehold Property to third-party purchasers
and encumbrancers of the affected real property. For purposes of this
definition, the term "Record Document" means, with respect to any Leasehold
Property, (a) the lease evidencing such Leasehold Property or a memorandum
thereof, executed and
34
acknowledged by the owner of the affected real property, as lessor, or (b) if
such Leasehold Property was acquired or subleased from the holder of a Recorded
Leasehold Interest, the applicable assignment or sublease document, executed and
acknowledged by such holder, in each case in form sufficient to give such
constructive notice upon recordation and otherwise in form reasonably
satisfactory to Administrative Agent.
"Refunded Swing Line Loans" has the meaning assigned to that term in
subsection 2.1A(v).
"Register" has the meaning assigned to that term in subsection 2.1D.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Reimbursement Date" has the meaning assigned to that term in
subsection 3.3B.
"Related Agreements" means, collectively, the Acquisition Documents,
the Senior Guaranteed Note Documents, the Subordinated Note Documents, the
Stockholders Agreement and all material agreements entered into in connection
with the IRB Debt,
PIDA Loan, PIDC Loan or any loan from MELF to any Loan Party.
"Release" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including the abandonment or disposal of any barrels, containers or
other closed receptacles containing any Hazardous Materials), including the
movement of any Hazardous Materials through the air, soil, surface water or
groundwater.
"Requisite Class Lenders" means, at any time of determination for the
Class of Lenders having outstanding Term Loans and/or Revolving Loan Exposure,
Lenders having or holding more than 50% of the sum of the aggregate outstanding
Term Loans of all Lenders plus the aggregate Revolving Loan Exposure of all
Lenders.
"Requisite Lenders" means Lenders having or holding more than 66 2/3%
of the sum of the aggregate principal amount of outstanding Term Loans, plus the
aggregate Revolving Loan Exposure of all Lenders.
"Responsible Officer" means any senior financial officer and any other
officer of Parent, Borrower or any of their Subsidiaries with responsibility for
the administration of the relevant portion of this Agreement.
"Restricted Junior Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of Borrower or
35
Parent now or hereafter outstanding, except a dividend payable solely in shares
of that class of stock to the holders of that class, (ii) any 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 Borrower or
Parent 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 Borrower or Parent 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, any Senior Guaranteed Notes and any Subordinated Notes and (v) any payment
made to First Atlantic Capital, Ltd. or any of its Affiliates in respect of
management consulting or other services provided to Parent and/or its
Subsidiaries.
"Restructuring" means the following transactions, as a result of which
substantially all of the assets and liabilities of Quality Foods, L.P. were
transferred to and assumed by QF Acquisition: (i) the merger of QF Management
with and into QF Acquisition with QF Acquisition being the surviving
corporation; (ii) the contribution by Parent and Borrower of all limited
partnership interests of Quality Foods, L.P. to QF Acquisition, as a result of
which QF Acquisition holds all of the limited partnership interests of Quality
Foods, L.P.; (iii) the transfer of all assets and liabilities of Quality Foods,
L.P. to QF Acquisitions; and (iv) the liquidation and dissolution of Quality
Foods, L.P., all on terms and conditions reasonably satisfactory to
Administrative Agent and Requisite Lenders.
"Revolving Letter of Credit" or "Revolving Letters of Credit" means the
Letters of Credit issued or to be issued by Issuing Lender for the account of
Borrower pursuant to subsection 3.1A(1) for the purpose of supporting
obligations of Borrower and or any of its Subsidiaries in the ordinary course of
business of Borrower or such Subsidiary.
"Revolving Letter of Credit Usage" means, as at any date of
determination, the sum of (i) the maximum aggregate amount which is or at any
time thereafter may become available for drawing under all Revolving Letters of
Credit then outstanding plus (ii) the aggregate amount of all drawings under
Revolving Letters of Credit honored by Issuing Lender and not theretofore
reimbursed by Borrower (including any such reimbursement out of the proceeds of
Revolving Loans pursuant to subsection 3.3B) plus (iii) the Maximum Exposure
Under IRB Reimbursement Agreement.
"Revolving Loan Commitment" means the commitment of a Lender to make
Revolving Loans to Borrower pursuant to subsection 2.1A(iv), and "Revolving Loan
Commitments" means such commitments of all Lenders in the aggregate.
"Revolving Loan Commitment Termination Date" means June 30, 2002.
36
"Revolving Loan Exposure" means, with respect to any Lender as of any
date of determination (i) prior to the termination of the Revolving Loan
Commitments, that Lender's Revolving Loan Commitment and (ii) after the
termination of the Revolving Loan Commitments, the sum of (a) the aggregate
outstanding principal amount of the Revolving Loans of that Lender plus (b) in
the case of Issuing Lender, the aggregate Revolving Letter of Credit Usage (net
of any participations purchased by other Lenders in any Letter of Credit, the
IRB Reimbursement Agreement or any unreimbursed drawings under such Letter of
Credit or IRB Reimbursement Advance) plus (c) the aggregate amount of all
participations purchased by that Lender in any outstanding Letters of Credit,
the IRB Reimbursement Agreement or any unreimbursed drawings under any Letters
of Credit or IRB Reimbursement Advance plus (d) in the case of Swing Line
Lender, the aggregate outstanding principal amount of all Swing Line Loans (net
of any participations therein purchased by other Lenders) plus (e) the aggregate
amount of all participations purchased by that Lender in any outstanding Swing
Line Loans.
"Revolving Loans" means the Loans made by Lenders to Borrower pursuant
to subsection 2.1A(iv).
"Revolving Notes" means (i) the promissory notes of Borrower issued
pursuant to subsection 2.1E(i)(c) on the Closing Date and (ii) any promissory
notes issued by Borrower pursuant to the last sentence of subsection 10.1B(i) in
connection with assignments of the Revolving Loan Commitments and Revolving
Loans of any Lenders, in each case substantially in the form of Exhibit VII
annexed hereto, as they may be amended, supplemented or otherwise modified from
time to time.
"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.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, and any successor statute.
"Senior Guaranteed Note Documents" means the Senior Guaranteed Notes,
the indenture pursuant to which the Senior Guaranteed Notes were issued, and all
other material agreements entered into in connection with the Senior Guaranteed
Notes, as any of such Senior Guaranteed Note Documents may be amended from time
to time to the extent permitted under subsection 7.13B.
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"Senior Guaranteed Notes" means the Senior Guaranteed Notes of Borrower
in an aggregate amount of $115,000,000 issued on January 28, 1997 pursuant to
the Senior Guaranteed Note Documents, as such Senior Guaranteed Notes may be
amended from time to time to the extent permitted under subsection 7.13B.
"Solvent" and "Solvency" mean, with respect to any Person on a
particular date, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person, (b) the present fair
saleable value of the assets of such Person is not less than the amount that
will be required to pay the probable liability of such Person on its debts as
they become absolute or matured, (c) such Person does not intend to, and does
not believe that it will, incur debts and liabilities beyond such Person's
ability to pay as such debts and liabilities mature and (d) such Person is not
engaged in a business or a transaction, and is not about to engage in a business
or a transaction, for which such Person's property would constitute an
unreasonably small capital.
"Stockholders Agreement" means the Stockholders Agreement executed and
delivered by Parent and certain of its stockholders on the Closing Date,
delivered to Administrative Agent and Lenders on the Closing Date, as such
Stockholders Agreement may thereafter be amended, supplemented or otherwise
modified from time to time to the extent permitted under subsection 7.13B.
"Subordinated Note Documents" the Subordinated Notes and all material
agreements entered into in connection with the Subordinated Notes in such form
and substance reasonably satisfactory to Administrative Agent and Requisite
Lenders, as any of such Subordinated Note Documents may be amended from time to
time to the extent permitted under subsection 7.13A.
"Subordinated Notes" means the promissory notes of Borrower or its
Subsidiaries issued after the Closing Date in an aggregate principal amount
permitted under subsection 7.1(xi) pursuant to documentation containing
maturities, amortization schedules, covenants, defaults, remedies, subordination
provisions and other material terms which taken as a whole are no less favorable
to Lenders or Borrower and its Subsidiaries than the corresponding terms in the
Bridge Financing Documents; provided that in no event shall such Subordinated
Notes contain any provision granting holders thereof the rights with respect to
amendments to the Loan Documents set forth in Section 9.16(a) of the note
purchase agreement relating to the Bridge Notes as in effect on the Closing
Date.
"Subsidiary" of any Person at any time shall mean (i) any corporation,
joint venture, limited liability company, trust, estate or other entity of which
50% or more (by number of shares or number of votes) of the outstanding Voting
Stock is at such time owned directly or indirectly by such Person or one or more
of such Person's Subsidiaries, or any partnership of which such Person is a
general partner or of which
38
50% or more of the partnership interests is at the time directly or indirectly
owned by such Person or one or more of such Person's Subsidiaries, or (ii) any
corporation, trust, partnership or other entity which is controlled or capable
of being controlled by such Person and/or one or more of such Person's
Subsidiaries.
"Subsidiary Guarantor" means any Subsidiary of Borrower that executes
and delivers a counterpart of the Subsidiary Guaranty on the Closing Date or
from time to time thereafter pursuant to subsection 6.8.
"Subsidiary Guaranty" means the Subsidiary Guaranty executed and
delivered by existing Subsidiaries of Borrower on the Closing Date and to be
executed and delivered by additional Subsidiaries of Borrower from time to time
thereafter in accordance with subsection 6.8, substantially in the form of
Exhibit XIX annexed hereto, as such Subsidiary Guaranty may hereafter be
amended, supplemented or otherwise modified from time to time.
"Subsidiary Patent Security Agreement" means each Subsidiary Patent
Security Agreement executed and delivered by an existing Subsidiary Guarantor on
the Closing Date or executed and delivered by any additional Subsidiary
Guarantor from time to time thereafter in accordance with subsection 6.8, in
each case substantially in the form of Exhibit XXII annexed hereto, as such
Subsidiary Patent Security Agreement may be amended, supplemented or otherwise
modified from time to time, and "Subsidiary Patent Security Agreements" means
all such Subsidiary Patent Security Agreements, collectively.
"Subsidiary Pledge Agreement" means each Subsidiary Pledge Agreement
executed and delivered by an existing Subsidiary Guarantor on the Closing Date
(if any) or executed and delivered by any additional Subsidiary Guarantor from
time to time thereafter in accordance with subsection 6.8, in each case
substantially in the form of Exhibit XX annexed hereto, as such Subsidiary
Pledge Agreement may be amended, supplemented or otherwise modified from time to
time, and "Subsidiary Pledge Agreements" means all such Subsidiary Pledge
Agreements, collectively.
"Subsidiary Security Agreement" means each Subsidiary Security
Agreement executed and delivered by an existing Subsidiary Guarantor on the
Closing Date or executed and delivered by any additional Subsidiary Guarantor
from time to time thereafter in accordance with subsection 6.8, in each case
substantially in the form of Exhibit XXI annexed hereto, as such Subsidiary
Security Agreement may be amended, supplemented or otherwise modified from time
to time, and "Subsidiary Security Agreements" means all such Subsidiary Security
Agreements, collectively.
"Subsidiary Trademark Security Agreement" means each Subsidiary
Trademark Security Agreement executed and delivered by an existing Subsidiary
Guarantor on the Closing Date or executed and delivered by an additional
Subsidiary Guarantor from
39
time to time thereafter in accordance with subsection 6.8, in each case
substantially in the form of Exhibit XXIII annexed hereto, as such Subsidiary
Trademark Security Agreement ▇▇▇ be amended, supplemented or otherwise modified
from time to time, and "Subsidiary Trademark Security Agreements" means all such
Subsidiary Trademark Security Agreements, collectively.
"Supplemental Collateral Agent" has the meaning assigned to that term
in subsection 9.1B.
"Swing Line Lender" means NationsBank, or any Person serving as a
successor Administrative Agent hereunder, in its capacity as Swing Line Lender
hereunder.
"Swing Line Loan Commitment" means the commitment of Swing Line Lender
to make Swing Line Loans to Borrower pursuant to subsection 2.1A(iii).
"Swing Line Loans" means the Loans made by Swing Line Lender to
Borrower pursuant to subsection 2.1A(iii).
"Swing Line Note" means (i) the promissory note of Borrower issued
pursuant to subsection 2.1E(ii) on the Closing Date and (ii) any promissory note
issued by Borrower to any successor Administrative Agent and Swing Line Lender
pursuant to the last sentence of subsection 9.5B, in each case substantially in
the form of Exhibit VIII annexed hereto, as it may be amended, supplemented or
otherwise modified from time to time.
"Tax" or "Taxes" means any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever called, by
whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or
assessed; provided that "Tax on the overall net income" of a Person shall be
construed as a reference to a tax imposed by the jurisdiction in which that
Person is organized or in which that Person's principal office (and/or, in the
case of a Lender, its lending office) is located or in which that Person
(and/or, in the case of a Lender, its lending office) is deemed to be doing
business on all or part of the net income, profits or gains (whether worldwide,
or only insofar as such income, profits or gains are considered to arise in or
to relate to a particular jurisdiction, or otherwise) of that Person (and/or, in
the case of a Lender, its lending office), including a franchise tax that is
measured by net income.
"Term Loan Commitment" means the commitment of a Lender to make Term
Loans to Borrower pursuant to subsection 2.1A(i), and "Term Loans Commitments"
means such commitments of all Lenders in the aggregate.
"Term Loans" means the Loans made by Lenders to Borrower pursuant to
subsection 2.1A(i).
40
"Term Notes" means (i) the promissory notes of Borrower issued pursuant
to subsection 2.1E(i)(a) on the Closing Date and (ii) any promissory notes
issued by Borrower pursuant to the last sentence of subsection 10.1B(i) in
connection with assignments of the Term Loan Commitments or Term Loans of any
Lenders, in each case substantially in the form of Exhibit V-A annexed hereto,
as they may be amended, supplemented or otherwise modified from time to time.
"Title Company" means, collectively, First American Title Insurance
Company and/or one or more other title insurance companies reasonably
satisfactory to Administra tive Agent.
"Total Utilization of Revolving Loan Commitments" means, as at any date
of determination, the sum of (i) the aggregate principal amount of all
outstanding Revolving Loans (other than Revolving Loans made for the purpose of
repaying any Refunded Swing Line Loans or reimbursing Issuing Lender for any
amount drawn under any Revolving Letter of Credit but not yet so applied) plus
(ii) the aggregate principal amount of all outstanding Swing Line Loans plus
(iii) the Revolving Letter of Credit Usage.
"Transaction Costs" means the fees, costs and expenses payable by
Borrower or Parent on or before the Closing Date in connection with the
transactions contemplated by the Loan Documents and the Related Agreements.
"UCC" means the Uniform Commercial Code (or any similar or equivalent
legislation) as in effect in any applicable jurisdiction.
"Voting Stock" means capital stock issued by, or equivalent interests
in, any Person, the holders of which are ordinarily, in the absence of any
contingency, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even though the right so to vote
has been suspended by the happening of such a contingency.
"Withdrawal Liability" has the meaning specified in Part I of Subtitle
E of Title IV of ERISA.
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations
Under Agreement.
Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. Financial statements and other information
required to be delivered by Borrower to Lenders pursuant to clauses (i), (ii),
(iii) and (xiii) of subsection 6.1 shall be prepared in accordance with GAAP as
in effect at the time of such preparation (and delivered together with the
reconciliation statements provided for in
41
subsection 6.1(v)). Calculations in connection with the definitions, covenants
and other provisions of this Agreement shall utilize accounting principles and
policies in conformity with those used to prepare the financial statements
referred to in subsection 5.3.
1.3 Other Definitional Provisions and Rules of Construction.
A. Any of the terms defined herein may, unless the context otherwise
requires, be used in the singular or the plural, depending on the reference.
B. References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided.
C. The use herein of the word "include" or "including", when following
any general statement, term or matter, shall not be construed to limit such
statement, term or matter to the specific items or matters set forth immediately
following such word or to similar items or matters, whether or not nonlimiting
language (such as "without limitation" or "but not limited to" or words of
similar import) is used with reference thereto, but rather shall be deemed to
refer to all other items or matters that fall within the broadest possible scope
of such general statement, term or matter.
Section 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 Commitments; Making of Loans; the Register; Notes.
A. Commitments. Subject to the terms and conditions of this Agreement
and in reliance upon the representations and warranties of Parent and Borrower
herein set forth, each Lender (i) made the Loans described in subsection 2.1A(i)
on the Closing Date and (ii) hereby severally agrees to make the Loans described
in subsections 2.1A(ii) and Swing Line Lender hereby agrees to make the Loans
described in subsection 2.1A(iii).
(i) Term Loans. Term Loans were made in the aggregate
principal amount of $10,000,000 on December 31, 1996 under the Existing
Agreement. The amount of each Lender's Term Loans is set forth opposite
its name on Schedule 2.1 annexed hereto. Amounts borrowed under this
subsection 2.1A(i) and subsequently repaid or prepaid may not be
reborrowed.
(ii) Revolving Loans. Each Lender severally agrees, subject to
the limitations set forth below with respect to the maximum amount of
Revolving Loans permitted to be outstanding from time to time, to lend
to Borrower from time to time during the period from the Closing Date
to but excluding the
42
Revolving Loan Commitment Termination Date an aggregate amount not
exceeding its Pro Rata Share of the aggregate amount of the Revolving
Loan Commitments to be used for the purposes identified in subsection
2.5B. The original amount of each Lender's Revolving Loan Commitment is
set forth opposite its name on Schedule 2.1 annexed hereto and the
aggregate original amount of the Revolving Loan Commitments is
$20,000,000; provided that the Revolving Loan Commitments of Lenders
shall be adjusted to give effect to any assignments of the Revolving
Loan Commitments pursuant to subsection 10.1B; and provided, further
that the amount of the Revolving Loan Commitments shall be reduced from
time to time by the amount of any reductions thereto made pursuant to
subsection 2.4B(ii). Each Lender's Revolving Loan Commitment shall
expire on the Revolving Loan Commitment Termination Date and all
Revolving Loans and all other amounts owed hereunder with respect to
the Revolving Loans and the Revolving Loan Commitments shall be paid in
full no later than that date. Amounts borrowed under this subsection
2.1A(iv) may be repaid and reborrowed to but excluding the Revolving
Loan Commitment Termination Date.
Anything contained in this Agreement to the contrary
notwithstanding, the Revolving Loans and the Revolving Loan Commitments
shall be subject to the limitation that in no event shall the Total
Utilization of Revolving Loan Commit ments at any time exceed the
lesser of (1) the Revolving Loan Commitments then in effect and (2) the
Borrowing Base then in effect.
(iii) Swing Line Loans. Swing Line Lender hereby agrees,
subject to the limitations set forth below with respect to the maximum
amount of Swing Line Loans permitted to be outstanding from time to
time, to make a portion of the Revolving Loan Commitments available to
Borrower from time to time during the period from the Closing Date to
but excluding the Revolving Loan Commitment Termination Date by making
Swing Line Loans to Borrower in an aggregate amount not exceeding the
amount of the Swing Line Loan Commitment to be used for the purposes
identified in subsection 2.5B, notwithstanding the fact that such Swing
Line Loans, when aggregated with Swing Line Lender's outstanding
Revolving Loans and Swing Line Lender's Pro Rata Share of the Revolving
Letter of Credit Usage then in effect, may exceed Swing Line Lender's
Revolving Loan Commitment. The original amount of the Swing Line Loan
Commitment is $5,000,000; provided that any reduction of the Revolving
Loan Commitments made pursuant to subsection 2.4B(ii) which reduces the
aggregate Revolving Loan Commitments to an amount less than the then
current amount of the Swing Line Loan Commitment shall result in an
automatic corresponding reduction of the Swing Line Loan Commitment to
the amount of the Revolving Loan Commitments, as so reduced, without
any further action on the part of Borrower, Administrative Agent or
Swing Line Lender. The Swing Line Loan Commitment shall expire on the
Revolving Loan Commitment Termination Date and all Swing Line Loans and
all other amounts owed hereunder with respect to the Swing Line Loans
shall be paid in full no later than that date. Amounts borrowed under
this subsection
43
2.1A(iii) may be repaid and reborrowed to but excluding the Revolving
Loan Commitment Termination Date.
Anything contained in this Agreement to the contrary
notwithstanding, the Swing Line Loans and the Swing Line Loan
Commitment shall be subject to the limitation that in no event shall
the Total Utilization of Revolving Loan Commit ments at any time exceed
the Revolving Loan Commitments then in effect.
With respect to any Swing Line Loans which have not been
voluntarily prepaid by Borrower pursuant to subsection 2.4B(i), Swing
Line Lender may, at any time in its sole and absolute discretion,
deliver to Administrative Agent (with a copy to Borrower), no later
than 11:00 A.M. (Dallas, Texas time) on the first Business Day in
advance of the proposed Funding Date, a notice (which shall be deemed
to be a Notice of Borrowing given by Borrower) requesting Lenders to
make Revolving Loans that are Base Rate Loans on such Funding Date in
an amount equal to the amount of such Swing Line Loans (the "Refunded
Swing Line Loans") outstanding on the date such notice is given which
Swing Line Lender requests Lenders to prepay. Anything contained in
this Agreement to the contrary notwithstanding, (i) the proceeds of
such Revolving Loans made by Lenders other than Swing Line Lender shall
be immediately delivered by Administrative Agent to Swing Line Lender
(and not to Borrower) and applied to repay a corresponding portion of
the Refunded Swing Line Loans and (ii) on the day such Revolving Loans
are made, Swing Line Lender's Pro Rata Share of the Refunded Swing Line
Loans shall be deemed to be paid with the proceeds of a Revolving Loan
made by Swing Line Lender, and such portion of the Swing Line Loans
deemed to be so paid shall no longer be outstanding as Swing Line Loans
and shall no longer be due under the Swing Line Note of Swing Line
Lender but shall instead constitute part of Swing Line Lender's
outstanding Revolving Loans and shall be due under the Revolving Note
of Swing Line Lender. Borrower hereby authorizes Administrative Agent
and Swing Line Lender to charge Borrower's accounts with Administrative
Agent and Swing Line Lender (up to the amount available in each such
account) in order to immediately pay Swing Line Lender the amount of
the Refunded Swing Line Loans to the extent the proceeds of such
Revolving Loans made by Lenders, including the Revolving Loan deemed to
be made by Swing Line Lender, are not sufficient to repay in full the
Refunded Swing Line Loans. If any portion of any such amount paid (or
deemed to be paid) to Swing Line Lender should be recovered by or on
behalf of Borrower from Swing Line Lender in bankruptcy, by assignment
for the benefit of creditors or otherwise, the loss of the amount so
recovered shall be ratably shared among all Lenders in the manner
contemplated by subsection 10.5.
If for any reason (a) Revolving Loans are not made upon the
request of Swing Line Lender as provided in the immediately preceding
paragraph in an amount sufficient to repay any amounts owed to Swing
Line Lender in respect of any outstanding Swing Line Loans or (b) the
Revolving Loan Commitments are
44
terminated at a time when any Swing Line Loans are outstanding, each
Lender shall be deemed to, and hereby agrees to, have purchased a
participation in such outstanding Swing Line Loans in an amount equal
to its Pro Rata Share (calculated, in the case of the foregoing clause
(b), immediately prior to such termination of the Revolving Loan
Commitments) of the unpaid amount of such Swing Line Loans together
with accrued interest thereon. Upon one Business Day's notice from
Swing Line Lender, each Lender shall deliver to Swing Line Lender an
amount equal to its respective participation in same day funds at the
Funding and Payment Office. In order to further evidence such
participation (and without prejudice to the effective ness of the
participation provisions set forth above), each Lender agrees to enter
into a separate participation agreement at the request of Swing Line
Lender in form and substance reasonably satisfactory to Swing Line
Lender. In the event any Lender fails to make available to Swing Line
Lender the amount of such Lender's participa tion as provided in this
paragraph, Swing Line Lender shall be entitled to recover such amount
on demand from such Lender together with interest thereon at the rate
customarily used by Swing Line Lender for the correction of errors
among banks for three Business Days and thereafter at the Base Rate. In
the event Swing Line Lender receives a payment of any amount in which
other Lenders have purchased participations as provided in this
paragraph, Swing Line Lender shall promptly distribute to each such
other Lender its Pro Rata Share of such payment.
Anything contained herein to the contrary notwithstanding,
each Lender's obligation to make Revolving Loans for the purpose of
repaying any Refunded Swing Line Loans pursuant to the second preceding
paragraph and each Lender's obligation to purchase a participation in
any unpaid Swing Line Loans pursuant to the immediately preceding
paragraph shall be absolute and unconditional and shall not be affected
by any circumstance, including without limitation (a) any set-off,
counter claim, recoupment, defense or other right which such Lender may
have against Swing Line Lender, Borrower or any other Person for any
reason whatsoever; (b) the occurrence or continuation of an Event of
Default or a Potential Event of Default; (c) any adverse change in the
business, operations, properties, assets, condition (financial or
otherwise) or prospects of Borrower or any of its Subsidiaries; (d) any
breach of this Agreement or any other Loan Document by any party
thereto; or (e) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing; provided that such
obligations of each Lender are subject to the condition that (X) Swing
Line Lender believed in good faith that all conditions under Section 4
to the making of the applicable Refunded Swing Line Loans or other
unpaid Swing Line Loans, as the case may be, were satisfied at the time
such Refunded Swing Line Loans or unpaid Swing Line Loans were made or
(Y) the sat isfaction of any such condition not satisfied had been
waived in accordance with subsection 10.6 prior to or at the time such
Refunded Swing Line Loans or other unpaid Swing Line Loans were made.
45
B. Borrowing Mechanics. Revolving Loans made on any Funding Date (other
than Revolving Loans made pursuant to a request by Swing Line Lender pursuant to
subsection 2.1A(iii) for the purpose of repaying any Refunded Swing Line Loans,
or Revolving Loans made pursuant to subsection 3.3B for the purpose of
reimbursing Issuing Lender for the amount of a drawing under a Letter of Credit
or an IRB Reimbursement Advance) shall be in an aggregate minimum amount of
$2,000,000 and integral multiples of $500,000 in excess of that amount; provided
that Revolving Loans made on any Funding Date as Eurodollar Rate Loans with a
particular Interest Period shall be in an aggregate minimum amount of $2,000,000
and integral multiples of $500,000 in excess of that amount. Swing Line Loans
made on any Funding Date shall be in an aggregate minimum amount of $500,000 and
integral multiples of $500,000 in excess of that amount. Whenever Borrower
desires that Lenders make Revolving Loans it shall deliver to Administrative
Agent a Notice of Borrowing no later than 11:00 A.M. (Dallas, Texas time) at
least three Business Days in advance of the proposed Funding Date (in the case
of a Eurodollar Rate Loan) or at least one Business Day in advance of the
proposed Funding Date (in the case of a Base Rate Loan). Whenever Borrower
desires that Swing Line Lender make a Swing Line Loan, it shall deliver to
Administrative Agent a Notice of Borrowing no later than 11:00 A.M. (Dallas,
Texas time) on the proposed Funding Date. The Notice of Borrowing shall specify
(i) the proposed Funding Date (which shall be a Business Day), (ii) the amount
and type of Loans requested, (iii) in the case of Revolving Loans, whether such
Loans shall be Base Rate Loans or Eurodollar Rate Loans, and (iv) in the case of
any Loans requested to be made as Eurodollar Rate Loans, the initial Interest
Period requested therefor. Term Loans and Revolving Loans may be continued as or
converted into Base Rate Loans and Eurodollar Rate Loans in the manner provided
in subsection 2.2D. In lieu of delivering the above-described Notice of
Borrowing, Borrower may give Administrative Agent telephonic notice by the
required time of any proposed borrowing under this subsection 2.1B; provided
that such notice shall be promptly confirmed in writing by delivery of a Notice
of Borrowing to Administrative Agent on or before the applicable Funding Date.
Neither Administrative Agent nor any Lender shall incur any liability
to Borrower in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow on behalf of Borrower or
for otherwise acting in good faith under this subsection 2.1B, and upon funding
of Loans by Lenders in accordance with this Agreement pursuant to any such
telephonic notice Borrower shall have effected Loans hereunder.
Borrower shall notify Administrative Agent prior to the funding of any
Loans in the event that any of the matters to which Borrower is required to
certify in the applicable Notice of Borrowing is no longer true and correct as
of the applicable Funding Date, and the acceptance by Borrower of the proceeds
of any Loans shall constitute a re-certification by Borrower, as of the
applicable Funding Date, as to
46
the matters to which Borrower is required to certify in the applicable Notice of
Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Borrowing for a Eurodollar Rate Loan (or telephonic notice in lieu
thereof) shall be irrevocable on and after the related Interest Rate
Determination Date, and Borrower shall be bound to make a borrowing in
accordance therewith.
C. Disbursement of Funds. All Revolving Loans under this Agreement
shall be made by Lenders simultaneously and proportionately to their respective
Pro Rata Shares, it being understood that no Lender shall be responsible for any
default by any other Lender in that other Lender's obligation to make a Loan
requested hereunder nor shall the Commitment of any Lender to make the
particular type of Loan requested be increased or decreased as a result of a
default by any other Lender in that other Lender's obligation to make a Loan
requested hereunder. Promptly after receipt by Administrative Agent of a Notice
of Borrowing pursuant to subsection 2.1B (or telephonic notice in lieu thereof),
Administrative Agent shall notify each Lender or Swing Line Lender, as the case
may be, of the proposed borrowing. Each Lender shall make the amount of its Loan
available to Administrative Agent not later than 2:00 P.M. (Dallas, Texas time)
on the applicable Funding Date, and Swing Line Lender shall make the amount of
its Swing Line Loan available to Administrative Agent not later than 2:00 P.M.
(Dallas, Texas time) on the applicable Funding Date, in each case in same day
funds in Dollars, at the Funding and Payment Office. Except as provided in
subsection 2.1A(iii) with respect to Revolving Loans used to repay Refunded
Swing Line Loans, or subsection 3.3B with respect to Revolving Loans used to
reimburse Issuing Lender for the amount of a drawing under a Letter of Credit or
an IRB Reimbursement Advance, upon satisfaction or waiver of the conditions
precedent specified in subsection 4.2, Administrative Agent shall make the
proceeds of such Loans available to Borrower on the applicable Funding Date by
causing an amount of same day funds in Dollars equal to the proceeds of all such
Loans received by Administrative Agent from Lenders or Swing Line Lender, as the
case may be, to be credited to the account of Borrower at the Funding and
Payment Office.
Unless Administrative Agent shall have been notified by any Lender
prior to the Funding Date for any Loans that such Lender does not intend to make
available to Administrative Agent the amount of such Lender's Loan requested on
such Funding Date, Administrative Agent may assume that such Lender has made
such amount available to Administrative Agent on such Funding Date and
Administrative Agent may, in its sole discretion, but shall not be obligated to,
make available to Borrower a corresponding amount on such Funding Date. If such
corresponding amount is not in fact made available to Administrative Agent by
such Lender, Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest thereon,
for each day from such Funding Date until the date such amount is paid to
Administrative Agent, at the customary rate set by Administrative Agent for the
correction of errors among banks for three Business Days and thereafter at the
47
Base Rate. If such Lender does not pay such corresponding amount forthwith upon
Administrative Agent's demand therefor, Administrative Agent shall promptly
notify Borrower and Borrower shall immediately pay such corresponding amount to
Administrative Agent together with interest thereon, for each day from such
Funding Date until the date such amount is paid to Administrative Agent, at the
rate payable under this Agreement for Base Rate Loans. Nothing in this
subsection 2.1C shall be deemed to relieve any Lender from its obligation to
fulfill its Commitments hereunder or to prejudice any rights that Borrower may
have against any Lender as a result of any default by such Lender hereunder.
D. The Register.
(i) Agent shall maintain, at its address referred to in
subsection 10.8, a register for the recordation of the names and
addresses of Lenders and the Commitments and Loans of each Lender from
time to time (the "Register"). The Register shall be available for
inspection by Borrower or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
(ii) Agent shall record in the Register the Term Loan
Commitment and Revolving Loan Commitment and the Term Loans, and
Revolving Loans from time to time of each Lender, the Swing Line Loan
Commitment and the Swing Line Loans from time to time of Swing Line
Lender, and each repayment or prepayment in respect of the principal
amount of the Term Loans or Revolving Loans of each Lender or the Swing
Line Loans of Swing Line Lender. Any such recordation shall be
conclusive and binding on Borrower and each Lender, absent manifest
error; provided that failure to make any such recordation, or any error
in such recordation, shall not affect any Lender's Commitments or
Borrower's Obligations in respect of any applicable Loans.
(iii) Each Lender shall record on its internal records
(including, without limitation, the Notes held by such Lender) the
amount of the Term Loans and each Revolving Loan made by it and each
payment in respect thereof. Any such recordation shall be conclusive
and binding on Borrower, absent manifest error; provided that failure
to make any such recordation, or any error in such recordation, shall
not affect any Lender's Commitments or Borrower's Obligations in
respect of any applicable Loans; and provided, further that in the
event of any inconsistency between the Register and any Lender's
records, the recordations in the Register shall govern.
(iv) Borrower, Administrative Agent and Lenders shall deem and
treat the Persons listed as Lenders in the Register as the holders and
owners of the corresponding Commitments and Loans listed therein for
all purposes hereof, and no assignment or transfer of any such
Commitment or Loan shall be effective, in each case unless and until an
Assignment Agreement effecting the assignment or transfer thereof shall
have been accepted by Administrative
48
Agent and recorded in the Register as provided in subsection 10.1B(ii).
Prior to such recordation, all amounts owed with respect to the
applicable Commitment or Loan shall be owed to the Lender listed in the
Register as the owner thereof, and any request, authority or consent of
any Person who, at the time of making such request or giving such
authority or consent, is listed in the Register as a Lender shall be
conclusive and binding on any subsequent holder, assignee or transferee
of the corresponding Commitments or Loans.
(v) Borrower hereby designates NationsBank to serve as
Borrower's agent solely for purposes of maintaining the Register as
provided in this subsection 2.1D, and Borrower hereby agrees that, to
the extent NationsBank serves in such capacity, NationsBank and its
officers, directors, employees, agents and affiliates shall constitute
Indemnitees for all purposes under subsection 10.3.
E. Notes. Borrower executed and delivered on the Closing Date (i) to
each Lender (or to Administrative Agent for that Lender) (a) a Term Note
substantially in the form of Exhibit V annexed hereto to evidence that Lender's
Term Loans and with other appropriate insertions, and (b) a Revolving Note
substantially in the form of Exhibit VII annexed hereto to evidence that
Lender's Revolving Loans, in the principal amount of that Lender's Revolving
Loan Commitment and with other appropriate insertions, and (ii) to Swing Line
Lender (or to Administrative Agent for Swing Line Lender) a Swing Line Note
substantially in the form of Exhibit VIII annexed hereto to evidence Swing Line
Lender's Swing Line Loans, in the principal amount of the Swing Line Loan
Commitment and with other appropriate insertions. Agent may deem and treat the
payee of any Note as the owner thereof for all purposes hereof unless and until
an Assignment Agreement effecting the assignment or transfer thereof shall have
been accepted by Administrative Agent as provided in subsection 10.1B(ii). Any
request, authority or consent of any person or entity who, at the time of making
such request or giving such authority or consent, is the holder of any Note
shall be conclusive and binding on any subsequent holder, assignee or transferee
of that Note or of any Note or Notes issued in exchange therefor.
2.2 Interest on the Loans.
A. Rate of Interest. Subject to the provisions of subsections 2.6 and
2.7, each Term Loan and each Revolving Loan shall bear interest on the unpaid
principal amount thereof from the date made through maturity (whether by
acceleration or otherwise) at a rate determined by reference to the Base Rate or
the Adjusted Eurodollar Rate. Subject to the provisions of subsection 2.7, each
Swing Line Loan shall bear interest on the unpaid principal amount thereof from
the date made through maturity (whether by acceleration or otherwise) at a rate
determined by reference to the Base Rate. The applicable basis for determining
the rate of interest with respect to any Term Loan or any Revolving Loan shall
be selected by Borrower initially at the time a Notice of Borrowing is given
with respect to such Loan pursuant to subsection
49
2.1B, and the basis for determining the interest rate with respect to any Term
Loan or any Revolving Loan may be changed from time to time pursuant to
subsection 2.2D. If on any day a Term Loan or Revolving Loan is outstanding with
respect to which notice has not been delivered to Administrative Agent in
accordance with the terms of this Agreement specifying the applicable basis for
determining the rate of interest, then for that day that Loan shall bear
interest determined by reference to the Base Rate.
(i) Subject to the provisions of subsections 2.2E and 2.7, the
Term Loans shall bear interest through maturity as follows:
(a) if a Base Rate Loan, then at the sum of the Base
Rate plus the Applicable Margin; or
(b) if a Eurodollar Rate Loan, then at the sum of the
Adjusted Eurodollar Rate plus the Applicable Margin.
(ii) Subject to the provisions of subsections 2.2E and 2.7,
the Revolving Loans shall bear interest through maturity as follows:
(a) if a Base Rate Loan, then at the sum of the Base
Rate plus the Applicable Margin; or
(b) if a Eurodollar Rate Loan, then at the sum of the
Adjusted Eurodollar Rate plus the Applicable Margin.
(iii) Subject to the provisions of subsections 2.2E and 2.7,
the Swing Line Loans shall bear interest through maturity at the sum of
the Base Rate plus 0.75% per annum.
B. Interest Periods. In connection with each Eurodollar Rate Loan,
Borrower may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, select an interest period (each an
"Interest Period") to be applicable to such Loan, which Interest Period shall
be, at Borrower's option, either a one, two, three or six month period; provided
that:
(i) the initial Interest Period for any Eurodollar Rate Loan
shall commence on the Funding Date in respect of such Loan, in the case
of a Loan initially made as a Eurodollar Rate Loan, or on the date
specified in the applicable Notice of Conversion/Continuation, in the
case of a Loan converted to a Eurodollar Rate Loan;
(ii) in the case of immediately successive Interest Periods
applicable to a Eurodollar Rate Loan continued as such pursuant to a
Notice of Conver sion/Continuation, each successive Interest Period
shall commence on the day on which the next preceding Interest Period
expires;
50
(iii) if an Interest Period would otherwise expire on a day
that is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day; provided that, if any Interest Period
would otherwise expire on a day that is not a Business Day but is a day
of the month after which no further Business Day occurs in such month,
such Interest Period shall expire on the next preceding Business Day;
(iv) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall, subject to clause (v) of this subsection 2.2B, end on
the last Business Day of a calendar month;
(v) no Interest Period with respect to any portion of the Term
Loans shall extend beyond June 30, 2002 and no Interest Period with
respect to any portion of the Revolving Loans shall extend beyond the
Revolving Loan Commitment Termination Date;
(vi) no Interest Period with respect to any portion of the
Term Loans shall extend beyond a date on which Borrower is required to
make a scheduled payment of principal of the Term Loans, unless the sum
of (a) the aggregate principal amount of Term Loans that are Base Rate
Loans plus (b) the aggregate principal amount of Term Loans that are
Eurodollar Rate Loans with Interest Periods expiring on or before such
date equals or exceeds the principal amount required to be paid on the
Term Loans, on such date;
(vii) there shall be no more than five Interest Periods
outstanding at any time; and
(viii) in the event Borrower fails to specify an Interest
Period for any Eurodollar Rate Loan in the applicable Notice of
Borrowing or Notice of Conversion/Continuation, Borrower shall be
deemed to have selected an Interest Period of one month.
C. Interest Payments. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity); provided that in the event any Swing Line Loans or any Revolving
Loans that are Base Rate Loans are prepaid pursuant to subsection 2.4B(i),
interest accrued on such Swing Line Loans or Revolving Loans through the date of
such prepayment shall be payable on the next succeeding Interest Payment Date
applicable to Base Rate Loans (or, if earlier, at final maturity).
51
D. Conversion or Continuation. Subject to the provisions of subsection
2.6, Borrower shall have the option (i) to convert at any time all or any part
of its outstanding Term Loans or Revolving Loans equal to $2,000,000 and
integral multiples of $500,000 in excess of that amount from Loans bearing
interest at a rate determined by reference to one basis to Loans bearing
interest at a rate determined by reference to an alternative basis or (ii) upon
the expiration of any Interest Period applicable to a Eurodollar Rate Loan, to
continue all or any portion of such Loan equal to $2,000,000 and integral
multiples of $500,000 in excess of that amount as a Eurodollar Rate Loan;
provided, however, that a Eurodollar Rate Loan may only be converted into a Base
Rate Loan on the expiration date of an Interest Period applicable thereto.
Borrower shall deliver a Notice of Conversion/Continuation to
Administrative Agent no later than 11:00 A.M. (Dallas, Texas time) at least one
Business Day in advance of the proposed conversion date (in the case of a
conversion to a Base Rate Loan) and at least three Business Days in advance of
the proposed conversion/continuation date (in the case of a conversion to, or a
continuation of, a Eurodollar Rate Loan). A Notice of Conversion/Continuation
shall specify (i) the proposed conversion/continuation date (which shall be a
Business Day), (ii) the amount and type of the Loan to be converted/continued,
(iii) the nature of the proposed conversion/continuation, (iv) in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan, the requested
Interest Period, and (v) in the case of a conversion to, or a continuation of, a
Eurodollar Rate Loan, that no Potential Event of Default or Event of Default has
occurred and is continuing. In lieu of delivering the above-described Notice of
Conversion/Continuation, Borrower may give Administrative Agent telephonic
notice by the required time of any proposed conversion/continuation under this
subsection 2.2D; provided that such notice shall be promptly confirmed in
writing by delivery of a Notice of Conversion/Continuation to Administrative
Agent on or before the proposed conversion/continuation date. Upon receipt of
written or telephonic notice of any proposed conversion/continuation under this
subsection 2.2D, Administrative Agent shall promptly transmit such notice by
telefacsimile or telephone to each Lender.
Neither Administrative Agent nor any Lender shall incur any liability
to Borrower in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to act on behalf of Borrower or
for otherwise acting in good faith under this subsection 2.2D, and upon
conversion or continuation of the applicable basis for determining the interest
rate with respect to any Loans in accordance with this Agreement pursuant to any
such telephonic notice Borrower shall have effected a conversion or
continuation, as the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Conversion/Continuation for conversion to, or continuation of, a
Eurodollar Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable
on and after the
52
related Interest Rate Determination Date, and Borrower shall be bound to effect
a conversion or continuation in accordance therewith.
E. Post-Maturity Interest. Any principal payments on the Loans not paid
when due and, to the extent permitted by applicable law, any interest payments
on the Loans or any fees or other amounts owed hereunder not paid when due, in
each case whether at stated maturity, by notice of prepayment, by acceleration
or otherwise, shall thereafter bear interest (including post-petition interest
in any proceeding under the Bankruptcy Code or other applicable bankruptcy laws)
payable on demand at a rate which is 2% per annum in excess of the interest rate
otherwise payable under this Agreement with respect to the applicable Loans (or,
in the case of any such fees and other amounts, at a rate which is 2% per annum
in excess of the interest rate otherwise payable under this Agreement for Base
Rate Loans); provided that, in the case of Eurodollar Rate Loans, upon the
expiration of the Interest Period in effect at the time any such increase in
interest rate is effective such Eurodollar Rate Loans shall thereupon become
Base Rate Loans and shall thereafter bear interest payable upon demand at a rate
which is 2% per annum in excess of the interest rate otherwise payable under
this Agreement for Base Rate Loans. Payment or acceptance of the increased rates
of interest provided for in this subsection 2.2E is not a permitted alternative
to timely payment and shall not constitute a waiver of any Event of Default or
otherwise prejudice or limit any rights or remedies of Administrative Agent or
any Lender.
F. Computation of Interest. Interest on the Loans shall be computed (i)
in the case of Base Rate Loans, on the basis of a 365-day or 366 day year, as
the case may be, and (ii) in the case of Eurodollar Rate Loans, on the basis of
a 360-day year, in each case for the actual number of days elapsed in the period
during which it accrues. In computing interest on any Loan, the date of the
making of such Loan or the first day of an Interest Period applicable to such
Loan or, with respect to a Base Rate Loan being converted from a Eurodollar Rate
Loan, the date of conversion of such Eurodollar Rate Loan to such Base Rate
Loan, as the case may be, shall be included, and the date of payment of such
Loan or the expiration date of an Interest Period applicable to such Loan or,
with respect to a Base Rate Loan being converted to a Eurodollar Rate Loan, the
date of conversion of such Base Rate Loan to such Eurodollar Rate Loan, as the
case may be, shall be excluded; provided that if a Loan is repaid on the same
day on which it is made, one day's interest shall be paid on that Loan.
2.3 Fees.
A. Commitment Fees. Borrower agrees to pay to Administrative Agent, for
distribution to each Lender in proportion to that Lender's Pro Rata Share,
commitment fees for the period from and including the Closing Date to and
excluding the Revolving Loan Commitment Termination Date equal to the average of
the daily excess of the Revolving Loan Commitments over the sum of (i) the
aggregate principal amount of outstanding Revolving Loans (but not any
outstanding Swing Line Loans) plus (ii) the
53
Revolving Letter of Credit Usage multiplied by 1/2 of 1% per annum, such
commitment fees to be calculated on the basis of a 360-day year and the actual
number of days elapsed and to be payable quarterly in arrears on March 31, June
30, September 30 and December 31 of each year, commencing on March 31, 1997, and
on the Revolving Loan Commitment Termination Date.
B. Annual Administrative Fee. Borrower agrees to pay to Administrative
Agent an annual administrative fee payable in advance on February 15, 1997 and
on each anniversary thereof, in an amount equal to the greater of (x) 0.1%
multiplied by the sum of (i) the Revolving Loan Commitments and, (ii) the
outstanding principal amount of Term Loans, and (y) $50,000.
C. Other Fees. Borrower agrees to pay to Administrative Agent such
other fees in the amounts and at the times separately agreed upon between
Borrower or Parent and Administrative Agent.
2.4 Repayments, Prepayments and Reductions in Revolving Loan Commitments;
General Provisions Regarding Payments; Application of Proceeds of
Collateral and Payments Under Subsidiary Guaranty.
A. Scheduled Payments of Term Loans.
Borrower shall make principal payments on the Term
Loans in install ments on the dates and in the amounts set
forth below until such time the Term Loans are repaid in full:
Scheduled Repayment
Date of Term Loans
================================ ================================
June 30, 1997 $333,333
-------------------------------- --------------------------------
September 30, 1997 $333,333
-------------------------------- --------------------------------
December 31, 1997 $333,334
-------------------------------- --------------------------------
March 31, 1998 $375,000
-------------------------------- --------------------------------
June 30, 1998 $375,000
-------------------------------- --------------------------------
September 30, 1998 $375,000
-------------------------------- --------------------------------
December 31, 1998 $375,000
-------------------------------- --------------------------------
March 31, 1999 $500,000
-------------------------------- --------------------------------
June 30, 1999 $500,000
-------------------------------- --------------------------------
September 30, 1999 $500,000
-------------------------------- --------------------------------
December 31, 1999 $500,000
-------------------------------- --------------------------------
March 31, 2000 $525,000
-------------------------------- --------------------------------
June 30, 2000 $525,000
-------------------------------- --------------------------------
September 30, 2000 $525,000
-------------------------------- --------------------------------
54
Scheduled Repayment
Date of Term Loans
================================ ================================
December 31, 2000 $525,000
-------------------------------- --------------------------------
March 31, 2001 $550,000
-------------------------------- --------------------------------
June 30, 2001 $550,000
-------------------------------- --------------------------------
September 30, 2001 $550,000
-------------------------------- --------------------------------
December 31, 2001 $550,000
-------------------------------- --------------------------------
March 31, 2002 $600,000
-------------------------------- --------------------------------
June 30, 2002 $600,000
================================ ================================
; provided that the scheduled installments of principal of the
Term Loans set forth above shall be reduced in connection with
any voluntary or mandatory prepayments of the Term Loans in
accordance with subsection 2.4B(iv); and provided, further
that the Term Loans and all other amounts owed hereunder with
respect to the Term Loans shall be paid in full no later than
June 30, 2002, and the final installment payable by Borrower
in respect of the Term Loans on such date shall be in an
amount, if such amount is different from that specified above,
sufficient to repay all amounts owing by Borrower under this
Agreement with respect to the Term Loans.
B. Prepayments and Reductions in Revolving Loan Commitments.
(i) Voluntary Prepayments. Borrower may, upon written or
telephonic notice to Administrative Agent on or prior to 11:00 A.M.
(Dallas, Texas time) on the date of prepayment, which notice, if
telephonic, shall be promptly confirmed in writing, at any time and
from time to time prepay any Swing Line Loan on any Business Day in
whole or in part in an aggregate minimum amount of $500,000 and
integral multiples of $500,000 in excess of that amount. Borrower may,
upon not less than one Business Day's prior written or telephonic
notice, in the case of Base Rate Loans, and three Business Days' prior
written or telephonic notice, in the case of Eurodollar Rate Loans, in
each case given to
55
Administrative Agent by 11:00 A.M. (Dallas, Texas time) on the date
required and, if given by telephone, promptly confirmed in writing to
Administrative Agent (which original written or telephonic notice
Administrative Agent will promptly transmit by telefacsimile or
telephone to each Lender), at any time and from time to time prepay any
Term Loans or Revolving Loans on any Business Day in whole or in part
in an aggregate minimum amount of $2,000,000 and integral multiples of
$500,000 in excess of that amount; provided, however, that a Eurodollar
Rate Loan may only be prepaid on the expiration of the Interest Period
applicable thereto. Notice of prepayment having been given as
aforesaid, the principal amount of the Loans specified in such notice
shall become due and payable on the prepayment date specified therein.
Any such voluntary prepayment shall be applied as specified in
subsection 2.4B(iv).
(ii) Voluntary Reductions of Revolving Loan Commitments.
Borrower may, upon not less than three Business Days' prior written or
telephonic notice confirmed in writing to Administrative Agent (which
original written or telephonic notice Administrative Agent will
promptly transmit by telefacsimile or telephone to each Lender), at any
time and from time to time terminate in whole or permanently reduce in
part, without premium or penalty, the Revolving Loan Commitments in an
amount up to the amount by which the Revolving Loan Commitments exceed
the Total Utilization of Revolving Loan Commitments at the time of such
proposed termination or reduction; provided that any such partial
reduction of the Revolving Loan Commitments shall be in an aggregate
minimum amount of $2,000,000 and integral multiples of $500,000 in
excess of that amount. Borrower's notice to Administrative Agent shall
designate the date (which shall be a Business Day) of such termination
or reduction and the amount of any partial reduction, and such
termination or reduction of the Revolving Loan Commitments shall be
effective on the date specified in Borrower's notice and shall reduce
the Revolving Loan Commitment of each Lender proportionately to its Pro
Rata Share.
(iii) Mandatory Prepayments of Loans. The Loans shall be
prepaid in the amounts and under the circumstances set forth below, all
such prepayments to be applied as set forth below or as more
specifically provided in subsection 2.4B(iv):
(a) Prepayments From Net Asset Sale Proceeds. No
later than the first Business Day following the date of
receipt by Borrower or any of its Subsidiaries of any Net
Asset Sale Proceeds in respect of any Asset Sale, Borrower
shall prepay the Loans in an aggregate amount equal to such
Net Asset Sale Proceeds; provided that, except with respect to
an Asset Sale involving a sale and leaseback transaction, to
the extent such Net Asset Sale Proceeds will be used within
180 days of such Asset Sale to purchase replacement assets (as
certified by Borrower to Administrative Agent in an Officer's
Certificate) no such payment or
56
reduction shall be required unless any of such Net Asset Sale Proceeds
are not so used within 180 days, in which case, Borrower shall, at the
end of such 180th day, deliver to the Administra tive Agent an
Officer's Certificate specifying the amount of Net Asset Sale Proceeds
not so used and shall prepay the Loans in such amount on the first
Business Day after the end of such period.
(b) Prepayments From Net Insurance/ Condemnation
Proceeds. No later than the first Business Day following the
date of receipt by Administra tive Agent or by Borrower or any
of its Subsidiaries of any Net Insur ance/Condemnation
Proceeds that are required to be applied to prepay the Loans
pursuant to the provisions of subsection 6.4C, Borrower shall
prepay the Loans in an aggregate amount equal to the amount of
such Net Insur ance/Condemnation Proceeds.
(c) Prepayments Due to Reversion of Surplus Assets of
Pension Plans. On the date of return to Borrower or any of its
Subsidiaries of any surplus assets of any pension plan of
Borrower or any of its Subsidiaries, Borrower shall prepay the
Loans in an aggregate amount (such amount being the "Net
Pension Proceeds") equal to 100% of such returned surplus
assets, net of transaction costs and expenses incurred in
obtaining such return, including incremental taxes payable as
a result thereof.
(d) Prepayments Upon Issuance of Debt or Equity
Securities. On the date of receipt by Borrower of the Net
Securities Proceeds from the issuance of any debt or equity
Securities of Borrower after the Closing Date, Borrower shall
prepay the Loans in an aggregate amount equal to such Net
Securities Proceeds. In the event the Preferred Stock
Redemption is not consummated by June 30, 1997 and the PIDA
Loan is funded, Borrower shall on such date prepay Term Loans
in an amount equal to the gross proceeds of the PIDA Loan
minus the face amount of any Letter of Credit issued to
support the PIDA Loan as contemplated by the PIDA Commitment
Letter annexed hereto as Schedule 7.2(vii).
(e) [Reserved]
(f) Prepayments From Consolidated Excess Cash Flow.
In the event that there shall be Consolidated Excess Cash Flow
for any Fiscal Year (commencing with the first Fiscal Year
ending after the Closing Date), Borrower shall, no later than
90 days after the end of such Fiscal Year, prepay the Loans in
an aggregate amount equal to (i) 75% of such ▇▇▇▇▇▇▇ dated
Excess Cash Flow if the Leverage Ratio at such time (as most
recently calculated prior to making any prepayment required
hereunder) is equal to or greater than 3:1 or (ii) 50% of such
Consolidated Excess
57
Cash Flow if the Leverage Ratio at such time (as most recently
calculated prior to making any prepayment required hereunder)
is less than 3:1.
(g) Prepayments Due to Purchase Price Adjustment and
Escrow Funds. On the date of receipt by Borrower of any
Purchase Price Adjustment Payments pursuant to the Acquisition
Documents, to the extent such funds in the aggregate exceed
$2,000,000, Borrower shall apply such funds to the full extent
thereof to repay Revolving Loans. On the date of receipt by
Borrower of any Escrow Funds pursuant to the Acquisition
Documents, Borrower shall apply such funds, to the extent such
funds are not owed to third party claimants, to repay Term
Loans.
(h) Calculations of Net Proceeds Amounts; Additional
Prepayments and Reductions Based on Subsequent Calculations.
Concurrently with any prepayment of the Loans pursuant to
subsections 2.4B(iii)(a)-(g), Borrower shall deliver to
Administrative Agent an Officers' Certificate demonstrating
the calculation of the amount (the "Net Proceeds Amount") of
the applicable Net Asset Sale Proceeds, Net
Insurance/Condemnation Proceeds, the applicable Net Pension
Proceeds or Net Securities Proceeds, or the applicable
Consolidated Excess Cash Flow, as the case may be, that gave
rise to such prepayment and/or reduction. In the event that
Borrower shall subsequently determine that the actual Net
Proceeds Amount was greater than the amount set forth in such
Officers' Certificate, Borrower shall promptly make an
additional prepayment of the Loans in an amount equal to the
amount of such excess, and Borrower shall concurrently
therewith deliver to Administra tive Agent an Officers'
Certificate demonstrating the derivation of the additional Net
Proceeds Amount resulting in such excess.
(i) Prepayments Due to Reductions or Restrictions of
Revolving Loan Commitments. Borrower shall from time to time
prepay first the Swing Line Loans and second the Revolving
Loans to the extent necessary so that the Total Utilization of
Revolving Loan Commitments shall not at any time exceed the
lesser of (x) the Revolving Loan Commitments then in effect
and (y) the Borrowing Base then in effect.
(iv) Application of Prepayments and Reductions of Revolving Loan
Commitments.
(a) Application of Voluntary Prepayments by Type of
Loans and Order of Maturity. Any voluntary prepayments
pursuant to subsection 2.4B(i) shall be applied as specified
by Borrower in the applicable notice of prepayment; provided
that in the event Borrower fails to specify the Loans to which
any such prepayment shall be applied, such prepayment shall be
applied first to repay outstanding Swing Line Loans
58
to the full extent thereof, second to repay outstanding
Revolving Loans to the full extent thereof, and third to repay
outstanding Term Loans to the full extent thereof. Any
voluntary prepayments of the Term Loans pursuant to subsection
2.4B(i) shall be applied to prepay Term Loans and to reduce
the scheduled installments of Term Loans set forth in
subsection 2.4A(i) in inverse order of maturity.
(b) Application of Mandatory Prepayments by Type of
Loans. Except as otherwise set forth in subsection
2.4B(iii)(h), any amount (the "Applied Amount") required to be
applied as a mandatory prepayment of the Loans pursuant to
subsections 2.4B(iii)(a)-(g) shall be applied first to prepay
Term Loans to the full extent thereof, second, to the extent
of any remaining portion of the Applied Amount, to prepay the
Swing Line Loans to the full extent thereof and to permanently
reduce the Revolving Loan Commitments by the amount of such
prepayment and third, to the extent of any remaining portion
of the Applied Amount, to prepay the Revolving Loans to the
full extent thereof.
(c) Application of Mandatory Prepayments of Term
Loans and the Scheduled Installments of Principal Thereof. Any
mandatory prepayments of the Term Loans pursuant to subsection
2.4B(iii) shall be applied to prepay Term Loans and to reduce
scheduled installments of principal on Term Loans set forth in
subsection 2.4A(i) on a pro rata basis.
(d) Application of Prepayments to Base Rate Loans and
Eurodollar Rate Loans. Considering Term Loans and Revolving
Loans being prepaid separately, any prepayment thereof shall
be applied first to Base Rate Loans to the full extent thereof
before application to Eurodollar Rate Loans, in each case in a
manner which minimizes the amount of any payments required to
be made by Borrower pursuant to subsection 2.6D.
C. General Provisions Regarding Payments.
(i) Manner and Time of Payment. All payments by Borrower of
principal, interest, fees and other Obligations hereunder and under the
Notes shall be made in Dollars in same day funds, without defense,
setoff or counterclaim, free of any restriction or condition, and
delivered to Administrative Agent not later than 11:00 A.M. (Dallas,
Texas time) on the date due at the Funding and Payment Office for the
account of Lenders; funds received by Administrative Agent after that
time on such due date shall be deemed to have been paid by Borrower on
the next succeeding Business Day. Borrower hereby authorizes
Administrative Agent to charge its accounts with Administrative Agent
in order to cause timely payment to be made to Administrative Agent of
all
59
principal, interest, fees and expenses due hereunder (subject to
sufficient funds being available in its accounts for that purpose).
(ii) Application of Payments to Principal and Interest. Except
as provided in subsection 2.2C, all payments in respect of the
principal amount of any Loan shall include payment of accrued interest
on the principal amount being repaid or prepaid, and all such payments
(and, in any event, any payments in respect of any Loan on a date when
interest is due and payable with respect to such Loan) shall be applied
to the payment of interest before application to principal.
(iii) Apportionment of Payments. Except as permitted in
subsection 2.4B(iv)(c), aggregate principal and interest payments in
respect of Term Loans and Revolving Loans shall be apportioned among
all outstanding Loans to which such payments relate, in each case
proportionately to Lenders' respective Pro Rata Shares. Administrative
Agent shall promptly distribute to each Lender, at its primary address
set forth below its name on the appropriate signature page hereof or at
such other address as such Lender may request, its Pro Rata Share of
all such payments received by Administrative Agent and the commitment
fees of such Lender when received by Administrative Agent pursuant to
subsection 2.3. Notwithstanding the foregoing provisions of this
subsection 2.4C(iii), if, pursuant to the provisions of subsection
2.6C, any Notice of Conversion/Continuation is withdrawn as to any
Affected Lender or if any Affected Lender makes Base Rate Loans in lieu
of its Pro Rata Share of any Eurodollar Rate Loans, Administrative
Agent shall give effect thereto in apportioning payments received
thereafter.
(iv) Payments on Business Days. Whenever any payment to be
made hereunder shall be stated to be due on a day that is not a
Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the
computation of the payment of interest hereunder or of the commitment
fees hereunder, as the case may be.
(v) Notation of Payment. Each Lender agrees that before
disposing of any Note held by it, or any part thereof (other than by
granting participations therein), that Lender will make a notation
thereon of all Loans evidenced by that Note and all principal payments
previously made thereon and of the date to which interest thereon has
been paid; provided that the failure to make (or any error in the
making of) a notation of any Loan made under such Note shall not limit
or otherwise affect the obligations of Borrower hereunder or under such
Note with respect to any Loan or any payments of principal or interest
on such Note.
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D. Application of Proceeds of Collateral and Payments Under
Subsidiary Guaranty.
(i) Application of Proceeds of Collateral. Except as otherwise
provided in subsection 2.4B(iii), all proceeds received by
Administrative Agent in respect of any sale of, collection from, or
other realization upon all or any part of the Collateral under any
Collateral Document may, in the discretion of Administrative Agent, be
held by Administrative Agent as Collateral for, and/or (then or at any
time thereafter) applied in full or in part by Administrative Agent
against, the applicable Secured Obligations (as defined in such
Collateral Document) in the following order of priority:
(a) To the payment of all costs and expenses of such
sale, collection or other realization, including reasonable
compensation to Administrative Agent and its agents and
counsel, and all other expenses, liabilities and advances made
or incurred by Administrative Agent in connection therewith,
and all amounts for which Administrative Agent is entitled to
indemnification under such Collateral Document and all
advances made by Administrative Agent thereunder for the
account of the applicable Loan Party, and to the payment of
all costs and expenses paid or incurred by Administrative
Agent in connection with the exercise of any right or remedy
under such Collateral Document, all in accordance with the
terms of this Agreement and such Collateral Document;
(b) thereafter, to the extent of any excess such
proceeds, to the payment of all other such Secured Obligations
for the ratable benefit of the holders thereof; and
(c) thereafter, to the extent of any excess such
proceeds, to the payment to or upon the order of such Loan
Party or to whosoever may be lawfully entitled to receive the
same or as a court of competent jurisdiction may direct.
(ii) Application of Payments Under Guaranties. All payments
received by Administrative Agent under either Guaranty shall be applied
promptly from time to time by Administrative Agent in the following
order of priority:
(a) To the payment of the reasonable costs and
expenses of any collection or other realization under such
Guaranty, including reasonable compensation to Administrative
Agent and its agents and counsel, and all reasonable expenses,
liabilities and advances made or incurred by Administra tive
Agent in connection therewith, all in accordance with the
terms of this Agreement and such Guaranty;
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(b) thereafter, to the extent of any excess such
payments, to the payment of all other Guarantied Obligations
(as defined in such Guaranty) for the ratable benefit of the
holders thereof; and
(c) thereafter, to the extent of any excess such
payments, to the payment to Parent or the applicable
Subsidiary Guarantor or to whosoever may be lawfully entitled
to receive the same or as a court of competent jurisdiction
may direct.
2.5 Use of Proceeds.
A. Term Loans. On the Closing Date, the proceeds of those certain
"Tranche A Term Loans" and "Tranche B Term Loans" made under the Existing
Agreement, together with the proceeds of the Term Loans and up to $4,000,000 in
proceeds of the initial Revolving Loans (the "Acquisition Revolving Loans") and
the proceeds of the Bridge Financing, were applied by Borrower to (i) finance
the purchase price of the Acquisition, (ii) refinance the indebtedness set forth
on Schedule 4.1E and (iii) to pay Transaction Costs.
B. Revolving Loans; Swing Line Loans. The proceeds of the Acquisition
Revolving Loans shall be applied by Borrower as provided in subsection 2.5A. The
proceeds of any other Revolving Loans and any Swing Line Loans shall be applied
by Borrower for general corporate purposes, which may include the making of
intercompany loans to any of Borrower's Subsidiaries, in accordance with
subsection 7.1(iv) and to consummate the Preferred Stock Redemption in
accordance with subsection 7.5.
C. Margin Regulations. No portion of the proceeds of any borrowing
under this Agreement shall be used by Borrower or any of its Subsidiaries in any
manner that might cause the borrowing or the application of such proceeds to
violate Regulation G, Regulation U, Regulation T or Regulation X of the Board of
Governors of the Federal Reserve System or any other regulation of such Board or
to violate the Exchange Act, in each case as in effect on the date or dates of
such borrowing and such use of proceeds.
2.6 Special Provisions Governing Eurodollar Rate Loans.
Notwithstanding any other provision of this Agreement to the contrary,
the following provisions shall govern with respect to Eurodollar Rate Loans as
to the matters covered:
A. Determination of Applicable Interest Rate. As soon as practicable
after 12:00 Noon (Dallas, Texas time) on each Interest Rate Determination Date,
Administrative Agent shall determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) the interest rate that
shall apply to the Eurodollar Rate Loans for which an interest rate is then
being determined
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for the applicable Interest Period and shall promptly give notice thereof (in
writing or by telephone confirmed in writing) to Borrower and each Lender.
B. Inability to Determine Applicable Interest Rate. In the event that
Administra tive Agent shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Eurodollar Rate Loans, that by reason of
circumstances affecting the London interbank market adequate and fair means do
not exist for ascertaining the interest rate applicable to such Loans on the
basis provided for in the definition of Adjusted Eurodollar Rate, Administrative
Agent shall on such date give notice (by telefacsimile or by telephone confirmed
in writing) to Borrower and each Lender of such determination, whereupon (i) no
Loans may be made as, or converted to, Eurodollar Rate Loans until such time as
Administrative Agent notifies Borrower and Lenders that the circumstances giving
rise to such notice no longer exist and (ii) any Notice of Borrowing or Notice
of Conversion/Continuation given by Borrower with respect to the Loans in
respect of which such determination was made shall be deemed to be rescinded by
Borrower.
C. Illegality or Impracticability of Eurodollar Rate Loans. In the
event that on any date any Lender shall have determined (which determination
shall be final and conclusive and binding upon all parties hereto but shall be
made only after consultation with Borrower and Administrative Agent) that the
making, maintaining or continuation of its Eurodollar Rate Loans (i) has become
unlawful as a result of compliance by such Lender in good faith with any law,
treaty, governmental rule, regulation, guideline or order (or would conflict
with any such treaty, governmental rule, regulation, guideline or order not
having the force of law even though the failure to comply therewith would not be
unlawful) or (ii) has become impracticable, or would cause such Lender material
hardship, as a result of contingencies occurring, in each case, after the date
of this Agreement which materially and adversely affect the London interbank
market or the position of such Lender in that market, then, and in any such
event, such Lender shall be an "Affected Lender" and it shall on that day give
notice (by telefacsimile or by telephone confirmed in writing) to Borrower and
Administrative Agent of such determination (which notice Administrative Agent
shall promptly transmit to each other Lender). Thereafter (a) the obligation of
the Affected Lender to make Loans as, or to convert Loans to, Eurodollar Rate
Loans shall be suspended until such notice shall be withdrawn by the Affected
Lender, (b) to the extent such determination by the Affected Lender relates to a
Eurodollar Rate Loan then being requested by Borrower pursuant to a Notice of
Borrowing or a Notice of Conversion/Continuation, the Affected Lender shall
make such Loan as (or convert such Loan to, as the case may be) a Base Rate
Loan, (c) the Affected Lender's obligation to maintain its outstanding
Eurodollar Rate Loans (the "Affected Loans") shall be terminated at the earlier
to occur of the expiration of the Interest Period then in effect with respect to
the Affected Loans or when required by law, and (d) the Affected Loans shall
automatically convert into Base Rate Loans on the date of such termination.
Notwithstanding the foregoing, to the extent a determination by an
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Affected Lender as described above relates to a Eurodollar Rate Loan then being
requested by Borrower pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, Borrower shall have the option, subject to the
provisions of subsection 2.6D, to rescind such Notice of Borrowing or Notice of
Conversion/Continuation as to all Lenders by giving notice (by telefacsimile or
by telephone confirmed in writing) to Administrative Agent of such rescission on
the date on which the Affected Lender gives notice of its determination as
described above (which notice of rescission Administrative Agent shall promptly
transmit to each other Lender). Except as provided in the immediately preceding
sentence, nothing in this subsection 2.6C shall affect the obligation of any
Lender other than an Affected Lender to make or maintain Loans as, or to convert
Loans to, Eurodollar Rate Loans in accordance with the terms of this Agreement.
D. Compensation For Breakage or Non-Commencement of Interest Periods.
Borrower shall compensate each Lender, upon written request by that Lender
(which request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including, without limitation, any
interest paid by that Lender to lenders of funds borrowed by it to make or carry
its Eurodollar Rate Loans and any loss, expense or liability sustained by that
Lender in connection with the liquidation or re-employment of such funds but
excluding, in any case, loss of anticipated profits) which that Lender may
sustain: (i) if for any reason (other than a default by that Lender) a borrowing
of any Eurodollar Rate Loan does not occur on a date specified therefor in a
Notice of Borrowing or a telephonic request for borrowing, or a conversion to or
continuation of any Eurodollar Rate Loan does not occur on a date specified
therefor in a Notice of Conversion/Continuation or a telephonic request for
conversion or continuation, (ii) if any prepayment (including without limitation
any prepayment pursuant to subsection 2.4B(i)) or other principal payment or any
conversion of any of its Eurodollar Rate Loans occurs on a date prior to the
last day of an Interest Period applicable to that Loan, (iii) if any prepayment
of any of its Eurodollar Rate Loans is not made on any date specified in a
notice of prepayment given by Borrower, (iv) as a consequence of any other
default by Borrower in the repayment of its Eurodollar Rate Loans when required
by the terms of this Agreement, or (v) as a consequence of any assignment of the
Commitments, Loans, Letters of Credit, the IRB Reimbursement Agreement or
participations therein by NationsBank at any time during the first ninety (90)
days after the Closing Date.
E. Booking of Eurodollar Rate Loans. Any Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of any of its branch
offices or the office of an Affiliate of that Lender.
F. Assumptions Concerning Funding of Eurodollar Rate Loans. Calculation
of all amounts payable to a Lender under this subsection 2.6 and under
subsection 2.7A shall be made as though that Lender had actually funded each of
its relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to clause (i) of the definition
of Adjusted Eurodollar
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Rate in an amount equal to the amount of such Eurodollar Rate Loan and having a
maturity and a principal amount comparable to the relevant Interest Period and
through the transfer of such Eurodollar deposit from an offshore office of that
Lender to a domestic office of that Lender in the United States of America;
provided, however, that each Lender may fund each of its Eurodollar Rate Loans
in any manner it sees fit and the foregoing assumptions shall be utilized only
for the purposes of calculating amounts payable under this subsection 2.6 and
under subsection 2.7A.
G. Eurodollar Rate Loans After Default. After the occurrence of and
during the continuation of a Potential Event of Default or an Event of Default,
(i) Borrower may not elect to have a Loan be made or maintained as, or converted
to, a Eurodollar Rate Loan after the expiration of any Interest Period then in
effect for that Loan and (ii) subject to the provisions of subsection 2.6D, any
Notice of Borrowing or Notice of Conver sion/Continuation given by Borrower with
respect to a requested borrowing or conver sion/continuation that has not yet
occurred shall be deemed to be rescinded by Borrower.
2.7 Increased Costs; Taxes; Capital Adequacy.
A. Compensation for Increased Costs and Taxes. Subject to the
provisions of subsection 2.7B (which shall be controlling with respect to the
matters covered thereby), in the event that any Lender shall determine (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) that any law, treaty or govern mental rule, regulation
or order, or any change therein or in the interpretation, administration or
application thereof (including the introduction of any new law, treaty or govern
mental rule, regulation or order), or any determination of a court or
governmental authority, in each case that becomes effective after the date
hereof, or compliance by such Lender with any guideline, request or directive
issued or made after the date hereof by any central bank or other governmental
or quasi-governmental authority (whether or not having the force of law):
(i) subjects such Lender (or its applicable lending office) to
any additional Tax (other than any Tax on the overall net income of
such Lender) with respect to this Agreement or any of its obligations
hereunder or any payments to such Lender (or its applicable lending
office) of principal, interest, fees or any other amount payable
hereunder;
(ii) imposes, modifies or holds applicable any reserve
(including without limitation any marginal, emergency, supplemental,
special or other reserve), special deposit, compulsory loan, FDIC
insurance or similar requirement against assets held by, or deposits or
other liabilities in or for the account of, or advances or loans by, or
other credit extended by, or any other acquisition of funds by, any
office of such Lender (other than any such
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reserve or other requirements with respect to Eurodollar Rate Loans
that are reflected in the definition of Adjusted Eurodollar Rate); or
(iii) imposes any other condition (other than with respect to
a Tax matter) on or affecting such Lender (or its applicable lending
office) causing it to have increased costs in connection with its
participation in the London interbank market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Loans hereunder or to reduce any amount
received or receivable by such Lender (or its applicable lending office) with
respect thereto; then, in any such case, Borrower shall promptly pay to such
Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
sole discretion shall determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder. Such Lender shall deliver to Borrower (with a copy to Administrative
Agent) a written statement, setting forth in reasonable detail the basis for
calculating the additional amounts owed to such Lender under this subsection
2.7A, which statement shall be conclusive and binding upon all parties hereto
absent manifest error.
B. Withholding of Taxes.
(i) Payments to Be Free and Clear. Subject to the provisions
of the following clause (ii), all sums payable by Borrower under this
Agreement and the other Loan Documents shall (except to the extent
required by law) be paid free and clear of, and without any deduction
or withholding on account of, any Tax (other than a Tax on the overall
net income of any Lender) imposed, levied, collected, withheld or
assessed by or within the United States of America or any political
subdivision in or of the United States of America or any other
jurisdiction from or to which a payment is made by or on behalf of
Borrower or by any federation or organization of which the United
States of America or any such jurisdiction is a member at the time of
payment.
(ii) Grossing-up of Payments. If Borrower or any other Person
is required by law to make any deduction or withholding on account of
any such Tax from any sum paid or payable by Borrower to Administrative
Agent or any Lender under any of the Loan Documents:
(a) Borrower shall notify Administrative Agent of any
such require ment or any change in any such requirement as
soon as Borrower becomes aware of it;
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(b) Borrower shall pay any such Tax before the date
on which penalties attach thereto, such payment to be made (if
the liability to pay is imposed on Borrower) for its own
account or (if that liability is imposed on Administrative
Agent or such Lender, as the case may be) on behalf of and in
the name of Administrative Agent or such Lender;
(c) the sum payable by Borrower in respect of which
the relevant deduction, withholding or payment is required
shall be increased to the extent necessary to ensure that,
after the making of that deduction, withholding or payment,
Administrative Agent or such Lender, as the case may be,
receives on the due date a net sum equal to what it would have
received had no such deduction, withholding or payment been
required or made; and
(d) within 30 days after paying any sum from which it
is required by law to make any deduction or withholding, and
within 30 days after the due date of payment of any Tax which
it is required by clause (b) above to pay, Borrower shall
deliver to Administrative Agent evidence satisfactory to the
other affected parties of such deduction, withholding or
payment and of the remittance thereof to the relevant taxing
or other authority;
provided that no such additional amount shall be required to be paid to
or on behalf of any Lender under clause (b) or (c) above except to the
extent that any change after the date hereof (in the case of each
Lender listed on the signature pages hereof) or after the date of the
Assignment Agreement pursuant to which such Lender became a Lender (in
the case of each other Lender) in any such requirement for a deduction,
withholding or payment as is mentioned therein shall result in an
increase in the rate of such deduction, withholding or payment from
that in effect at the date of this Agreement or at the date of such
Assignment Agreement, as the case may be, in respect of payments to
such Lender.
(iii) Evidence of Exemption from U.S. Withholding Tax.
(a) Each Lender that is organized under the laws of
any jurisdiction other than the United States or any state or
other political subdivision thereof (for purposes of this
subsection 2.7B(iii), a "Non-US Lender") shall deliver to
Administrative Agent for transmission to Borrower, on or prior
to the Closing Date (in the case of each Lender listed on the
signature pages hereof) or on or prior to the date of the
Assignment Agreement pursuant to which it becomes a Lender (in
the case of each other Lender), and at such other times as may
be necessary in the determination of Borrower or
Administrative Agent (each in the reasonable exercise of its
discretion), (1) two original
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copies of Internal Revenue Service Form 1001 or 4224 (or any
successor forms), properly completed and duly executed by such
Lender, together with any other certificate or statement of
exemption required under the Internal Revenue Code or the
regulations issued thereunder to establish that such Lender is
not subject to deduction or withholding of United States
federal income tax with respect to any payments to such Lender
of principal, interest, fees or other amounts payable under
any of the Loan Documents or (2) if such Lender is not a
"bank" or other Person described in Section 881(c)(3) of the
Internal Revenue Code and cannot deliver either Internal
Revenue Service Form 1001 or 4224 pursuant to clause (1)
above, a Certificate re Non- Bank Status together with two
original copies of Internal Revenue Service Form W-8 (or any
successor form), properly completed and duly executed by such
Lender, together with any other certificate or statement of
exemption required under the Internal Revenue Code or the
regulations issued thereunder to establish that such Lender is
not subject to deduction or withholding of United States
federal income tax with respect to any payments to such Lender
of interest payable under any of the Loan Documents.
(b) Each Lender required to deliver any forms,
certificates or other evidence with respect to United States
federal income tax withholding matters pursuant to subsection
2.7B(iii)(a) hereby agrees, from time to time after the
initial delivery by such Lender of such forms, certificates or
other evidence, whenever a lapse in time or change in
circumstances renders such forms, certificates or other
evidence obsolete or inaccurate in any material respect, that
such Lender shall promptly (1) deliver to Administrative Agent
for transmission to Borrower two new original copies of
Internal Revenue Service Form 1001 or 4224, or a Certificate
re Non-Bank Status and two original copies of Internal Revenue
Service Form W-8, as the case may be, properly completed and
duly executed by such Lender, together with any other
certificate or statement of exemption required in order to
confirm or establish that such Lender is not subject to
deduction or withholding of United States federal income tax
with respect to payments to such Lender under the Loan
Documents or (2) notify Administrative Agent and Borrower of
its inability to deliver any such forms, certificates or other
evidence.
(c) Borrower shall not be required to pay any
additional amount to or on behalf of any Non-US Lender under
clause (b) or (c) of subsection 2.7B(ii) if such Lender shall
have failed to satisfy the requirements of clause (a) or
(b)(1) of this subsection 2.7B(iii) or if the representations
set forth in clauses (a) or (b) of this subsection 2.7B(iii)
made by any Lender are not true; provided that if such Lender
shall have satisfied the requirements of subsection
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2.7B(iii)(a) on the Closing Date (in the case of each Lender
listed on the signature pages hereof) or on the date of the
Assignment Agreement pursuant to which it became a Lender (in
the case of each other Lender), nothing in this subsection
2.7B(iii)(c) shall relieve Borrower of its obligation to pay
any additional amounts pursuant to clause (c) of subsection
2.7B(ii) in the event that, as a result of any change in any
applicable law, treaty or governmental rule, regulation or
order, or any change in the interpretation, administration or
application thereof, such Lender is no longer properly
entitled to deliver forms, certificates or other evidence at a
subsequent date establishing the fact that such Lender is not
subject to withholding as described in subsection
2.7B(iii)(a).
(d) If any Lender shall become aware that it is
entitled to receive a refund in respect of Taxes or other
taxes as to which it has been indemni fied by Borrower
pursuant to this Section 2.7 (including any Taxes applicable
to any additional amounts payable under this Section), it
shall promptly notify Borrower of the availability of such
refund and shall, within 30 days after receipt of a request by
Borrower, apply for such refund at the expense of Borrower. If
any Lender receives a refund in respect of any Taxes or other
taxes as to which it has been indemnified by Borrower pursuant
to this Section (including any Taxes applicable to any
additional amounts payable under this Section), it shall
promptly notify Borrower of such refund and shall, within 30
days after receipt of a request by Borrower (or promptly upon
receipt, if Borrower has requested application for such refund
pursuant hereto), repay such refund (including any interest
actually received from the taxing authority with respect
thereto) to Borrower (to the extent of amounts that have been
paid by Borrower under this subsection 2.7B with respect to
such refund), net of all out-of-pocket expenses of such Lender
and taxes imposed with respect to such refund; provided that
Borrower, upon the request of such Lender, agrees to return
such refund (plus penalties, interest or other charges) to
such Lender in the event such Lender is required to repay such
refund. Nothing contained in this subsection (e) shall require
any Lender to make available any tax returns (or any other
information relating to its taxes that it deems confidential).
(e) Any Lender claiming any additional amounts
payable pursuant to this Section 2.7, shall use reasonable
efforts (consistent with legal and regulatory restrictions) to
file any certificate or document requested by the Borrower if
the making of such a filing or change would avoid the need for
or reduce the amount of any such additional amounts that may
thereafter accrue and would not, in the sole determination of
69
such Lender, be otherwise disadvantageous to such Lender, and
Borrower shall pay all reasonable costs associated therewith.
C. Capital Adequacy Adjustment. If any Lender shall have determined
that the adoption, effectiveness, phase-in or applicability after the date
hereof of any law, rule or regulation (or any provision thereof) regarding
capital adequacy, or any change therein or in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Lender (or its applicable lending office) with any guideline, request or
directive regarding capital adequacy (whether or not having the force of law) of
any such governmental authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on the capital of such Lender or
any corporation controlling such Lender as a consequence of, or with reference
to, such Lender's Loans or Commit ments or Letters of Credit or the IRB
Reimbursement Agreement or participations therein or other obligations hereunder
with respect to the Loans or the Letters of Credit or the IRB Reimbursement
Agreement to a level below that which such Lender or such controlling
corporation could have achieved but for such adoption, effectiveness, phase-in,
applicability, change or compliance (taking into consideration the policies of
such Lender or such controlling corporation with regard to capital adequacy),
then from time to time, within five Business Days after receipt by Borrower from
such Lender of the statement referred to in the next sentence, Borrower shall
pay to such Lender such additional amount or amounts as will compensate such
Lender or such controlling corporation on an after-tax basis for such reduction.
Such Lender shall deliver to Borrower (with a copy to Administrative Agent) a
written statement, setting forth in reasonable detail the basis of the
calculation of such additional amounts, which statement shall be conclusive and
binding upon all parties hereto absent manifest error.
2.8 Obligation of Lenders and Issuing Lender to Mitigate.
Each Lender and Issuing Lender agrees that, as promptly as practicable
after the officer of such Lender or Issuing Lender responsible for administering
the Loans or Letters of Credit of such Lender or Issuing Lender, as the case may
be, becomes aware of the occurrence of an event or the existence of a condition
that would cause such Lender to become an Affected Lender or that would entitle
such Lender or Issuing Lender to receive payments under subsection 2.7 or
subsection 3.6, it will, to the extent not inconsistent with the internal
policies of such Lender or Issuing Lender and any applicable legal or regulatory
restrictions, use reasonable efforts (i) to make, issue, fund or maintain the
Commitments of such Lender or the affected Loans or Letters of Credit of such
Lender or Issuing Lender through another lending or letter of credit office of
such Lender or Issuing Lender, or (ii) take such other measures as such Lender
or Issuing Lender may deem reasonable, if as a result thereof the circumstances
which would cause such Lender to be an Affected Lender would cease to exist or
the additional amounts which would otherwise be required to be paid to such
Lender or Issuing Lender pursuant to subsection 2.7 or subsection 3.6 would be
70
materially reduced and if, as determined by such Lender or Issuing Lender in its
sole discretion, the making, issuing, funding or maintaining of such Commitments
or Loans or Letters of Credit through such other lending or letter of credit
office or in accordance with such other measures, as the case may be, would not
otherwise materially adversely affect such Commitments or Loans or Letters of
Credit or the interests of such Lender or Issuing Lender; provided that such
Lender or Issuing Lender will not be obligated to utilize such other lending or
letter of credit office pursuant to this subsection 2.8 unless Borrower agrees
to pay all incremental expenses incurred by such Lender or Issuing Lender as a
result of utilizing such other lending or letter of credit office as described
in clause (i) above. A certificate as to the amount of any such expenses payable
by Borrower pursuant to this subsection 2.8 (setting forth in reasonable detail
the basis for requesting such amount) submitted by such Lender or Issuing Lender
to Borrower (with a copy to Administrative Agent) shall be conclusive absent
manifest error.
Section 3. LETTERS OF CREDIT; IRB REIMBURSEMENT AGREEMENT
3.1 Issuance of Letters of Credit, Execution of IRB Reimbursement Agreement
and Lenders' Purchase of Participations Therein.
A. Revolving Letters of Credit; and IRB Reimbursement Agreement.
1. Revolving Letters of Credit. In addition to Borrower
requesting that Lenders make Loans pursuant to subsection 2.1A,
Borrower may request, in accordance with the provisions of this
subsection 3.1, from time to time during the period from the Closing
Date to but excluding the Revolving Loan Commitment Termination Date,
that Issuing Lender issue Revolving Letters of Credit for the account
of Borrower for the purposes specified in the definition of Revolving
Letter of Credit. Subject to the terms and conditions of this Agreement
and in reliance upon the representations and warranties of Borrower
herein set forth, Issuing Lender shall issue Revolving Letters of
Credit in accordance with the provisions of this subsection 3.1;
provided that Borrower shall not request that Issuing Lender issue and
Issuing Lender shall not issue:
(i) any Revolving Letter of Credit if, after giving
effect to such issuance, the Total Utilization of Revolving
Loan Commitments (including the Maximum Exposure Under IRB
Reimbursement Agreement), would exceed the lesser of (1) the
Revolving Loan Commitments then in effect and (2) the
Borrowing Base then in effect;
(ii) any Revolving Letter of Credit if, after giving
effect to such issuance, the Revolving Letter of Credit Usage
would exceed $3,000,000;
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(iii) any Revolving Letter of Credit having an
expiration date (a) later than the earlier of (x) the
Revolving Loan Commitment Termination Date and (y) the date
which is one year from the date of issuance of such Revolving
Letter of Credit; provided that the immediately preceding
clause (y) shall not prevent Issuing Lender from agreeing that
a Revolving Letter of Credit will automatically be extended
for one or more successive periods not to exceed one year each
unless Issuing Lender elects not to extend for any such
additional period; and provided, further that Issuing Lender
shall elect not to extend such Revolving Letter of Credit if
it has knowledge that an Event of Default has occurred and is
continuing (and has not been waived in accordance with
subsection 10.6) at the time Issuing Lender must elect whether
or not to allow such extension or (b) that is otherwise
unacceptable to Issuing Lender in its reasonable discretion;
or
(iv) any Revolving Letter of Credit denominated in a
currency other than Dollars.
2. IRB Reimbursement Agreement. Borrower may request, in
accordance with the provisions of this subsection 3.1A.2, that Issuing
Lender enter into the IRB Reimbursement Agreement for the account of
Borrower and its Subsidiaries. Subject to the terms and conditions of
this Agreement and in reliance upon the representa tions and warranties
of Borrower set forth herein, Issuing Lender shall make IRB
Reimbursement Advances in accordance with the provisions of the IRB
Reimbursement Agreement.
B. Mechanics of Issuance.
(i) Notice of Issuance. Whenever Borrower desires the issuance
of a Letter of Credit, it shall deliver to Administrative Agent a
Notice of Issuance of Letter of Credit substantially in the form of
Exhibit III annexed hereto no later than 11:00 A.M. (Dallas, Texas
time) at least five Business Days or such shorter period as may be
agreed to by Issuing Lender in any particular instance, in advance of
the proposed date of issuance. The Notice of Issuance of Letter of
Credit shall specify (a) the proposed date of issuance (which shall be
a Business Day), (b) the face amount of the Letter of Credit, (c) the
expiration date of the Letter of Credit, (d) the name and address of
the beneficiary, and (e) either the verbatim text of the proposed
Revolving Letter of Credit or the proposed terms and conditions
thereof, including a precise description of any documents to be
presented by the beneficiary which, if presented by the beneficiary
prior to the expiration date of the Revolving Letter of Credit, would
require Issuing Lender to make payment under the Revolving Letter of
Credit; provided that Issuing Lender, in its reasonable discretion, may
require changes in the text of the proposed Revolving Letter of Credit
or any such documents; and provided, further that no Revolving Letter
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of Credit shall require payment against a conforming draft to be made
thereunder on the same business day (under the laws of the jurisdiction
in which the office of Issuing Lender to which such draft is required
to be presented is located) that such draft is presented if such
presentation is made after 10:00 A.M. (in the time zone of such office
of Issuing Lender) on such business day.
Borrower shall notify Issuing Lender prior to the issuance of
any Letter of Credit in the event that any of the matters to which
Borrower is required to certify in the applicable Notice of Issuance of
Letter of Credit is no longer true and correct as of the proposed date
of issuance of such Letter of Credit, and upon the issuance of any
Letter of Credit, Borrower shall be deemed to have re-certified, as of
the date of such issuance, as to the matters to which Borrower is
required to certify in the applicable Notice of Issuance of Letter of
Credit.
(ii) Issuance of Letter of Credit. Upon satisfaction or waiver
(in accordance with subsection 10.6) of the conditions set forth in
subsection 4.3, Issuing Lender shall issue the requested Letter of
Credit in accordance with Issuing Lender's standard operating
procedures.
(iii) Execution of IRB Reimbursement Agreement. On the Closing
Date, Issuing Lender entered into IRB Reimbursement Agreement.
(iv) Notification to Lenders. Upon the issuance of any Letter
of Credit Issuing Lender shall promptly notify Administrative Agent and
each other Lender of such issuance, which notice shall be accompanied
by a copy of such Letter of Credit and identify the amount of such
Lender's respective participation in such Letter of Credit, determined
in accordance with subsection 3.1C.
C. Lenders' Purchase of Participations.
(i) Letters of Credit. Immediately upon the issuance of each
Letter of Credit, each Lender shall be deemed to, and hereby agrees to,
have irrevocably purchased from Issuing Lender a participation in such
Letter of Credit and any drawings honored thereunder in an amount equal
to such Lender's Pro Rata Share of the maximum amount which is or at
any time may become available to be drawn thereunder.
(ii) IRB Reimbursement Agreement. Immediately upon the
execution of the IRB Reimbursement Agreement, each Lender irrevocably
purchased from Issuing Lender a participation in the IRB Reimbursement
Agreement (including any IRB Reimbursement Advances thereunder) in an
amount equal to such Lender's Pro Rata Share of the Maximum Exposure
Under IRB Reimbursement Agreement
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3.2 Letter of Credit Fees; IRB Reimbursement Account Fees.
A. Letter of Credit Fees. Borrower agrees to pay the following amounts
with respect to Letters of Credit issued hereunder:
(i) with respect to each Letter of Credit, (a) a fronting fee,
payable directly to Issuing Lender for its own account, equal to 0.25%
per annum of the daily amount available to be drawn under such Letter
of Credit and (b) a letter of credit fee, payable to Administrative
Agent for the account of Lenders, equal to the product of (x) the
Applicable Margin for Revolving Loans made as Eurodollar Rate Loans and
(y) the available amount to be drawn under any Revolving Letter of
Credit, each such fronting fee or letter of credit fee to be payable in
arrears on and to (but excluding) each March 31, June 30, September 30
and December 31 of each year commencing on March 31, 1997 and computed
on the basis of a 360-day year for the actual number of days elapsed;
and
(ii) with respect to the issuance, amendment or transfer of
each Letter of Credit and each payment of a drawing made thereunder
(without duplication of the fees payable under clauses (i) above),
documentary and processing charges payable directly to Issuing Lender
for its own account in accordance with Issuing Lender's standard
schedule for such charges in effect at the time of such issuance,
amendment, transfer or payment, as the case may be.
For purposes of calculating any fees payable under clauses (i) and (ii) of this
subsec tion 3.2A, the daily amount available to be drawn under any Letter of
Credit shall be determined as of the close of business on any date of
determination. Promptly upon receipt by Administrative Agent of any amount
described in clause (i)(b) of this subsection 3.2A, Administrative Agent shall
distribute to each Lender its Pro Rata Share of such amount.
B. IRB Reimbursement Agreement Fees. Borrower agrees to pay the
following amounts with respect to the IRB Reimbursement Agreement:
(i) with respect to the IRB Reimbursement Agreement, (a) a
fronting fee, payable directly to Issuing Lender for its own account,
equal to 0.25% per annum of the Maximum Exposure Under IRB
Reimbursement Agreement and (b) an IRB Reimbursement Advance fee,
payable to Administrative Agent for the account of Lenders, equal to
the product of (x) the Applicable Margin for Revolving Loans made as
Eurodollar Rate Loans and (y) the Maximum Exposure Under IRB
Reimbursement Agreement, each such fronting fee or IRB Reimbursement
Advance fee to be payable in arrears on and to (but excluding) each
March 31, June 30, September 30 and December 31 of each year commencing
on March 31, 1997 and, in each case, computed on the basis of a 360-day
year for the actual number of days elapsed; and
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(ii) with respect to the IRB Reimbursement Agreement and each
IRB Reimbursement Advance (without duplication of the fees payable
under clause (i) above), documentary and processing charges payable
directly to Issuing Lender for its own account in accordance with
Issuing Lender's standard schedule for such charges in effect at the
time of such payment (treating, for these purposes, the execution of
the IRB Reimbursement Agreement as the issuance of a Letter of Credit
and each IRB Reimbursement Advance as a draw under a Letter of Credit).
For purposes of calculating any fees payable under clauses (i) and (ii) of this
subsection 3.2B, the daily Maximum Exposure Under IRB Reimbursement Agreement
shall be determined as of the close of business on any date of determination.
Promptly upon receipt by Administrative Agent of any amount described in clause
(i) of this subsection 3.2B, Administrative Agent shall distribute to each
Lender its Pro Rata Share of such amount.
3.3 Drawings and Reimbursement of Amounts Paid Under Letters of Credit and
the IRB Reimbursement Agreement.
A. Responsibility of Issuing Lender With Respect to Drawings. In
determining whether to honor any drawing under any Letter of Credit by the
beneficiary thereof, Issuing Lender shall be responsible only to examine the
documents delivered under such Letter of Credit with reasonable care so as to
ascertain whether they appear on their face to be in accordance with the terms
and conditions of such Letter of Credit.
B. Reimbursement by Borrower of Amounts Paid Under Letters of Credit
and the IRB Reimbursement Agreement. In the event that either (x) Issuing Lender
has determined to honor a drawing under a Letter of Credit issued by it or (y)
Issuing Lender makes any IRB Reimbursement Advance under the IRB Reimbursement
Agreement, Issuing Lender shall immediately notify Borrower, and Borrower shall
reimburse Issuing Lender on or before the Business Day immediately following the
date on which such drawing is honored or such IRB Reimbursement Advance is made,
as applicable (the "Reimbursement Date"), in an amount in Dollars and in same
day funds equal to the amount of such honored drawing or such IRB Reimbursement
Advance; provided that, anything contained in this Agreement to the contrary
notwithstanding, (i) unless Borrower shall have notified Administrative Agent
and Issuing Lender prior to 10:00 A.M. (Dallas, Texas time) on the date such
drawing is honored or IRB Reimbursement Advance is made that Borrower intends to
reimburse Issuing Lender for the amount of such honored drawing or IRB
Reimbursement Advance with funds other than the proceeds of Revolving Loans,
Borrower shall be deemed to have given a timely Notice of Borrowing to
Administrative Agent requesting Lenders to make Revolving Loans that are Base
Rate Loans on the Reimburse ment Date in an amount in Dollars equal to the
amount of such honored drawing or IRB Reimbursement Advance and (ii) subject to
satisfaction or waiver of the conditions specified in subsection 4.3B, Lenders
shall, on the
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Reimbursement Date, make Revolving Loans that are Base Rate Loans in the amount
of such honored drawing or IRB Reimbursement Advance, the proceeds of which
shall be applied directly by Administrative Agent to reimburse Issuing Lender
for the amount of such honored drawing or IRB Reimbursement Advance; and
provided, further that if for any reason proceeds of Revolving Loans are not
received by Issuing Lender on the Reimbursement Date in an amount equal to the
amount of such honored drawing or IRB Reimbursement Advance, Borrower shall
reimburse Issuing Lender, on demand, in an amount in same day funds equal to the
excess of the amount of such honored drawing or IRB Reimbursement Advance over
the aggregate amount of such Loans, if any, which are so received. Nothing in
this subsection 3.3B shall be deemed to relieve any Lender from its obligation
to make Loans on the terms and conditions set forth in this Agreement, and
Borrower shall retain any and all rights it may have against any Lender
resulting from the failure of such Lender to make such Loans under this
subsection 3.3B.
C. Payment by Lenders of Unreimbursed Amounts Paid Under Letters of
Credit or the IRB Reimbursement Agreement.
(i) Payment by Lenders. In the event that Borrower shall fail
for any reason to reimburse Issuing Lender as provided in subsection
3.3B in an amount equal to the amount of any drawing honored by Issuing
Lender under a Letter of Credit issued by it or under the IRB
Reimbursement Agreement, as applicable, Issuing Lender shall promptly
notify each other Lender of the unreimbursed amount of such honored
drawing or IRB Reimbursement Advance and of such other Lender's
respective participation therein based on such Lender's Pro Rata Share.
Each Lender shall make available to Issuing Lender an amount equal to
its respective participation, in Dollars and in same day funds, at the
office of Issuing Lender specified in such notice, not later than 2:00
P.M. (Dallas, Texas time) on the first business day (under the laws of
the jurisdiction in which such office of Issuing Lender is located)
after the date notified by Issuing Lender. In the event that any Lender
fails to make available to Issuing Lender on such business day the
amount of such Lender's participation in such Letter of Credit or the
IRB Reimbursement Agreement, as applicable, as provided in this
subsection 3.3C, Issuing Lender shall be entitled to recover such
amount on demand from such Lender together with interest thereon at the
rate customarily used by Issuing Lender for the correction of errors
among banks for three Business Days and thereafter at the Base Rate.
Nothing in this subsection 3.3C shall be deemed to prejudice the right
of any Lender to recover from Issuing Lender any amounts made available
by such Lender to Issuing Lender pursuant to this subsection 3.3C in
the event that it is determined by the final judgment of a court of
competent jurisdiction that the payment with respect to a Letter of
Credit or the IRB Reimbursement Agreement by Issuing Lender in respect
of which payment was made by such Lender constituted gross negligence
or willful misconduct on the part of Issuing Lender.
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(ii) Distribution to Lenders of Reimbursements Received From
Borrower. In the event Issuing Lender shall have been reimbursed by
other Lenders pursuant to subsection 3.3C(i) for all or any portion of
any drawing honored by Issuing Lender under a Letter of Credit issued
by it, or under the IRB Reimbursement Agreement, as applicable, Issuing
Lender shall distribute to each other Lender which has paid all amounts
payable by it under subsection 3.3C(i) with respect to such honored
drawing such other Lender's Pro Rata Share of all payments subsequently
received by Issuing Lender from Borrower in reimbursement of such
honored drawing or IRB Reimbursement Advance when such payments are
received. Any such distribution shall be made to a Lender at its
primary address set forth below its name on the appropriate signature
page hereof or at such other address as such Lender may request.
D. Interest on Amounts Paid Under Letters of Credit and the IRB
Reimbursement Agreement.
(i) Payment of Interest by Borrower. Borrower agrees to pay to
Issuing Lender, with respect to drawings honored under any Letters of
Credit issued by it, and with respect to IRB Reimbursement Advances,
interest on the amount paid by Issuing Lender in respect of each such
honored drawing or IRB Reimbursement Advance from the date such drawing
is honored or IRB Reimbursement Advance is made to but excluding the
date such amount is reimbursed by Borrower (including any such
reimbursement out of the proceeds of Revolving Loans pursuant to
subsection 3.3B) at a rate equal to (a) for the period from the date
such drawing is honored or IRB Reimbursement Advance is made to but
excluding the Reimburse ment Date, the rate then in effect under this
Agreement with respect to Revolving Loans that are Base Rate Loans and
(b) thereafter, a rate which is 2% per annum in excess of the rate of
interest otherwise payable under this Agreement with respect to
Revolving Loans that are Base Rate Loans. Interest payable pursuant to
this subsection 3.3D(i) shall be computed on the basis of a 365-day
year for the actual number of days elapsed in the period during which
it accrues and shall be payable on demand or, if no demand is made, on
the date on which the related drawing under a Letter of Credit or IRB
Reimbursement Advance is reimbursed in full.
(ii) Distribution of Interest Payments by Issuing Lender.
Promptly upon receipt by Issuing Lender of any payment of interest
pursuant to subsection 3.3D(i) with respect to a drawing honored under
a Letter of Credit issued by it, or with respect to an IRB
Reimbursement Advance, (a) Issuing Lender shall distribute to each
other Lender, out of the interest received by Issuing Lender in respect
of the period from the date such drawing is honored or such IRB
Reimbursement is made to but excluding the date on which Issuing Lender
is reimbursed for the amount of such drawing or IRB Reimbursement
Advance (including any such reimbursement out of the proceeds of
Revolving Loans, the amount that such other Lender would have been
entitled to receive
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either (x) in respect of the letter of credit fee that would have been
payable in respect of such Letter of Credit for such period pursuant to
subsection 3.2 if no drawing had been honored under such Letter of
Credit, or (y) in respect of the IRB Reimbursement Agreement fee that
would have been payable for such period pursuant to subsection 3.2 if
no IRB Reimbursement Advance had been made, as applicable, and (b) in
the event Issuing Lender shall have been reimbursed by other Lenders
pursuant to subsection 3.3C(i) for all or any portion of such honored
drawing, or IRB Reimbursement Advance, Issuing Lender shall distribute
to each other Lender which has paid all amounts payable by it under
subsection 3.3C(i) with respect to such honored drawing or IRB
Reimbursement Advance such other Lender's Pro Rata Share of any
interest received by Issuing Lender in respect of that portion of such
honored drawing or IRB Reimbursement Advance so reimbursed by other
Lenders for the period from the date on which Issuing Lender was so
reimbursed by other Lenders to but excluding the date on which such
portion of such honored drawing or IRB Reimbursement Advance is
reimbursed by Borrower. Any such distribution shall be made to a Lender
at its primary address set forth below its name on the appropriate
signature page hereof or at such other address as such Lender may
request.
3.4 Obligations Absolute.
The obligation of Borrower to reimburse Issuing Lender for drawings
honored under Letters of Credit and IRB Reimbursement Advances and to repay any
Revolving Loans made by Lenders pursuant to subsection 3.3B and the obligations
of Lenders under subsection 3.3C(i) shall be unconditional and irrevocable and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances including, without limitation, any of the following circumstances:
(i) any lack of validity or enforceability of any Letter of
Credit or the IRB Reimbursement Agreement;
(ii) the existence of any claim, set-off, defense or other
right which Borrower or any Lender may have at any time against a
beneficiary or any transferee of any Letter of Credit (or any Persons
for whom any such transferee may be acting) or any beneficiary of the
IRB Reimbursement Agreement, Issuing Lender or other Lender or any
other Person or, in the case of a Lender, against Borrower, whether in
connection with this Agreement, the transactions contemplated herein or
any unrelated transaction (including any underlying transaction between
Borrower or one of its Subsidiaries and the beneficiary for which any
Letter of Credit was procured);
(iii) any draft or other document presented under any Letter
of Credit or with respect to the IRB Reimbursement Agreement proving to
be forged,
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fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;
(iv) payment by Issuing Lender under any Letter of Credit
against presentation of a draft or other document which does not comply
with the terms of such Letter of Credit;
(v) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or prospects of
Borrower or any of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan Document
by any party thereto;
(vii) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing; or
(viii) the fact that an Event of Default or a Potential Event
of Default shall have occurred and be continuing; provided, in each
case, that payment by Issuing Lender under the applicable Letter of
Credit or with respect to the IRB Reimbursement Agreement shall not
have constituted gross negligence or willful misconduct of Issuing
Lender under the circumstances in question.
3.5 Indemnification; Nature of Issuing Lender's Duties.
A. Indemnification. In addition to amounts payable as provided in
subsection 3.6, Borrower hereby agrees to protect, indemnify, pay and save
harmless Issuing Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and allocated costs of internal
counsel) which Issuing Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit by Issuing
Lender, other than, subject to the following clause (ii), the wrongful dishonor
by Issuing Lender of a proper demand for payment made under any Letter of Credit
issued by it, (ii) the failure of Issuing Lender to honor a drawing under any
such Letter of Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto government or
governmental authority (all such acts or omissions herein called "Govern mental
Acts") or (iii) the execution, delivery and performance of the IRB Reimbursement
Agreement, in any case, other than as a result of the gross negligence or
willful misconduct of Issuing Lender.
B. Nature of Issuing Lender's Duties. As between Borrower and Issuing
Lender, Borrower assumes all risks of the acts and omissions of, or misuse of
the
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Letters of Credit issued by Issuing Lender by, the respective beneficiaries of
such Letters of Credit. In furtherance and not in limitation of the foregoing,
Issuing Lender shall not be responsible for: (i) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document submitted by
any party in connection with the application for and issuance of any such Letter
of Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or assign
any such Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or ineffective for
any reason; (iii) failure of the beneficiary of any such Letter of Credit to
comply fully with any conditions required in order to draw upon such Letter of
Credit; (iv) errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether
or not they be in cipher; (v) errors in interpretation of technical terms; (vi)
any loss or delay in the transmission or otherwise of any document required in
order to make a drawing under any such Letter of Credit or of the proceeds
thereof; (vii) the misapplication by the beneficiary of any such Letter of
Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any
consequences arising from causes beyond the control of Issuing Lender, including
without limitation any Governmental Acts, and none of the above shall affect or
impair, or prevent the vesting of, any of Issuing Lender's rights or powers
hereunder, except, in any case, as a result of the gross negligence or willful
misconduct of the Issuing Lender. As between Borrower and Issuing Lender,
Borrower assumes all risks of the acts and omissions of the beneficiaries of the
IRB Reimbursement Agreement.
In furtherance and extension and not in limitation of the specific
provisions set forth in the first paragraph of this subsection 3.5B, any action
taken or omitted by Issuing Lender under or in connection with the Letters of
Credit issued by it, the IRB Reimbursement Agreement or any documents and
certificates delivered thereunder, if taken or omitted in good faith and without
gross negligence or willful misconduct, shall not put Issuing Lender under any
resulting liability to Borrower.
Notwithstanding anything to the contrary contained in this subsection
3.5, Borrower shall retain any and all rights it may have against Issuing Lender
for any liability arising solely out of the gross negligence or willful
misconduct of Issuing Lender, as determined by a final judgment of a court of
competent jurisdiction.
3.6 Increased Costs and Taxes Relating to Letters of Credit.
Subject to the provisions of subsection 2.7B (which shall be
controlling with respect to the matters covered thereby), in the event that
Issuing Lender or Lender shall determine (which determination shall, absent
manifest error, be final and conclusive and binding upon all parties hereto)
that any law, treaty or governmental rule, regulation or order, or any change
therein or in the interpretation, administration or application thereof
(including the introduction of any new law,
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treaty or governmental rule, regulation or order), or any determination of a
court or governmental authority, in each case that becomes effective after the
date hereof, or compliance by Issuing Lender or Lender with any guideline,
request or directive issued or made after the date hereof by any central bank or
other governmental or quasi-governmental authority (whether or not having the
force of law):
(i) subjects Issuing Lender or Lender (or its applicable
lending or letter of credit office) to any additional Tax (other than
any Tax on the overall net income of Issuing Lender or Lender) with
respect to the issuing or maintaining of any Letters of Credit or the
purchasing or maintaining of any participations therein or any other
obligations under this Section 3, whether directly or by such being
imposed on or suffered by any particular Issuing Lender;
(ii) imposes, modifies or holds applicable any reserve
(including without limitation any marginal, emergency, supplemental,
special or other reserve), special deposit, compulsory loan, FDIC
insurance or similar requirement in respect of any Letters of Credit
issued by Issuing Lender or participations therein purchased by any
Lender; or
(iii) imposes any other condition (other than with respect to
a Tax matter) on or affecting Issuing Lender or Lender (or its
applicable lending or letter of credit office) regarding this Section
3, any Letter of Credit or any participation therein or the IRB
Reimbursement Agreement;
and the result of any of the foregoing is (x) to increase the cost to Issuing
Lender or Lender of agreeing to issue, issuing or maintaining any Letter of
Credit or agreeing to purchase, purchasing or maintaining any participation
therein or purchasing its obligations under the IRB Reimbursement Agreement or
(y) to reduce any amount received or receivable by Issuing Lender or Lender (or
its applicable lending or letter of credit office) with respect thereto; then,
in any case, Borrower shall promptly pay to Issuing Lender or Lender, upon
receipt of the statement referred to in the next sentence, such additional
amount or amounts as may be necessary to compensate Issuing Lender or Lender for
any such increased cost or reduction in amounts received or receivable
hereunder. Issuing Lender or Lender, as the case may be, shall deliver to
Borrower a written statement, setting forth in reasonable detail the basis for
calculating the additional amounts owed to Issuing Lender or Lender under this
subsection 3.6, which statement shall be conclusive and binding upon all parties
hereto absent manifest error.
Section 4. CONDITIONS TO EFFECTIVENESS TO LOANS AND LETTERS OF CREDIT
4.1 Conditions to Effectiveness.
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The effectiveness of this Agreement is subject to the satisfaction of
all of the following conditions:
(i) each of the parties hereto shall have executed and delivered
counterparts of this Agreement to Administrative Agent; and
(ii) Borrower and Parent shall have taken such actions and delivered to
Administrative Agent such documents as Administrative Agent may reasonably
request and all such documents shall be in form and substance satisfactory to
Administrative Agent.
4.2 Conditions to All Loans.
The obligations of Lenders to make Loans on each Funding Date are
subject to the following further conditions precedent:
A. Agent shall have received before that Funding Date, in accordance
with the provisions of subsection 2.1B, an originally executed Notice of
Borrowing, in each case signed by the chief executive officer, the chief
financial officer or the treasurer of Borrower or by any executive officer of
Borrower designated by any of the above-described officers on behalf of Borrower
in a writing delivered to Administrative Agent.
B. As of that Funding Date:
(i) The representations and warranties contained herein and in
the other Loan Documents shall be true, correct and complete in all
material respects on and as of that Funding Date to the same extent as
though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date,
in which case such representations and warranties shall have been true,
correct and complete in all material respects on and as of such earlier
date;
(ii) No event shall have occurred and be continuing or would
result from the consummation of the borrowing contemplated by such
Notice of Borrowing that would constitute an Event of Default or a
Potential Event of Default;
(iii) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender
from making the Loans to be made by it on that Funding Date; and
(iv) The making of the Loans requested on such Funding Date
shall not violate any law including, without limitation, Regulation G,
Regulation T, Regulation U or Regulation X of the Board of Governors
of the Federal Reserve System.
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4.3 Conditions to Letters of Credit.
The issuance of any Letter of Credit hereunder is subject to the
following conditions precedent:
A. On or before the date of issuance of the initial Revolving Letter of
Credit pursuant to this Agreement, the initial Loans shall have been made.
B. On or before the date of issuance of such Letter of Credit,
Administrative Agent shall have received, in accordance with the provisions of
subsection 3.1B(i), an originally executed Notice of Issuance of Letter of
Credit, in each case signed by the chief executive officer, the chief financial
officer or the treasurer of Borrower or by any executive officer of Borrower
designated by any of the above-described officers on behalf of Borrower in a
writing delivered to Administrative Agent, together with all other information
specified in subsection 3.1B(i) and such other documents or information as
Issuing Lender may reasonably require in connection with the issuance of such
Letter of Credit.
Section 5. BORROWER'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to make the
Loans, to induce Issuing Lender to issue Letters of Credit and to enter into the
IRB Reimbursement Agreement, and to induce other Lenders to purchase
participations in the Letters of Credit and the IRB Reimbursement Agreement,
each of Parent and Borrower, jointly and severally, represents and warrants to
each Lender, on the date of this Agreement, on each Funding Date and on the date
of issuance of each Letter of Credit, that the following statements are true,
correct and complete:
5.1 Organization, Powers, Qualification, Good Standing, Business,
Subsidiaries and Restructuring.
A. Organization and Powers. Each Loan Party is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation as specified in Schedule 5.1 annexed hereto. Each
Loan Party has all requisite corporate power and authority to own and operate
its properties, to carry on its business as now conducted and as proposed to be
conducted, to enter into the Loan Documents and Related Agreements to which it
is a party and to carry out the transactions contemplated thereby.
B. Qualification and Good Standing. Each Loan Party is qualified to do
business and in good standing in every jurisdiction where its assets are located
and wherever necessary to carry out its business and operations, except in
jurisdictions where the failure to be so qualified or in good standing has not
had and will not have a Material Adverse Effect.
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C. Conduct of Business. Parent and its Subsidiaries are engaged only in
the businesses permitted to be engaged in pursuant to subsection 7.12.
D. Subsidiaries. All of the Subsidiaries of Borrower are wholly owned
and identified in Schedule 5.1 annexed hereto, as said Schedule 5.1 may be
supplemented from time to time pursuant to the provisions of subsection
6.1(xvi). The capital stock of each of the Subsidiaries of Borrower identified
in Schedule 5.1 annexed hereto (as so supplemented) is duly authorized, validly
issued, fully paid and nonassessable and none of such capital stock constitutes
Margin Stock. Each of the Subsidiaries of Borrower identified in Schedule 5.1
annexed hereto (as so supplemented) is a corporation duly organized, validly
existing and in good standing under the laws of its respective jurisdiction of
incorporation set forth therein (which jurisdiction shall be in the United
States), has all requisite corporate power and authority to own and operate its
properties and to carry on its business as now conducted and as proposed to be
conducted, and is qualified to do business and in good standing in every
jurisdiction where its assets are located and wherever necessary to carry out
its business and operations, in each case except where failure to be so
qualified or in good standing or a lack of such corporate power and authority
has not had and will not have a Material Adverse Effect. Schedule 5.1 annexed
hereto (as so supplemented) correctly sets forth the ownership interest of
Borrower and each of its Subsidiaries in each of the Subsidiaries of Borrower
identified therein.
E. Restructuring. The Restructuring has been consummated as of the
Closing Date in accordance with the terms thereof.
5.2 Authorization of Borrowing, etc.
A. Authorization of Borrowing. The execution, delivery and performance
of the Loan Documents and the Related Agreements have been duly authorized by
all necessary corporate action on the part of each Loan Party that is a party
thereto.
B. No Conflict. The execution, delivery and performance by Loan Parties
of the Loan Documents and the Related Agreements to which they are parties and
the consummation of the transactions contemplated by the Loan Documents and such
Related Agreements do not and will not (i) violate any provision of any law or
any governmental rule or regulation applicable to Parent or any of its
Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of Parent
or any of its Subsidiaries or any order, judgment or decree of any court or
other agency of government binding on Parent or any of its Subsidiaries, (ii)
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any material Contractual Obligation of Parent or
any of its Subsidiaries, (iii) result in or require the creation or imposition
of any Lien upon any of the properties or assets of Parent or any of its
Subsidiaries (other than any Liens created under any of the Loan Documents in
favor of Administrative Agent on behalf of Lenders), or (iv) require any
approval of stockholders or any approval or consent of any Person under any
material
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Contractual Obligation of Parent or any of its Subsidiaries, except for such
approvals or consents that are (i) listed on Schedule 5.2B and (ii) that will be
obtained on or before the Closing Date or where the failure to obtain such
approvals or consents has not had and would not be reasonably likely to have a
Material Adverse Effect.
C. Governmental Consents. The execution, delivery and performance by
Loan Parties of the Loan Documents and the Related Agreements to which they are
parties and the consummation of the transactions contemplated by the Loan
Documents and such Related Agreements do not and will not require any
registration with, consent or approval of, or notice to, or other action to,
with or by, any federal, state or other governmental authority or regulatory
body, except for such registrations, consents, approvals, notices and other
actions that are (i) listed on Schedule 5.2C, all of which have been obtained or
made on or prior to the Closing Date and are in full force and effect or (ii)
are required exclusively in connection with the Acquisition and the
Restructuring, the failure to obtain of which has not and had and would not be
reasonably likely to have a Material Adverse Effect.
D. Binding Obligation. Each of the Loan Documents and Related
Agreements has been duly executed and delivered by each Loan Party that is a
party thereto and is the legally valid and binding obligation of such Loan
Party, enforceable against such Loan Party in accordance with its respective
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors' rights generally
or by equitable principles relating to enforceability.
E. Valid Issuance of Senior Guaranteed Notes. Borrower has the
corporate power and authority to issue the Senior Guaranteed Notes. The Senior
Guaranteed Notes are the legally valid and binding obligations of Borrower,
enforceable against Borrower in accordance with their respective terms, except
as may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or limiting creditors' rights generally or by equitable
principles relating to enforceability. The Senior Guaranteed Notes have either
(a) have been registered or qualified under applicable federal and state
securities laws or (b) be exempt therefrom.
5.3 Financial Condition.
Borrower has heretofore delivered to Lenders, at Lenders' request, the
following Financial Statements:
(i) the consolidated balance sheets of Borrower and its
Subsidiaries as at September 30, 1994, 1995 and 1996, and the related
consolidated statements of income and cash flows of Borrower and its
Subsidiaries for the fiscal years then ended, accompanied, in the case
of the financial statements
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for the fiscal years ended September 30, 1994 and September 30, 1995,
by an opinion of Borrower's accoun tants, and accompanied, in the case
of the financial statements for the fiscal year ended September 30,
1996, by a form of opinion of Borrower's accountants, together with a
letter from Borrower's accountants with respect thereto, and the
consolidated and consolidating balance sheets of Borrower and its
Subsidiaries as at October 31, 1996, together with selected
consolidated statements of income, stockholders' equity and cash flow
for the one month period then ended, duly certified by the chief
financial officer of Borrower that such financial statements fairly
present (subject, in the case of such balance sheet as at October 31,
1996 and such statements of income and cash flows for the one month
then ended, to normal year-end audit adjustments) the consolidated
financial condition of Borrower and its Subsidiaries as at such dates
and the consolidated results of the operation of Borrower and its
Subsidiaries for the periods ended on such dates and that all such
financial statements, including the related schedules and notes
thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved;
(ii) the consolidated balance sheets of Quality Foods, L.P.
and its Subsidiaries as at December 31, 1993, 1994 and 1995, and the
related statements of income and cash flows of Quality Foods, L.P. and
its Subsidiaries for the fiscal years then ended, accompanied by an
opinion of Quality Foods, L.P.'s accountants; the consolidated balance
sheet of Quality Foods, L.P. and its Subsidiaries as at September 30,
1995 and 1996, and the related consolidated statements of income and
cash flows of Quality Foods, L.P. and its Subsidiaries for the nine
months then ended, duly certified by the chief financial officer of
Quality Foods, L.P. that such financial statements fairly present
(subject, in the case of such balance sheet as at September 30, 1996
and such statements of income and cash flows for the nine months then
ended, to normal year-end audit adjustments) the consolidated financial
condition of Quality Foods, L.P. and its Subsidiaries as at such dates
and the consolidated results of the operations of Quality Foods, L.P.
and its Subsidiaries for the periods ended on such dates and that all
such financial statements, including the related schedules and notes
thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved;
(iii) pro forma financial statements of Borrower and its
Subsidiaries as of September 30, 1996, giving effect to the
Acquisition, the Restructuring and the other transactions contemplated
hereby and reflecting estimated purchase price accounting adjustments,
prepared by Borrower, and substantially in compliance with Article 11
of Regulation S-X of the Securities and Exchange Commission (assuming
such pro forma financial statements were furnished in connection with a
public offering), which pro forma financial statements shall be
accompanied by a certificate of the chief financial officer of Borrower
to the effect that, based on his discussion with
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Borrower's accountants, such pro forma financial statements are
substantially in compliance with such Article 11; and
(iv) together with each of the interim financial statements
referred to in subdivision (ii) above, an independent accountant's
review report signed by Quality Foods, L.P.'s accountants to the effect
that they have conducted a limited review with respect to such interim
financial statements in accordance with Statement on Auditing Standards
No. 71.
The Financial Statements (other than pro forma financial statements)
were prepared in conformity with GAAP and fairly present, in all material
respects, the financial position (on a consolidated and, where applicable,
consolidating basis) of the entities described in such Financial Statements as
at the respective dates thereof and the results of operations and cash flows (on
a consolidated and, where applicable, consolidating basis) of the entities
described therein for each of the periods then ended, subject, in the case of
any unaudited Financial Statements, to changes resulting from audit and normal
year-end adjustments. The pro forma financial statements included in the
Financial Statements present fairly the information shown therein, have been
properly compiled on the pro forma basis described therein, and in Borrower's
opinion, the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions or
circumstances referred to herein. Parent and its Subsidiaries do not (and will
not following the funding of the initial Loans) have any Contingent Obligation,
contingent liability or liability for taxes, long-term lease or unusual forward
or long-term commitment that is not reflected in the foregoing financial
statements or the notes thereto and which in any such case is material in
relation to the business, operations, properties, assets, condition (financial
or otherwise) or prospects of Parent or any of its Subsidiaries.
5.4 No Material Adverse Change; No Restricted Junior Payments.
Since September 30, 1995, no event or change has occurred that has
caused or evidences, either in any case or in the aggregate, a Material Adverse
Effect. Neither Parent nor any of its Subsidiaries has directly or indirectly
declared, ordered, paid or made, or set apart any sum or property for, any
Restricted Junior Payment or agreed to do so except as permitted by subsection
7.5 and as set forth in Schedule 5.4.
5.5 Title to Properties; Liens; Real Property.
A. Title to Properties; Liens. Subject to Permitted Liens, Parent and
its Subsidiaries have (i) good, sufficient and legal title to (in the case of
fee interests in real property), (ii) valid leasehold interests in (in the case
of leasehold interests in real or personal property), or (iii) good title to (in
the case of all other personal property), all of their respective properties and
assets
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reflected in the financial statements referred to in subsection 5.3 or in the
most recent financial statements delivered pursuant to subsection 6.1, in each
case except for assets disposed of since the date of such financial statements
in the ordinary course of business or as otherwise permitted under subsection
7.7. Except as permitted by this Agreement, all such properties and assets are
free and clear of Liens.
B. Real Property. As of the Closing Date, Schedule 5.5 annexed hereto
contains a true, accurate and complete list of (i) all owned Real Property
Assets and (ii) all leases, subleases or assignments of leases (together with
all amendments, modifications, supplements, renewals or extensions of any
thereof) affecting each Real Property Asset of any Loan Party, regardless of
whether such Loan Party is the landlord or tenant (whether directly or as an
assignee or successor in interest) under such lease, sublease or assignment.
Except as specified in Schedule 5.5 annexed hereto, each agreement listed in
clause (ii) of the immediately preceding sentence is in full force and effect
and neither Parent nor Borrower has any knowledge of any default that has
occurred and is continuing thereunder, and each such agreement constitutes the
legally valid and binding obligation of each applicable Loan Party, enforceable
against such Loan Party in accordance with its terms, except as enforcement may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or by equitable principles.
5.6 Litigation; Adverse Facts.
Except as set forth in Schedule 5.6 annexed hereto, there are no
actions, suits, proceedings, arbitrations or governmental investigations at law
or in equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign (including any Environmental Claims) that are pending or, to
the knowledge of Borrower or Parent, threatened against or affecting Parent or
any of its Subsidiaries or any property of Parent or any of its Subsidiaries and
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect. Neither Parent nor any of its Subsidiaries (i) is
in violation of any applicable laws (including Environmental Laws) that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect, or (ii) is subject to or in default with respect to any
final judgments, writs, injunctions, decrees, rules or regulations of any court
or any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.
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5.7 Payment of Taxes.
Except to the extent permitted by subsection 6.3, all tax returns and
reports of Parent and its Subsidiaries required to be filed by any of them have
been timely filed, and all taxes due and payable and all assessments, fees and
other governmental charges upon Parent and its Subsidiaries and upon their
respective properties, assets, income, businesses and franchises which are due
and payable have been paid when due and payable. Neither Parent nor Borrower
knows of any proposed tax assessment against Parent or any of its Subsidiaries
which is not being actively contested by Parent or such Subsidiary in good faith
and by appropriate proceedings; provided that such reserves or other appropriate
provisions, if any, as shall be required in conformity with GAAP shall have been
made or provided therefor.
5.8 Performance of Agreements; Materially Adverse Agreements; Material
Contracts.
A. Neither Parent nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any of its Contractual Obligations, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences of such default or
defaults, if any, would not have a Material Adverse Effect.
B. Schedule 5.8 contains a true, correct and complete list of all the
Material Contracts in effect on the Closing Date. All such Material Contracts
are in full force and effect and no material defaults currently exist
thereunder, and except where the consequenc es of such default or defaults, if
any, would not reasonably be likely to have a Material Adverse Effect.
5.9 Governmental Regulation.
Neither Parent nor any of its Subsidiaries is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its ability to incur
Indebtedness or which may otherwise render all or any portion of the Obligations
unenforceable.
5.10 Securities Activities.
A. Neither Parent nor any of its Subsidiaries is engaged principally,
or as one of its important activities, in the business of extending credit for
the purpose of purchasing or carrying any Margin Stock.
B. Following application of the proceeds of each Loan, not more than
25% of the value of the assets (either of Borrower only or of Borrower and its
Subsidiaries on a consolidated basis) subject to the provisions of subsection
7.2 or 7.7 or subject
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to any restriction contained in any agreement or instrument, between Borrower
and any Lender or any Affiliate of any Lender, relating to Indebtedness and
within the scope of subsection 8.2, will be Margin Stock.
5.11 Employee Benefit Plans.
A. Parent, each of its Subsidiaries and each of their respective ERISA
Affiliates are in material compliance with all applicable provisions and
requirements of ERISA and the regulations and published interpretations
thereunder with respect to each Employee Benefit Plan, and have performed all
their material obligations under each Employee Benefit Plan. Each Employee
Benefit Plan which is intended to qualify under Section 401(a) of the Internal
Revenue Code is so qualified.
B. No ERISA Event has occurred or is reasonably expected to occur.
C. Except to the extent required under Section 4980B of the Internal
Revenue Code or except as set forth in Schedule 5.11 annexed hereto, no Employee
Benefit Plan provides health or welfare benefits (through the purchase of
insurance or otherwise) for any retired or former employee of Parent, any of its
Subsidiaries or any of their respective ERISA Affiliates.
D. As of the most recent valuation date for any Pension Plan, the
amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA), individually or in the aggregate for all Pension Plans (excluding for
purposes of such computation any Pension Plans with respect to which assets
exceed benefit liabilities), does not exceed $500,000.
E. As of the most recent valuation date for each Multiemployer Plan for
which the actuarial report is available, the potential liability of Parent, its
Subsidiaries and their respective ERISA Affiliates for a complete withdrawal
from such Multiemployer Plan (within the meaning of Section 4203 of ERISA), when
aggregated with such potential liability for a complete withdrawal from all
Multiemployer Plans, based on information available pursuant to Section 4221(e)
of ERISA, does not exceed $500,000.
5.12 Certain Fees.
No broker's or finder's fee or commission will be payable with respect
to this Agreement, and Parent and Borrower hereby, jointly and severally,
indemnify Lenders against, and agrees that it will hold Lenders harmless from,
any claim, demand or liability for any such broker's or finder's fees alleged to
have been incurred in connection herewith or therewith and any expenses
(including reasonable fees, expenses and disbursements of counsel) arising in
connection with any such claim, demand or liability.
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5.13 Environmental Protection.
Except as set forth in Schedule 5.13 annexed hereto:
(i) neither Parent nor any of its Subsidiaries nor any of
their respective Facilities or operations are subject to any
outstanding written order, consent decree or settlement agreement with
any Person relating to (a) any Environmental Law, (b) any Environmental
Claim, or (c) any Hazardous Materials Activity;
(ii) neither Parent nor any of its Subsidiaries has received
any letter or request for information under Section 104 of the
Comprehensive Environmental Response, Compensation, and Liability Act
(42 U.S.C. ss. 9604) or any comparable state law;
(iii) there are and, to Parent's and Borrower's knowledge,
have been no conditions, occurrences, or Hazardous Materials Activities
which could reasonably be expected to form the basis of an
Environmental Claim against Parent or any of its Subsidiaries;
(iv) for at least three years prior to the Closing Date, each
of Borrower and its Subsidiaries has maintained an environmental
management system for its operations that demonstrates a commitment to
environmental compliance and includes procedures for (a) preparing and
updating appropriate written compliance manuals covering pertinent
regulatory areas, (b) tracking changes in applicable Environmental Laws
and modifying operations to comply with new requirements thereunder and
(c) training employees to comply with applicable environmental
requirements and updating such training as necessary; and
(v) compliance with all current or reasonably foreseeable
future require ments pursuant to or under Environmental Laws will not,
individually or in the aggregate, have a reasonable possibility of
giving rise to a Material Adverse Effect.
Notwithstanding anything in this subsection 5.13 to the contrary, no event or
condition has occurred or is occurring with respect to Parent or any of its
Subsidiaries relating to any Environmental Law, any Release of Hazardous
Materials, or any Hazardous Materials Activity (including those set forth in
Schedule 5.13 annexed hereto) which individually or in the aggregate has had or
could reasonably be expected to have a Material Adverse Effect.
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5.14 Employee Matters.
There is no strike or work stoppage in existence or threatened
involving Parent or any of its Subsidiaries that could reasonably be expected to
have a Material Adverse Effect.
5.15 Solvency.
Each Loan Party is, and the Loan Parties taken as a whole are, and upon
the incurrence of any Loans by such Loan Party on any date on which this
representation is made each Loan Party and the Loan Parties taken as a whole
will be, Solvent. Without limiting the foregoing, each Loan Party and the Loan
Parties taken as a whole will be Solvent on the Closing Date after giving effect
to the Acquisition, the Restructuring and the borrowings made in connection
therewith.
5.16 Matters Relating to Collateral.
A. Creation, Perfection and Priority of Liens. The execution and
delivery of the Collateral Documents by Loan Parties, together with (i) the
actions taken on or prior to the Closing Date pursuant to subsections 6.8 and
6.9 and (ii) the delivery to Administrative Agent of any Pledged Collateral not
delivered to Administrative Agent at the time of execution and delivery of the
applicable Collateral Document (all of which Pledged Collateral has been so
delivered) are effective to create in favor of Administrative Agent for the
benefit of Lenders, as security for the respective Secured Obligations (as
defined in the applicable Collateral Document in respect of any Collateral), a
valid and perfected First Priority Lien on all of the Collateral, and all
filings and other actions necessary or desirable to perfect and maintain the
perfection and First Priority status of such Liens have been duly made or taken
and remain in full force and effect, other than the filing of any UCC financing
statements delivered to Administrative Agent for filing (but not yet filed) and
the periodic filing of UCC continuation statements in respect of UCC financing
statements filed by or on behalf of Administrative Agent.
B. Governmental Authorizations. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the pledge or grant by any Loan Party
of the Liens purported to be created in favor of Administrative Agent pursuant
to any of the Collateral Documents or (ii) the exercise by Administrative Agent
of any rights or remedies in respect of any Collateral (whether specifically
granted or created pursuant to any of the Collateral Documents or created or
provided for by applicable law), except for filings or recordings contemplated
by subsection 5.16A and except as may be required, in connection with the
disposition of any Pledged Collateral, by laws generally affecting the offering
and sale of securities.
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C. Absence of Third-Party Filings. Except such as may have been filed
in favor of Administrative Agent as contemplated by subsection 5.16A and except
as set forth in Schedule 5.16C, (i) no effective UCC financing statement,
fixture filing or other instrument similar in effect covering all or any part of
the Collateral is on file in any filing or recording office (other than with
respect to Permitted Liens) and (ii) no effective filing covering all or any
part of the IP Collateral is on file in the PTO.
D. Margin Regulations. The pledge of the Pledged Collateral pursuant to
the Collateral Documents does not violate Regulation G, T, U or X of the Board
of Governors of the Federal Reserve System.
E. Information Regarding Collateral. All information supplied to
Administrative Agent by or on behalf of any Loan Party with respect to any of
the Collateral (in each case taken as a whole with respect to any particular
Collateral) is accurate and complete in all material respects.
5.17 Related Agreements.
A. Delivery of Related Agreements. Borrower has delivered to Lenders
complete and correct copies of each effective Related Agreement and of all
exhibits and schedules thereto.
B. Warranties of Borrower. Subject to the qualifications set forth
therein, each of the representations and warranties given by Borrower to all of
the stockholders of QF Acquisition and QF Management and all of the limited
partners of Quality Foods, L.P. in the Acquisition Agreement is true and correct
in all material respects as of the date hereof and will be true and correct in
all material respects as of the Closing Date.
C. Survival. Notwithstanding anything in the Acquisition Agreement to
the contrary, the representations and warranties of Borrower set forth in
subsections 5.17B shall, solely for purposes of this Agreement, survive the
Closing Date for the benefit of Lenders.
5.18 Disclosure.
No representation or warranty of Parent or any of its Subsidiaries
contained in any Loan Document or Related Agreement or in any other document,
certificate or written statement furnished to Lenders by or on behalf of Parent
or any of its Subsidiaries for use in connection with the transactions
contemplated by this Agreement contains any untrue statement of a material fact
or omits to state a material fact (known to Parent or Borrower, in the case of
any document not furnished by it) necessary in order to make the statements
contained herein or therein not misleading in light of the circumstances in
which the same were made and that
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individually or in the aggregate could reasonably be expected to have a Material
Adverse Effect. Any projections and pro forma financial information contained in
such materials are based upon good faith estimates and assumptions believed by
Parent and its Subsidiaries to be reasonable at the time made, it being
recognized by Lenders that such projections as to future events are not to be
viewed as facts and that actual results during the period or periods covered by
any such projections may materially differ from the projected results.
Section 6. PARENT'S AND BORROWER'S AFFIRMATIVE COVENANTS
Parent and Borrower, jointly and severally, covenant and agree that, so
long as any of the Commitments hereunder shall remain in effect and until
payment in full of all of the Loans and other Obligations and the cancellation
or expiration of all Letters of Credit and the termination of the IRB
Reimbursement Agreement, unless Requisite Lenders shall otherwise give prior
written consent, Parent shall perform, and shall cause each of its Subsidiaries
to perform, all covenants in this Section 6.
6.1 Financial Statements and Other Reports.
Parent will maintain, and cause each of its Subsidiaries to maintain, a
system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP. Borrower will deliver to Administrative Agent and Lenders:
(i) Monthly Financials: as soon as available and in any event
within 30 days after the end of each month ending after the Closing
Date, (a) the consolidated and consolidating balance sheets of Parent
and its Subsidiaries as at the end of such month and the related
consolidated and consolidating statements of income, stockholders'
equity and cash flows of Parent 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 and certified by the chief financial officer of
Parent and Borrower that they fairly present, in all material respects,
the financial condition of Parent 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, (b) a narrative report describing the
operations of Parent and its Subsidiaries in the form prepared for
presentation to senior management for such month and for the period
from the beginning of the then current Fiscal Year to the end of such
month and (c) reports on the meat spread and production quantity for
such month for each of the Operating Subsidiaries;
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(ii) Quarterly Financials: as soon as available and in any
event within 45 days after the end of each Fiscal Quarter, (a) the
consolidated and consolidating balance sheets of Parent and its
Subsidiaries as at the end of such Fiscal Quarter and the related
consolidated and consolidating statements of income, stockholders'
equity and cash flows of Parent 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 and certified by the chief financial officer of
Parent and Borrower that they fairly present, in all material respects,
the financial condition of Parent 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, and (b) a narrative report describing the
operations of Parent and its Subsidiaries in the form prepared for
presentation to senior management for such Fiscal Quarter and for the
period from the beginning of the then current Fiscal Year to the end of
such Fiscal Quarter;
(iii) Year-End Financials: as soon as available and in any
event within 90 days after the end of each Fiscal Year, (a) the
consolidated and consolidating balance sheets of Parent and its
Subsidiaries as at the end of such Fiscal Year and the related
consolidated and consolidating statements of income, stockholders'
equity and cash flows of Parent 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, all in reasonable detail and certified by the chief
financial officer of Parent and Borrower that they fairly present, in
all material respects, the financial condition of Parent and its
Subsidiaries as at the dates indi cated and the results of their
operations and their cash flows for the periods indicated, (b) a
narrative report describing the operations of Parent and its
Subsidiaries in the form prepared for presentation to senior management
for such Fiscal Year, and (c) in the case of such consolidated
financial statements, a report thereon of Deloitte & Touche LLP or
other independent certified public accountants of recognized national
standing selected by Parent and satisfactory to Administrative Agent,
which report shall be unqualified, shall express no doubts about the
ability of Parent and its Subsidiaries to continue as a going concern,
and shall state that such consolidated financial statements fairly
present, in all material respects, the consolidated financial position
of Parent 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 GAAP applied on a basis consistent with
prior years (except as otherwise disclosed in such financial
statements)
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and that the examination by such accountants in connection with such
consolidated financial statements has been made in accordance with
generally accepted auditing standards;
(iv) Officers' and Compliance Certificates: together with each
delivery of financial statements of Parent and its Subsidiaries
pursuant to subdivisions (i), (ii) and (iii) above, (a) an Officers'
Certificate of Parent and Borrower stating that the signers have
reviewed the terms of this Agreement and have made, or caused to be
made under their supervision, a review in reasonable detail of the
transactions and condition of Parent and its Subsidiaries during the
accounting period covered by such financial statements and that such
review has not disclosed the existence during or at the end of such
accounting period, and that the signers do not have knowledge of the
existence as at the date of such Officers' Certificate, of any
condition or event that constitutes an Event of Default or Potential
Event of Default, or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action
each of Parent and Borrower has taken, is taking and proposes to take
with respect thereto; and (b) a Compliance Certificate demonstrat ing
in reasonable detail compliance during and at the end of the applicable
accounting periods with the restrictions contained in Section 7, in
each case to the extent compliance with such restrictions is required
to be tested at the end of the applicable accounting period;
(v) Reconciliation Statements: if, as a result of any change
in accounting principles and policies from those used in the
preparation of the audited financial statements referred to in
subsection 5.3, the consolidated financial statements of Parent and its
Subsidiaries delivered pursuant to subdivisions (i), (ii), (iii) or
(xiii) of this subsection 6.1 will differ in any material respect from
the consolidated financial statements that would have been delivered
pursuant to such subdivisions had no such change in accounting
principles and policies been made, then (a) together with the first
delivery of financial statements pursuant to subdivision (i), (ii),
(iii) or (xiii) of this subsection 6.1 following such change,
consolidated financial statements of Parent and its Subsidiaries for
(y) the current Fiscal Year to the effective date of such change and
(z) the two full Fiscal Years immediately preceding the Fiscal Year in
which such change is made, in each case prepared on a pro forma basis
as if such change had been in effect during such periods, and (b)
together with each delivery of financial statements pursuant to
subdivision (i), (ii), (iii) or (xiii) of this subsection 6.1 following
such change, a written statement of the chief accounting officer or
chief financial officer of Parent and Borrower setting forth the
differences (including without limitation any differences that would
affect any calculations relating to the financial covenants set forth
in subsection 7.6) which would
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have resulted if such financial statements had been prepared without
giving effect to such change;
(vi) Accountants' Certification: together with each delivery
of consolidated financial statements of Parent and its Subsidiaries
pursuant to subdivision (iii) above, 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
relevant terms of this Agreement and the other Loan Documents as they
relate to accounting matters and (b) stating whether, in connection
with their audit examination, anything came to their attention that
caused them to believe that Parent of Borrower failed to comply with
the terms, covenants, provisions or conditions of this Agreement
insofar as they relate to financial and accounting matters, although
their audit was not directed primarily toward obtaining knowledge of
such noncompliance; provided that such accountants shall not be liable
by reason of any failure to obtain knowledge of any failure to comply
that would not be disclosed in the course of their audit examination;
(vii) Accountants' Reports: promptly upon receipt thereof
(unless restricted by applicable professional standards), copies of all
reports submitted to Parent or Borrower by independent certified public
accountants in connection with each annual, interim or special audit of
the financial statements of Parent and its Subsidiaries made by such
accountants, including, without limitation, any comment letter
submitted by such accountants to management in connection with their
annual audit;
(viii) SEC Filings and Press Releases: promptly upon their
becoming available, copies of (a) all financial statements, reports,
notices and proxy statements sent or made available generally by Parent
to its security holders or by any Subsidiary of Parent to its security
holders other than Parent or another Subsidiary of Parent, (b) all
regular and periodic reports and all registration statements (other
than on Form S-8 or a similar form) and prospectuses, if any, filed by
Parent or any of its Subsidiaries with any securities exchange or with
the Securities and Exchange Commission or any governmental or private
regulatory authority, and (c) all press releases and other statements
made available generally by Parent or any of its Subsidiaries to the
public concerning material developments in the business of Parent or
any of its Subsidiaries;
(ix) Events of Default, etc.: promptly upon, and in any event
two days after, any officer of Parent or Borrower obtaining knowledge
(a) of any condition or event that constitutes an Event of Default or
Potential Event of Default, or becoming aware that any Lender has given
any notice (other than to Administrative Agent) or taken any other
action with respect to a claimed Event of Default or Potential Event of
Default, (b) that any Person has given any
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notice to Parent or any of its Subsidiaries or taken any other action
with respect to a claimed default or event or condition of the type
referred to in subsection 8.2, (c) of any condition or event that would
be required to be disclosed in a current report filed by Parent or
Borrower with the Securities and Exchange Commission on Form 8-K (Items
1, 2, 4, 5 and 6 of such Form as in effect on the date hereof) if
Parent or Borrower were required to file such reports under the
Exchange Act, or (d) 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, Potential Event of Default, default,
event or condition, and what action each of Parent and Borrower has
taken, is taking and proposes to take with respect thereto;
(x) Litigation or Other Proceedings: promptly upon, and in any
event within two days after, any officer of Parent or Borrower
obtaining knowledge of (X) the institution of any action, suit,
proceeding (whether administrative, judicial or otherwise),
governmental investigation or arbitration against or affecting Parent
or any of its Subsidiaries or any property of Parent or any of its
Subsidiaries (collective ly, "Proceedings") not previously disclosed in
writing by Parent or Borrower to Lenders or (Y) any material
development in any Proceeding that, in any case:
(1) if adversely determined, has a reasonable
possibility of giving rise to a Material Adverse Effect; or
(2) 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 Parent or Borrower to enable Lenders and their
counsel to evaluate such matters;
(xi) ERISA Events: promptly upon becoming aware of the
occurrence of or forthcoming occurrence of any ERISA Event, a written
notice specifying the nature thereof, what action Parent, any of its
Subsidiaries or any of their respective ERISA Affiliates has taken, is
taking or proposes to take with respect thereto and, when known, any
action taken or threatened by the Internal Revenue Service, the
Department of Labor or the PBGC with respect thereto, and, on the date
any records, documents or other information must be furnished to the
PBGC with respect to any Pension Plan pursuant to Section 4010 of
ERISA, a copy of such records, documents and information;
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(xii) ERISA Notices: promptly and in any event within two
Business Days after receipt thereof by Parent or any ERISA Affiliate,
copies of each notice from the PBGC stating its intention to terminate
any Pension Plan or to have a trustee appointed to administer any
Pension Plan; promptly upon receipt thereof by Parent or any ERISA
Affiliate, a copy of the annual actuarial valuation report for each
Plan the funded current liability percentage (as defined in Section
302(d)(8) of ERISA) of which is less than 90% or the unfunded current
liability of which exceeds $250,000; promptly and in any event within
five Business Days after receipt thereof by Parent or any ERISA
Affiliate from the sponsor of a Multiemployer Plan, copies of each
notice concerning (1) the imposition of Withdrawal Liability by any
such Multi employer Plan, (2) the reorganization or termination, within
the meaning of Title IV of ERISA, of any such Multiemployer Plan or (3)
the amount of liability incurred, or that may be incurred, by Parent or
any ERISA Affiliate in connection with any event described in clause
(1) or (2);
(xiii) Financial Plans: as soon as practicable and in any
event no later than 45 days after the beginning of each Fiscal Year, a
consolidated and consolidating plan and financial forecast for such
Fiscal Year and the next two Fiscal Years thereafter (the "Financial
Plan" for such Fiscal Years), including without limitation (a)
forecasted consolidated and consolidating balance sheets and forecasted
consolidated and consolidating statements of income and cash flows of
Parent and its Subsidiaries for each 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, (b)
forecasted consolidated and consolidating statements of income and cash
flows of Parent and its Subsidiaries for each month of the first such
Fiscal Year, together with an explanation of the assumptions on which
such forecasts are based, (c) the amount of forecasted unallocated
overhead for each such Fiscal Year, and (d) such other information and
projections as any Lender may reasonably request;
(xiv) Insurance: as soon as practicable and in any event by
the last day of each Fiscal Year, a report in form and substance
satisfactory to Administrative Agent outlining all material insurance
coverage maintained as of the date of such report by Parent and its
Subsidiaries and all material insurance coverage planned to be main
tained by Parent and its Subsidiaries in the immediately succeeding
Fiscal Year;
(xv) Board of Directors: with reasonable promptness, written
notice of any change in the Board of Directors of Parent;
(xvi) New Subsidiaries: promptly upon any Person becoming a
Subsidiary of Parent, a written notice setting forth with respect to
such Person (a) the date on which such Person became a Subsidiary of
Parent and (b) all of the data
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required to be set forth in Schedule 5.1 annexed hereto with respect to
all Subsidiaries of Parent (it being understood that such written
notice shall be deemed to supplement Schedule 5.1 annexed hereto for
all purposes of this Agreement;
(xvii) UCC Search Report: As promptly as practicable after the
date of delivery to Administrative Agent of any UCC financing statement
executed by any Loan Party pursuant to subsection 6.8A, copies of
completed UCC searches evidencing the proper filing, recording and
indexing of all such UCC financing statement and listing all other
effective financing statements that name such Loan Party as debtor,
together with copies of all such other financing statements not
previously delivered to Administrative Agent by or on behalf of Parent
or such Loan Party;
(xviii) Borrowing Base Certificate: (a) within fifteen days
after the last day of any fiscal month and, in addition, as often as
Parent may elect, a Borrowing Base Certificate demonstrating the
Borrowing Base as of the last day of such fiscal month and certified by
the chief financial officer of Borrower and (b) upon written reasonable
request of Administrative Agent or at the option of Borrower, a
Borrowing Base Certificate certified by the chief financial officer or
controller of Borrower and calculated as of the date requested by
Administrative Agent in such request or selected by Borrower, as the
case may be;
(xix) Creditor Reports: promptly after the furnishing thereof,
copies of any statement or report furnished to any other holder of the
Securities of Parent or of any of its Subsidiaries pursuant to the
terms of any indenture, loan or credit or similar agreement and not
otherwise required to be furnished to the Lenders pursuant to any other
clause of this subsection 6.1;
(xx) Agreement Notices: promptly upon receipt thereof, copies
of all notices, requests and other documents received by Parent or any
of its Subsidiaries under or pursuant to any Related Agreement or any
notice of a breach, default or termination of a Material Contract or
indenture, loan or credit or similar agreement and, from time to time
upon request by Administrative Agent, such information and reports
regarding the Related Documents and the Material Contracts as
Administra tive Agent may reasonably request;
(xxi) Revenue Agent Reports: within 10 days after receipt,
copies of all Revenue Agent Reports (Internal Revenue Service Form
886), or other written proposals of the Internal Revenue Service, that
propose, determine or otherwise set forth positive adjustments to the
federal income tax liability of the affiliated group (within the
meaning of Section 1504(a)(1) of the
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Internal Revenue Code) of which Parent or Borrower is a member
aggregating $500,000 or more;
(xxii) Environmental Conditions: promptly after the assertion
or occurrence thereof, notice of any Environmental Claim against or of
any noncompliance by Parent or any of its Subsidiaries with any
Environmental Law that could reasonably be expected to have a Material
Adverse Effect; and
(xxiii) Other Information: with reasonable promptness, such
other informa tion and data with respect to Parent or any of its
Subsidiaries as from time to time may be reasonably requested by any
Lender.
6.2 Corporate Existence, etc.
Parent will, and will cause each of its Subsidiaries to, at all times
preserve and keep in full force and effect its corporate existence and all
rights, permits, licenses, approvals, privileges and franchises material to its
business; provided, however that neither Parent nor any of its Subsidiaries
shall be required to preserve any such right, permit, license, approval,
privilege or franchise if the Board of Directors of Parent or such Subsidiary
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of Parent or such Subsidiary, as the case may be, and
that the loss thereof is not disadvantageous in any material respect to Parent,
such Subsidiary or Lenders; provided further, that Parent and its Subsidiaries
may consummate any merger of consolidation permitted under subsection 7.7.
6.3 Payment of Taxes and Claims; Tax Consolidation.
A. Parent will, and will cause each of its Subsidiaries to, pay all
taxes, assessments and other governmental charges imposed upon it or any of its
properties or assets or in respect of any of its income, businesses or
franchises before any penalty accrues thereon, and all claims (including,
without limitation, 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 that no such charge or claim
need be paid if it is being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted, so long as (1) such reserve or
other appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made therefor and (2) in the case of a charge 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 charge or claim.
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B. Parent will not, 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 Parent or any of its Subsidiaries).
6.4 Maintenance of Properties; Insurance; Application of Net Insurance/
Condemnation Proceeds.
A. Maintenance of Properties. Parent 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 or useful in the business of Parent and its Subsidiaries (including,
without limitation, all Intellectual Property) and from time to time will make
or cause to be made all appropriate repairs, renewals and replacements thereof.
B. Insurance. Borrower 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 Borrower and its Subsidiaries in accordance
with past practices, with such deductibles, covering such risks and otherwise on
such terms and conditions as shall be customary for corporations similarly
situated in the industry. Without limiting the generality of the foregoing,
Borrower will maintain or cause to be maintained (i) 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 (ii) replacement value casualty insurance on the Collateral under
such policies of insurance, and (iii) key man life insurance covering, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ and, within 60 days after the Closing Date key man life insurance
covering ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇, in each case with such insurance
companies, in such amounts, with such deductibles, and covering such terms and
risks as are at all times satisfactory to Administrative Agent in its
commercially reasonable judgment. Each such policy of insurance shall (a) name
Administrative Agent for the benefit of Lenders as an additional insured
thereunder as its interests may appear and (b) in the case of each business
interruption and casualty insurance policy, contain a loss payable clause or
endorsement, satisfactory in form and substance to Administrative Agent, that
names Administrative Agent for the benefit of Lenders as the loss payee
thereunder for any covered loss in excess of $50,000 and provides for at least
30 days prior written notice to Administrative Agent of any modification or
cancellation of such policy.
C. Application of Net Insurance/Condemnation Proceeds.
(i) Business Interruption Insurance. Upon receipt by Borrower
or any of its Subsidiaries of any business interruption insurance
proceeds constituting Net Insurance/Condemnation Proceeds, (a) so long
as no Event of
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Default or Potential Event of Default shall have occurred and be
continuing, Borrower or such Subsidiary may retain and apply such Net
Insurance/Condemnation Proceeds for working capital purposes, and (b)
if an Event of Default or Potential Event of Default shall have
occurred and be continuing, Borrower shall apply an amount equal to
such Net Insurance/Condemnation Proceeds to prepay the Loans as
provided in subsection 2.4B(iii)(b);
(ii) Casualty Insurance/Condemnation Proceeds. Upon receipt by
Borrower or any of its Subsidiaries of any Net Insurance/Condemnation
Proceeds other than from business interruption insurance, (a) so long
as no Event of Default or Potential Event of Default shall have
occurred and be continuing, Borrower shall, or shall cause one or more
of its Subsidiaries to, promptly and diligently apply such Net
Insurance/Condemnation Proceeds to pay or reimburse the costs of
repairing, restoring or replacing the assets in respect of which such
Net Insurance/Condemnation Proceeds were received or, to the extent
not so applied, to prepay the Loans (and/or the Revolving Loan
Commitments shall be reduced) as provided in subsection 2.4B(iii)(b),
and (b) if an Event of Default or Potential Event of Default shall have
occurred and be continuing, Borrower shall apply an amount equal to
such Net Insurance/Condemnation Proceeds to prepay the Loans as
provided in subsection 2.4B(iii)(b).
(iii) Net Insurance/Condemnation Proceeds Received by
Administrative Agent. Upon receipt by Administrative Agent of any Net
Insurance/Condemnation Proceeds as loss payee, (a) if the aggregate
amount of Net Insurance/Condemnation Proceeds received (and reasonably
expected to be received) by Administrative Agent in respect of any
covered loss exceeds $1,500,000, or if and to the extent Borrower would
have been required to apply such Net Insurance/Condemnation Proceeds
(if it had received them directly) to prepay the Loans and/or reduce
the Revolving Loan Commitments, Administrative Agent shall, and
Borrower hereby authorizes Administrative Agent to, apply such Net
Insurance/Condemnation Proceeds to prepay the Loans as provided in
subsection 2.4B(iii)(b), and (b) to the extent the foregoing clause (a)
does not apply and (1) the aggregate amount of such Net
Insurance/Condemnation Proceeds received (and reasonably expected to be
received) by Administrative Agent in respect of any covered loss does
not exceed $500,000, Administrative Agent shall deliver such Net
Insurance/Condemnation Proceeds to Borrower, and Borrower shall, or
shall cause one or more of its Subsidiaries to, promptly apply such Net
Insurance/Condemnation Proceeds to the costs of repairing, restoring,
or replacing the assets in respect of which such Net
Insurance/Condemnation Proceeds were received, and (2) if the aggregate
amount of Net Insurance/Condemnation Proceeds received (and reasonably
expected to be received) by Administrative Agent in respect of any
covered loss exceeds $500,000, Administrative Agent shall hold such Net
Insurance/Condemnation Proceeds pursuant to the terms of
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the Collateral Account Agreement and, so long as Borrower or any of its
Subsidiaries proceeds diligently to repair, restore or replace the
assets of Borrower or such Subsidiary in respect of which such Net
Insur ance/Condemnation Proceeds were received, Administrative Agent
shall from time to time disburse to Borrower or such Subsidiary from
the Collateral Account, to the extent of any such Net
Insurance/Condemnation Proceeds remaining therein in respect of the
applicable covered loss, amounts necessary to pay the cost of such
repair, restoration or replacement after the receipt by Administrative
Agent of invoices or other documentation reasonably satisfactory to
Administrative Agent relating to the amount of costs so incurred and
the work performed (including, if required by Administrative Agent,
lien releases and architects' certificates); provided, however that if
at any time Administrative Agent reasonably determines (A) that
Borrower or such Subsidiary is not proceeding diligently with such
repair, restoration or replacement or (B) that such repair, restoration
or replacement cannot be completed with the Net Insurance/Condemnation
Proceeds then held by Administra tive Agent for such purpose, together
with funds otherwise available to Borrower for such purpose,
Administrative Agent shall, and Borrower hereby authorizes
Administrative Agent to, apply such Net Insurance/Condemnation
Proceeds to prepay the Loans as provided in subsection 2.4B(iii)(b).
6.5 Inspection Rights; Audits of Inventory and Accounts Receivable; Lender
Meeting.
A. Inspection Rights. Parent shall, and shall cause each of its
Subsidiaries to, permit any authorized representatives designated by any Lender
to visit and inspect any of the properties of Parent or of any of its
Subsidiaries, to inspect, copy and take extracts from its and their financial
and accounting books and records, and to discuss its and their affairs, finances
and accounts with its and their officers and independent public accountants
(provided that Parent may, if it so chooses, be present at or participate in any
such discussion), all upon reasonable notice and at such reasonable times during
normal business hours and as often as may reasonably be requested.
B. Audits of Inventory and Accounts Receivable. Parent shall, and shall
cause each of its Subsidiaries to, permit any authorized representatives
designated by Administrative Agent to conduct one audit of all Inventory and
Accounts Receivable of Loan Parties during each twelve-month period after the
Closing Date and such additional audits as Administrative Agent or Requisite
Lenders may reasonably request, each such audit to be substantially similar in
scope and substance to the audit of Inventory and accounts receivable referred
to in subsection 6.16, all upon reasonable notice and at such reasonable times
during normal business hours as may reasonably be requested.
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C. Lender Meeting. Borrower will, upon the request of Administrative
Agent or Requisite Lenders, participate in a meeting of Administrative Agent and
Lenders once during each Fiscal Year to be held at Borrower's corporate offices
(or at such other location as may be agreed to by Borrower and Administrative
Agent) at such time as may be agreed to by Borrower and Administrative Agent.
6.6 Compliance with Laws, etc.
Parent shall comply, and shall cause each of its Subsidiaries and all
other Persons on or occupying any Facilities to comply, in all material
respects, with the requirements of all applicable laws, rules, regulations and
orders of any governmental authority (including all ERISA and Environmental
Laws).
6.7 Environmental Review and Investigation, Disclosure, Etc.; Parent's and
Borrower's Actions Regarding Hazardous Materials Activities,
Environmental Claims and Violations of Environmental Laws.
A. Environmental Review and Investigation. Parent and Borrower each
agrees that Administrative Agent may, from time to time and in its reasonable
discretion, (i) retain, at Borrower's expense, an independent professional
consultant to review any environmental audits, investigations, analyses and
reports relating to Hazardous Materials prepared by or for Borrower and (ii) in
the event (a) Administrative Agent reasonably believes that Parent or Borrower
has breached any representation, warranty or covenant contained in subsection
5.6, 5.13, 6.6 or 6.7 or that there has been a material violation of
Environmental Laws at any Facility or by Parent or any of its Subsidiaries at
any other location or (b) an Event of Default has occurred and is continuing,
conduct its own investigation of any Facility. For purposes of conducting such a
review and/or investigation, each of Parent and Borrower hereby grants to
Administrative Agent and its agents, employees, consultants and contractors the
right to enter into or onto any Facilities currently owned, leased, operated or
used by Parent or any of its Subsidiaries and to perform such tests on such
property (including taking samples of soil, groundwater and suspected
asbestos-containing materials) as are reasonably necessary in connection
therewith. Any such investigation of any Facility shall be conducted, unless
otherwise agreed to by Borrower and Administrative Agent, during normal business
hours and, to the extent reasonably practicable, shall be conducted so as not to
interfere with the ongoing operations at such Facility or to cause any damage or
loss to any property at such Facility. Parent, Borrower and Administrative Agent
hereby acknowledge and agree that any report of any investigation conducted at
the request of Administrative Agent pursuant to this subsection 6.7A will be
obtained and shall be used by Administrative Agent and Lenders for the purposes
of Lenders' internal credit decisions, to monitor and police the Loans and to
protect Lenders' security interests, if any, created by the Loan Documents.
Administrative Agent agrees to deliver a copy of any such report to Borrower
with the understanding that each of Parent and Borrower acknowledges and agrees
that neither Administrative Agent nor any Lender makes any representation or
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warranty with respect to such report and by delivering such report to Borrower,
neither Administrative Agent nor any Lender is requiring or recommending the
implementation of any suggestions or recommendations contained in such report.
B. Environmental Disclosure. Borrower will deliver to Administrative
Agent and Lenders:
(i) Environmental Audits and Reports. 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 Parent or any of its Subsidiaries or by
independent consultants, governmental authorities or any other Persons,
with respect to significant environmental matters at any Facility
which, individually or in the aggregate, could reasonably be expected
to result in a Material Adverse Effect or with respect to any
Environmental Claims which, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect;
(ii) Notice of Certain Releases, Remedial Actions, Etc.
Promptly upon the occurrence thereof, written notice describing in
reasonable detail (a) any Release required to be reported to any
federal, state or local governmental or regulatory agency under any
applicable Environmental Laws, (b) any remedial action taken by
Borrower or any other Person in response to (1) 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 (2) any Environmental
Claims that, individually or in the aggregate, have a reasonable
possibility of resulting in a Material Adverse Effect, and (c) Parent's
discovery of any occurrence or condition on any real property adjoining
or in the vicinity of any Facility that could 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) Written Communications Regarding Environmental Claims,
Releases, Etc. As soon as practicable following the sending or receipt
thereof by Parent or any of its Subsidiaries, a copy of any and all
written communications with respect to (a) any Environmental Claims
that, individually or in the aggregate, have a reasonable possibility
of giving rise to a Material Adverse Effect, (b) any Release required
to be reported to any federal, state or local governmental or
regulatory agency, and (c) any request for information from any
governmental agency that suggests such agency is investigating whether
Parent or any of its Subsidiaries may be potentially responsible for
any Hazardous Materials Activity.
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(iv) Notice of Certain Proposed Actions Having Environmental
Impact. Prompt written notice describing in reasonable detail (a) any
proposed acquisition of stock, assets, or property by Parent or any of
its Subsidiaries that could reasonably be expected to (1) expose Parent
or any of its Subsidiaries to, or result in, Environ mental Claims that
could reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect or (2) affect the ability of Parent or any of
its Subsidiaries to maintain in full force and effect all material
Governmental Authorizations required under any Environmental Laws for
their respective operations and (b) any proposed action to be taken by
Parent or any of its Subsidiaries to modify current operations in a
manner that could reasonably be expected to subject Parent or any of
its Subsidiaries to any additional obligations or requirements under
any Environmental Laws that could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
(v) Other Information. With reasonable promptness, such other
documents and information as from time to time may be reasonably
requested by Administrative Agent in relation to any matters disclosed
pursuant to this subsection 6.7.
C. Parent's and Borrower's Actions Regarding Hazardous Materials
Activities, Environmental Claims and Violations of Environmental Laws.
(i) Remedial Actions Relating to Hazardous Materials
Activities. Parent shall promptly undertake, and shall cause each of
its Subsidiaries promptly to undertake, any and all investigations,
studies, sampling, testing, abatement, cleanup, removal, remediation or
other response actions necessary to remove, remediate, clean up or
▇▇▇▇▇ any Hazardous Materials Activity on, under or about any Facility
that is in violation of any Environmental Laws or that presents a
material risk of giving rise to an Environmental Claim. In the event
Parent or any of its Subsidiaries undertakes any such action with
respect to any Hazardous Materials, Parent or such Subsidiary shall
conduct and complete such action in compliance with all applicable
Environmental Laws and in accordance with the policies, orders and
directives of all federal, state and local governmental authorities
except when, and only to the extent that, Parent's or such Subsidiary's
liability with respect to such Hazardous Materials Activity is being
contested in good faith by Parent or such Subsidiary.
(ii) Actions with Respect to Environmental Claims and
Violations of Environmental Laws. Parent 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
Parent or its Subsidiaries and (ii) make an appropriate response to any
Environmental Claim against Parent or
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any of its Subsidiaries and discharge any obligations it may have to
any Person thereunder.
6.8 Execution of Subsidiary Guaranty and Personal Property Collateral
Documents by Certain Subsidiaries and Future Subsidiaries.
A. Execution of Subsidiary Guaranty and Personal Property Collateral
Documents. In the event that any Person becomes a Subsidiary of Borrower after
the date hereof, Borrower will promptly notify Administrative Agent of that fact
and cause such Subsidiary to execute and deliver to Administrative Agent a
counterpart of the Subsidiary Guaranty and a Subsidiary Pledge Agreement, a
Subsidiary Security Agreement, a Subsidiary Trademark Security Agreement and a
Subsidiary Patent Security Agreement and to take all such further actions and
execute all such further documents and instruments as may be necessary or, in
the opinion of Administrative Agent, desirable to create in favor of
Administrative Agent, for the benefit of Lenders, a valid and perfected First
Priority Lien on all of the personal and mixed property assets of such
Subsidiary described in the applicable forms of Collateral Documents. Such
actions shall include, without limitation, the following:
(i) Schedules to Collateral Documents. Delivery to
Administrative Agent of accurate and complete schedules to all of the
applicable Collateral Documents.
(ii) Stock Certificates and Instruments. Delivery to
Administrative Agent of (a) certificates (which certificates shall be
accompanied by irrevocable undated stock powers, duly endorsed in blank
and otherwise satisfactory in form and substance to Administrative
Agent) representing all capital stock pledged pursuant to the Parent
Pledge Agreement, Borrower Pledge Agreement and the Subsidiary Pledge
Agreements and (b) all promissory notes or other instruments (duly
endorsed, where appropriate, in a manner satisfactory to Administrative
Agent) evidencing any Collateral;
(iii) Lien Searches and UCC Termination Statements. Delivery
to Administrative Agent of (a) the results of a recent search, by a
Person satisfactory to Administrative Agent, of all effective UCC
financing statements and fixture filings and all judgment and tax lien
filings which may have been made with respect to any personal or mixed
property of any Loan Party, together with copies of all such filings
disclosed by such search, and (b) UCC termination statements duly
executed by all applicable Persons for filing in all applicable
jurisdictions as may be necessary to terminate any effective UCC
financing statements or fixture filings disclosed in such search (other
than any such financing statements or fixture filings in respect of
Liens permitted to remain outstanding pursuant to the terms of this
Agreement);
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(iv) UCC Financing Statements and Fixture Filings. Delivery to
Adminis trative Agent of UCC financing statements and, where
appropriate, fixture filings, duly executed by each applicable Loan
Party with respect to all personal and mixed property Collateral of
such Loan Party, for filing in all jurisdictions as may be necessary
or, in the opinion of Administrative Agent, desirable to perfect the
security interests created in such Collateral pursuant to the
Collateral Documents;
(v) PTO Cover Sheets, Etc. Delivery to Administrative Agent of
all cover sheets or other documents or instruments required to be filed
with the PTO in order to create or perfect Liens in respect of any IP
Collateral; and
(vi) Opinions of Local Counsel. Delivery to Administrative
Agent of an opinion of counsel (which counsel shall be reasonably
satisfactory to Administrative Agent) under the laws of each
jurisdiction in which any Loan Party or any personal or mixed property
Collateral is located with respect to the creation and perfection of
the security interests in favor of Administrative Agent in such
Collateral and such other matters governed by the laws of such
jurisdiction regarding such security interests as Administrative Agent
may reasonably request, in each case in form and substance reasonably
satisfactory to Administrative Agent.
B. Subsidiary Charter Documents, Legal Opinions, Etc. Borrower shall
deliver to Administrative Agent, together with such Loan Documents, (i)
certified copies of such Subsidiary's Certificate or Articles of Incorporation,
together with a good standing certificate from the Secretary of State of the
jurisdiction of its incorporation and each other state in which such Person is
qualified as a foreign corporation to do business and, to the extent generally
available, a certificate or other evidence of good standing as to payment of any
applicable franchise or similar taxes from the appropriate taxing authority of
each of such jurisdictions, each to be dated a recent date prior to their
delivery to Administrative Agent, (ii) a copy of such Subsidiary's Bylaws,
certified by its corporate secretary or an assistant secretary as of a recent
date prior to their delivery to Administrative Agent, (iii) a certificate
executed by the secretary or an assistant secretary of such Subsidiary as to (a)
the fact that the attached resolutions of the Board of Directors of such
Subsidiary approving and authorizing the execution, delivery and performance of
such Loan Documents are in full force and effect and have not been modified or
amended and (b) the incumbency and signatures of the officers of such Subsidiary
executing such Loan Documents, and (iv) a favorable opinion of counsel to such
Subsidiary, in form and substance satisfactory to Administrative Agent and its
counsel, as to (a) the due organization and good standing of such Subsidiary,
(b) the due authorization, execution and delivery by such Subsidiary of such
Loan Documents, (c) the enforceability of such Loan Documents against such
Subsidiary, (d) such other matters (including matters relating to the creation
and perfection of Liens in any Collateral pursuant to such Loan Documents) as
Administrative Agent may reasonably request, all
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of the foregoing to be satisfactory in form and substance to Administrative
Agent and its counsel.
6.9 Conforming Leasehold Interests; Matters Relating to Additional Real
Property Collateral.
A. Conforming Leasehold Interests. If Borrower or any of its
Subsidiaries acquires any Leasehold Property, Borrower shall, or shall cause
such Subsidiary to, use its best efforts (without requiring Borrower or such
Subsidiary to relinquish any material rights or incur any material obligations
or to expend more than a nominal amount of money over and above the
reimbursement, if required, of the landlord's out-of-pocket costs, including
attorneys fees) to cause such Leasehold Property to be a Conforming Leasehold
Interest.
B. Additional Mortgages, Etc. From and after the Closing Date, in the
event that (i) Borrower or any Subsidiary Guarantor acquires any fee interest in
real property or any Material Leasehold Property, or Administrative Agent
determines in its sole discretion to place a Mortgage on any Real Property Asset
owned on the Closing Date by Parent or any of its Subsidiaries if a Mortgage was
not placed in any such Real Property Asset as of the Closing Date, or (ii) at
the time any Person becomes a Subsidiary Guarantor, such Person owns or holds
any fee interest in real property or any Material Leasehold Property, in either
case excluding any such Real Property Asset the encumbrancing of which requires
the consent of any applicable lessor or (in the case of clause (ii) above)
then-existing senior lienholder, where Borrower and its Subsidiaries are unable
to obtain such lessor's or senior lienholder's consent (any such non-excluded
Real Property Asset described in the foregoing clause (i) or (ii) being an
"Additional Mortgaged Property"), Borrower or such Subsidiary Guarantor shall
deliver to Administrative Agent, as soon as practicable after such Person
acquires such Additional Mortgaged Property the following:
(i) Additional Mortgage. A fully executed and notarized
Mortgage (an "Additional Mortgage"), in proper form for recording in
all appropriate places in all applicable jurisdictions, encumbering the
interest of such Loan Party in such Additional Mortgaged Property;
(ii) Opinions of Counsel. (a) A favorable opinion of counsel
to such Loan Party, in form and substance satisfactory to
Administrative Agent and its counsel, as to the due authorization,
execution and delivery by such Loan Party of such Additional Mortgage
and such other matters as Administrative Agent may reasonably request,
and (b) if required by Administrative Agent, an opinion of counsel
(which counsel shall be reasonably satisfactory to Administrative
Agent) in the state in which such Additional Mortgaged Property is
located with respect to the enforceability of the form of Additional
Mortgage to be recorded in such state and such other matters (including
without limitation any matters governed by the laws of such state
regarding personal property security
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interests in respect of any Collateral) as Administrative Agent may
reasonably request, in each case in form and substance reasonably
satisfactory to Administrative Agent;
(iii) Landlord Consent and Estoppel; Recorded Leasehold
Interest. In the case of any Additional Mortgaged Property consisting
of a Leasehold Property, (a) a Landlord Consent and Estoppel and (b)
evidence that such Leasehold Property is a Recorded Leasehold Interest;
(iv) Title Insurance. (a) If required by Administrative Agent,
an ALTA mortgagee title insurance policy or an unconditional commitment
therefor (an "Additional Mortgage Policy") issued by the Title Company
with respect to such Additional Mortgaged Property, in an amount
satisfactory to Administrative Agent, insuring fee simple title to, or
a valid leasehold interest in, such Additional Mortgaged Property
vested in such Loan Party and assuring Administrative Agent that such
Additional Mortgage creates a valid and enforceable First Priority
mortgage Lien on such Additional Mortgaged Property, subject only to a
standard survey exception, which Additional Mortgage Policy (1) shall
include an endorsement for mechanics' liens, for future advances under
this Agreement and for any other matters reasonably requested by
Administrative Agent and (2) shall provide for affirmative insurance
and such reinsurance as Administrative Agent may reasonably request,
all of the foregoing in form and substance reasonably satisfactory to
Administrative Agent; and (b) evidence satisfactory to Administrative
Agent that such Loan Party has (i) delivered to the Title Company all
certificates and affidavits required by the Title Company in connection
with the issuance of the Additional Mortgage Policy and (ii) paid to
the Title Company or to the appropriate governmental authorities all
expenses and premiums of the Title Company in connection with the
issuance of the Additional Mortgage Policy and all recording and stamp
taxes (including mortgage recording and intangible taxes) payable in
connection with recording the Additional Mortgage in the appropriate
real estate records;
(v) Title Report. If no Additional Mortgage Policy is required
with respect to such Additional Mortgaged Property, a title report
issued by the Title Company with respect thereto, dated not more than
30 days prior to the date such Additional Mortgage is to be recorded
and satisfactory in form and substance to Administrative Agent;
(vi) Copies of Documents Relating to Title Exceptions. Copies
of all recorded documents listed as exceptions to title or otherwise
referred to in the Additional Mortgage Policy or title report delivered
pursuant to clause (v) or (vi) above;
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(vii) Matters Relating to Flood Hazard Properties. (a)
Evidence, which may be in the form of a letter from an insurance broker
or a municipal engineer, as to (1) whether such Additional Mortgaged
Property is a Flood Hazard Property and (2) if so, whether the
community in which such Flood Hazard Property is located is
participating in the National Flood Insurance Program, (b) if such
Additional Mortgaged Property is a Flood Hazard Property, such Loan
Party's written acknowledgement of receipt of written notification from
Administrative Agent (1) that such Additional Mortgaged Property is a
Flood Hazard Property and (2) as to whether the community in which such
Flood Hazard Property is located is participating in the National Flood
Insurance Program, and (c) in the event such Additional Mortgaged
Property is a Flood Hazard Property that is located in a community that
participates in the National Flood Insurance Program, evidence that
Borrower has obtained flood insurance in respect of such Flood Hazard
Property to the extent required under the applicable regulations of the
Board of Governors of the Federal Reserve System; and
(viii) Environmental Audit. If required by Administrative
Agent, reports and other information, in form, scope and substance
satisfactory to Administrative Agent and prepared by environmental
consultants satisfactory to Administrative Agent, concerning any
environmental hazards or liabilities to which Parent or any of its
Subsidiaries may be subject with respect to such Additional Mortgaged
Property.
C. Real Estate Appraisals. Parent shall, and shall cause each of its
Subsidiaries to, permit an independent real estate appraiser satisfactory to
Administrative Agent, upon reasonable notice, to visit and inspect any
Additional Mortgaged Property for the purpose of preparing an appraisal of such
Additional Mortgaged Property satisfying the requirements of any applicable laws
and regulations (in each case to the extent required under such laws and
regulations as determined by Administrative Agent in its discretion).
6.10 Deposit Accounts.
At any time there are Revolving Loans outstanding, Parent shall not
permit the aggregate amount on deposit in all Deposit Accounts of Parent and its
Subsidiaries (other than Deposit Accounts maintained with Administrative Agent)
at any time to exceed $3,000,000.
6.11 Determination of Borrowing Base.
A. Borrower shall deliver a Borrowing Base Certificate to
Administrative Agent sufficiently in advance of the Closing Date to permit
Administrative Agent to determine the Borrowing Base to be in effect on the
Closing Date and thereafter, shall deliver Borrowing Base Certificates on a
monthly basis pursuant to
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subsection 6.1(xviii); each such Borrowing Base Certificate to be dated as of
the last day of the applicable reporting period. Promptly following its receipt
of each such Borrowing Base Certificate, Administrative Agent shall determine,
or, as the case may be, redetermine the Borrowing Base in accordance with the
definition thereof, using the information contained in such Borrowing Base
Certificate, and shall notify Borrower of the Borrowing Base so determined or so
redetermined. Each such Borrowing Base so determined or redetermined by
Administrative Agent shall remain in effect until notice of a redetermined
Borrowing Base shall have been given by Administra tive Agent in accordance with
the provisions of this subsection 6.11.
B. Each of the Accounts Receivable shown on each Borrowing Base
Certificate shall conform to the requirements set forth in the definition of
Eligible Receivables.
C. All Inventory shown on each Borrowing Base Certificate shall conform
to the requirements of the definition of Eligible Inventory, shall be the
Operating Subsidiaries' exclusive property and shall be valued at the lower of
cost or market value.
D. Borrower agrees to furnish to Administrative Agent any information
which it may reasonably request regarding the determination and calculation of
the Borrowing Base including, without limitation, correct and complete copies of
any material invoices, underlying agreements, instruments or other documents and
the identity of all obligors.
E. The Administrative Agent may, at any time that it in good faith
believes that the Total Utilization of the Revolving Loan Commitments exceeds
the Borrowing Base reflected in the most recent Borrowing Base Certificate
delivered by Borrower, require Borrower to, and Borrower may at any time elect
to, submit an updated Borrowing Base Certificate and/or reevaluate the value of
any item included in the Borrowing Base in accordance with the definition of
such item as set forth in subsection 1.1, including, without limitation, the
creditworthiness of any obligor relating to any item included in the Borrowing
Base. The Administrative Agent may determine, as a result of any such
reevaluation, to reduce the amount which such item contributes to the Borrowing
Base or exclude such item from the Borrowing Base, which determination shall,
absent manifest error, be final, binding and conclusive upon all parties hereto.
If the Administrative Agent determines that the Borrowing Base shall be reduced
pursuant to this subsection 6.11, the Administrative Agent shall give written
notice to Borrower and Lenders which states the amount of such reduction and the
nature of the action taken by the Administrative Agent, which reduction shall be
effective on the third Business Day following receipt of such notice by
Borrower.
F. Borrower shall promptly notify the Administrative Agent in writing
of any material information which Borrower receives or otherwise gain knowledge
of relating to any item included in the Borrowing Base which materially and
adversely
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affects the value of such item or would cause such item to be excluded in whole
or in part from the Borrowing Base.
6.12 Keeping of Books.
Parent shall keep, and cause each of its Subsidiaries to keep, proper
books of record and account, in which full and correct entries shall be made of
all financial transactions and the assets and business of Parent and each such
Subsidiary in accordance with GAAP in effect from time to time.
6.13 Compliance with Terms of Leaseholds.
Borrower shall make all payments and otherwise perform all obligations
in respect of all leases of real property to which Borrower or any of its
Subsidiaries is a party, keep such leases in full force and effect and not allow
such leases to lapse or be terminated or any rights to renew such leases to be
forfeited or cancelled, notify Administrative Agent of any default by any party
with respect to such leases and cooperate with Administrative Agent in all
respects to cure any such default, and cause each of its Subsidiaries to do so
except, in any case, where the failure to do so, either individually or in the
aggregate, could not be reasonably likely to have a Material Adverse Effect.
6.14 Performance of Related Agreements.
Borrower shall perform and observe all of the material terms and
provisions of each Related Agreement to be performed or observed by it, maintain
each such Related Agreement in full force and effect, enforce such Related
Agreement in accordance with its terms, take all such action to such end as may
be from time to time reasonably requested by Requisite Lenders and, upon request
of Requisite Lenders, make to each other party to each such Related Agreement
such demands and requests for information and reports or for action as Borrower
is entitled to make under such Related Agreement, and cause each of its
Subsidiaries to do so.
6.15 Performance of Material Contracts.
Borrower shall perform and observe all the material terms and
provisions of each Material Contract to be performed or observed by it, maintain
each such Material Contract in full force and effect, enforce each such Material
Contract in accordance with its terms, take all such action to such end as may
be from time to time reasonably requested by Requisite Lenders and, upon request
of Requisite Lenders, make to each other party to each such Material Contract
such demands and requests for information and reports or for action as Borrower
is entitled to make under such Material Contract, and cause each of its
Subsidiaries to do so except, in any case, where the failure to do so, either
individually or in the aggregate, could not be reasonably likely to have a
Material Adverse Effect.
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6.16 Audit of Inventory and Accounts Receivable.
Borrower shall assist Administrative Agent (or an independent auditor
satisfactory to Administrative Agent) in completing audits of the Inventory,
accounts receivable and payables of Borrower and its Subsidiaries during the
30-day period after the Closing Date, which audits will be provided to each
Lender. Borrower will negotiate in good faith with Administrative Agent (and
Administrative Agent shall consult with Lenders with respect thereto) to revise
the definitions of "Eligible Accounts Receivable" and "Eligible Inventory" to
reflect the results of such audits.
Section 7. NEGATIVE COVENANTS
Parent and Borrower, jointly and severally, covenant and agree that, so
long as any of the Commitments hereunder shall remain in effect and until
payment in full of all of the Loans and other Obligations and the cancellation
or expiration of all Letters of Credit and the termination of the IRB
Reimbursement Agreement, unless Requisite Lenders shall otherwise give prior
written consent, each of Parent and Borrower shall perform, and shall cause each
of its Subsidiaries to perform, all covenants in this Section 7.
7.1 Indebtedness.
Parent shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume, guaranty, or suffer to exist or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(i) Borrower may become and remain liable with respect to the
Obliga tions;
(ii) Borrower and its Subsidiaries may become and remain
liable with respect to Contingent Obligations permitted by subsection
7.4 and, upon any matured obligations actually arising pursuant
thereto, the Indebtedness corresponding to the Contingent Obligations
so extinguished;
(iii) Borrower and its Subsidiaries may become and remain
liable with respect to Indebtedness in respect of Capital Leases in an
aggregate principal amount not to exceed $2,000,000;
(iv) Borrower may become and remain liable with respect to
Indebtedness to any of its Subsidiaries, and any Subsidiary of Borrower
may become and remain liable with respect to Indebtedness to Borrower
or any other Subsidiary of Borrower; provided that (a) all such
intercompany Indebtedness shall be evidenced by promissory notes and
pledged to Administrative Agent pursuant to
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the Borrower Pledge Agreement or the applicable Subsidiary Pledge
Agreement, as the case may be, (b) all such intercompany Indebtedness
owed by Borrower to any of its Subsidiaries shall be subordinated on
terms acceptable to Requisite Lenders in right of payment to the
payment in full of the Obligations pursuant to the terms of the
applicable promissory notes or an intercompany subordination agreement,
and (c) any payment by any Subsidiary of Borrower under any guaranty of
the Obligations shall result in a pro tanto reduction of the amount of
any intercompany Indebtedness owed by such Subsidiary to Borrower or to
any of its Subsidiaries for whose benefit such payment is made;
(v) Borrower and its Subsidiaries, as applicable, may remain
liable with respect to Indebtedness existing on the date hereof and
described in Schedule 7.1 annexed hereto;
(vi) Borrower and its Subsidiaries may remain liable with
respect to the IRB Debt pursuant to the IRB Trust Indenture in an
aggregate principal amount not to exceed $4,400,000;
(vii) Borrower may become and remain liable with respect to
the Senior Guaranteed Notes in an aggregate principal amount not to
exceed $115,000,000;
(viii) Borrower and its Subsidiaries may become and remain
liable with respect to other unsecured Indebtedness in an aggregate
principal amount not to exceed $2,000,000 at any time outstanding;
(ix) QF Acquisition may become and remain liable with respect
to the PIDA Loan and PIDC Loan in an aggregate principal amount not to
exceed, in each case, $1,750,000 at any time outstanding;
(x) Borrower and its Subsidiaries may become and remain liable
with respect to secured purchase money or other similar Indebtedness in
an aggregate amount not to exceed $2,000,000 at any time; provided that
at least 80% of the purchase price of such assets was provided by the
proceeds of such purchase money Indebtedness;
(xi) Borrower and its Subsidiaries may become and remain
liable with respect to Subordinated Notes in an aggregate principal
amount not to exceed $10,000,000.
7.2 Liens and Related Matters.
A. Prohibition on Liens. Parent shall not, and shall not 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 Parent or any of its
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Subsidiaries, whether now owned or hereafter acquired, or any income or profits
therefrom, or sign 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 Uniform Commercial Code
of any State or under any similar recording or notice statute, or sign or permit
to exist any security agreement authorizing any secured party thereunder to file
such financing statement or similar notice, except:
(i) Permitted Encumbrances;
(ii) Liens granted pursuant to the Collateral Documents;
(iii) Liens existing on the date hereof described in Schedule
7.2 annexed hereto; and
(iv) purchase money Liens upon or in real property or
equipment acquired or held by Borrower or any of its Subsidiaries in
the ordinary course of business to secure the purchase price of such
property or equipment or to secure Indebtedness incurred solely for the
purpose of financing the acquisition, construction or improvement of
any such property or equipment to be subject to such Liens, or Liens
existing on any such property or equipment at the time of acquisition
(other than any such Liens created in contemplation of such acquisition
that do not secure the purchase price), or extensions, renewals or
replacements of any of the foregoing for the same or a lesser amount;
provided, however, that no such Lien shall extend to or cover any
property other than the property or equipment being acquired,
constructed or improved, and no such extension, renewal or replacement
shall extend to or cover any property not theretofore subject to the
Lien being extended, renewed or replaced; and provided further that the
aggregate principal amount of the Indebtedness secured by Liens
permitted by this clause (iv) shall not exceed the amount permitted
under subsection 7.1(x) at any time outstanding;
(v) Liens arising in connection with Capitalized Leases
permitted under subsection 7.1(iii), provided that no such Lien shall
extend to or cover any assets other than the assets subject to such
Capitalized Leases;
(vi) the replacement, extension or renewal of any Lien
permitted by clauses (i), (iii), (v), (vii) and (viii) of this
subsection 7.2 upon or in the same property theretofore subject thereto
or the replacement, extension or renewal (without increase in the
amount or change in any direct or contingent obligor) of the
Indebtedness secured thereby; and
(vii) Liens arising in connection with PIDA Loans permitted
under subsection 7.1(ix), provided that such Liens shall be (1)
subordinated to all Obligations hereunder in respect of any IRB
Reimbursement Advance, (2) limited
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to the extent set forth in the PIDA Commitment Letter annexed hereto as
Schedule 7.2(vii), and (3) otherwise be in form and substance
reasonably satisfactory to Requisite Lenders.
B. Equitable Lien in Favor of Lenders. If Parent or any of its
Subsidiaries shall create or assume any Lien upon any of its properties or
assets, whether now owned or here after acquired, other than Liens excepted by
the provisions of subsection 7.2A, it shall make or cause to be made effective
provision 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 that, notwithstanding the foregoing,
this covenant shall not be construed as a consent by Requisite Lenders to the
creation or assumption of any such Lien not permitted by the provisions of
subsection 7.2A.
C. No Further Negative Pledges. Except with respect to specific
property encum bered to secure payment of particular Indebtedness or to be sold
pursuant to an executed agreement with respect to an Asset Sale, neither Parent
nor any of its Subsidiaries shall enter into any agreement (other than the
Senior Guaranteed Note Documents) prohibiting the creation or assumption of any
Lien upon any of its properties or assets, whether now owned or hereafter
acquired.
D. No Restrictions on Subsidiary Distributions to Borrower or Other
Subsidiar ies. Except as provided herein, or in any Senior Guaranteed Note
Document, Parent will not, and will not 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
Borrower to (i) pay dividends or make any other distributions on any of such
Subsidiary's capital stock owned by Borrower or any other Subsidiary of
Borrower, (ii) repay or prepay any Indebtedness owed by such Subsidiary to
Borrower or any other Subsidiary of Borrower, (iii) make loans or advances to
Borrower or any other Subsidiary of Borrower, or (iv) transfer any of its
property or assets to Borrower or any other Subsidiary of Borrower, other than
encumbrances and restrictions arising under (i) applicable law, (ii) customary
provisions restricting subletting or assignment of any lease governing a
leasehold interest of Borrower or any of its Subsidiaries, and (iii) customary
restrictions on dispositions of real property interests found in reciprocal
easement agreements of Borrower or any of its Subsidiaries.
7.3 Investments; Joint Ventures.
Parent shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, make or own any Investment in any Person, including any
Joint Venture, except:
(i) Subject to subsection 8.15, Parent and its Subsidiaries
may make and own Investments in Cash Equivalents;
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(ii) Borrower and its Subsidiaries may own and make equity
Investments in any Subsidiary of Borrower;
(iii) Borrower and its Subsidiaries may make intercompany
loans to the extent permitted under subsection 7.1(iv);
(iv) Borrower and its Subsidiaries may make Consolidated
Capital Expenditures permitted by subsection 7.8;
(v) Borrower and its Subsidiaries may continue to own the
Investments owned by them as of the Closing Date and described in
Schedule 7.3 annexed hereto;
(vi) Borrower may continue to own Investments with respect to
the Acquisition;
(vii) Parent and its Subsidiaries may make loans and advances
to employees in the ordinary course of the business of Parent and its
Subsidiaries as presently conducted in an aggregate principal amount
not to exceed $500,000 at any time outstanding; provided that any such
loans shall be evidenced by a promissory note and pledged to
Administrative Agent pursuant to the Parent Pledge Agreement, the
Borrower Pledge Agreement or applicable Subsidiary Pledge Agreement, as
the case may be;
(viii) Parent and its Subsidiaries may make loans to employees
for the purpose of selling equity securities of Parent to such
employees in an aggregate principal amount not to exceed $500,000 at
anytime outstanding; provided that such loans shall be evidenced by a
promissory note and pledged to Administrative Agent pursuant to the
Parent Pledge Agreement, the Borrower Pledge Agreement or applicable
Subsidiary Pledge Agreement, as the case may be;
(ix) Borrower and its Subsidiaries may make Investments
consisting of Contingent Obligations to the extent permitted under
subsection 7.4;
(x) Borrower and its Subsidiaries may make and own other
Investments to the extent permitted under subsection 7.7; and
(xi) Parent may make Investments consisting of repurchases of
equity Securities of Parent to the extent permitted under subsection
7.5.
7.4 Contingent Obligations.
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Parent shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or become or remain liable with respect to any
Contingent Obligation, except:
(i) Borrower's Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of the Subsidiary
Guaranty;
(ii) Borrower may become and remain liable with respect to
Contingent Obligations in respect of the IRB Reimbursement Agreement,
and Borrower and its Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of Revolving Letters of
Credit in an aggregate amount not to exceed at any time $3,000,000;
(iii) Borrower may become and remain liable with respect to
Contingent Obligations under Hedge Agreements required under subsection
6.10;
(iv) Borrower and its Subsidiaries may become and remain
liable with respect to Contingent Obligations in respect of customary
indemnification and purchase price adjustment obligations incurred
pursuant to the Acquisition Agreement or in connection with Asset Sales
or other sales of assets;
(v) Borrower may become and remain liable with respect to
Contingent Obligations under guarantees in the ordinary course of
business of the obligations of suppliers, customers, franchisees and
licensees of Borrower and its Subsidiaries;
(vi) Borrower and its Subsidiaries, as applicable, may remain
liable with respect to Contingent Obligations existing on the Closing
Date and described in Schedule 7.4 annexed hereto;
(vii) Subsidiary Guarantors may become and remain liable with
respect to Contingent Obligations arising under (a) guaranties of the
Senior Guaranteed Notes as set forth in the Senior Guaranteed Note
Documents and (b) subordinated guaranties of any Subordinated Notes as
set forth in any Subordinated Note Documents; and
(viii) Borrower and its Subsidiaries may become and remain
liable with respect to other Contingent Obligations that are expressly
subordinated by their terms to the Obligations; provided that the
maximum aggregate liability, contingent or otherwise, of Borrower in
respect of all such Contingent Obligations shall at no time exceed
$2,000,000.
120
7.5 Restricted Junior Payments.
Parent shall not, and shall not permit Borrower or any of its other
Subsidiaries to, directly or indirectly, declare, order, pay, make or set apart
any sum for any Restricted Junior Payment; provided that (i) Borrower may make
Restricted Junior Payments to make cash interest payments to the holders of the
Senior Guaranteed Notes, in accordance with the terms of, and only to the extent
required by, the Senior Guaranteed Note Documents, (ii) if proceeds of the PIDA
Loan are actually received by Borrower, Borrower may at any time on or prior to
June 30, 1997 consummate the Preferred Stock Redemption for an aggregate amount
not to exceed the lesser of (x) $1,225,000 and (y) the gross proceeds of the
PIDA Loan plus $225,000 less the face amount of any Letter of Credit supporting
the PIDA Loan, (iii) so long as no Event of Default or Potential Event of
Default shall have occurred and be continuing or shall be caused thereby,
Borrower may make Restricted Junior Payments to Parent to enable Parent to make
Restricted Junior Payments to First Atlantic Capital, Ltd. pursuant to the terms
of the Management Consulting Agreement in effect on the Closing Date in an
aggregate amount not to exceed $600,000 plus reasonable out of pocket expenses
in any Fiscal Year, provided that notwithstanding any Event of Default or
Potential Event of Default, fees otherwise payable under the Management
Consulting Agreement may accrue but shall not be payable until such time as such
Potential Event of Default or Event of Default is cured or is waived, at which
time all such accrued fees shall be payable, and (iv) so long as no Event of
Default or Potential Event of Default has occurred and is continuing or shall be
caused thereby, Borrower may make Restricted Junior Payments to Parent to enable
Parent to repurchase equity investments of management investors pursuant to the
Stockholders Agreement; provided that the amount of Restricted Junior Payments
pursuant to this clause (iv) shall not exceed, in any Fiscal Year, an amount
equal to that portion of Consolidated Excess Cash Flow for the immediately
preceding Fiscal Year not required to prepay Loans pursuant to subsection
2.4B(iii)(f) so long as, immediately after giving effect to any such Restricted
Junior Payment, Borrower shall have not less than $5,000,000 of availability
under the Revolving Loan Commitments (giving effect to the Borrowing Base as of
the date of determination).
7.6 Financial Covenants.
A. Minimum Interest Coverage Ratio. Parent shall not permit the ratio
of (i) Consolidated Adjusted EBITDA to (ii) Consolidated Interest Expense for
any four-Fiscal Quarter period ending on or about any of the dates set forth
below (or in the case of any period prior to December 31, 1997, the period from
January 1, 1997 through such date) to be less than the correlative ratio
indicated:
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Minimum Interest
Approximate Date Coverage Ratio
================================ ===============================
March 31, 1997 1.15:1.00
------------------------------- -------------------------------
June 30, 1997 1.40:1.00
------------------------------- -------------------------------
September 30, 1997 1.55:1.00
------------------------------- -------------------------------
December 31, 1997 1.55:1.00
------------------------------- -------------------------------
March 31, 1998 1.55:1.00
------------------------------- -------------------------------
June 30, 1998 1.55:1.00
------------------------------- -------------------------------
September 30, 1998 1.55:1.00
------------------------------- -------------------------------
December 31, 1998 1.70:1.00
------------------------------- -------------------------------
March 31, 1999 1.70:1.00
------------------------------- -------------------------------
June 30, 1999 1.70:1.00
------------------------------- -------------------------------
September 30, 1999 1.70:1.00
------------------------------- -------------------------------
December 31, 1999 1.90:1.00
------------------------------- -------------------------------
March 31, 2000 1.90:1.00
------------------------------- -------------------------------
June 30, 2000 1.90:1.00
------------------------------- -------------------------------
September 30, 2000 1.90:1.00
------------------------------- -------------------------------
December 31, 2000 2.00:1.00
------------------------------- -------------------------------
March 31, 2001 2.00:1.00
------------------------------- -------------------------------
June 30, 2001 2.00:1.00
------------------------------- -------------------------------
September 30, 2001 2.00:1.00
------------------------------- -------------------------------
December 31, 2001
and each Fiscal Quarter's 2.00:1.00
end thereafter
================================ ===============================
B. Minimum Fixed Charge Coverage Ratio. Parent shall not permit the
ratio of (i) Consolidated Adjusted EBITDA minus Consolidated Capital
Expenditures to (ii) Consolidated Fixed Charges for any four-Fiscal Quarter
period ending on or about any of the dates set forth below (or, in the case of
any period ending prior to December 31, 1997, the period from January 1, 1997
through such date) to be less than the correlative ratio indicated:
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Minimum Fixed
Charge Coverage
Approximate Date Ratio
================================ ==============================
March 31, 1997 N/A
------------------------------- -------------------------------
June 30, 1997 1.00:1.00
------------------------------- -------------------------------
September 30, 1997 1.05:1.00
------------------------------- -------------------------------
December 31, 1997 1.10:1.00
------------------------------- -------------------------------
March 31, 1998 1.10:1.00
------------------------------- -------------------------------
June 30, 1998 1.10:1.00
------------------------------- -------------------------------
September 30, 1998 1.10:1.00
------------------------------- -------------------------------
December 31, 1998 1.20:1.00
------------------------------- -------------------------------
March 31, 1999 1.20:1.00
------------------------------- -------------------------------
June 30, 1999 1.20:1.00
------------------------------- -------------------------------
September 30, 1999 1.20:1.00
------------------------------- -------------------------------
December 31, 1999 1.30:1.00
------------------------------- -------------------------------
March 31, 2000 1.30:1.00
------------------------------- -------------------------------
June 30, 2000 1.30:1.00
------------------------------- -------------------------------
September 30, 2000 1.30:1.00
------------------------------- -------------------------------
December 31, 2000 1.40:1.00
------------------------------- -------------------------------
March 31, 2001 1.40:1.00
------------------------------- -------------------------------
June 30, 2001 1.40:1.00
------------------------------- -------------------------------
September 30, 2001 1.40:1.00
------------------------------- -------------------------------
December 31, 2001
and each Fiscal Quarter's 1.40:1.00
end thereafter
=============================== ===============================
C. Maximum Leverage Ratio. Parent shall not permit the ratio of (i)
▇▇▇▇▇▇▇ dated Total Debt as of the last day of any Fiscal Quarter ending on or
about any of the dates set forth below to (ii) Consolidated Adjusted EBITDA for
the four Fiscal Quarter period ending on such date (the "Leverage Ratio") to
exceed the correlative ratio indicated:
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Maximum Leverage
Approximate Date Ratio
================================ ==============================
December 31, 1997 5.75:1.00
------------------------------- ------------------------------
March 31, 1998 5.75:1.00
------------------------------- ------------------------------
June 30, 1998 5.75:1.00
------------------------------- ------------------------------
September 30, 1998 5.75:1.00
------------------------------- ------------------------------
December 31, 1998 5.00:1.00
------------------------------- ------------------------------
March 31, 1999 5.00:1.00
------------------------------- ------------------------------
June 30, 1999 5.00:1.00
------------------------------- ------------------------------
September 30, 1999 5.00:1.00
------------------------------- ------------------------------
December 31, 1999 4.25:1.00
------------------------------- ------------------------------
March 31, 2000 4.25:1.00
------------------------------- ------------------------------
June 30, 2000 4.25:1.00
------------------------------- ------------------------------
September 30, 2000 4.25:1.00
------------------------------- ------------------------------
December 31, 2000 3.50:1.00
------------------------------- ------------------------------
March 31, 2001 3.50:1.00
------------------------------- ------------------------------
June 30, 2001 3.50:1.00
------------------------------- ------------------------------
September 30, 2001 3.50:1.00
------------------------------- ------------------------------
December 31, 2001
and each Fiscal Quarter's 3.00:1.00
end thereafter
================================ ==============================
D. Minimum Consolidated Adjusted EBITDA. Parent shall not permit
Consolidated Adjusted EBITDA for any period commencing on January 1, 1997 and
ending at the end of the Fiscal Quarter ending on or about the date set forth
below to be less than the correlative amount indicated:
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Minimum Consolidated
Approximate Date Adjusted EBITDA
=================================== ===============================
March 31, 1997 $ 4,300,000
----------------------------------- -------------------------------
June 30, 1997 $10,000,000
----------------------------------- -------------------------------
September 30, 1997 $18,600,000
=================================== ===============================
E. Minimum Consolidated Adjusted Net Worth. Parent shall not permit
Consolidated Adjusted Net Worth at the end of any Fiscal Quarter to be less than
the sum of (x) the Consolidated Net Worth at the Closing Date plus (y) 50% of
the Consolidated Adjusted Net Income for the period commencing on the Closing
Date and ending on the last day of such Fiscal Quarter minus (z) the aggregate
amount of Restricted Junior Payments actually made pursuant to clause (ii),
(iii), and (vi) of subsection 7.5.
For purposes of this subsection 7.6 the covenant measurement dates have been
determined based on the assumption that the Borrower's Fiscal Quarters end on
March 31, June 30, September 30 and December 31 of each year. In the event that
the Fiscal Quarters end on other dates, the foregoing covenant measurement dates
shall be adjusted, so that any change in the ratios shall occur as of the last
day of the applicable Fiscal Quarter.
7.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions.
Parent shall not, and shall not permit any of its Subsidiaries to,
alter the corporate, capital or legal structure of Parent or any of its
Subsidiaries, or 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 sub-lease (as lessor or sublessor),
transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business, property or assets, whether now
owned or hereafter acquired, or acquire by purchase or otherwise all or
substantially all 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 of any Person, except:
(i) Borrower may be merged into Parent and any Subsidiary of
Borrower may be merged with or into 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 any Subsidiary Guarantor; provided that, in the case of such a
merger, such Subsidiary Guarantor shall be the continuing or surviving
corporation;
125
(ii) Borrower and its Subsidiaries may make Consolidated
Capital Expenditures permitted under subsection 7.8;
(iii) Borrower and its Subsidiaries may dispose of obsolete,
worn out or surplus property in the ordinary course of business;
(iv) Borrower and its Subsidiaries may sell or otherwise
dispose of assets for cash in transactions that do not constitute Asset
Sales; provided that the consideration received for such assets shall
be in an amount at least equal to the fair market value thereof;
(v) subject to subsection 7.11 Borrower and its Subsidiaries
may make Asset Sales of assets having a fair market value not in excess
of $2,000,000; provided that (x) the consideration received for such
assets shall be in an amount at least equal to the fair market value
thereof; (y) the sole consideration received shall be cash; and (z) the
proceeds of such Asset Sales shall be applied as required by subsec
tion 2.4B(iii)(a);
(vi) Borrower and its Subsidiaries may make acquisitions in an
aggregate amount not to exceed (x) $25,000,000 in the aggregate if the
aggregate principal amount of Term Loans outstanding equals or exceeds
$5,000,000 but equals or is less than $10,000,000 and (y) $35,000,000
in the aggregate if the aggregate principal amount of Term Loans
outstanding is, less than $5,000,000; provided that with respect to
acquisitions made pursuant to this subsection 7.7(vi): (a) any newly
acquired or created Subsidiary of Borrower or any of its Subsidiaries
shall be a wholly owned Subsidiary thereof; (b) immediately before and
after giving effect thereto, no Potential Event of Default or Event of
Default shall have occurred and be continuing or would result
therefrom; (c) any business acquired or invested in pursuant to this
subsection 7.7(vi) shall be in the same line of business as the
business of Borrower or any of its Subsidiaries; (d) Borrower shall
comply with the requirements of subsection 6.8; (e) after giving effect
to such acquisition, Borrower shall be in compliance on a pro forma
basis with all of the covenants set forth in subsection 7.6; (e) after
giving effect to such acquisition, Borrower shall have not less than
$5,000,000 of availability under the Revolving Loan Commitments; and
(f) no default shall be caused by such acquisition under any Material
Contract of Parent or any of its Subsidiaries.
7.8 Consolidated Capital Expenditures.
Parent shall not permit its Subsidiaries to, make or incur Consolidated
Capital Expenditures in any Fiscal Year in an aggregate amount in excess of
$5,000,000; provided that the maximum Consolidated Capital Expenditures for any
Fiscal Year shall be increased by the lesser of (i) an amount equal to 100% of
the excess, if any, of the maximum Consolidated Capital Expenditures for the
previous Fiscal Year (without
126
giving effect to any adjustments pursuant to with this proviso) over the actual
amount of Consolidated Capital Expenditures for such previous Fiscal Year and
(ii) for Fiscal Year 1998, $1,500,000 and, for each Fiscal Year thereafter,
$1,000,000.
7.9 Sale or Discount of Receivables.
Parent shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, sell with recourse, or discount or otherwise sell for
less than the face value thereof, any of its notes or accounts receivable.
7.10 Transactions with Shareholders and Affiliates.
Parent shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any holder of 10% or more of any
class of equity Securities of Parent or with any Affiliate of Parent or of any
such holder, on terms that are less favorable to Parent or that Subsidiary, as
the case may be, than those that would be obtained at that time from Persons who
are not such a holder or Affiliate; provided that the foregoing restriction
shall not apply to (i) any transaction between Borrower and any of its
Subsidiaries or among any of its Subsidiaries, (ii) reason able and customary
fees paid to members of the Boards of Directors of Parent and its Subsidiaries
or (iii) fees and expenses payable to First Atlantic Capital, Ltd. pursuant to
the Management Consulting Agreement to the extent permitted under subsection
7.5.
7.11 Disposal of Subsidiary Stock.
Parent shall not (except with respect to Liens granted pursuant to the
Loan Documents):
(i) directly or indirectly sell, assign, pledge or otherwise
encumber or dispose of any shares of capital stock or other equity
Securities of any of its Subsidi aries, or permit any of its
Subsidiaries to issue any shares of capital stock or other equity
Securities, except sales or issuances to qualify directors if and only
to the extent required by applicable law; or
(ii) permit any of its Subsidiaries directly or indirectly to
sell, assign, pledge or otherwise encumber or dispose of any shares of
capital stock or other equity Securities of any of its Subsidiaries
(including such Subsidiary), except to Parent, another Subsidiary of
Parent, or to qualify directors if required by applicable law.
127
7.12 Conduct of Business.
From and after the Closing Date, Parent shall not, and shall not permit
any of its Subsidiaries to, engage in any business other than (i) the businesses
engaged in by Parent and its Subsidiaries on the Closing Date and similar or
related businesses and (ii) such other lines of business as may be consented to
by Requisite Lenders.
7.13 Amendments or Waivers of Certain Related Agreements; Amendments of
Senior Guaranteed Note Documents; and Designation of "Designated Senior
Indebtedness".
A. Amendments or Waivers of Certain Related Agreements. Neither Parent
nor any of its Subsidiaries will agree to any material amendment to, or waive
any of its material rights under, any Related Agreement which amendment or
waiver could be materially adverse to the Lenders (other than any Senior
Guaranteed Note Documents, which shall be subject to subsection 7.13B) after the
Closing Date without in each case obtaining the prior written consent of
Requisite Lenders to such amendment or waiver.
B. Amendments of Senior Guaranteed Note Documents. Parent shall not,
and shall not permit any of its Subsidiaries to, amend or otherwise change the
terms of any Senior Guaranteed Note Documents in any material respect, or make
any payment consistent with any material amendment thereof or change thereto, if
the effect of such amendment or change is to increase the interest rate on the
Indebtedness evidenced thereby, change (to earlier dates) any dates upon which
payments of principal or interest are due thereon, change in any material
respect 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, change the subordination provisions thereof (or of any
guaranty thereof), or change any collateral therefor (other than to release such
collateral), 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 the
Senior Guaranteed Notes (or a trustee or other representative on their behalf)
which could reasonably be expected to be adverse to Parent, Borrower, any
Lenders or Issuing Lender.
C. Designation of "Designated Senior Indebtedness". Neither Parent nor
any Subsidiary thereof shall designate any Indebtedness as "Designated Senior
Indebtedness" (as defined in the Senior Guaranteed Note Documents) without the
prior written consent of Requisite Lenders.
128
7.14 Fiscal Year
Parent and Borrower shall not change its Fiscal Year-end from the date
determined by Borrower as set forth in the definition of Fiscal Year.
7.15 Charter Amendments.
Parent shall not amend, nor permit any of its Subsidiaries to amend,
its certificate of incorporation or bylaws in a manner adverse to the Lenders.
7.16 Amendment, Etc. of Material Contracts.
Parent shall not cancel or terminate any Material Contract or consent
to or accept any cancellation or termination thereof, amend or otherwise modify
any Material Contract or give any consent, waiver or approval thereunder, waive
any default under or breach of any Material Contract, agree in any manner to any
other amendment, modification or change of any term or condition of any Material
Contract without the prior written consent of Administrative Agent.
7.17 Partnerships, Etc.
Parent shall not become a general partner in any general or limited
partnership or joint venture, or permit any of its Subsidiaries to do so.
7.18 Speculative Transactions.
Parent shall not engage, or permit any of its Subsidiaries to engage,
in any transaction involving commodity options or futures contracts or any
similar speculative transactions except for Hedge Agreements permitted under
Section 7.4(iii).
Section 8. EVENTS OF DEFAULT
If any of the following conditions or events ("Events of Default")
shall occur:
8.1 Failure to Make Payments When Due.
Failure by Borrower to pay any installment of principal of any Loan
when due, whether at stated maturity, by acceleration, by notice of voluntary
prepayment, by mandatory prepayment or otherwise; failure by Borrower to pay
when due any amount payable to Issuing Lender in reimbursement of any drawing
under a Letter of Credit or any IRB Reimbursement Advance; or failure by
Borrower to pay any interest on any Loan
129
or any fee or any other amount due under this Agreement within three Business
Days after the date due; or
8.2 Default in Other Agreements.
(i) Failure of Parent or any of its 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 subsection
8.1) or Contingent Obligations in an individual principal amount of $500,000 or
more or with an aggregate principal amount of $1,000,000 or more, in each case
beyond the end of any grace period provided therefor; or (ii) breach or default
by Parent or any of its Subsidiaries with respect to any other material term of
(a) one or more items of Indebtedness or Contingent Obligations in the
individual or aggregate principal amounts referred to in clause (i) above or (b)
any loan agreement, mortgage, indenture or other agreement relating to such
item(s) of Indebtedness or Contingent Obligation(s), if the effect of such
breach or default is to cause, or to permit the holder or holders of that
Indebtedness or Contingent Obligation(s) (or a trustee on behalf of such holder
or holders) to cause, that Indebtedness or Contingent Obligation(s) to become or
be declared due and payable prior to its stated maturity or the stated maturity
of any underlying obligation, as the case may be (upon the giving or receiving
of notice, lapse of time, both, or otherwise); or
8.3 Breach of Certain Covenants.
Failure of Parent or Borrower to perform or comply with any term or
condition contained in subsection 2.5 or 6.1(ix)(a) or 6.2 or Section 7 of this
Agreement; or
8.4 Breach of Warranty.
Any representation, warranty, certification or other statement made by
Parent or any of its Subsidiaries in any Loan Document or in any statement or
certificate at any time given by Parent or any of its Subsidiaries in writing
pursuant hereto or thereto or in connection herewith or therewith shall be false
in any material respect on the date as of which made or deemed made; or
8.5 Other Defaults Under Loan Documents.
Any Loan Party shall default in the performance of or compliance with
any term contained in this Agreement or any of the other Loan Documents, other
than any such term referred to in any other subsection of this Section 8, and
such default shall not have been remedied or waived within 30 days after the
earlier of (i) a Responsible Officer becomes aware of such default and (ii)
receipt by Borrower and such Loan Party of notice from Administrative Agent or
any Lender of such default; or
130
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc.
(i) A court having jurisdiction in the premises shall enter a decree or
order for relief in respect of Parent or any of its Material Subsidiaries 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 Parent or any of its Material Subsidiaries 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 Parent or any of its
Material Subsidiaries, or over all or substantially all of its property, shall
have been entered; or there shall have occurred the involuntary appointment of
an interim receiver, trustee or other custodian of Parent or any of its Material
Subsidiaries for all or substantially all of its property; or a warrant of
attachment, execution or similar process shall have been issued against any
substantial part of the property of Parent or any of its Material Subsidiaries,
and any such event described in this clause (ii) shall continue for 60 days
unless dismissed, bonded or discharged; or
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.
(i) Parent or any of its Material Subsidiaries shall have an order for
relief entered with respect to it or 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
substantially of its property; or Parent or any of its Material Subsidiaries
shall make any assignment for the benefit of creditors; or (ii) Parent or any of
its Material Subsidiaries shall be unable, or shall fail generally, or shall
admit in writing its inability, to pay its debts as such debts become due; or
the Board of Directors of Parent or any of its Material Subsidiaries (or any
committee thereof) shall adopt any resolution or otherwise authorize any action
to approve any of the actions referred to in clause (i) above or this clause
(ii); or
8.8 Judgments, Attachments, etc.
Any money judgment, writ or warrant of attachment or similar process
involving (i) in any individual case an amount in excess of $500,000 or (ii) in
the aggregate at any time an amount in excess of $1,000,000 (in either case not
adequately covered by insurance as to which a solvent and unaffiliated insurance
company has acknowledged coverage) shall be entered or filed against Parent or
any of its Subsidiaries or any of their respective assets and shall remain
undischarged, unvacated, unbonded or
131
unstayed for a period of 60 days (or in any event later than five days prior to
the date of any proposed sale thereunder); or any non-monetary judgment or order
shall be rendered against Parent or any of its Subsidiaries that could be
reasonably likely to have a Material Adverse Effect, and there shall be any
period of 10 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
8.9 Dissolution.
Any order, judgment or decree shall be entered against Parent or any of
its Subsidi aries decreeing the dissolution or split up of Parent or that
Subsidiary and such order shall remain undischarged or unstayed for a period in
excess of 30 days; or
8.10 Employee Benefit Plans.
There shall occur one or more ERISA Events which individually or in the
aggregate results in or might reasonably be expected to result in liability of
Parent, any of its Subsidiaries or any of their respective ERISA Affiliates in
excess of $100,000 during the term of this Agreement; or there shall exist an
amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA), individually or in the aggregate for all Pension Plans (excluding for
purposes of such computation any Pension Plans with respect to which assets
exceed benefit liabilities), which exceeds $100,000; or
8.11 Material Adverse Effect.
Any event or change shall occur that has caused or evidences, either in
any case or in the aggregate, a Material Adverse Effect; or
8.12 Change in Control.
There shall occur a Change of Control; or
8.13 Invalidity of Guarantees; Failure of Security; Repudiation of
Obligations.
At any time after the execution and delivery thereof, (i) any Guaranty
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, (ii) any Collateral Document shall
cease to be in full force and effect (other than by reason of a release of
Collateral thereunder in accordance with the terms hereof or thereof, the
satisfaction in full of the Obligations or any other termination of such
Collateral Document in accordance with the terms hereof or thereof) or shall be
declared null and void, or Administrative Agent shall not have or shall cease to
have a valid and perfected First Priority Lien (subject only to Permitted Liens)
in any material Collateral purported to be covered thereby, in each
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case for any reason other than the failure of Administrative Agent or any Lender
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 without limitation with respect to
future advances by Lenders, under any Loan Document to which it is a party; or
8.14 Action Relating to Certain Indebtedness.
Any event shall occur which under the terms of the Senior Guaranteed
Note Documents shall require Borrower or any of its Subsidiaries to purchase,
redeem or otherwise acquire, or offer to purchase, redeem or otherwise acquire,
all or any portion of the Senior Guaranteed Notes, or Parent or any of its
Subsidiaries shall for any other reason purchase, redeem or otherwise acquire,
or offer to purchase, redeem or otherwise acquire, or make any other payments in
respect of, all or any portion of the Senior Guaranteed Notes, except to the
extent expressly permitted by subsection 7.5; or
8.15 Conduct of Business By Parent and Borrower.
Parent or Borrower shall (i) engage in any business other than (x)
entering into and performing its obligations under and in accordance with the
Loan Documents and Related Agreements to which it is a party or (y) as required
by law, or (ii) own any assets other than (a) the capital stock of its
Subsidiaries and (b) in the case of Parent only, Cash and Cash Equivalents as
may be reasonably necessary for the purpose of paying its general operating
expenses; or Parent shall cease to own 100% of the outstanding stock of
Borrower; or Borrower shall cease to own 100% of the outstanding stock of its
Subsidiaries.
THEN (i) upon the occurrence of any Event of Default described in subsection 8.6
or 8.7, each of (a) the unpaid principal amount of and accrued interest on the
Loans, (b) an amount equal to the maximum amount that may at any time be drawn
under all Letters of Credit then outstanding (whether or not any beneficiary
under any such Letter of Credit shall have presented, or shall be entitled at
such time to present, the drafts or other documents or certificates required to
draw under such Letter of Credit), (c) the Maximum Exposure Under IRB
Reimbursement Agreement and (d) all other Obligations shall automatically become
immediately due and payable, without presentment, demand, protest or other
requirements of any kind, all of which are hereby expressly waived by Borrower,
and the obligation of each Lender to make any Loan, the obligation of Issuing
Lender to issue any Letter of Credit hereunder shall thereupon terminate, and
(ii) upon the occurrence and during the continuation of any other Event of
Default, Administrative Agent shall, upon the written request or with the
written consent of Requisite Lenders, by written notice to Borrower, declare all
or any portion of the amounts described in clauses (a) through (d) above to be,
and the same shall forthwith become, immediately due and payable, and the
obligation of each Lender to make any Loan, the obligation of Issuing Lender to
issue any Letter of Credit
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hereunder shall thereupon terminate; provided that the foregoing shall not
affect in any way the obligations of Lenders under subsection 3.3C(i) or the
obligations of Lenders to purchase participations in any unpaid Swing Line Loans
as provided in subsection 2.1A(iii).
Any amounts described in clause (b) above, when received by
Administrative Agent, shall be held by Administrative Agent pursuant to the
terms of the Collateral Account Agreement and shall be applied as therein
provided.
Notwithstanding anything contained in the second preceding paragraph,
if at any time within 60 days after an acceleration of the Loans pursuant to
clause (ii) of such paragraph Borrower shall pay all arrears of interest and all
payments on account of principal which shall have become due otherwise than as a
result of such acceleration (with interest on principal and, to the extent
permitted by law, on overdue interest, at the rates specified in this Agreement)
and all Events of Default and Potential Events of Default (other than
non-payment of the principal of and accrued interest on the Loans, in each case
which is due and payable solely by virtue of acceleration) shall be remedied or
waived pursuant to subsection 10.6, then Requisite Lenders, by written notice to
Borrower, may at their option rescind and annul such acceleration and its
consequences; but such action shall not affect any subsequent Event of Default
or Potential Event of Default or impair any right consequent thereon. The
provisions of this paragraph are intended merely to bind Lenders to a decision
which may be made at the election of Requisite Lenders and are not intended,
directly or indirectly, to benefit Borrower, and such provisions shall not at
any time be construed so as to grant Borrower the right to require Lenders to
rescind or annul any acceleration hereunder or to preclude Administrative Agent
or Lenders from exercising any of the rights or remedies available to them under
any of the Loan Documents, even if the conditions set forth in this paragraph
are met.
Section 9. ADMINISTRATIVE AGENT
9.1 Appointment.
A. Appointment of Administrative Agent. NationsBank is hereby appointed
Administrative Agent hereunder and under the other Loan Documents and each
Lender hereby authorizes Administrative Agent to act as its agent in accordance
with the terms of this Agreement and the other Loan Documents. Administrative
Agent agrees to act upon the express conditions contained in this Agreement and
the other Loan Documents, as applicable. The provisions of this Section 9 are
solely for the benefit of Administrative Agent and Lenders and neither Parent
nor Borrower shall have any rights as a third party beneficiary of any of the
provisions thereof. In performing its functions and duties under this Agreement,
Administrative Agent shall act solely as an agent of Lenders and does not assume
and shall not be deemed to have assumed any
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obligation towards or relationship of agency or trust with or for Parent or any
of its Subsidiaries.
B. Appointment of Supplemental Collateral Administrative Agents. It is
the purpose of this Agreement and the other Loan Documents that there shall be
no violation of any law of any jurisdiction denying or restricting the right of
banking corporations or associations to transact business as agent or trustee in
such jurisdiction. It is recognized that in case of litigation under this
Agreement or any of the other Loan Documents, and in particular in case of the
enforcement of any of the Loan Documents, or in case Administra tive Agent deems
that by reason of any present or future law of any jurisdiction it may not
exercise any of the rights, powers or remedies granted herein or in any of the
other Loan Documents or take any other action which may be desirable or
necessary in connection therewith, it may be necessary that Administrative Agent
appoint an additional individual or institution as a separate trustee,
co-trustee, collateral agent or collateral co-agent (any such additional
individual or institution being referred to herein individually as a
"Supplemental Collateral Agent" and collectively as "Supplemental Collateral
Agents").
In the event that Administrative Agent appoints a Supplemental
Collateral Agent with respect to any Collateral, (i) each and every right,
power, privilege or duty expressed or intended by this Agreement or any of the
other Loan Documents to be exercised by or vested in or conveyed to
Administrative Agent with respect to such Collateral shall be exercisable by and
vest in such Supplemental Collateral Agent to the extent, and only to the
extent, necessary to enable such Supplemental Collateral Agent to exercise such
rights, powers and privileges with respect to such Collateral and to perform
such duties with respect to such Collateral, and every covenant and obligation
contained in the Loan Documents and necessary to the exercise or performance
thereof by such Supplemental Collateral Agent shall run to and be enforceable by
either Administrative Agent or such Supplemental Collateral Agent, and (ii) the
provisions of this Section 9 and of subsections 10.2 and 10.3 that refer to
Administrative Agent shall inure to the benefit of such Supplemental Collateral
Agent and all references therein to Administrative Agent shall be deemed to be
references to Administrative Agent and/or such Supplemental Collateral Agent, as
the context may require.
Should any instrument in writing from Parent or any other Loan Party be
required by any Supplemental Collateral Agent so appointed by Administrative
Agent for more fully and certainly vesting in and confirming to him or it such
rights, powers, privileges and duties, Parent shall, or shall cause such Loan
Party to, execute, acknowledge and deliver any and all such instruments promptly
upon request by Administrative Agent. In case any Supplemental Collateral Agent,
or a successor thereto, shall die, become incapable of acting, resign or be
removed, all the rights, powers, privileges and duties of such Supplemental
Collateral Agent, to the extent permitted by law, shall vest in and be exercised
by Administrative Agent until the appointment of a new Supplemental Collateral
Agent.
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9.2 Powers and Duties; General Immunity.
▇. ▇▇▇▇▇▇; Duties Specified. Each Lender irrevocably authorizes
Administrative Agent to take such action on such Lender's behalf and to exercise
such powers, rights and remedies hereunder and under the other Loan Documents as
are specifically delegated or granted to Administrative Agent by the terms
hereof and thereof, together with such powers, rights and remedies as are
reasonably incidental thereto. Without limiting the foregoing, each Lender
hereby authorizes Administrative Agent to (i) enter into the IRB Reimburse ment
Agreement on the Closing Date and (ii) upon expiration of the PNC Letter of
Credit, to issue one or more replacement letters of credit with terms and
conditions substantially similar to the terms of the PNC Letter of Credit
(annexed hereto as Schedule 9.2), so long as such replacement letter of credit
does not have terms that extend beyond the Revolving Loan Commitment Termination
Date. Administrative Agent shall have only those duties and responsibilities
that are expressly specified in this Agreement and the other Loan Documents.
Administrative Agent may exercise such powers, rights and remedies and perform
such duties by or through its agents or employees. Administrative Agent shall
not have, by reason of this Agreement or any of the other Loan Documents, a
fiduciary relationship in respect of any Lender; and nothing in this Agreement
or any of the other Loan Documents, expressed or implied, is intended to or
shall be so construed as to impose upon Administrative Agent any obligations in
respect of this Agreement or any of the other Loan Documents except as expressly
set forth herein or therein.
B. No Responsibility for Certain Matters. Administrative Agent shall
not be responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceabili ty, collectibility or sufficiency of this Agreement or
any other Loan Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statements or
in any financial or other statements, instruments, reports or certificates or
any other documents furnished or made by Administrative Agent to Lenders or by
or on behalf of Parent or Borrower to Administrative Agent or any Lender in
connection with the Loan Documents and the transactions contemplated thereby or
for the financial condition or business affairs of Borrower or any other Person
liable for the payment of any Obligations, nor shall Administrative Agent be
required to ascertain or inquire as to the performance or observance of any of
the terms, conditions, provisions, covenants or agreements contained in any of
the Loan Documents or as to the use of the proceeds of the Loans or the use of
the Letters of Credit or as to the existence or possible existence of any Event
of Default or Potential Event of Default. Anything contained in this Agreement
to the contrary notwithstanding, Administrative Agent shall not have any
liability arising from confirmations of the amount of outstanding Loans or the
Revolving Letter of Credit Usage or the component amounts thereof.
C. Exculpatory Provisions. Neither Administrative Agent nor any of its
officers, directors, employees or agents shall be liable to Lenders for any
action taken or omitted by Administrative Agent under or in connection with any
of the Loan
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Documents except to the extent caused by Administrative Agent's gross negligence
or willful misconduct. Administra tive Agent shall be entitled to refrain from
any act or the taking of any action (including the failure to take an action) in
connection with this Agreement or any of the other Loan Documents or from the
exercise of any power, discretion or authority vested in it hereunder or
thereunder unless and until Administrative Agent shall have received
instructions in respect thereof from Requisite Lenders (or such other Lenders as
may be required to give such instructions under subsection 10.6) and, upon
receipt of such instructions from Requisite Lenders (or such other Lenders, as
the case may be), Administrative Agent shall be entitled to act or (where so
instructed) refrain from acting, or to exercise such power, discretion or
authority, in accordance with such instructions. Without prejudice to the
generality of the foregoing, (i) Administrative Agent shall be entitled to rely,
and shall be fully protected in relying, upon any communication, instrument or
document believed by it to be genuine and correct and to have been signed or
sent by the proper person or persons, and shall be entitled to rely and shall be
protected in relying on opinions and judgments of attorneys (who may be
attorneys for Parent and its Subsidiaries), accountants, experts and other
professional advisors selected by it; and (ii) no Lender shall have any right of
action whatsoever against Administrative Agent as a result of Administrative
Agent acting or (where so instructed) refraining from acting under this
Agreement or any of the other Loan Documents in accordance with the instructions
of Requisite Lenders (or such other Lenders as may be required to give such
instructions under subsection 10.6).
D. Agent Entitled to Act as Lender. The agency hereby created shall in
no way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, Administrative Agent in its individual capacity as a Lender
hereunder. With respect to its participation in the Loans and the Letters of
Credit and the IRB Reimbursement Agreement, Administrative Agent shall have the
same rights and powers hereunder as any other Lender and may exercise the same
as though it were not performing the duties and functions delegated to it
hereunder, and the term "Lender" or "Lenders" or any similar term shall, unless
the context clearly otherwise indicates, include Administrative Agent in its
individual capacity. Administrative Agent and its Affiliates may accept deposits
from, lend money to and generally engage in any kind of banking, trust,
financial advisory or other business with Borrower or any of its Affiliates as
if it were not performing the duties specified herein, and may accept fees and
other consideration from Borrower for services in connection with this Agreement
and otherwise without having to account for the same to Lenders.
9.3 Representations and Warranties; No Responsibility For Appraisal of
Creditworthiness.
Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of Parent and
its Subsidiaries in connection with the making of the Loans and the issuance of
Letters of Credit
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hereunder and the execution of the IRB Reimbursement Agreement and that it has
made and shall continue to make its own appraisal of the creditworthiness of
Parent and its Subsidiaries. Administrative Agent shall not have any duty or
responsibility, either initially or on a continuing basis, to make any such
investigation or any such appraisal on behalf of Lenders or to provide any
Lender with any credit or other information with respect thereto, whether coming
into its possession before the making of the Loans or at any time or times there
after, and Administrative Agent shall not have any responsibility with respect
to the accuracy of or the completeness of any information provided to Lenders.
9.4 Right to Indemnity.
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify Administrative Agent, to the extent that Administrative Agent shall
not have been reimbursed by Borrower or Parent, for and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including counsel fees and disbursements) or disbursements of
any kind or nature whatsoever which may be imposed on, incurred by or asserted
against Administrative Agent in exercising its powers, rights and remedies or
performing its duties hereunder or under the other Loan Documents or otherwise
in its capacity as Administrative Agent in any way relating to or arising out of
this Agreement or the other Loan Documents; provided that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from Administrative Agent's gross negligence or willful misconduct. If any
indemnity furnished to Administrative Agent for any purpose shall, in the
opinion of Administrative Agent, be insufficient or become impaired,
Administrative Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional indemnity is
furnished.
9.5 Successor Agent and Swing Line Lender.
A. Successor Agent. Administrative Agent may resign at any time by
giving 30 days' prior written notice thereof to Lenders and Borrower, and
Administrative Agent may be removed at any time with or without cause by an
instrument or concurrent instruments in writing delivered to Borrower and
Administrative Agent and signed by Requisite Lenders. Upon any such notice of
resignation or any such removal, Requisite Lenders shall have the right, upon
five Business Days' notice to Borrower, to appoint a successor Administrative
Agent. Upon the acceptance of any appointment as Administrative Agent hereunder
by a successor Administrative Agent, that successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring or removed Administrative Agent and the retiring or
removed Administrative Agent shall be discharged from its duties and obligations
under this Agreement. After any retiring or removed Administrative Agent's
resignation or removal hereunder as Administrative Agent, the provisions of
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this Section 9 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Administrative Agent under this Agreement.
B. Successor Swing Line Lender. Any resignation or removal of
Administrative Agent pursuant to subsection 9.5A shall also constitute the
resignation or removal of NationsBank or its successor as Swing Line Lender, and
any successor Administrative Agent appointed pursuant to subsection 9.5A shall,
upon its acceptance of such appointment, become the successor Swing Line Lender
for all purposes hereunder. In such event (i) Borrower shall prepay any
outstanding Swing Line Loans made by the retiring or removed Administrative
Agent in its capacity as Swing Line Lender, (ii) upon such prepayment, the
retiring or removed Administrative Agent and Swing Line Lender shall surrender
the Swing Line Note held by it to Borrower for cancellation, and (iii) Borrower
shall issue a new Swing Line Note to the successor Administrative Agent and
Swing Line Lender substantially in the form of Exhibit VIII annexed hereto, in
the principal amount of the Swing Line Loan Commitment then in effect and with
other appropriate insertions.
9.6 Collateral Documents and Guaranties.
Each Lender hereby further authorizes Administrative Agent, on behalf
of and for the benefit of Lenders, to enter into each Collateral Document
(including, without limitation, the MELF Intercreditor Agreement) as secured
party and to be the agent for and representative of Lenders under each Guaranty,
and each Lender agrees to be bound by the terms of each Collateral Document and
Guaranty; provided that Administrative Agent shall not (i) enter into or consent
to any material amendment, modification, termination or waiver of any provision
contained in any Collateral Document or Guaranty or (ii) release any Collateral
(except as otherwise expressly permitted or required pursuant to the terms of
this Agreement or the applicable Collateral Document), in each case without the
prior consent of Requisite Lenders (or, if required pursuant to subsection 10.6,
all Lenders); provided further, however, that, without further written consent
or authorization from Lenders, Administrative Agent may execute any documents or
instruments necessary to (a) release any Lien encumbering any item of Collateral
that is the subject of a sale or other disposition of assets permitted by this
Agreement or to which Requisite Lenders have otherwise consented or (b) release
any Subsidiary Guarantor from the Subsidiary Guaranty if all of the capital
stock of such Subsidiary Guarantor is sold to any Person (other than an
Affiliate of Borrower) pursuant to a sale or other disposition permitted
hereunder or to which Requisite Lenders have otherwise consented. Anything
contained in any of the Loan Documents to the contrary notwithstanding, Parent,
Borrower, Administrative Agent and each Lender hereby agree that (X) no Lender
shall have any right individually to realize upon any of the Collateral under
any Collateral Document or to enforce any Guaranty, it being understood and
agreed that all powers, rights and remedies under the Collateral Documents and
the Guaranties may be exercised solely by Administrative Agent for the benefit
of Lenders in accordance with the terms thereof, and (Y) in the event of a
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foreclosure by Administrative Agent on any of the Collateral pursuant to a
public or private sale, Administrative Agent or any Lender may be the purchaser
of any or all of such Collateral at any such sale and Administrative Agent, as
agent for and representative of Lenders (but not any Lender or Lenders in its or
their respective individual capacities unless Requisite Lenders shall otherwise
agree in writing) shall be entitled, for the purpose of bidding and making
settlement or payment of the purchase price for all or any portion of the
Collateral sold at any such public sale, to use and apply any of the Obligations
as a credit on account of the purchase price for any collateral payable by
Administrative Agent at such sale.
9.7 Arranging Agent, Syndication Agent and Documentation Agent.
The rights, privileges and benefits of the foregoing provisions of this
Section 9 shall extend to NCMI in its capacity as Arranging Agent and
Syndication Agent and Fleet National Bank, as Documentation Agent. After the
Closing Date, none of Arranging Agent, Syndication Agent or Documentation Agent
shall have any obligations or duties to any Loan Party, Administrative Agent or
any Lender.
Section 10. MISCELLANEOUS
10.1 Assignments and Participations in Loans, Letters of Credit and IRB
Reimbursement Agreement.
A. General. Subject to subsection 10.1B, each Lender shall have the
right at any time to (i) sell, assign or transfer to any Eligible Assignee, or
(ii) sell participations to any Person in, all or any part of its Commitments or
any Loan or Loans made by it or its Letters of Credit or the IRB Reimbursement
Agreement, or participations therein or any other interest herein or in any
other Obligations owed to it; provided that no such sale, assignment, transfer
or participation shall, without the consent of Borrower, require Borrower to
file a registration statement with the Securities and Exchange Commission or
apply to qualify such sale, assignment, transfer or participation under the
securities laws of any state; provided, further that no such sale, assignment or
transfer described in clause (i) above shall be effective unless and until an
Assignment Agreement effecting such sale, assignment or transfer shall have been
accepted by Administrative Agent and recorded in the Register as provided in
subsection 10.1B(ii); provided, further that no such sale, assignment, transfer
or participation of any Letter of Credit, the IRB Reimbursement Agreement or any
participation therein may be made separately from a sale, assignment, transfer
or participation of a corresponding interest in the Revolving Loan Commitment
and the Revolving Loans of the Lender effecting such sale, assignment, transfer
or participation; and provided, further that, anything contained herein to the
contrary notwithstanding, the Swing Line Loan Commitment and the Swing Line
Loans of Swing Line Lender may not be sold, assigned or transferred as described
in clause (i) above to any Person other than a successor Administrative
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Agent and Swing Line Lender to the extent contemplated by subsection 9.5. Except
as otherwise provided in this subsection 10.1, no Lender shall, as between
Borrower and such Lender, be relieved of any of its obligations hereunder as a
result of any sale, assignment or transfer of, or any granting of participations
in, all or any part of its Commitments or the Loans or the Letters of Credit or
the IRB Reimbursement Agreement or participations therein, or the other
Obligations owed to such Lender.
B. Assignments.
(i) Amounts and Terms of Assignments. Each Commitment, Loan,
Letter of Credit, the IRB Reimbursement Agreement or participation
therein, or other Obligation may (a) be assigned in any amount to
another Lender, or to an Affiliate of the assigning Lender or another
Lender, with the giving of notice to Borrower and Administrative Agent
or (b) be assigned in an aggregate amount of not less than $5,000,000
(or such lesser amount as shall constitute the aggregate amount of the
Commitments, Loans, the Letters of Credit, the IRB Reimbursement
Agreement and participations therein, and other Obligations of the
assigning Lender) to any other Eligible Assignee with the consent of
Borrower and Administrative Agent (which consent of Borrower and
Administrative Agent shall not be unreasonably withheld or delayed and
which consent of Borrower shall not be required at any time that an
Event of Default has occurred and is continuing); provided that any
such assignment in accordance with either clause (a) or (b) above shall
effect a pro rata assignment (based on the respective principal amounts
thereof then outstanding or in effect) of each of (1) the Term Loan
Commitment and/or the Term Loans of the assigning Lender and (2) the
Revolving Loan Commitment and the Revolving Loans of the assigning
Lender. To the extent of any such assignment in accordance with either
clause (a) or (b) above, the assigning Lender shall be relieved of its
obligations with respect to its Commitments, Loans, Letters of Credit,
the IRB Reimbursement Agreement or participations therein, or other
Obligations or the portion thereof so assigned. The parties to each
such assignment shall execute and deliver to Administrative Agent, for
its acceptance and recording in the Register, an Assignment Agreement,
together with a processing and recordation fee of $3,500 and such
forms, certificates or other evidence, if any, with respect to United
States federal income tax withholding matters as the assignee under
such Assignment Agreement may be required to deliver to Administrative
Agent pursuant to subsection 2.7B(iii)(a). Upon such execution,
delivery, acceptance and recordation, from and after the effective date
specified in such Assignment Agreement, (y) the assignee thereunder
shall be a party hereto and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment
Agreement, shall have the rights and obligations of a Lender hereunder
and (z) the assigning Lender thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to
such Assignment Agreement, relinquish its rights (other than any rights
which
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survive the termination of this Agreement under subsection 10.9B) and
be released from its obligations under this Agreement (and, in the case
of an Assignment Agreement covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto; provided that, anything
contained in any of the Loan Documents to the contrary notwithstanding,
with respect to any outstanding Letters of Credit and the IRB
Reimbursement Agreement, Issuing Lender shall continue to have all
rights and obligations of an Issuing Lender thereunder until the
cancellation or expiration of such Letters of Credit and the
reimbursement of any amounts drawn thereunder) and the termination of
the IRB Reimbursement Agreement and the reimbursement of any IRB
Reimbursement Advances. The Commitments hereunder shall be modified to
reflect the Commitment of such assignee and any remaining Commitment of
such assigning Lender and, if any such assignment occurs after the
issuance of the Notes hereunder, the assigning Lender shall, upon the
effectiveness of such assignment or as promptly thereafter as
practicable, surrender its applicable Notes to Administrative Agent for
cancellation, and thereupon new Notes shall be issued to the assignee
and to the assigning Lender, substantially in the form of Exhibit V,
Exhibit VI or Exhibit VII annexed hereto, as the case may be, with
appropriate insertions, to reflect the new Commitments and/or
outstanding Term Loans of the assignee and the assigning Lender.
(ii) Acceptance by Administrative Agent; Recordation in
Register. Upon its receipt of an Assignment Agreement executed by an
assigning Lender and an assignee representing that it is an Eligible
Assignee, together with the processing and recordation fee referred to
in subsection 10.1B(i) and any forms, certificates or other evidence
with respect to United States federal income tax withholding matters
that such assignee may be required to deliver to Administrative Agent
pursuant to subsection 2.7B(iii)(a), Administrative Agent shall, if
Administrative Agent and Borrower have consented to the assignment
evidenced thereby (in each case to the extent such consent is required
pursuant to subsection 10.1B(i)), (a) accept such Assignment Agreement
by executing a counterpart thereof as provided therein (which
acceptance shall evidence any required consent of Administrative Agent
to such assignment), (b) record the information contained therein in
the Register, and (c) give prompt notice thereof to Borrower.
Administrative Agent shall maintain a copy of each Assignment Agreement
delivered to and accepted by it as provided in this subsection
10.1B(ii).
C. Participations. The holder of any participation, other than an
Affiliate of the Lender granting such participation, shall not be entitled to
require such Lender to take or omit to take any action hereunder except action
directly affecting (i) the extension of the scheduled final maturity date of any
Loan allocated to such participation or (ii) a reduction of the principal amount
of or the rate of interest payable on any Loan allocated to such participation,
and all amounts payable
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by Borrower hereunder (including without limitation amounts payable to such
Lender pursuant to subsections 2.6D, 2.7 and 3.6) shall be determined as if such
Lender had not sold such participation. Borrower and each Lender hereby
acknowledge and agree that, solely for purposes of subsections 10.4 and 10.5,
(a) any participation will give rise to a direct obligation of Borrower to the
participant and (b) the participant shall be considered to be a "Lender".
D. Assignments to Federal Reserve Banks. In addition to the assignments
and participations permitted under the foregoing provisions of this subsection
10.1, any Lender may assign and pledge all or any portion of its Loans, the
other Obligations owed to such Lender, and its Notes to any Federal Reserve Bank
as collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any operating circular issued by such Federal Reserve
Bank; provided that (i) no Lender shall, as between Borrower and such Lender, be
relieved of any of its obligations hereunder as a result of any such assignment
and pledge and (ii) in no event shall such Federal Reserve Bank be considered to
be a "Lender" or be entitled to require the assigning Lender to take or omit to
take any action hereunder.
E. Information. Each Lender may furnish any information concerning
Parent and its Subsidiaries in the possession of that Lender from time to time
to assignees and participants (including prospective assignees and
participants), subject to subsection 10.19.
F. Representations of Lenders. Each Lender listed on the signature
pages hereof hereby represents and warrants (i) that it is an Eligible Assignee
described in clause (A) of the definition thereof; (ii) that it has experience
and expertise in the making of loans such as the Loans; and (iii) that it will
make its Loans for its own account in the ordinary course of its business and
without a view to distribution of such Loans within the meaning of the
Securities Act or the Exchange Act or other federal securities laws (it being
understood that, subject to the provisions of this subsection 10.1, the
disposition of such Loans or any interests therein shall at all times remain
within its exclusive control). Each Lender that becomes a party hereto pursuant
to an Assignment Agreement shall be deemed to agree that the representations and
warranties of such Lender contained in Section 2(c) of such Assignment Agreement
are incorporated herein by this reference.
10.2 Expenses.
Whether or not the transactions contemplated hereby shall be
consummated, Parent and Borrower, jointly and severally, agree to pay promptly
(i) all the actual and reasonable costs and expenses of preparation of the Loan
Documents and any consents, amendments, waivers or other modifications thereto;
(ii) all the costs of furnishing all opinions by counsel for Parent and Borrower
(including without limitation any opinions requested by Lenders as to any legal
matters arising hereunder) and Parent's and Borrower's performance of and
compliance with all
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agreements and conditions on its part to be performed or complied with under
this Agreement and the other Loan Documents including, without limitation, with
respect to confirming compliance with environmental, insurance and solvency
requirements; (iii) the reasonable fees, expenses and disbursements of counsel
to Administrative Agent (including allocated costs of internal counsel) in
connection with the negotiation, preparation, execution and administration of
the Loan Documents and any consents, amendments, waivers or other modifications
thereto and any other documents or matters requested by Parent or Borrower; (iv)
all the actual costs and reasonable expenses of creating and perfecting Liens in
favor of Administrative Agent on behalf of Lenders pursuant to any Collateral
Document, including without limitation filing and recording fees, expenses and
taxes, stamp or documentary taxes, search fees, title insurance premiums, and
reasonable fees, expenses and disbursements of counsel to Administrative Agent
and of counsel providing any opinions that Administrative Agent or Requisite
Lenders may request in respect of the Collateral Documents or the Liens created
pursuant thereto; (v) all the actual costs and reasonable expenses (including
without limitation the reasonable fees, expenses and disbursements of any
auditors, accountants or appraisers and any environmen tal or other consultants,
advisors and agents employed or retained by Administrative Agent or its counsel)
of obtaining and reviewing any appraisals provided for under subsection 6.9C,
any environmental audits or reports provided for under subsection 6.9B(ix) and
any audits or reports provided for under subsection 6.5B or 6.16 with respect to
Inventory and Accounts Receivable of the Operating Subsidiaries; (vi) the
custody or preservation of any of the Collateral; (vii) all other actual and
reasonable costs and expenses incurred by Administrative Agent in connection
with the syndication of the Commitments and the negotiation, preparation and
execution of the Loan Documents and any consents, amendments, waivers or other
modifications thereto and the transactions contemplated thereby; and (viii)
after the occurrence of an Event of Default, all costs and expenses, including
reasonable attorneys' fees (including allocated costs of internal counsel) and
costs of settlement, incurred by Administrative Agent and Lenders in enforcing
any Obligations of or in collecting any payments due from any Loan Party
hereunder or under the other Loan Documents by reason of such Event of Default
(including, without limitation, in connection with the sale of, collection from,
or other realization upon any of the Collateral or the enforcement of any
Guaranty) or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a "work-out" or
pursuant to any insolvency or bankruptcy proceedings.
10.3 Indemnity.
In addition to the payment of expenses pursuant to subsection 10.2,
whether or not the transactions contemplated hereby shall be consummated, Parent
and Borrower, jointly and severally, agree to defend (subject to Indemnitees'
selection of counsel), indemnify, pay and hold harmless Administrative Agent and
Lenders, and the officers, directors, employees, agents and affiliates of
Administrative Agent and Lenders (collectively called the "Indemnitees"), from
and against any and all
144
Indemnified Liabilities (as hereinafter defined); provided that neither Parent
nor Borrower shall have any obligation to any Indemnitee hereunder with respect
to any Indemnified Liabilities to the extent such Indemnified Liabilities arise
solely from the gross negligence or willful misconduct of that Indemnitee as
determined by a final judgment of a court of competent jurisdiction.
As used herein, "Indemnified Liabilities" means, collectively, any and
all liabilities, obligations, losses, damages (including natural resource
damages), penalties, actions, judgments, suits, claims (including Environmental
Claims), costs (including the costs of any investigation, study, sampling,
testing, abatement, cleanup, removal, remediation or other response action
necessary to remove, remediate, clean up or ▇▇▇▇▇ any Hazardous Materials
Activity), expenses and disbursements of any kind or nature whatsoever
(including the reasonable fees and disbursements of counsel for Indemnitees in
connection with any investigative, administrative or judicial proceeding
commenced or threatened by any Person, whether or not any such Indemnitee shall
be designated as a party or a potential party thereto, and any fees or expenses
incurred by Indemnitees in enforcing this indemnity), whether direct, indirect
or consequential and whether based on any federal, state or foreign laws,
statutes, rules or regulations (including securities and commercial laws,
statutes, rules or regulations and Environmental Laws), on common law or
equitable cause or on contract or otherwise, that may be imposed on, incurred
by, or asserted against any such Indemnitee, in any manner relating to or
arising out of (i) this Agreement or the other Loan Documents or the Related
Agreements or the transactions contemplated hereby or thereby (including
Lenders' agreement to make the Loans hereunder or the use or intended use of the
proceeds thereof or the issuance of Letters of Credit hereunder or the use or
intended use of any thereof, or the execution of the IRB Reimbursement Agreement
or the use thereof, or any enforcement of any of the Loan Documents (including
any sale of, collection from, or other realization upon any of the Collateral or
the enforcement of any Guaranty), (ii) the statements contained in the
commitment letter delivered by any Lender to Borrower with respect thereto, or
(iii) any Environmental Claim or any Hazardous Materials Activity relating to or
arising from, directly or indirectly, any past or present activity, operation,
land ownership, or practice of Parent or any of its Subsidiaries.
To the extent that the undertakings to defend, indemnify, pay and hold
harmless set forth in this subsection 10.3 may be unenforceable in whole or in
part because they are violative of any law or public policy, Parent and Borrower
shall contribute the maximum portion that it is permitted to pay and satisfy
under applicable law to the payment and satis faction of all Indemnified
Liabilities incurred by Indemnitees or any of them.
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10.4 Set-Off; Security Interest in Deposit Accounts.
In addition to any rights now or hereafter granted under applicable law
and not by way of limitation of any such rights, upon the occurrence of any
Event of Default each Lender is hereby authorized by Borrower at any time or
from time to time, without notice to Borrower or to any other Person, any such
notice being hereby expressly waived, to set off and to appropriate and to apply
any and all deposits (general or special, including, but not limited to,
Indebtedness evidenced by certificates of deposit, whether matured or unmatured,
but not including trust accounts) and any other Indebtedness at any time held or
owing by that Lender to or for the credit or the account of Borrower against and
on account of the obligations and liabilities of Borrower to that Lender under
this Agreement, the Letters of Credit and participations therein and the other
Loan Documents, including, but not limited to, all claims of any nature or
description arising out of or connected with this Agreement, the Letters of
Credit and participations therein or any other Loan Document, irrespective of
whether or not (i) that Lender shall have made any demand hereunder or (ii) the
principal of or the interest on the Loans or any amounts in respect of the
Letters of Credit or any other amounts due hereunder shall have become due and
payable pursuant to Section 8 and although said obligations and liabilities, or
any of them, may be contingent or unmatured. Borrower hereby further grants to
Administrative Agent and each Lender a security interest in all deposits and
accounts maintained with Administrative Agent or such Lender as security for the
Obligations.
10.5 Ratable Sharing.
Lenders hereby agree among themselves that if any of them shall,
whether by voluntary payment (other than a voluntary prepayment of Loans made
and applied in accordance with the terms of this Agreement), by realization upon
security, through the exercise of any right of set-off or banker's lien, by
counterclaim or cross action or by the enforcement of any right under the Loan
Documents or otherwise, or as adequate protection of a deposit treated as cash
collateral under the Bankruptcy Code, receive payment or reduction of a
proportion of the aggregate amount of principal, interest, amounts payable in
respect of the Letters of Credit and the IRB Reimbursement Agreement, fees and
other amounts then due and owing to that Lender hereunder or under the other
Loan Documents (collectively, the "Aggregate Amounts Due" to such Lender) which
is greater than the proportion received by any other Lender in respect of the
Aggregate Amounts Due to such other Lender, then the Lender receiving such
proportionately greater payment shall (i) notify Administrative Agent and each
other Lender of the receipt of such payment and (ii) apply a portion of such
payment to purchase participations (which it shall be deemed to have purchased
from each seller of a participation simultaneously upon the receipt by such
seller of its portion of such payment) in the Aggregate Amounts Due to the other
Lenders so that all such recoveries of Aggregate Amounts Due shall be shared by
all Lenders in proportion to the Aggregate Amounts Due to them; provided that if
all or part of such proportionately greater payment received by such purchasing
Lender is thereafter
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recovered from such Lender upon the bankruptcy or reorganization of Borrower or
otherwise, those purchases shall be rescinded and the purchase prices paid for
such participations shall be returned to such purchasing Lender ratably to the
extent of such recovery, but without interest. Borrower expressly consents to
the foregoing arrangement and agrees that any holder of a participation so
purchased may exercise any and all rights of banker's lien, set-off or
counterclaim with respect to any and all monies owing by Borrower to that holder
with respect thereto as fully as if that holder were owed the amount of the
partic ipation held by that holder.
10.6 Amendments and Waivers.
No amendment, modification, termination or waiver of any provision of
this Agreement or of the Notes, and no consent to any departure by Parent or
Borrower therefrom, shall in any event be effective without the written
concurrence of Requisite Lenders; provided that any such amendment,
modification, termination, waiver or consent which: increases the amount of any
of the Commitments or reduces the principal amount of any of the Loans;
increases the maximum amount of Letters of Credit; increases the Maximum
Exposure Under IRB Reimbursement Agreement; changes in any manner the definition
of "Pro Rata Share" or the definition of "Requisite Class Lenders" or the
definition of "Requisite Lenders"; changes in any manner any provision of this
Agreement which, by its terms, expressly requires the approval or concurrence of
all Lenders; postpones the date or reduces the amount of any scheduled payment
(but not prepayment) of principal of any of the Loans; postpones the date on
which any interest or any fees are payable; decreases the interest rate borne by
any of the Loans (other than any waiver of any increase in the interest rate
applicable to any of the Loans pursuant to subsection 2.2E) or the amount of any
fees payable hereunder; increases the maximum duration of Interest Periods
permitted hereunder; reduces the amount or postpones the due date of any amount
payable in respect of, or extends the required expiration date of any Letter of
Credit; changes in any manner the obligations of Lenders relating to the
purchase of participations in Letters of Credit; changes in any manner the
obligations of Lenders relating to the IRB Reimburse ment Agreement; releases
any Lien granted in favor of Administrative Agent with respect to all or
substantially all of the Collateral; releases Parent from its obligations under
the Parent Guaranty or releases all or substantially all of the Subsidiary
Guarantors from their obligations under the Subsidiary Guaranty other than in
accordance with the terms of the Loan Documents; or changes in any manner the
provisions contained in subsection 8.1 or this subsection 10.6 shall be
effective only if evidenced by a writing signed by or on behalf of all Lenders.
In addition, (i) any amendment, modification, termination or waiver of any of
the provisions contained in Section 4 shall be effective only if evidenced by a
writing signed by or on behalf of Administrative Agent and Requisite Lenders,
(ii) no amendment, modification, termination or waiver of any provision of any
Note shall be effective without the written concurrence of the Lender which is
the holder of that Note, (iii) no amendment, modification, termination or waiver
of any provision of subsection 2.1A(iii) or of any other provision of this
Agreement relating to the Swing Line Loan
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Commitment or the Swing Line Loans shall be effective without the written
concurrence of Swing Line Lender, and (iv) no amendment, modification,
termination or waiver of any provision of Section 9 or of any other provision of
this Agreement which, by its terms, expressly requires the approval or
concurrence of Administrative Agent shall be effective without the written
concurrence of Administrative Agent. Administrative Agent may, but shall have no
obligation to, with the concurrence of any Lender, execute amendments,
modifications, waivers or consents on behalf of that Lender. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given. No notice to or demand on Parent or Borrower in
any case shall entitle Parent or Borrower to any other or further notice or
demand in similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this subsection 10.6
shall be binding upon each Lender at the time outstanding, each future Lender
and, if signed by Parent, on Parent and, if signed by Borrower, on Borrower.
If any changes in accounting principles from those used in the
preparation of the Financial Statements referred to in subsection 5.3 occasioned
by the promulgation of rules, regulations, pronouncements and opinions by or
required by the Financial Accounting Standards Board or the Accounting
Principles Board of the American Institute of Certified Public Accountants (or
successors thereto or agencies with similar functions) result in a change in the
method of calculation of financial covenants, standards or terms found in
Sections 1, 6 and 7 hereof, the parties hereto agree to enter into negotiations
in order to amend such provisions so as to equitably reflect such changes with
the desired result that the criteria for evaluating Parent and its Subsidiaries'
financial condition shall be the same after such changes as if such changes had
not been made.
10.7 Independence of Covenants.
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another covenant shall not avoid the occurrence of an Event
of Default or Potential Event of Default if such action is taken or condition
exists.
10.8 Notices.
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed; provided that notices to Administrative Agent shall not
be effective until received. For the purposes hereof, the address of each party
hereto shall be as set forth under such party's name
148
on the signature pages hereof or (i) as to Parent, Borrower and Administrative
Agent, such other address as shall be designated by such Person in a written
notice delivered to the other parties hereto and (ii) as to each other party,
such other address as shall be designated by such party in a written notice
delivered to Administrative Agent.
10.9 Survival of Representations, Warranties and Agreements.
A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the Loans
and the issuance of the Letters of Credit hereunder and the execution of the IRB
Reimbursement Agreement.
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Parent and Borrower, as applicable, set forth in
subsections 2.6D, 2.7, 3.5A, 3.6, 10.2, 10.3 and 10.4 and the agreements of
Lenders set forth in subsections 9.2C, 9.4 and 10.5 shall survive the payment of
the Loans, the cancellation or expiration of the Letters of Credit and the
reimbursement of any amounts drawn thereunder, the termination of the IRB
Reimbursement Agreement and the reimbursement of any IRB Reimbursement Amount,
and the termination of this Agreement.
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of Administrative Agent or any Lender
in the exercise of any power, right or privilege hereunder or under any other
Loan Document shall impair such power, right or privilege or be construed to be
a waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege. All rights and
remedies existing under this Agreement and the other Loan Documents are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
10.11 Marshalling; Payments Set Aside.
Neither Administrative Agent nor any Lender shall be under any
obligation to marshal any assets in favor of Borrower or any other party or
against or in payment of any or all of the Obligations. To the extent that
Borrower makes a payment or payments to Administrative Agent or Lenders (or to
Administrative Agent for the benefit of Lenders), or Administrative Agent or
Lenders enforce any security interests or exercise their rights of setoff, and
such payment or payments or the proceeds of such enforcement or setoff or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, any other state or federal law, common
law or any equitable cause, then, to the extent of such recovery, the obligation
or part thereof originally intended to be satisfied, and all Liens, rights
149
and remedies therefor or related thereto, shall be revived and continued in full
force and effect as if such payment or payments had not been made or such
enforcement or setoff had not occurred.
10.12 Severability.
In case any provision in or obligation under this Agreement or the
Notes shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
10.13 Obligations Several; Independent Nature of Lenders' Rights.
The obligations of Lenders hereunder are several and no Lender shall be
responsible for the obligations or Commitments of any other Lender hereunder.
Nothing contained herein or in any other Loan Document, and no action taken by
Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for such purpose.
10.14 Headings.
Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
10.15 Applicable Law.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.
10.16 Successors and Assigns.
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of Lenders (it being understood that
Lenders' rights of assignment are subject to subsection 10.1). Neither Parent's
nor Borrower's rights
150
or obligations hereunder nor any interest therein may be assigned or delegated
by Parent or Borrower without the prior written consent of all Lenders.
10.17 Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST PARENT OR BORROWER ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS
THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇. BY EXECUTING AND
DELIVERING THIS AGREEMENT, EACH OF PARENT AND BORROWER, FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, TO PARENT OR BORROWER AT ITS ADDRESS
PROVIDED IN ACCORDANCE WITH SUBSEC TION 10.8;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER PARENT AND BORROWER IN
ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST
PARENT AND BORROWER IN THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 10.17
RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO
THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW
SECTION 5-1402 OR OTHERWISE.
10.18 Waiver of Jury Trial.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver
is intended to be all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims and all
other common law and statutory claims. Each
151
party hereto acknowledges that this waiver is a material inducement to enter
into a business relationship, that each has already relied on this waiver in
entering into this Agreement, and that each will continue to rely on this waiver
in their related future dealings. Each party hereto further warrants and
represents that it has reviewed this waiver with its legal counsel and that it
knowingly and voluntarily waives its jury trial rights following consultation
with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER
SPECIFICALLY REFERRING TO THIS SUBSECTION 10.18 AND EXECUTED BY EACH OF THE
PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS
MADE HEREUNDER. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
10.19 Confidentiality.
Each Lender shall hold all non-public information obtained pursuant to
the requirements of this Agreement which has been identified as confidential by
Borrower in accordance with such Lender's customary procedures for handling
confidential information of this nature and in accordance with safe and sound
banking practices, it being understood and agreed by Borrower that in any event
a Lender may make disclosures to Affiliates of such Lender or disclosures
reasonably required by any bona fide assignee, transferee or participant in
connection with the contemplated assignment or transfer by such Lender of any
Loans or any participations therein or disclosures required or requested by any
govern mental agency or representative thereof or pursuant to legal process;
provided that, unless specifically prohibited by applicable law or court order,
each Lender shall notify Borrower of any request by any governmental agency or
representative thereof (other than any such request in connection with any
examination of the financial condition of such Lender by such governmental
agency) for disclosure of any such non-public information prior to disclosure of
such information; and provided, further that in no event shall any Lender be
obligated or required to return any materials furnished by Parent, Borrower or
any of its Subsidiaries.
10.20 Counterparts; Effectiveness.
This Agreement and any amendments, waivers, consents or supplements
hereto or in connection herewith may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by
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Borrower and Administrative Agent of written or telephonic notification of such
execution and authorization of delivery thereof.
10.21 Maximum Amount.
A. It is the intention of Loan Parties and Lenders to conform strictly
to the usury and similar laws relating to interest from time to time in force,
and all agreements between Loan Parties and Lenders, whether now existing or
hereafter arising and whether oral or written, are hereby expressly limited so
that in no contingency or event whatsoever, whether by acceleration of maturity
hereof or otherwise, shall the amount paid or agreed to be paid in the aggregate
to Lenders or to Administrative Agent on behalf of Lenders as interest hereunder
or under the other Loan Documents or in any other security agreement given to
secure the Obligations, or in any other document evidencing, securing or
pertaining to the indebtedness evidenced hereby or thereby, exceed the maximum
amount permissible under applicable usury or such other laws (the "Maximum
Amount"). If under any circumstances whatsoever fulfillment of any provision
hereof, or any of the other Loan Documents, at the time performance of such
provision shall be due, shall involve exceeding the Maximum Amount, then, ipso
facto, the obligation to be fulfilled shall be reduced to the Maximum Amount.
For the purposes of calculating the actual amount of interest paid and/or
payable hereunder, in respect of laws pertaining to usury or such other laws,
all sums paid or agreed to be paid to the holder hereof for the use, forbearance
or detention of the indebtedness of Borrower evidenced hereby, outstanding from
time to time shall, to the extent permitted by applicable law, be amortized,
pro-rated, allocated and spread from the date of disbursement of the proceeds of
the Loans until payment in full of all of such indebtedness, so that the actual
rate of interest on account of such indebtedness is uniform through the term
hereof. The terms and provisions of this subsection shall control and supersede
every other provision of all agreements between Borrower, Administrative Agent
and the Lenders.
B. If under any circumstances Lenders shall ever receive an amount
which would exceed the Maximum Amount, such amount shall be deemed a payment in
reduction of the principal amount of the Loans and shall be treated as a
voluntary prepayment under subsection 2.4B(i), and shall be so applied in
accordance with subsection 2.4B(iv) hereof, or if such excessive interest
exceeds the unpaid balance of the Loans and any other indebtedness of Borrower
in favor of Lenders, the excess shall be deemed to have been a payment made by
mistake and shall be refunded to Borrower.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
BORROWER:
CFP HOLDINGS, INC.
By: ________________________________
▇▇▇▇ ▇. Ek
Vice President and
Chief Financial Officer
Notice Address:
CFP Holdings, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ Ek
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
PARENT:
CFP GROUP, INC.
By: ________________________________
▇▇▇▇ ▇. Ek
Vice President and
Chief Financial Officer
Notice Address:
CFP Group, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ Ek
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
S-1
LENDERS:
NATIONSBANK OF TEXAS, N.A.,
individually and as Administrative Agent
By: ______________________________________
▇▇▇▇▇ ▇▇▇▇▇▇
Authorized Signatory
Notice Address:
NationsBank of Texas, N.A.
13th Floor
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
and to:
NationsBank, N.A.
Suite 4100
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Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
S-2
NATIONSBANC CAPITAL MARKETS, INC.,
as Arranging Agent and Syndication Agent
By: ______________________________________
▇▇▇▇▇ ▇▇▇▇▇▇
Director
Notice Address:
NationsBanc Capital Markets, Inc.
NationsBank Corporate Center
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Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Fax No: ▇▇▇-▇▇▇-▇▇▇▇
S-3
FLEET NATIONAL BANK,
individually and as Documentation Agent
By: __________________________________________
▇▇▇▇ ▇▇▇▇▇▇▇
Vice President
Notice Address:
Fleet National Bank
One Federal Street
Mail Code: MA OF DO3C
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Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
S-4
EXECUTION VERSION
================================================================================
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF MAY 15, 1997
AMONG
CFP HOLDINGS, INC.,
as Borrower,
CFP GROUP, INC.,
as Parent,
THE LENDERS LISTED HEREIN,
as Lenders,
and
NATIONSBANK OF TEXAS, N.A.,
as Administrative Agent,
and
NATIONSBANC CAPITAL MARKETS, INC.,
as Arranging Agent
and
Syndication Agent,
and
FLEET NATIONAL BANK,
as Documentation Agent
================================================================================
CFP GROUP, INC.
CFP HOLDINGS, INC.
CREDIT AGREEMENT
TABLE OF CONTENTS
Page
----
Section 1. DEFINITIONS................................................................................... 2
1.1 Certain Defined Terms......................................................................... 2
1.2 Accounting Terms; Utilization of GAAP for Purposes of
Calculations Under Agreement.................................................................. 39
1.3 Other Definitional Provisions and Rules of Construction....................................... 39
Section 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS................................................... 39
2.1 Commitments; Making of Loans; the Register; Notes............................................. 39
2.2 Interest on the Loans......................................................................... 46
2.3 Fees.......................................................................................... 50
2.4 Repayments, Prepayments and Reductions in Revolving Loan
Commitments; General Provisions Regarding Payments; Application
of Proceeds of Collateral and Payments Under Subsidiary Guaranty.............................. 51
2.5 Use of Proceeds............................................................................... 58
2.6 Special Provisions Governing Eurodollar Rate Loans............................................ 59
2.7 Increased Costs; Taxes; Capital Adequacy...................................................... 61
2.8 Obligation of Lenders and Issuing Lender to Mitigate.......................................... 66
Section 3. LETTERS OF CREDIT; IRB REIMBURSEMENT AGREEMENT................................................ 67
3.1 Issuance of Letters of Credit, Execution of IRB Reimbursement
Agreement and Lenders' Purchase of Participations Therein..................................... 67
3.2 Letter of Credit Fees......................................................................... 69
3.3 Drawings and Reimbursement of Amounts Paid Under Letters of
Credit and the IRB Reimbursement Agreement.................................................... 70
3.4 Obligations Absolute.......................................................................... 73
3.5 Indemnification; Nature of Issuing Lender's Duties............................................ 74
3.6 Increased Costs and Taxes Relating to Letters of Credit....................................... 76
Section 4. CONDITIONS TO EFFECTIVENESS AND TO LOANS AND LETTERS OF CREDIT................................ 77
4.1 Conditions to Effectiveness................................................................... 77
4.2 Conditions to All Loans....................................................................... 77
4.3 Conditions to Letters of Credit............................................................... 78
(i)
Page
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Section 5. BORROWER'S REPRESENTATIONS AND WARRANTIES..................................................... 78
5.1 Organization, Powers, Qualification, Good Standing, Business,
Subsidiaries and Restructuring................................................................ 78
5.2 Authorization of Borrowing, etc............................................................... 79
5.3 Financial Condition........................................................................... 80
5.4 No Material Adverse Change; No Restricted Junior Payments..................................... 82
5.5 Title to Properties; Liens; Real Property..................................................... 82
5.6 Litigation; Adverse Facts..................................................................... 83
5.7 Payment of Taxes.............................................................................. 83
5.8 Performance of Agreements; Materially Adverse Agreements;
Material Contracts............................................................................ 84
5.9 Governmental Regulation....................................................................... 84
5.10 Securities Activities......................................................................... 84
5.11 Employee Benefit Plans........................................................................ 84
5.12 Certain Fees.................................................................................. 85
5.13 Environmental Protection...................................................................... 85
5.14 Employee Matters.............................................................................. 86
5.15 Solvency...................................................................................... 86
5.16 Matters Relating to Collateral................................................................ 86
5.17 Related Agreements............................................................................ 87
5.18 Disclosure.................................................................................... 88
Section 6. PARENT'S AND BORROWER'S AFFIRMATIVE COVENANTS................................................. 88
6.1 Financial Statements and Other Reports........................................................ 88
6.2 Corporate Existence, etc...................................................................... 95
6.3 Payment of Taxes and Claims; Tax Consolidation................................................ 95
6.4 Maintenance of Properties; Insurance; Application of Net
Insurance/Condemnation Proceeds............................................................... 95
6.5 Inspection Rights; Audits of Inventory and Accounts Receivable;
Lender Meeting................................................................................ 98
6.6 Compliance with Laws, etc..................................................................... 98
6.7 Environmental Review and Investigation, Disclosure, Etc.; Parent's
and Borrower's Actions Regarding Hazardous Materials Activities,
Environmental Claims and Violations of Environmental Laws..................................... 98
6.8 Execution of Subsidiary Guaranty and Personal Property Collateral
Documents by Certain Subsidiaries and Future Subsidiaries.....................................101
6.9 Conforming Leasehold Interests; Matters Relating to Additional
Real Property Collateral......................................................................103
6.10 Deposit Accounts..............................................................................105
6.11 Determination of Borrowing Base...............................................................105
6.12 Keeping of Books..............................................................................106
(ii)
Page
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6.13 Compliance with Terms of Leaseholds...........................................................107
6.14 Performance of Related Agreements.............................................................107
6.15 Performance of Material Contracts.............................................................107
6.16 Audit of Inventory and Accounts Receivable....................................................107
Section 7. NEGATIVE COVENANTS............................................................................108
7.1 Indebtedness..................................................................................108
7.2 Liens and Related Matters.....................................................................109
7.3 Investments; Joint Ventures...................................................................111
7.4 Contingent Obligations........................................................................112
7.5 Restricted Junior Payments....................................................................113
7.6 Financial Covenants...........................................................................114
7.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions..............................117
7.8 Consolidated Capital Expenditures.............................................................119
7.9 Sale or Discount of Receivables...............................................................119
7.10 Transactions with Shareholders and Affiliates.................................................119
7.11 Disposal of Subsidiary Stock..................................................................119
7.12 Conduct of Business...........................................................................120
7.13 Amendments or Waivers of Certain Related Agreements;
Amendments of Senior Guaranteed Note Documents; and Designation of
"Designated Senior Indebtedness".. ...........................................................120
7.14 Fiscal Year...................................................................................121
7.15 Charter Amendments............................................................................121
7.16 Amendment, Etc. of Material Contracts.........................................................121
7.17 Partnerships, Etc.............................................................................121
7.18 Speculative Transactions......................................................................121
Section 8. EVENTS OF DEFAULT.............................................................................121
8.1 Failure to Make Payments When Due.............................................................121
8.2 Default in Other Agreements...................................................................122
8.3 Breach of Certain Covenants...................................................................122
8.4 Breach of Warranty............................................................................122
8.5 Other Defaults Under Loan Documents...........................................................122
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc..........................................123
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc............................................123
8.8 Judgments, Attachments, etc...................................................................123
8.9 Dissolution...................................................................................124
8.10 Employee Benefit Plans........................................................................124
8.11 Material Adverse Effect.......................................................................124
8.12 Change in Control.............................................................................124
8.13 Invalidity of Guarantees; Failure of Security; Repudiation of Obligations.....................124
(iii)
Page
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8.14 Action Relating to Certain Indebtedness.......................................................125
8.15 Conduct of Business By Parent and Borrower....................................................125
Section 9. ADMINISTRATIVE AGENT..........................................................................126
9.1 Appointment...................................................................................126
9.2 Powers and Duties; General Immunity...........................................................127
9.3 Representations and Warranties; No Responsibility For Appraisal of
Creditworthiness..............................................................................129
9.4 Right to Indemnity............................................................................129
9.5 Successor Agent and Swing Line Lender.........................................................130
9.6 Collateral Documents and Guaranties...........................................................130
9.7 Arranging Agent, Syndication Agent and Documentation Agent....................................131
Section 10. MISCELLANEOUS.................................................................................131
10.1 Assignments and Participations in Loans, Letters of Credit and IRB
Reimbursement Agreement.......................................................................131
10.2 Expenses......................................................................................135
10.3 Indemnity.....................................................................................136
10.4 Set-Off; Security Interest in Deposit Accounts................................................137
10.5 Ratable Sharing...............................................................................137
10.6 Amendments and Waivers........................................................................138
10.7 Independence of Covenants.....................................................................139
10.8 Notices.......................................................................................139
10.9 Survival of Representations, Warranties and Agreements........................................140
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative.........................................140
10.11 Marshalling; Payments Set Aside...............................................................140
10.12 Severability..................................................................................140
10.13 Obligations Several; Independent Nature of Lenders' Rights....................................141
10.14 Headings......................................................................................141
10.15 Applicable Law................................................................................141
10.16 Successors and Assigns........................................................................141
10.17 Consent to Jurisdiction and Service of Process................................................141
10.18 Waiver of Jury Trial..........................................................................142
10.19 Confidentiality...............................................................................143
10.20 Counterparts; Effectiveness...................................................................143
10.21 Maximum Amount................................................................................144
Signature pages S-1
(iv)
EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT
IV RESERVED
V FORM OF TERM LOAN NOTE
VI RESERVED
VII FORM OF REVOLVING NOTE
VIII FORM OF SWING LINE NOTE
IX FORM OF COMPLIANCE CERTIFICATE
X-A FORM OF OPINION OF ▇'▇▇▇▇▇▇▇▇ GRAEV & KARABELL, LLP
X-B FORM OF OPINION OF ▇▇▇▇ & SHARP
XI FORM OF OPINION OF O'MELVENY & ▇▇▇▇▇ LLP
XII FORM OF ASSIGNMENT AGREEMENT
XIII-A FORM OF LANDLORD CONSENT AND ESTOPPEL (CALIFORNIA
AND KENTUCKY)
XIII-B FORM OF LANDLORD CONSENT AND ESTOPPEL (WAREHOUSE)
XIV FORM OF CERTIFICATE RE NON-BANK STATUS
XV FORM OF FINANCIAL CONDITION CERTIFICATE
XVI FORM OF COLLATERAL ACCOUNT AGREEMENT
XVII FORM OF BORROWER PLEDGE AGREEMENT
XVIII FORM OF BORROWER SECURITY AGREEMENT
XIX FORM OF SUBSIDIARY GUARANTY
XX FORM OF SUBSIDIARY PLEDGE AGREEMENT
XXI FORM OF SUBSIDIARY SECURITY AGREEMENT
XXII FORM OF SUBSIDIARY PATENT SECURITY AGREEMENT
XXIII FORM OF SUBSIDIARY TRADEMARK SECURITY AGREEMENT
XXIV FORM OF PARENT GUARANTY
XXV FORM OF PARENT PLEDGE AGREEMENT
XXVI FORM OF PARENT SECURITY AGREEMENT
XXVII FORM OF MORTGAGE
XXVIII FORM OF BORROWING BASE CERTIFICATE
XXIX FORM OF IRB REIMBURSEMENT AGREEMENT
XXX FORM OF MELF INTERCREDITOR AGREEMENT
(v)
SCHEDULES
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
5.1 SUBSIDIARIES OF BORROWER
5.2B THIRD PARTY CONSENTS
5.2C GOVERNMENTAL CONSENTS
5.4 CERTAIN RESTRICTED JUNIOR PAYMENTS
5.5 REAL PROPERTY
5.6 LITIGATION
5.8 MATERIAL CONTRACTS
5.11 CERTAIN EMPLOYEE BENEFIT PLANS
5.13 ENVIRONMENTAL MATTERS
5.16C PERMITTED UCC FILINGS
7.1 CERTAIN EXISTING INDEBTEDNESS
7.2 CERTAIN EXISTING LIENS
7.2(vii) PIDA COMMITMENT LETTER
7.3 CERTAIN EXISTING INVESTMENTS
7.4 CERTAIN EXISTING CONTINGENT OBLIGATIONS
9.2 TERMS OF PNC BANK LETTER OF CREDIT
(vi)
