EXECUTION COPY
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PLAYCORE, INC.
PLAYCORE WISCONSIN, INC.
AMENDED AND RESTATED
CREDIT AGREEMENT
Originally dated as of March 13, 1997
Amended and Restated as of February 16, 1999
FLEET NATIONAL BANK, Agent
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TABLE OF CONTENTS
Page
1. Definitions; Certain Rules of Construction............................1
2. The Credits..........................................................30
2.1. Revolving Credit............................................30
2.1.1. Revolving Loan.....................................30
2.1.2. Maximum Amount of Revolving Credit.................30
2.1.3. Borrowing Requests.................................31
2.1.4. Revolving Notes....................................31
2.2. Term Loan A.................................................31
2.2.1. Term Loan A........................................31
2.2.2. Term Loan A Notes..................................32
2.3. Term Loan B.................................................32
2.3.1. Term Loan B........................................32
2.3.2. Term Loan B Notes..................................32
2.4. Letters of Credit...........................................32
2.4.1. Issuance of Letters of Credit......................32
2.4.2. Requests for Letters of Credit.....................33
2.4.3. Form and Expiration of Letters of Credit...........33
2.4.4. Lenders' Participation in Letters of Credit........33
2.4.5. Presentation.......................................33
2.4.6. Payment of Drafts..................................34
2.4.7. Uniform Customs and Practice.......................34
2.4.8. Subrogation........................................35
2.4.9. Modification, Consent, etc.........................36
2.5. Application of Proceeds.....................................36
2.5.1. Revolving Loan.....................................36
2.5.2. Term Loans.........................................36
2.5.3. Letters of Credit..................................36
2.5.4. Specifically Prohibited Applications...............36
2.6. Nature of Obligations of Lenders to Make Extensions of
Credit ..... ...............................................36
3. Interest; LIBOR Pricing Options; Fees.........................37
3.1. Interest....................................................37
3.2. LIBOR Pricing Options.......................................37
3.2.1. Election of LIBOR Pricing Options..................37
3.2.2. Notice to Lenders and ▇▇▇▇▇▇▇▇.....................38
3.2.3. Selection of LIBOR Interest Periods................38
3.2.4. Additional Interest................................39
3.2.5. Violation of Legal Requirements....................39
3.2.6. Funding Procedure..................................39
3.3. Commitment Fees.............................................40
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3.4. Letter of Credit Fees.......................................40
3.5. Changes in Circumstances; Yield Protection..................40
3.5.1. Reserve Requirements, etc..........................40
3.5.2. Taxes..............................................41
3.5.3. Capital Adequacy...................................41
3.5.4. Regulatory Changes.................................42
3.5.5. Compensation Claims................................42
3.5.6. Mitigation.........................................42
3.6. Computations of Interest and Fees...........................43
4. Payment..............................................................43
4.1. Payment at Maturity.........................................43
4.2. Scheduled Required Prepayments..............................43
4.2.1. Term Loan A........................................43
4.2.2. Term Loan B........................................44
4.3. Contingent Required Prepayments.............................45
4.3.1. Excess Credit Exposure.............................45
4.3.2. Excess Cash Flow...................................45
4.3.3. Net Asset Sale Proceeds............................46
4.3.4. Net Debt Proceeds..................................46
4.3.5. Net Equity Proceeds................................46
4.4. Voluntary Prepayments.......................................46
4.5. Letters of Credit...........................................47
4.6. Reborrowing; Application of Payments, etc...................47
4.6.1. Reborrowing........................................47
4.6.2. Order of Application...............................47
4.6.3. Payment with Accrued Interest, etc.................48
4.6.4. Payments for Lenders...............................48
5. Conditions to Extending Credit.......................................48
5.1. Conditions on Initial Closing Date..........................48
5.1.1. Notes...............................................49
5.1.2. Payment of Fees....................................49
5.1.3. Legal Opinions.....................................49
5.1.4. Guarantee and Security Agreement...................49
5.1.5. Guarantee and Pledge Agreement.....................49
5.1.6. Real Estate Collateral.............................49
5.1.7. Perfection of Security.............................50
5.1.8. Acquisition........................................50
5.1.9. Capitalization, etc................................51
5.1.10. Termination of Prior Credit Agreement.............51
5.1.11. Unaudited Annual Financial Statements.............52
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5.1.12. Insurance.........................................52
5.1.13. Environmental Review..............................52
5.1.14. Amendment of Securities Purchase Agreements.......52
5.1.15. Proper Proceedings................................52
5.1.16. General...........................................52
5.2. Conditions to Each Extension of Credit......................53
5.2.1. Officer's Certificate..............................53
5.2.2. Legality, etc......................................53
6. General Covenants....................................................53
6.1. Taxes and Other Charges; Accounts Payable...................53
6.1.1. Taxes and Other Charges............................53
6.1.2. Accounts Payable...................................54
6.2. Conduct of Business, etc....................................54
6.2.1. Types of Business..................................54
6.2.2. Maintenance of Properties..........................54
6.2.3. Statutory Compliance...............................54
6.2.4. Compliance with Material Agreements................55
6.3. Insurance...................................................55
6.3.1. Business Interruption Insurance....................55
6.3.2. Property Insurance.................................55
6.3.3. Liability Insurance................................55
6.3.4. Flood Insurance....................................55
6.4. Financial Statements and Reports............................56
6.4.1. Annual Reports.....................................56
6.4.2. Quarterly Reports..................................57
6.4.3. Monthly Reports....................................59
6.4.4. Borrowing Base Reports.............................59
6.4.5. Other Reports......................................59
6.4.6. Notice of Litigation, Defaults, etc................60
6.4.7. ERISA Reports......................................60
6.4.8. Other Information; Audit...........................60
6.5. Certain Financial Tests.....................................61
6.5.1. Consolidated Net Worth.............................61
6.5.2. Consolidated EBITDA................................61
6.5.3. Consolidated Total Debt to Consolidated EBITDA.....62
6.5.4. Consolidated Adjusted EBITDA Plus Rent to
Consolidated Fixed
Charges Plus Rent....................................................62
6.5.5. Capital Expenditures...............................63
6.6. Indebtedness................................................63
6.7. Guarantees; Letters of Credit...............................64
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6.8. Liens.......................................................65
6.9. Investments and Acquisitions................................66
6.10. Distributions...............................................67
6.11. Asset Dispositions and Mergers..............................68
6.12. Issuance of Stock by Subsidiaries; Subsidiary
Distributions...............................................69
6.12.1. Issuance of Stock by Subsidiaries.................69
6.12.2. No Restrictions on Subsidiary Distributions.......69
6.13. Voluntary Prepayments of Other Indebtedness.................69
6.14. Derivative Contracts........................................69
6.15. Negative Pledge Clauses.....................................70
6.16. ▇▇▇▇▇, etc..................................................70
6.17. Transactions with Affiliates................................70
6.18. Interest Rate Protection....................................70
6.19. Environmental Laws..........................................71
6.19.1. Compliance with Law and Permits...................71
6.19.2. Notice of Claims, etc.............................71
7. Representations and Warranties.......................................71
7.1. Organization and Business...................................71
7.1.1. The Holding Company................................71
7.1.2. Subsidiaries.......................................72
7.1.3. Qualification......................................72
7.1.4. Capitalization.....................................72
7.2. Financial Statements and Other Information; Material
Agreements..................................................73
7.2.1. Financial Statements and Other Information.........73
7.2.2. Material Agreements................................74
7.3. Agreements Relating to Financing Debt, Investments, etc.....74
7.4. Changes in Condition........................................75
7.5. Title to Assets.............................................75
7.6. Operations in Conformity With Law, etc......................75
7.7. Litigation..................................................75
7.8. Authorization and Enforceability............................76
7.9. No Legal Obstacle to Agreements.............................76
7.10. Defaults....................................................77
7.11. Licenses, etc...............................................77
7.12. Tax Returns.................................................77
7.13. Certain Business Representations............................78
7.13.1. Labor Relations...................................78
7.13.2. Antitrust.........................................78
7.13.3. Consumer Protection...............................78
7.13.4. Extraordinary Obligations.........................78
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7.13.5. Future Expenditures...............................78
7.13.6. Year 2000 Issues..................................78
7.14. Environmental Regulations...................................79
7.14.1. Environmental Compliance..........................79
7.14.2. Environmental Litigation..........................79
7.14.3. Hazardous Material................................79
7.14.4. Environmental Condition of Properties.............80
7.15. Pension Plans...............................................80
7.16. Acquisition Agreement, etc..................................80
7.17. Government Regulation; Margin Stock.........................80
7.17.1. Government Regulation.............................80
7.17.2. Margin Stock......................................81
7.18. Disclosure..................................................81
8. Defaults.............................................................81
8.1. Events of Default...........................................81
8.1.1. Payment............................................81
8.1.2. Specified Covenants................................81
8.1.3. Other Covenants....................................81
8.1.4. Representations and Warranties.....................81
8.1.5. Cross Default, etc.................................82
8.1.6. Ownership; Liquidation; etc........................82
8.1.7. Enforceability, etc................................83
8.1.8. Judgments..........................................83
8.1.9. ERISA..............................................83
8.1.10. Bankruptcy, etc...................................84
8.2. Certain Actions Following an Event of Default...............84
8.2.1. Terminate Obligation to Extend Credit..............84
8.2.2. Specific Performance; Exercise of Rights...........84
8.2.3. Acceleration.......................................85
8.2.4. Enforcement of Payment; Credit Security; Setoff....85
8.2.5. Cumulative Remedies................................85
8.3. Annulment of Defaults.......................................85
8.4. Waivers.....................................................86
9. Expenses; Indemnity..................................................86
9.1. Expenses....................................................86
9.2. General Indemnity...........................................87
9.3. Indemnity With Respect to Letters of Credit.................87
10. Operations; Agent....................................................87
10.1. Interests in Credits........................................88
10.2. Agent's Authority to Act, etc...............................88
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10.3. Borrower to Pay Agent, etc..................................88
10.4. Lender Operations for Advances, Letters of Credit, etc......88
10.4.1. Advances..........................................88
10.4.2. Letters of Credit.................................89
10.4.3. Agent to Allocate Payments, etc...................89
10.4.4. Delinquent Lenders; Nonperforming Lenders.........90
10.5. Sharing of Payments, etc....................................91
10.6. Amendments, Consents, Waivers, etc..........................91
10.7. Agent's Resignation.........................................93
10.8. Concerning the Agent........................................93
10.8.1. Action in Good Faith, etc.........................93
10.8.2. No Implied Duties, etc............................93
10.8.3. ▇▇▇▇▇▇▇▇, etc.....................................94
10.8.4. Compliance........................................94
10.8.5. Employment of Agents and Counsel..................94
10.8.6. Reliance on Documents and Counsel.................94
10.8.7. Agent's Reimbursement.............................94
10.9. Rights as a Lender..........................................95
10.10. Independent Credit Decision.................................95
10.11. Indemnification.............................................96
11. Successors and Assigns; Lender Assignments and Participations........96
11.1. Assignments by Lenders......................................96
11.1.1. Assignees and Assignment Procedures...............96
11.1.2. Terms of Assignment and Acceptance................97
11.1.3. Register..........................................98
11.1.4. Acceptance of Assignment and Assumption...........98
11.1.5. Federal Reserve Bank..............................99
11.1.6. Further Assurances................................99
11.2. Credit Participants.........................................99
11.3. Replacement of Lender......................................100
12. Confidentiality.....................................................101
13. Foreign Lenders.....................................................101
14. Notices.............................................................102
15. Course of Dealing; Amendments and Waivers...........................102
16. No Strict Construction..............................................103
17. Defeasance..........................................................103
18. Venue; Service of Process...........................................103
19. WAIVER OF JURY TRIAL................................................104
20. General.............................................................104
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EXHIBITS
1 - Heartland Financial Data for Periods Prior to Initial Closing Date
2.1.4 - Revolving Note
2.2.2 - Term Loan A Note
2.3.2 - Term Loan B Note
5.1.4 - Guarantee and Security Agreement
5.1.5 - Guarantee and Pledge Agreement
5.2.1 - Officer's Certificate
6.4. - Compliance Certificate
7.1 - Holding Company and its Subsidiaries
7.2.2 - Material Agreements
7.3 - Financing Debt, Certain Investments, etc.
7.14 - Hazardous Material Sites
10.1 - Commitments
11.1.1 - Assignment and Acceptance
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PLAYCORE, INC.
PLAYCORE WISCONSIN, INC.
AMENDED AND RESTATED
CREDIT AGREEMENT
This Agreement, dated as of February 16, 1999, is among PlayCore
Wisconsin, Inc., a Wisconsin corporation formerly known as "Newco, Inc.", the
Subsidiaries of PlayCore Wisconsin, Inc. from time to time party hereto,
PlayCore Wisconsin, Inc.'s corporate parent, PlayCore, Inc., a Delaware
corporation formerly known as "Swing-N-Slide Corp.", the Lenders from time to
time party hereto and Fleet National Bank, both in its capacity as a Lender and
in its capacity as agent for itself and the other Lenders. The parties agree as
follows:
Recitals: Pursuant to this Agreement, the Lenders are extending to the
Borrower a $28,000,000 revolving credit facility, including a $1,000,000
sub-allotment for Letters of Credit, a $38,000,000 Term Loan A facility and a
$9,000,000 Term Loan B facility. All the credit facilities mature on March 13,
2003, except the Term Loan B facility, which matures on June 30, 2003. The
credit facilities are guaranteed by the Holding Company and the Borrower's
Subsidiaries and are secured by liens on substantially all the assets and stock
of the Borrower and its Subsidiaries. Proceeds of the term loan facilities are
being used by the Borrower to acquire Heartland on the Initial Closing Date for
an aggregate cash purchase price of approximately $12,500,000, to repay
indebtedness and for general corporate purposes as provided herein.
Amendment and Restatement: Effective as of the Initial Closing Date, this
Agreement amends and restates in its entirety the Credit Agreement dated as of
March 13, 1997, as amended and in effect on the date hereof prior to giving
effect to this Agreement, among the Borrower, its Subsidiaries, the Holding
Company and a group of lenders for which Fleet is acting as agent. On the
Initial Closing Date the Lenders will make such assignments and other
arrangements among themselves so that the Notes and Letter of Credit Exposure
are held by the Lenders in accordance with their Percentage Interests. Amounts
in respect of interest, commitment fees, Letter of Credit fees and other amounts
payable hereunder shall be calculated in accordance with the terms of the Credit
Agreement referred to above as in effect prior to the amendment and restatement
on the Initial Closing Date for periods prior to the Initial Closing Date and in
accordance with this Agreement (as it amends and restates such Credit Agreement)
for periods from and after the Initial Closing Date.
1. Definitions; Certain Rules of Construction. Certain capitalized terms are
used in this Agreement and in the other Credit Documents with the specific
meanings defined below in this Section 1. Except as otherwise explicitly
specified to the contrary or unless the context clearly requires otherwise, (a)
the capitalized term "Section" refers to sections of this Agreement, (b) the
capitalized term "Exhibit" refers to exhibits to this Agreement, (c) references
to a
particular Section include all subsections thereof, (d) the word "including"
shall be construed as "including without limitation", (e) accounting terms not
otherwise defined herein have the meaning provided under GAAP, (f) references to
a particular statute or regulation include all rules and regulations thereunder
and any successor statute, regulation or rules, in each case as from time to
time in effect, (g) references to a particular Person include such Person's
successors and assigns to the extent not prohibited by this Agreement and the
other Credit Documents and (h) references to "Dollars" or "$" mean United States
Funds. References to "the date hereof" mean the date first set forth above.
1.1. "Accumulated Benefit Obligations" means the actuarial present value
of the accumulated benefit obligations under any Plan, calculated in accordance
with Statement No. 87 of the Financial Accounting Standards Board.
1.2. "Acquisition" means the merger of HI Acquisition Corp., a Delaware
corporation that is a Wholly Owned Subsidiary of the Borrower, into Heartland
pursuant to the Acquisition Agreement, pursuant to which the Heartland Sellers
will receive an aggregate of $12,500,000 in cash and Seller Subordinated Notes
in the aggregate principal amount of $500,000.
1.3. "Acquisition Agreement" means the Agreement and Plan of Merger dated
February 4, 1999 among the Borrower, HI Acquisition Corp., certain Heartland
shareholders and Heartland, as in effect on the date hereof and as subsequently
amended in accordance with Section 6.2.4.
1.4. "Affected Lender" is defined in Section 11.3.
1.5. "Affiliate" means, with respect to the Holding Company (or any other
specified Person), any other Person directly or indirectly controlling,
controlled by or under direct or indirect common control with the Holding
Company (or such specified Person), and shall include (a) any officer or
director or general partner of the Holding Company (or such specified Person),
(b) any Person of which the Holding Company (or such specified Person) or any
Affiliate (as defined in clause (a) above) of the Holding Company (or such
specified Person) shall, directly or indirectly, beneficially own either (i) at
least 10% of the outstanding equity securities having the general power to vote
or (ii) at least 10% of all equity interests or (c) any Person directly or
indirectly controlling the Holding Company through a management agreement,
voting agreement or other contract.
1.6. "Agent" means Fleet in its capacity as agent for the Lenders
hereunder, as well as its successors and assigns in such capacity pursuant to
Section 10.7.
1.7. "Agreement" means this Credit Agreement as from time to time
amended, modified and in effect.
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1.8. "Applicable Margin" means, (a) prior to August 1, 1999, the highest
percentage rate set forth in the table below and (b) on each day during any
month commencing after July 31, 1999, the percentage in the table below set
opposite the ratio of (i) Consolidated Senior Debt as of the end of the most
recent period of four consecutive fiscal quarters for which financial statements
have been (or are required to have been) furnished to the Lenders in accordance
with Sections 6.4.1 and 6.4.2 prior to the first day of such month to (ii)
Consolidated EBITDA for such period:
Ratio of Consolidated Senior Debt Applicable Base Applicable
to Consolidated EBITDA Rate Margin LIBOR Margin
Greater than or equal to 3.0 2.00% 3.25%
Greater than or equal to 2.75 and
less than 3.0 1.75% 3.00%
Greater than or equal to 2.5 and
less than 2.75 1.50% 2.75%
Greater than or equal to 2.25 and
less than 2.5 1.25% 2.50%
Greater than or equal to 2.00 and
less than 2.25 1.00% 2.25%
Less than 2.00 0.75% 2.00%
Changes in the Applicable Margin shall occur on the first day of each month
after quarterly financial statements have been (or are required to have been)
furnished to the Lenders in accordance with Sections 6.4.1 or 6.4.2 from time to
time. In the event that the financial statements required to be delivered
pursuant to Section 6.4.1 or 6.4.2, as applicable, are not delivered when due,
then during the period from the date upon which such financial statements were
required to be delivered until the date upon which they are actually delivered,
the ratio of Consolidated Senior Debt to Consolidated EBITDA shall be deemed for
purposes of this definition to be greater than 3.0.
1.9. "Applicable Maturity Date" means (a) with respect to the Revolving
Loan, the Final Revolving Maturity Date, (b) with respect to Term Loan A, the
Final Term Loan A Maturity Date and (c) with respect to Term Loan B, the Final
Term Loan B Maturity Date.
1.10. "Applicable Rate" means, at any date, the sum of:
(a) (i) with respect to each portion of the Revolving Loan and
Term Loan A subject to a LIBOR Pricing Option, the sum of the
Applicable Margin plus the LIBOR Rate with respect to such LIBOR
Pricing Option;
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(ii) with respect to each other portion of the Revolving
Loan and Term Loan A, the sum of the Applicable Margin plus the
Base Rate;
(iii) with respect to Term Loan B subject to a LIBOR
Pricing Option, the sum of 3.75% plus the LIBOR Rate with respect
to such LIBOR Pricing Option;
(iv) with respect to each other portion of Term Loan B, the
sum of 2.75% plus the Base Rate;
plus (b) an additional 2% effective on the day the Agent
notifies the Borrower that the interest rates hereunder are
increasing as a result of the occurrence and continuance of
an Event of Default until the earlier of such time as (i)
such Event of Default is no longer continuing or (ii) such
Event of Default is deemed no longer to exist, in each case
pursuant to Section 8.3.
1.11. "Assignee" is defined in Section 11.1.1.
1.12. "Assignment and Acceptance" is defined in Section 11.1.1.
1.13. "Banking Day" means any day other than Saturday, Sunday or a day on
which banks in Boston, Massachusetts are authorized or required by law or other
governmental action to close and, if such term is used with reference to a LIBOR
Pricing Option, any day on which dealings are effected in Eurodollars in
question by first-class banks in the London inter-bank Eurodollar markets in New
York, New York.
1.14. "Bankruptcy Code" means Title 11 of the United States Code.
1.15. "Bankruptcy Default" means an Event of Default referred to in
Section 8.1.10.
1.16. "Base Rate" means, on any date, the greater of (a) the rate of
interest announced by Fleet at the Boston Office as its Prime Rate or (b) the
sum of 1/2% plus the Federal Funds Rate.
1.17. "Borrower" means PlayCore Wisconsin, Inc., a Wisconsin corporation
formerly known as "Newco, Inc."
1.18. "Borrowing Base" means, on any date, the sum of:
(a) 80% of Eligible Accounts Receivable arising from the
Swing-N-Slide Division,
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plus (b) 85% of Eligible Accounts Receivable arising from the
Game Time Division,
plus (b) the following percentages of Eligible Inventory for the
categories indicated below:
(i) 50% of Eligible Inventory consisting of raw
materials,
(ii) 25% of Eligible Inventory consisting of
work-in-process,
(iii) 50% of Eligible Inventory consisting of
finished goods;
provided, however, that the Borrowing Base shall be reduced to $1.00 during any
period when the Holding Company has failed to furnish the computation of the
Borrowing Base required by Section 6.4.4, commencing five days after such
computation was originally due.
1.19. "Boston Office" means the principal banking office of Fleet in
Boston, Massachusetts.
1.20. "By-laws" means all written by-laws, rules, regulations and all
other documents relating to the management, governance or internal regulation of
any Person other than an individual, or interpretive of the Charter of such
Person, all as from time to time in effect.
1.21. "Capital Expenditures" means, for any period, amounts added or
required to be added to the property, plant and equipment or other fixed assets
account on the Consolidated balance sheet of the Borrower (or other specified
Person) and its Subsidiaries, prepared in accordance with GAAP, in respect of
(a) the acquisition, construction, improvement or replacement of land,
buildings, machinery, equipment, leaseholds and any other real or personal
property, (b) to the extent not included in clause (a) above, materials,
contract labor and direct labor relating thereto (excluding amounts properly
expensed as repairs and maintenance in accordance with GAAP) and (c) software
development costs to the extent not expensed; provided, however, that Capital
Expenditures shall not include amounts added or required to be added as a result
of acquisitions of the stock or substantially all of the assets of another
company as a going concern permitted by Section 6.9.
1.22. "Capitalized Lease" means any lease which is required to be
capitalized on the balance sheet of the lessee in accordance with GAAP,
including Statement Nos. 13 and 98 of the Financial Accounting Standards Board.
1.23. "Capitalized Lease Obligations" means the amount of the liability
reflecting the aggregate discounted amount of future payments under all
Capitalized Leases calculated in
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accordance with GAAP, including Statement Nos. 13 and 98 of the Financial
Accounting Standards Board.
1.24. "Cash Equivalents" means:
(a) negotiable certificates of deposit, time deposits (including
sweep accounts), demand deposits and bankers' acceptances having a
maturity of nine months or less and issued by any United States financial
institution having capital and surplus and undivided profits aggregating
at least $100,000,000 and rated at least Prime-1 by ▇▇▇▇▇'▇ or A-1 by S&P
or issued by any Lender;
(b) corporate obligations having a maturity of nine months or less
and rated at least Prime-1 by ▇▇▇▇▇'▇ or A-1 by S&P or issued by any
Lender;
(c) any direct obligation of the United States of America or any
agency or instrumentality thereof, or of any state or municipality
thereof, (i) which has a remaining maturity at the time of purchase of
not more than one year or which is subject to a repurchase agreement with
any Lender (or any other financial institution referred to in clause (a)
above) exercisable within one year from the time of purchase and (ii)
which, in the case of obligations of any state or municipality, is rated
at least AAA by ▇▇▇▇▇'▇ or AAA by S&P; and
(d) any mutual fund or other pooled investment vehicle rated at
least Aa by ▇▇▇▇▇'▇ or AA by S&P which invests principally in obligations
described above.
1.25. "CERCLA" means the federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980.
1.26. "Charter" means the articles of organization, certificate of
incorporation, statute, constitution, joint venture agreement, partnership
agreement, trust indenture, limited liability company agreement or other charter
document of any Person other than an individual, each as from time to time in
effect.
1.27. "Closing Date" means the Initial Closing Date and each other date
on which any extension of credit is made pursuant to Sections 2.1, 2.2, 2.3 or
2.4.
1.28. "Code" means the federal Internal Revenue Code of 1986.
1.29. "Commitment" means, with respect to any Lender, such ▇▇▇▇▇▇'s
obligations to extend the credits contemplated by Section 2. The original
Commitments are set forth in Exhibit 10.1 and the subsequent Commitments shall
be recorded from time to time in the Register.
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1.30. "Computation Covenants" means Sections 6.5, 6.6.7, 6.6.13, 6.9.6,
6.9.7, 6.9.8, 6.9.9, 6.10.3, 6.10.4, 6.10.5, 6.11.1, 6.11.4 and 6.16.
1.31. "Consolidated" and "Consolidating", when used with reference to any
term, mean that term as applied to the accounts of the Borrower (or other
specified Person) and all of its Subsidiaries (or other specified group of
Persons), or such of its Subsidiaries as may be specified, consolidated (or
combined) or consolidating (or combining), as the case may be, in accordance
with GAAP and with appropriate deductions for minority interests in
Subsidiaries.
1.32. "Consolidated Adjusted EBITDA" means, for any period, Consolidated
EBITDA minus Capital Expenditures (including, for the portion of any period
prior to the Initial Closing Date, Capital Expenditures incurred by Heartland as
set forth in Exhibit 1) minus taxes based upon or measured by net income
(including Distributions to the Holding Company in respect of taxes permitted by
Section 6.10.6, but not including deferred taxes) to the extent deducted from
Consolidated Net Income used to determine Consolidated EBITDA.
1.33. "Consolidated EBITDA" means, for any period, the total of:
(a) Consolidated Net Income; plus
(b) all amounts deducted in computing such Consolidated Net
Income in respect of:
(i) depreciation, amortization and other noncash
charges,
(ii) Consolidated Interest Expense,
(iii) taxes based upon or measured by net income
(including Distributions to the Holding Company in
respect of taxes permitted by Section 6.10.6), and
(iv) any extraordinary and nonrecurring losses,
minus (c) to the extent included in computing such
Consolidated Net Income any extraordinary and
nonrecurring gains;
provided, however, that Consolidated EBITDA for portions of any period prior to
the Initial Closing Date shall include amounts for Heartland as set forth in
Exhibit 1.
1.34. "Consolidated Excess Cash Flow" means, for any period, the total
of:
(a) Consolidated EBITDA,
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minus (b) Capital Expenditures,
minus (c) taxes based upon or measured by net income that are
actually paid (or to be paid currently) in cash
(including Distributions to the Holding Company in
respect of taxes permitted by Section 6.10.6),
minus (d) Consolidated Fixed Charges (but in no event
including contingent prepayments required by Section
4.3),
minus (e) voluntary prepayments of the Term Notes and other
term Financing Debt of the Borrower and its
Subsidiaries (including Distributions paid to the
Holding Company on account of the voluntary
prepayment of its term Financing Debt) permitted by
this Agreement,
minus (f) Consolidated Working Capital Factor (if a positive
number),
plus (g) Consolidated Working Capital Factor (if a negative
number); provided, however, that in adding the
Consolidated Working Capital Factor to compute
Consolidated Excess Cash Flow, the amount of the
negative Consolidated Working Capital Factor
described in this clause (g) shall be added as if it
were a positive number.
1.35. "Consolidated Fixed Charges" means, for any period, the sum of:
(a) Consolidated Interest Expense,
plus (b) the aggregate amount of all mandatory scheduled
payments and sinking fund payments with respect to
principal paid by the Borrower and its Subsidiaries
in respect of Consolidated Total Debt, including
payments in the nature of principal under
Capitalized Leases and Distributions paid to the
Holding Company on account of mandatory scheduled
payments and sinking fund payments with respect to
its Financing Debt, but in no event including
contingent prepayments required by Section 4.3,
plus (c) mandatory dividends paid or payable by the Borrower
or any of its Subsidiaries to third parties.
1.36. "Consolidated Interest Expense" means, for any period, the
aggregate amount of interest, including commitment fees, payments in the nature
of interest under Capitalized Leases and net payments under Interest Rate
Protection Agreements, accrued by the Borrower and its Subsidiaries in
accordance with GAAP on a Consolidated basis, whether such interest is reflected
as an item of expense or capitalized, and excluding in any event the
amortization of deferred financing charges and PIK Interest and including in any
event Distributions paid to the
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Holding Company on account of interest on its Financing Debt and cash payments
made during such period on account of PIK Interest expensed during a prior
period.
1.37. "Consolidated Net Income" means, for any period, the net income (or
loss) of the Borrower and its Subsidiaries, determined in accordance with GAAP
on a Consolidated basis minus the amount of Distributions paid to the Holding
Company pursuant to Sections 6.10.3, 6.10.4 and 6.10.6 and any other
Distributions paid to the Holding Company on account of taxes, interest on
Indebtedness, management fees and corporate overhead expense; provided, however,
that Consolidated Net Income shall not include:
(a) the income (or loss) of any Person accrued prior to the date
such Person becomes a Subsidiary or is merged into or consolidated with
the Borrower or any of its Subsidiaries;
(b) the income (or loss) of any Person (other than a Subsidiary)
in which the Borrower or any of its Subsidiaries has an ownership
interest; provided, however, that (i) Consolidated Net Income shall
include amounts in respect of the income of such Person when actually
received in cash by the Borrower or such Subsidiary in the form of
dividends or similar Distributions and (ii) Consolidated Net Income shall
be reduced by the aggregate amount of all Investments, regardless of the
form thereof, made by the Borrower or any of its Subsidiaries in such
Person for the purpose of funding any deficit or loss of such Person;
(c) all amounts included in computing such net income (or loss) in
respect of (i) the write-up of any asset on or after December 31, 1997,
including the subsequent amortization or expensing of the written-up
portion of assets on account of the Acquisition or (ii) the retirement of
any Indebtedness or equity at less than face value after December 31,
1997;
(d) extraordinary and nonrecurring gains;
(e) the income of any Subsidiary to the extent the payment of such
income in the form of a Distribution or repayment of Indebtedness to the
Borrower or a Wholly Owned Subsidiary is not permitted, whether on
account of any Charter or By-law restriction, any agreement, instrument,
deed or lease or any law, statute, judgment, decree or governmental
order, rule or regulation applicable to such Subsidiary;
(f) any after-tax gains or losses attributable to returned surplus
assets of any Plan;
(g) the write off after the Initial Closing Date of capitalized
financing costs incurred prior to the Initial Closing Date;
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(h) any deferred or other credit representing the excess of the
equity in any Subsidiary of the Borrower at the date of acquisition
thereof over the cost of the Investment in such Subsidiary;
(i) any restoration to income of any contingency reserve, except
to the extent that provision for such reserve was made out of income
accrued during the same period;
(j) any aggregate net gain (but not any aggregate net loss)
arising from the sale, conversion, exchange or other disposition of
capital assets, including (i) all non-current assets and, without
duplication, (ii) the following, whether or not current: (A) fixed
assets, whether tangible or intangible, (B) all inventory sold in
conjunction with the disposition of fixed assets and (C) all shares of
capital stock or other securities;
(k) any net gain from the collection of any proceeds of life
insurance policies;
(l) any gain arising from the acquisition of any shares of capital
stock or other securities, or the extinguishment, under GAAP, of any
Indebtedness, of the Borrower or any Subsidiary of the Borrower;
(m) any net income or gain (but not any net loss) from (i) any
change in accounting principles in accordance with GAAP, (ii) any prior
period adjustments resulting from any change in accounting principles in
accordance with GAAP and (iii) any discontinued operations or the
disposition thereof;
(n) any portion of Consolidated Net Income that cannot be freely
converted into United States Funds; and
(o) any other non-cash gain included in Consolidated Net Income.
1.38. "Consolidated Net Worth" means, at any date, the total of:
(a) stockholders' equity of the Borrower and its Subsidiaries
determined in accordance with GAAP on a Consolidated basis, excluding the
effect of any foreign currency translation adjustments;
minus (b) the amount by which such stockholders' equity has been
increased after December 31, 1997 by the items described in clauses (a)
through (o) of the definition of Consolidated Net Income or by goodwill.
1.39. "Consolidated Rental Obligations" shall mean, for any period, all
rents and other amounts (including as such amounts all payments which such
Person is obligated to make
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to the lessor on termination of any lease and/or on surrender of the leased
property other than payments for which such Person is contingently liable on
account of early termination or breach of such lease) paid, payable or
guaranteed during such period by the Borrower and its Subsidiaries on a
Consolidated basis, as lessee or sublessee under any lease (other than a
Capitalized Lease), excluding any amount required to be paid by such Person
(whether or not designated as rents or additional rents) on account of
maintenance, repairs, insurance, taxes, utilities and similar charges,
determined in accordance with GAAP; provided, however, that Consolidated Rental
Obligations for portions of any period prior to the Initial Closing Date shall
include amounts for Heartland as set forth in Exhibit 1. Whenever the amount of
Consolidated Rental Obligations are determined for any period, to the extent
that such Consolidated Rental Obligations are not definitely determinable by the
terms of the lease, the Consolidated Rental Obligations not so definitely
determinable shall be estimated in good faith and in such reasonable manner as
the board of directors of the Holding Company may determine (as evidenced by a
certified resolution of such board of directors promptly delivered to the
Agent).
1.40. "Consolidated Senior Debt" means, at any date, Consolidated Total
Debt minus the Seller Subordinated Debt minus the Senior Subordinated Notes.
1.41. "Consolidated Total Debt" means, at any date, all Financing Debt of
the Borrower and its Subsidiaries on a Consolidated basis.
1.42. "Consolidated Working Capital Factor" means, for any period, the
amount (whether positive or negative) equal to:
Current Assets
(a) Accounts Receivable:
(i) the amount, if any, by which accounts receivable at
the end of such period were greater than accounts
receivable at the beginning of such period,
minus (ii) the amount, if any, by which accounts receivable at
the end of such period were less than accounts
receivable at the beginning of such period,
(b) Inventory:
plus (i) the amount, if any, by which inventory at the end of
such period was greater than inventory at the
beginning of such period,
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minus (ii) the amount, if any, by which inventory at the end of
such period was less than inventory at the beginning
of such period,
(c) Prepaid Expenses:
plus (i) the amount, if any, by which prepaid expenses at the
end of such period were greater than prepaid
expenses at the beginning of such period,
minus (ii) the amount, if any, by which prepaid expenses at the
end of such period were less than prepaid expenses
at the beginning of such period,
Current Liabilities
(d) Accounts Payable:
plus (i) the amount, if any, by which accounts payable at the
end of such period were less than accounts payable
at the beginning of such period,
minus (ii) the amount, if any, by which accounts payable at the
end of such period were greater than accounts
payable at the beginning of such period,
(e) Accrued Expenses
plus (i) the amount, if any, by which accrued expenses at the
end of such period were less than accrued expenses
at the beginning of such period,
minus (ii) the amount, if any, by which accrued expenses at the
end of such period were greater than accrued
expenses at the beginning of such period,
all with respect to the Borrower and its Subsidiaries as determined in
accordance with GAAP on a Consolidated basis.
1.43. "Convertible Subordinated Debentures" means the Holding Company's
10% Convertible Subordinated Debentures due 2004 issued (a) in 1995 to
GreenGrass Holdings in an original aggregate principal amount of $4,300,000 and
(b) in 1997 to other stockholders of the Holding Company in an original
aggregate principal amount not exceeding $3,300,000 in
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form identical (except for the conversion price) to the Convertible Subordinated
Debentures described in the foregoing clause (a).
1.44. "Credit Documents" means:
(a) this Agreement, the Notes, each Letter of Credit, each draft
presented or accepted under a Letter of Credit, the Guarantee and
Security Agreement, the Guarantee and Pledge Agreement, the fee agreement
contemplated by Section 5.1.2 and each Interest Rate Protection Agreement
provided by a Lender (or an Affiliate of a Lender) to the Holding Company
or any of its Subsidiaries, each as from time to time in effect; and
(b) any other present or future agreement or instrument from time
to time entered into among the Holding Company, any of its Subsidiaries
or any other Obligor, on one hand, and the Agent, any Letter of Credit
Issuer or all the Lenders, on the other hand, relating to, amending or
modifying this Agreement or any other Credit Document referred to above
or which is stated to be a Credit Document, each as from time to time in
effect.
1.45. "Credit Obligations" means all present and future liabilities,
obligations and Indebtedness of the Holding Company, the Borrower, any of its
Subsidiaries or any other Obligor owing to the Agent or any Lender (or any
Affiliate of a Lender) under or in connection with this Agreement or any other
Credit Document, including obligations in respect of principal, interest,
reimbursement obligations under Letters of Credit and Interest Rate Protection
Agreements provided by a Lender (or an Affiliate of a Lender), commitment fees,
Letter of Credit fees, amounts provided for in Sections 3.2.4, 3.5 and 9 and
other fees, charges, indemnities and expenses from time to time owing hereunder
or under any other Credit Document (whether accruing before or after a
Bankruptcy Default).
1.46. "Credit Participant" is defined in Section 11.2.
1.47. "Credit Security" means all assets now or from time to time
hereafter subjected to a security interest, mortgage or charge (or intended or
required so to be subjected pursuant to the Guarantee and Security Agreement,
the Guarantee and Pledge Agreement or any other Credit Document) to secure the
payment or performance of any of the Credit Obligations on a pari passu basis,
including the assets described in section 3.1 of the Guarantee and the Security
Agreement and in section 3.1 of the Guarantee and Pledge Agreement.
1.48. "Default" means any Event of Default and any event or condition
which with the passage of time or giving of notice, or both, would become an
Event of Default and the filing against the Holding Company, any of its
Subsidiaries or any other Obligor of a petition commencing an involuntary case
under the Bankruptcy Code.
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1.49. "Delinquency Period" is defined in Section 10.4.4.
1.50. "Delinquent Lender" is defined in Section 10.4.4.
1.51. "Delinquent Payment" is defined in Section 10.4.4.
1.52. "Designated Financing Debt" means Financing Debt incurred by the
Holding Company or any of its Subsidiaries after the Initial Closing Date other
than Financing Debt permitted by Sections 6.6.1 (the Loan), 6.6.7 (purchase
money Indebtedness and Capitalized Leases) and 6.6.9 (intercompany
Indebtedness).
1.53. "Distribution" means, with respect to the Holding Company (or other
specified Person):
(a) the declaration or payment of any dividend or distribution on
or in respect of any shares of any class of capital stock of or other
equity interests in the Holding Company (or such specified Person);
(b) the purchase, redemption or other retirement of any shares of
any class of capital stock of or other equity interest in the Holding
Company (or such specified Person) or of options, warrants or other
rights for the purchase of such shares, directly, indirectly through a
Subsidiary or otherwise;
(c) any other distribution on or in respect of any shares of any
class of capital stock of or equity or other beneficial interest in the
Holding Company (or such specified Person);
(d) any payment of principal or interest with respect to, or any
purchase, redemption or defeasance of, any Financing Debt of the Holding
Company (or such specified Person) which by its terms or the terms of any
agreement is subordinated to the payment of the Credit Obligations; and
(e) any payment, loan or advance by the Holding Company (or such
specified Person) to, or any other Investment by the Holding Company (or
such specified Person) in, the holder of any shares of any class of
capital stock of or equity interest in the Holding Company (or such
specified Person), or any Affiliate of such holder (including the payment
of management and transaction fees and expenses);
provided, however, that the term "Distribution" shall not include (i) dividends
payable in perpetual common stock of or other similar equity interests in the
Holding Company (or such specified Person) or (ii) payments in the ordinary
course of business in respect of (A) reasonable compensation paid to employees,
officers and directors, (B) advances and reimbursements to employees for travel
expenses, drawing accounts and similar expenditures,
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or (C) rent paid to, or accounts payable for services rendered or goods sold by,
non-Affiliates that own capital stock of or other equity interests in the
Holding Company (or such specified Person).
1.54. "Eligible Accounts Receivable" means, at any date, the remainder
of:
(a) the aggregate amount carried as accounts receivable (reduced
appropriately for doubtful accounts and customer returns) on the most
recent borrowing base report of the Borrower and its Subsidiaries
delivered in accordance with Section 6.4.4,
minus (b) the aggregate amount of any such accounts receivable that are
unpaid more than 60 days past the due date or 150 days past the date of
the original invoice,
minus (c) discounts, commissions and distribution fees payable by the
Borrower or any Subsidiary (other than to the Borrower or a Wholly Owned
Subsidiary) in respect of such accounts receivable,
minus (d) the amount of such accounts receivable due from Affiliates,
minus (e) all payments under such accounts receivable to be made in a
currency other than United States Funds that is not freely convertible
into United States Funds or that may not be freely withdrawn from the
country of origin,
minus (f) all payments under such accounts receivable due from a Person
located outside the United States of America and Canada, unless supported
by receivables insurance reasonably satisfactory to the Agent or by an
irrevocable letter of credit issued by a United States bank.
minus (g) accounts receivable subject to Liens other than Liens securing
the Credit Obligations,
minus (h) the aggregate amount of any such accounts receivable that are
unpaid more than 90 days past the date of the original invoice to the
extent such accounts receivable exceed 50% of Eligible Accounts
Receivable,
minus (i) all such accounts receivable due from any Person and its
Affiliates in the event at least 25% of such accounts receivable due from
such Person and its Affiliates are unpaid more than 60 days past the due
date or 150 days past the date of the original invoice,
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minus (j) in the case only of such accounts receivable from the
Swing-N-Slide Division, accrued advertising and volume rebates in respect
of such accounts receivable,
minus (k) the amount of such accounts receivable due from individuals
(but in no event subtracting the amount of accounts receivable due from
credit card issuers).
1.55. "Eligible Inventory" means, at any date, the remainder of:
(a) the aggregate amount carried as inventory, at the lower of
cost or market value, on the most recent borrowing base report of the
Borrower and its Subsidiaries delivered in accordance with Section 6.4.4,
minus (b) advance payments from customers reflected on the Consolidated
balance sheet of the Borrower and its Subsidiaries,
minus (c) inventory subject to Liens other than Liens securing the Credit
Obligations,
minus (d) inventory located outside the United States of America,
minus (e) inventory for consignment sale,
minus (f) obsolete and damaged inventory to the extent not previously
covered by reserves on the Consolidated balance sheet of the Borrower and
its Subsidiaries,
minus (g) packaging supplies included in such inventory,
minus (h) inventory that has been carried on the Consolidated balance
sheet of the Borrower and its Subsidiaries for more than one year,
minus (i) inventory in transit between locations,
minus (j) inventory not covered by a perfected, first priority Lien
securing the Credit Obligations,
minus (k) product samples on site at branch and distribution locations;
provided, however, that this clause (k) shall not exclude from "Eligible
Inventory" product samples on site at locations owned or leased by
Heartland in an amount not exceeding the lesser of (i) $1,000,000 or (ii)
50% of the net book value of all such product samples described in this
proviso.
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1.56. "Environmental Laws" means all applicable federal, state or local
statutes, laws, ordinances, codes, rules, regulations and guidelines (including
consent decrees and administrative orders) relating to public health and safety
and protection of the environment, including OSHA.
1.57. "Equity Transaction" means any issuance by the Holding Company or
any of its Subsidiaries after the Initial Closing Date of any shares of its
capital stock, other equity interests or options, warrants or other purchase
rights to acquire such capital stock or other equity interests to, or receipt of
a capital contribution from, any Person other than:
(a) any Obligors,
(b) the officers, employees and directors of the Holding Company,
the Borrower or any of the Borrower's Subsidiaries,
(c) GreenGrass Holdings and its Affiliates and investors in funds
managed by Glencoe, but only to the extent:
(i) funds invested pursuant to this clause (c) in the
Holding Company are used for the purpose of acquiring shares held
by minority stockholders of the Holding Company (but in no event
including GreenGrass Holdings and such Affiliates and investors)
and
(ii) funds invested pursuant to this clause (c) in the
Borrower and its Subsidiaries are not made directly or indirectly
to remedy a Default or in anticipation of a Default, and
(d) any other purchaser of capital stock of the Holding Company,
but only to the extent the funds invested pursuant to this clause (d) are
used to make an acquisition approved in writing by the Required Lenders.
1.58. "ERISA" means the federal Employee Retirement Income Security Act
of 1974.
1.59. "ERISA Group Person" means the Holding Company, any Subsidiary of
the Holding Company and any Person which is a member of the controlled group or
under common control with the Holding Company or any Subsidiary within the
meaning of section 414 of the Code or section 4001(a)(14) of ERISA.
1.60. "Eurodollars" means, with respect to any Lender, deposits of United
States Funds in a non-United States office or an international banking facility
of such Lender.
1.61. "Event of Default" is defined in Section 8.1.
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1.62. "Exchange Act" means the federal Securities Exchange Act of 1934.
1.63. "Federal Funds Rate" means, for any day, the rate equal to the
weighted average (rounded upward to the nearest 1/8%) of (a) the rates on
overnight federal funds transactions with members of the Federal Reserve System
arranged by federal funds brokers, (a) as such weighted average is published for
such day (or, if such day is not a Banking Day, for the immediately preceding
Banking Day) by the Federal Reserve Bank of New York or (b) if such rate is not
so published for such Banking Day, quotations received by the Agent from three
federal funds brokers of recognized standing selected by the Agent. Each
determination by the Agent of the Federal Funds Rate shall, in the absence of
manifest error, be conclusive.
1.64. "Final Revolving Maturity Date" means March 13, 2003.
1.65. "Final Term Loan A Maturity Date" means March 13, 2003.
1.66. "Final Term Loan B Maturity Date" means June 30, 2003.
1.67. "Financial Officer" of the Holding Company (or other specified
Person) means its chief executive officer, chief financial officer, chief
operating officer, chairman, president, treasurer or any of its vice presidents
whose primary responsibility is for its financial affairs, all of whose
incumbency and signatures have been certified to the Agent by the secretary or
other appropriate attesting officer of the Holding Company (or such specified
Person).
1.68. "Financing Debt" means each of the items described in clauses (a)
through (f) of the definition of the term "Indebtedness" and, without
duplication, any Guarantees of such items.
1.69. "Fleet" means Fleet National Bank.
1.70. "Funding Liability" means (a) any Eurodollar deposit which was used
(or deemed by Section 3.2.6 to have been used) to fund any portion of the Loan
subject to a LIBOR Pricing Option, and (b) any portion of the Loan subject to a
LIBOR Pricing Option funded (or deemed by Section 3.2.6 to have been funded)
with the proceeds of any such Eurodollar deposit.
1.71. "GAAP" means generally accepted accounting principles as from time
to time in effect, including the statements and interpretations of the United
States Financial Accounting Standards Board; provided, however, that for
purposes of compliance with Section 6 (other than Section 6.4) and the related
definitions, "GAAP" means such principles as in effect on December 31, 1997 as
applied by the Borrower and its Subsidiaries in the preparation of the most
recent annual statements referred to in Section 7.2.1(a), and consistently
followed, without giving effect to any subsequent changes thereto.
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1.72. "Game Time Division" means the operating division of the Borrower
that conducts primarily only the business conducted by Game Time, Inc. prior to
its acquisition by the Borrower and other activities relating thereto.
1.73. "Game Time Sellers" means ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
1.74. "Glencoe" means Glencoe Investment Corporation, a Delaware
corporation.
1.75. "GreenGrass Holdings" means GreenGrass Holdings, a Delaware general
partnership, between GreenGrass Management LLC and GreenGrass Capital LLC and
Greengrass Capital II, LLC.
1.76. "Guarantee" means, with respect to the Holding Company (or other
specified Person):
(a) any guarantee by the Holding Company (or such specified
Person) of the payment or performance of, or any contingent obligation by
the Holding Company (or such specified Person) in respect of, any
Indebtedness or other obligation of any primary obligor;
(b) any other arrangement whereby credit is extended to a primary
obligor on the basis of any promise or undertaking of the Holding Company
(or such specified Person), including any binding "comfort letter" or
"keep well agreement" written by the Holding Company (or such specified
Person), to a creditor or prospective creditor of such primary obligor,
to (i) pay the Indebtedness of such primary obligor, (ii) purchase an
obligation owed by such primary obligor, (iii) pay for the purchase or
lease of assets or services regardless of the actual delivery thereof or
(iv) maintain the capital, working capital, solvency or general financial
condition of such primary obligor;
(c) any liability of the Holding Company (or such specified
Person), as a general partner of a partnership in respect of Indebtedness
or other obligations of such partnership;
(d) any liability of the Holding Company (or such specified
Person) as a joint venturer of a joint venture in respect of Indebtedness
or other obligations of such joint venture;
(e) any liability of the Holding Company (or such specified
Person) with respect to the tax liability of others as a member of a
group (other than a group
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consisting solely of the Holding Company and its Subsidiaries) that is
consolidated for tax purposes; and
(f) reimbursement obligations, whether contingent or matured, of
the Holding Company (or such specified Person) with respect to letters of
credit, bankers acceptances, surety bonds, other financial guarantees and
Interest Rate Protection Agreements,
in each case whether or not any of the foregoing are reflected on the balance
sheet of the Holding Company (or such specified Person) or in a footnote
thereto; provided, however, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
amount of any Guarantee and the amount of Indebtedness resulting from such
Guarantee shall be the maximum amount that the guarantor may become obligated to
pay in respect of the obligations (whether or not such obligations are
outstanding at the time of computation).
1.77. "Guarantee and Security Agreement" is defined in Section 5.1.4.
1.78. "Guarantee and Pledge Agreement" is defined in Section 5.1.5.
1.79. "Guarantor" means the Holding Company and each Subsidiary party to,
or which subsequently becomes party to, the Guarantee and Security Agreement as
a Guarantor.
1.80. "Hazardous Material" means any pollutant, toxic or hazardous
material or waste, including any "hazardous substance" or "pollutant" or
"contaminant" as defined in section 101(14) of CERCLA or any other Environmental
Law or regulated as toxic or hazardous under RCRA or any other Environmental
Law.
1.81. "Heartland" means Heartland Industries, Inc. (DE), a Delaware
corporation.
1.82. "Heartland Sellers" means the shareholders of Heartland immediately
prior to the Acquisition.
1.83. "Holding Company" means PlayCore, Inc., a Delaware corporation
formerly known as "Swing-N-Slide Corp."
1.84. "Indebtedness" means all obligations, contingent or otherwise,
which in accordance with GAAP are required to be classified upon the balance
sheet of the Holding Company (or other specified Person) as liabilities, but in
any event including (without duplication):
(a) borrowed money;
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(b) indebtedness evidenced by notes, debentures or similar
instruments;
(c) Capitalized Lease Obligations;
(d) the deferred purchase price of assets or securities, including
related noncompetition, consulting and stock repurchase obligations
(other than ordinary trade accounts payable within six months after the
incurrence thereof in the ordinary course of business);
(e) mandatory redemption or dividend rights on capital stock (or
other equity);
(f) reimbursement obligations, whether contingent or matured, with
respect to letters of credit, bankers acceptances, surety bonds, other
financial guarantees and Interest Rate Protection Agreements (without
duplication of other Indebtedness supported or guaranteed thereby);
(g) unfunded pension liabilities;
(h) obligations that are immediately and directly due and payable
out of the proceeds of or production from property;
(i) liabilities secured by any Lien existing on property owned or
acquired by the Holding Company (or such specified Person), whether or
not the liability secured thereby shall have been assumed; and
(j) all Guarantees in respect of Indebtedness of others.
1.85. "Indemnified Party" is defined in Section 9.2.
1.86. "Initial Closing Date" means February 16, 1999 or such other date
prior to April 1, 1999 agreed to by the Holding Company and the Agent as the
first Closing Date hereunder.
1.87. "Interest Rate Protection Agreement" means any interest rate swap,
interest rate cap, interest rate hedge or other contractual arrangement that
converts variable interest rates into fixed interest rates, fixed interest rates
into variable interest rates or other similar arrangements.
1.88. "Investment" means, with respect to the Holding Company (or other
specified Person):
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(a) any share of capital stock, partnership or other equity
interest, evidence of Indebtedness or other security issued by any other
Person;
(b) any loan, advance or extension of credit to, or contribution
to the capital of, any other Person;
(c) any Guarantee of the Indebtedness of any other Person;
(d) any acquisition of all, or any division or similar operating
unit of, the business of any other Person or the assets comprising such
business, division or unit; and
(e) any other similar investment.
The investments described in the foregoing clauses (a) through (e) shall
be included in the term "Investment" whether they are made or acquired by
purchase, exchange, issuance of stock or other securities, merger,
reorganization or any other method; provided, however, that the term
"Investment" shall not include (i) trade and customer accounts and notes
receivable for property leased, goods furnished or services rendered in the
ordinary course of business and payable on a current basis in accordance with
customary trade terms, (ii) deposits, advances or prepayments to suppliers for
property leased or licensed, goods furnished and services rendered in the
ordinary course of business, (iii) advances to employees for relocation and
travel expenses, drawing accounts and similar expenditures, (iv) stock or other
securities acquired in connection with the satisfaction or enforcement of
Indebtedness or claims due to the Holding Company (or such specified Person) or
as security for any such Indebtedness or claim or (v) demand deposits in banks
or similar financial institutions.
In determining the amount of outstanding Investments:
(A) the amount of any Investment shall be the cost thereof minus
any returns of capital in cash on such Investment (determined in
accordance with GAAP without regard to amounts realized as income on such
Investment);
(B) the amount of any Investment in respect of a purchase
described in clause (d) above shall include the amount of any Financing
Debt assumed in connection with such purchase or secured by any asset
acquired in such purchase (whether or not any Financing Debt is assumed)
or for which any Person that becomes a Subsidiary is liable on the date
on which the securities of such Person are acquired; and
(C) no Investment shall be increased as the result of an increase
in the undistributed retained earnings of the Person in which the
Investment was made or decreased as a result of an equity interest in the
losses of such Person.
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1.89. "Legal Requirement" means any present or future requirement imposed
upon any of the Lenders or the Holding Company and its Subsidiaries by any law,
statute, rule, regulation, directive, order, decree or guideline (or any
interpretation thereof by courts or of administrative bodies) of the United
States of America, or any jurisdiction in which any LIBOR Office is located or
any state or political subdivision of any of the foregoing, or by any board,
governmental or administrative agency, central bank or monetary authority of the
United States of America, any jurisdiction in which any LIBOR Office is located,
or any political subdivision of any of the foregoing.
1.90. "Lender" means each of the Persons listed as lenders on the
signature page hereto, including Fleet in its capacity as a Lender and such
other Persons who may from time to time own a Percentage Interest in the Credit
Obligations, but the term "Lender" shall not include any Credit Participant.
1.91. "Lending Officer" means such individuals whom the Agent may
designate by notice to the Holding Company from time to time as an officer who
may receive telephone requests for borrowings under Section 2.1.3.
1.92. "Letter of Credit" is defined in Section 2.4.1.
1.93. "Letter of Credit Exposure" means, at any date, the sum of (a) the
aggregate face amount of all drafts that may then or thereafter be presented by
beneficiaries under all Letters of Credit then outstanding, plus (b) the
aggregate face amount of all drafts that the Letter of Credit Issuer has
previously accepted under Letters of Credit but has not paid.
1.94. "Letter of Credit Issuer" means, for any Letter of Credit, Fleet
or, in the event Fleet does not for any reason issue a requested Letter of
Credit, another Lender designated by the Agent to issue such Letter of Credit.
1.95. "LIBOR Basic Rate" means, for any LIBOR Interest Period:
(a) the rate of interest at which deposits of United States Funds
are offered in the London interbank market for a period of time equal to
such LIBOR Interest Period that appears on the Telerate Page 3750 as of
11:00 a.m. London time two Banking Days prior to the Banking Day on which
such LIBOR Interest Period begins or
(b) if no such rate appears on the Telerate Page 3750, the rate of
interest determined by the Agent to be the average of up to four interest
rates per annum at which deposits of United States Funds are offered in
the London interbank market for a period of time equal to such LIBOR
Interest Period which appear on the ▇▇▇▇▇▇'▇ Screen LIBO Page as of 11:00
a.m. London time two Banking Days prior to the Banking Day on which such
LIBOR Interest Period begins if at least two such offered rates so appear
on the ▇▇▇▇▇▇'▇ Screen LIBO Page or
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(c) if no such rate appears on the Telerate Page 3750 and fewer
than two offered rates appear on the ▇▇▇▇▇▇'▇ Screen LIBO Page, the rate
of interest at which deposits of United States Funds in an amount
comparable to the portion of the Loan as to which the related LIBOR
Pricing Option has been elected and which have a term corresponding to
such LIBOR Interest Period are offered to the Agent by first class banks
in the London inter-bank market for delivery in immediately available
funds at a LIBOR Office on the first day of such LIBOR Interest Period as
determined by the Agent at approximately 11:00 a.m. (London time) two
Banking Days prior to the date upon which such LIBOR Interest Period is
to commence (which determination by the Agent shall, in the absence of
manifest error, be conclusive).
1.96. "LIBOR Interest Period" means any period, selected as provided in
Section 3.2.1, of one, two, three or six months, commencing on any Banking Day
and ending on the corresponding date in the subsequent calendar month so
indicated (or, if such subsequent calendar month has no corresponding date, on
the last day of such subsequent calendar month); provided, however, that subject
to Section 3.2.3, if any LIBOR Interest Period so selected would otherwise begin
or end on a date which is not a Banking Day, such LIBOR Interest Period shall
instead begin or end, as the case may be, on the immediately preceding or
succeeding Banking Day as determined by the Agent in accordance with the then
current banking practice in the inter-bank LIBOR market with respect to LIBOR
deposits at the applicable LIBOR Office, which determination by the Agent shall,
in the absence of manifest error, be conclusive.
1.97. "LIBOR Office" means such non-United States office or international
banking facility of any Lender as the Lender may from time to time select.
1.98. "LIBOR Pricing Options" means the options granted pursuant to
Section 3.2.1 to have the interest on any portion of the Loan computed on the
basis of a LIBOR Rate.
1.99. "LIBOR Rate" for any LIBOR Interest Period means the rate, rounded
upward to the nearest 1/100%, obtained by dividing (a) the LIBOR Basic Rate for
such LIBOR Interest Period by (b) an amount equal to 1 minus the LIBOR Reserve
Rate; provided, however, that if at any time during such LIBOR Interest Period
the LIBOR Reserve Rate applicable to any outstanding LIBOR Pricing Option
changes, the LIBOR Rate for such LIBOR Interest Period shall automatically be
adjusted to reflect such change, effective as of the date of such change to the
extent required by the Legal Requirement implementing such change.
1.100. "LIBOR Reserve Rate" means the stated maximum rate (expressed as a
decimal) of all reserves (including any basic, supplemental, marginal or
emergency reserve or any reserve asset), if any, as from time to time in effect,
required by any Legal Requirement to be maintained by any Lender against (a)
"Eurocurrency liabilities" as specified in Regulation D of the Board of
Governors of the Federal Reserve System applicable to LIBOR Pricing
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Options, (b) any other category of liabilities that includes LIBOR deposits by
reference to which the interest rate on portions of the Loan subject to LIBOR
Pricing Options is determined, (c) the principal amount of or interest on any
portion of the Loan subject to a LIBOR Pricing Option or (d) any other category
of extensions of credit, or other assets, that includes loans subject to a LIBOR
Pricing Option by a non-United States office of any of the Lenders to United
States residents.
1.101. "Lien" means, with respect to the Holding Company (or any other
specified Person):
(a) any lien, encumbrance, mortgage, pledge, charge or security
interest of any kind upon any property or assets of the Holding Company
(or such specified Person), whether now owned or hereafter acquired, or
upon the income or profits therefrom;
(b) the acquisition of, or the agreement to acquire, any property
or asset upon conditional sale or subject to any other title retention
agreement, device or arrangement (including a Capitalized Lease);
(c) the sale, assignment, pledge or transfer for security of any
accounts, general intangibles or chattel paper of the Holding Company (or
such specified Person), with or without recourse;
(d) the transfer of any tangible property or assets for the
purpose of subjecting such items to the payment of previously outstanding
Indebtedness in priority to payment of the general creditors of the
Holding Company (or such specified Person); and
(e) the existence for a period of more than 120 consecutive days
of any Indebtedness against the Holding Company (or such specified
Person) which if unpaid would by law or upon a Bankruptcy Default be
given any priority over general creditors.
1.102. "Loan" means, collectively, the Revolving Loan and the Term Loans.
1.103. "Margin Stock" means "margin stock" within the meaning of
Regulations T, U or X of the Board of Governors of the Federal Reserve System.
1.104. "Material Adverse Change" means, since any specified date or from
the circumstances existing immediately prior to the happening of any specified
event, a material adverse change in (a) the business, assets, financial
condition, income or prospects of the Holding Company and its Subsidiaries (on a
Consolidated basis), whether as a result of (i) general economic conditions
affecting the playground equipment industry, (ii) difficulties in
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obtaining supplies and raw materials, (iii) fire, flood or other natural
calamities, (iv) environmental pollution, (v) regulatory changes, judicial
decisions, war or other governmental action or (vi) any other event or
development, whether or not related to those enumerated above or (b) the ability
of the Obligors to perform their obligations under the Credit Documents or (c)
the rights and remedies of the Agent and the Lenders under the Credit Documents.
1.105. "Material Agreements" is defined in Section 7.2.2.
1.106. "Maximum Amount of Revolving Credit" is defined in Section 2.1.2.
1.107. "Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
1.108. "Multiemployer Plan" means any Plan that is a "multiemployer plan"
as defined in section 4001(a)(3) of ERISA.
1.109. "Net Asset Sale Proceeds" means the cash proceeds of the sale or
disposition of assets (including by way of merger) by the Borrower or any of its
Subsidiaries after the Initial Closing Date, net of (a) any Indebtedness
permitted by Section 6.6.7 (Capitalized Leases and purchase money indebtedness)
secured by assets being sold in such transaction required to be paid from such
proceeds, (b) income taxes that, as estimated by the Borrower in good faith,
will be required to be paid by the Borrower or any of its Subsidiaries in cash
as a result of, and within 15 months after, such sale or disposition, (c)
reasonable reserves for liabilities resulting from the sale of assets and (d)
all reasonable expenses of the Borrower or any of its Subsidiaries payable in
connection with the sale or disposition; provided, however, that "Net Asset Sale
Proceeds" shall not include cash proceeds:
(i) of asset sales permitted by Section 6.11.1,
(ii) of mergers permitted by Section 6.11.2, or
(iii) in an amount not exceeding $1,000,000 in any fiscal
year in the aggregate (or $3,000,000 in the aggregate since the
date hereof) that will be used to acquire replacement or other
assets within six months after such sale or disposition; provided,
however, that if any amount in this clause (iii) is not actually
used to acquire replacement or other assets within such six-month
period, such amount shall become Net Asset Sale Proceeds.
1.110. "Net Debt Proceeds" means cash proceeds of the incurrence of
Designated Financing Debt by the Holding Company or any of its Subsidiaries (net
of reasonable out-of-pocket transaction fees and expenses).
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1.111. "Net Equity Proceeds" means the cash proceeds received by the
Holding Company or any of its Subsidiaries in connection with any Equity
Transaction (net of reasonable out-of-pocket fees and expenses).
1.112. "Nonperforming Lender" is defined in Section 10.4.4.
1.113. "Notes" means, collectively, the Revolving Notes and the Term
Notes.
1.114. "Obligor" means the Borrower, the Holding Company, each other
Guarantor and each other Person guaranteeing or providing collateral for the
Credit Obligations.
1.115. "OSHA" means the federal Occupational Health and Safety Act.
1.116. "Overdue Reimbursement Rate" means, at any date, the highest
Applicable Rate then in effect.
1.117. "Payment Date" means (a) the last Banking Day of each month,
beginning on the first such date after the Initial Closing Date and (b) the
Final Term Loan B Maturity Date.
1.118. "PBGC" means the Pension Benefit Guaranty Corporation or any
successor entity.
1.119. "Percentage Interest" means, with respect to any Lender, the
Commitment of such Lender in the respective portions of the Loan and Letter of
Credit Exposure. For purposes of votes and consents of the Lenders, Percentage
Interests shall be computed as follows: (a) at all times when no Event of
Default under Section 8.1.1 and no Bankruptcy Default exists, the ratio that the
respective Commitments of any Lender with respect to the Revolving Loan plus the
respective outstanding Term Loans of such Lender bears to the total Commitments
of all Lenders with respect to the Revolving Loan plus the total outstanding
Term Loans of all Lenders, as from time to time in effect and reflected in the
Register, and (b) at all other times, the ratio that the respective amounts of
the Loan and Letter of Credit Exposure owing to any Lender bear to the total
outstanding Loan and Letter of Credit Exposure owing to all Lenders.
1.120. "Performing Lender" is defined in Section 10.4.4.
1.121. "Person" means any present or future natural person or any
corporation, association, partnership, joint venture, limited liability, joint
stock or other company, business trust, trust, organization, business or
government or any governmental agency or political subdivision thereof.
1.122. "PIK Interest" means any accrued interest payments on Financing
Debt that are postponed or made through the issuance of "payment-in-kind" notes
or other similar
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securities (including book-entry accrual with respect to such postponed interest
payments), all in accordance with the terms of such Financing Debt; provided,
however, that in no event shall PIK Interest include payments made with cash or
Cash Equivalents.
1.123. "Plan" means any pension benefit plan subject to Title IV of ERISA
maintained, or to which contributions have been made or are required to be made,
by any ERISA Group Person within six years prior to the date hereof.
1.124. "Prior Credit Agreement" means the Loan and Security Agreement
dated October 14, 1994 between Heartland and The Provident Bank.
1.125. "RCRA" means the federal Resource Conservation and Recovery Act,
42 U.S.C. ss. 690, et seq.
1.126. "Register" is defined in Section 11.1.3.
1.127. "Related Fund" means, with respect to any Lender that is a fund
that invests in senior bank loans, any other fund that invests in senior bank
loans and is managed by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.
1.128. "Replacement Lender" is defined in Section 11.3.
1.129. "Required Lenders" means, with respect to any approval, consent,
modification, waiver or other action to be taken by the Agent or the Lenders
under the Credit Documents which require action by the Required Lenders, such
Lenders as own at least a majority of the Percentage Interests; provided,
however, that with respect to any matters referred to in the proviso to Section
10.6, Required Lenders means such Lenders as own at least the respective
portions of the Percentage Interests required by Section 10.6.
1.130. "Revolving Loan" is defined in Section 2.1.4.
1.131. "Revolving Notes" is defined in Section 2.1.4.
1.132. "S&P" means Standard & Poor's Ratings Group, a division of The
McGraw Hill Companies, Inc.
1.133. "Securities Act" means the federal Securities Act of 1933.
1.134. "Securities Purchase Agreements" means those certain Securities
Purchase Agreements dated March 13, 1997 among the Holding Company, the Borrower
and each of Massachusetts Mutual Life Insurance Company, MassMutual Corporate
Investors, MassMutual Participation Investors and MassMutual Corporate Value
Partners Limited, as previously
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furnished to the Lenders and as amended, modified and supplemented from time to
time in accordance with Section 6.2.4.
1.135. "Seller Subordinated Debt" means, collectively, (a) the Borrower's
$2,000,000 10% Subordinated Note due 2005 payable to the Game Time Sellers and
(b) the Borrower's $500,000 10% Subordinated Promissory Notes due 2004 payable
to the Heartland Sellers.
1.136. "Senior Subordinated Notes" means the Borrower's $12,500,000 12%
Senior Subordinated Notes due 2005 issued pursuant to the Securities Purchase
Agreements.
1.137. "Subsidiary" means any Person of which the Holding Company (or
other specified Person) shall at the time, directly or indirectly through one or
more of its Subsidiaries, (a) own at least 50% of the outstanding capital stock
(or other shares of beneficial interest) entitled to vote generally, (b) hold at
least 50% of the partnership, joint venture or similar interests or (c) be a
general partner or joint venturer; provided, however, that "Subsidiary" shall
not include any Unrestricted Affiliate regardless of the ownership thereof by
the Holding Company.
1.138. "Swing-N-Slide Division" means the operating divisions and
Subsidiaries of the Borrower other than the Game Time Division.
1.139. "Tax" means any present or future tax, levy, duty, impost,
deduction, withholding or other charges of whatever nature at any time required
by any Legal Requirement (a) to be paid by any Lender or (b) to be withheld or
deducted from any payment otherwise required hereby to be made to any Lender, in
each case on or with respect to its obligations hereunder, the Loan, any payment
in respect of the Credit Obligations or any Funding Liability not included in
the foregoing; provided, however, that the term "Tax" shall not include taxes
imposed upon or measured by the net income of such Lender (other than
withholding taxes) or franchise taxes.
1.140. "Term Loan A" is defined in Section 2.2.1.
1.141. "Term Loan A1" is defined in Section 2.2.1.
1.142. "Term Loan A2" is defined in Section 2.2.1.
1.143. "Term Loan A Note" is defined in Section 2.2.2.
1.144. "Term Loan B" is defined in Section 2.3.1.
1.145. "Term Loan B1" is defined in Section 2.3.1.
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1.146. "Term Loan B2" is defined in Section 2.3.1.
1.147. "Term Loan B Note" is defined in Section 2.3.2.
1.148. "Term Loans" means Term Loan A and Term Loan B, collectively.
1.149. "Term Notes" means the Term Loan A Notes and the Term Loan B
Notes, collectively.
1.150. "Uniform Customs and Practice" is defined in Section 2.4.7.
1.151. "United States Funds" means such coin or currency of the United
States of America as at the time shall be legal tender therein for the payment
of public and private debts.
1.152. "Unrestricted Affiliate" means a Person acquired by the Holding
Company in accordance with Section 6.9.7 and which is designated in writing by
the Holding Company to the Agent as an "Unrestricted Affiliate".
1.153. "Wholly Owned Subsidiary" means any Subsidiary of which all of the
outstanding capital stock (or other shares of beneficial interest) entitled to
vote generally (other than directors' qualifying shares) is owned by the Holding
Company (or other specified Person) directly, or indirectly through one or more
Wholly Owned Subsidiaries.
2. The Credits.
2.1. Revolving Credit.
2.1.1. Revolving Loan. Subject to all the terms and conditions of
this Agreement and so long as no Default exists, from time to time on and
after the Initial Closing Date and prior to the Final Revolving Maturity
Date the Lenders will, severally in accordance with their respective
Commitments in the Revolving Loan, make loans to the Borrower in such
amounts as may be requested by the Borrower in accordance with Section
2.1.3. The sum of the aggregate principal amount of loans made under this
Section 2.1.1 at any one time outstanding plus the Letter of Credit
Exposure shall in no event exceed the lesser of (a) the Maximum Amount of
Revolving Credit or (b) the Borrowing Base. In no event will the
principal amount of loans at any one time outstanding made by any Lender
pursuant to this Section 2.1, together with such ▇▇▇▇▇▇'s Percentage
Interest in the Letter of Credit Exposure, exceed such ▇▇▇▇▇▇'s
Commitment with respect to the Revolving Loan.
2.1.2. Maximum Amount of Revolving Credit. The term "Maximum
Amount of Revolving Credit" means (a) (i) $28,000,000 minus (ii) Net
Asset Sale Proceeds described in Section 4.3.3 and Net Debt Proceeds
described in Section 4.3.4,
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in each case to the extent allocable to the Revolving Loan in accordance
with Section 4.6.2, or (b) the amount (in an integral multiple of
$500,000) to which the then applicable amount set forth in clause (a)(i)
above shall have been irrevocably reduced from time to time by notice
from the Borrower to the Agent.
2.1.3. Borrowing Requests. The Borrower may from time to time
request a loan under Section 2.1.1 by providing to the Agent a notice
(which may be given by a telephone call received by a Lending Officer if
promptly confirmed in writing). Such notice must be not later than noon
(Boston time) on the first Banking Day (third Banking Day if any portion
of such loan will be subject to a LIBOR Pricing Option on the requested
Closing Date) prior to the requested Closing Date for such loan. The
notice must specify (a) the amount of the requested loan (which shall be
not less than $50,000 and an integral multiple of $50,000) and (b) the
requested Closing Date therefor (which shall be a Banking Day). Upon
receipt of such notice, the Agent will promptly inform each other Lender
(by telephone or otherwise). Each such loan will be made at the Boston
Office by depositing the amount thereof to the general account of the
Borrower with the Agent. In connection with each such loan, the Borrower
shall furnish to the Agent a certificate in substantially the form of
Exhibit 5.2.1.
2.1.4. Revolving Notes. The aggregate principal amount of the
loans outstanding from time to time under this Section 2.1 is referred to
as the "Revolving Loan". The Agent shall keep a record of the Revolving
Loan as part of the Register. The Revolving Loan shall be deemed owed to
each Lender having a Commitment therein severally in accordance with such
Lender's Percentage Interest therein, and all payments thereon shall be
for the account of each Lender in accordance with its Percentage Interest
therein. The Borrower's obligations to pay each Lender's Percentage
Interest in the Revolving Loan shall be evidenced by a separate note of
the Borrower in substantially the form of Exhibit 2.1.4 (the "Revolving
Notes"), payable to each Lender in accordance with such Lender's
Percentage Interest in the Revolving Loan.
2.2. Term Loan A.
2.2.1. Term Loan A. Subject to all the terms and conditions of
this Agreement and so long as no Default exists, on the Initial Closing
Date the Lenders will, in accordance with their respective Percentage
Interests in Term Loan A, severally lend to the Borrower as a term loan
$38,000,000, including $32,500,000 in principal amount previously
outstanding ("Term Loan A1") and $5,500,000 in principal amount as an
incremental advance on the Initial Closing Date ("Term Loan A2"). The
aggregate principal amount of the loans made pursuant to this Section
2.2.1 at any one time outstanding, including both Term Loan A1 and Term
Loan A2, is referred to as "Term Loan A". In connection with Term Loan A,
the Borrower shall furnish to the Agent a certificate in substantially
the form of Exhibit 5.2.1.
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2.2.2. Term Loan A Notes. Term Loan A shall be made at the Boston
Office by crediting the amount of such loan to the general account of the
Borrower with the Agent against delivery to the Agent of the separate
term notes of the Borrower (the "Term Loan A Notes") payable to the
respective Lenders, and marked to indicate whether such notes evidence
Term Loan A1 or Term Loan A2. The Term Loan A Notes issued to each Lender
shall be in an aggregate principal amount equal to such Lender's
Percentage Interest in Term Loan A, and shall be in substantially the
form of Exhibit 2.2.2. The Agent shall keep a record of Term Loan A1 and
Term Loan A2 as part of the Register.
2.3. Term Loan B.
2.3.1. Term Loan B. Subject to all the terms and conditions of
this Agreement and so long as no Default exists, on the Initial Closing
Date the Lenders will, in accordance with their respective Percentage
Interests in Term Loan B, severally lend to the Borrower as a term loan
$9,000,000, including $4,400,000 in principal amount previously
outstanding ("Term Loan B1") and $4,600,000 in principal amount as an
incremental advance on the Initial Closing Date ("Term Loan B2"). The
aggregate principal amount of the loans made pursuant to this Section
2.3.1 at any one time outstanding, including both Term Loan B1 and Term
Loan B2, is referred to as "Term Loan B". In connection with Term Loan B,
the Borrower shall furnish to the Agent a certificate in substantially
the form of Exhibit 5.2.1.
2.3.2. Term Loan B Notes. Term Loan B shall be made at the Boston
Office by crediting the amount of such loan to the general account of the
Borrower with the Agent against delivery to the Agent of the separate
term notes of the Borrower (the "Term Loan B Notes") payable to the
respective Lenders, and marked to indicate whether such notes evidence
Term Loan B1 or Term Loan B2. The Term Loan B Notes issued to each Lender
shall be in an aggregate principal amount equal to such Lender's
Percentage Interest in Term Loan B, and shall be in substantially the
form of Exhibit 2.3.2. The Agent shall keep a record of Term Loan B1 and
Term Loan B2 as part of the Register.
2.4. Letters of Credit.
2.4.1. Issuance of Letters of Credit. Subject to all the terms and
conditions of this Agreement and so long as no Default exists, from time
to time on and after the Initial Closing Date and prior to the Final
Revolving Maturity Date, the Letter of Credit Issuer will issue for the
account of the Borrower one or more irrevocable documentary or standby
letters of credit (the "Letters of Credit"). Letter of Credit Exposure
plus the Revolving Loan shall in no event exceed the lesser of (a) the
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Maximum Amount of Revolving Credit or (b) the Borrowing Base. Letter of
Credit Exposure shall in no event exceed $1,000,000.
2.4.2. Requests for Letters of Credit. The Borrower may from time
to time request a Letter of Credit to be issued by providing to the
Letter of Credit Issuer (and the Agent if the Letter of Credit Issuer is
not the Agent) a notice which is actually received not less than five
Banking Days prior to the requested Closing Date for such Letter of
Credit specifying (a) the amount of the requested Letter of Credit, (b)
the beneficiary thereof, (c) the requested Closing Date and (d) the
principal terms of the text for such Letter of Credit. Each Letter of
Credit will be issued by forwarding it to the Borrower or to such other
Person as directed in writing by the Borrower. In connection with the
issuance of any Letter of Credit, the Borrower shall furnish to the
Letter of Credit Issuer (and the Agent if the Letter of Credit Issuer is
not the Agent) a certificate in substantially the form of Exhibit 5.2.1
and any customary application forms required by the Letter of Credit
Issuer. In the event of any inconsistency between such application forms
and this Agreement, this Agreement shall govern.
2.4.3. Form and Expiration of Letters of Credit. Each Letter of
Credit issued under this Section 2.4 and each draft accepted or paid
under such a Letter of Credit shall be issued, accepted or paid, as the
case may be, by the Letter of Credit Issuer at its principal office. No
Letter of Credit shall provide for the payment of drafts drawn
thereunder, and no draft shall be payable, at a date which is later than
the earlier of (a) the date 12 months after the date of issuance or (b)
the Final Revolving Maturity Date. Each Letter of Credit and each draft
accepted under a Letter of Credit shall be in such form and minimum
amount, and shall contain such terms, as the Letter of Credit Issuer and
the Borrower may agree upon at the time such Letter of Credit is issued,
including a requirement of not less than three Banking Days after
presentation of a draft before payment must be made thereunder.
2.4.4. Lenders' Participation in Letters of Credit. Upon the
issuance of any Letter of Credit, a participation therein, in an amount
equal to each Lender's Percentage Interest in the Revolving Loan, shall
automatically be deemed granted by the Letter of Credit Issuer to each
such Lender on the date of such issuance and such Lenders shall
automatically be obligated, as set forth in Section 10.4, to reimburse
the Letter of Credit Issuer to the extent of their respective Percentage
Interests in the Revolving Loan for all obligations incurred by the
Letter of Credit Issuer to third parties in respect of such Letter of
Credit not reimbursed by the Borrower. The Letter of Credit Issuer will
send to each Lender (and the Agent if the Letter of Credit Issuer is not
the Agent) a confirmation regarding the participations in Letters of
Credit outstanding during such month.
2.4.5. Presentation. The Letter of Credit Issuer may accept or pay
any draft presented to it, regardless of when drawn and whether or not
negotiated, if such draft,
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the other required documents and any transmittal advice are presented to
the Letter of Credit Issuer and dated on or before the expiration date of
the Letter of Credit under which such draft is drawn. Except insofar as a
particular Letter of Credit contains express, contrary instructions, the
Letter of Credit Issuer may honor as complying with the terms of any
Letter of Credit and with this Agreement any drafts or other documents
otherwise in order signed or issued by an administrator, executor,
conservator, trustee in bankruptcy, debtor in possession, assignee for
benefit of creditors, liquidator, receiver or other legal representative
of the party authorized under such Letter of Credit to draw or issue such
drafts or other documents.
2.4.6. Payment of Drafts. At such time as a Letter of Credit
Issuer makes any payment on a draft presented or accepted under a Letter
of Credit, the Borrower will on demand pay to the Agent in immediately
available funds the amount of such payment. Unless the Borrower shall
otherwise pay to the Agent the amount required by the foregoing sentence,
such amount shall be considered a loan under Section 2.1.1 and part of
the Revolving Loan as if the Borrower had paid in full the amount
required with respect to the Letter of Credit by borrowing such amount
under Section 2.1.1 to the extent such amount does not cause the
Revolving Loan to exceed the Maximum Amount of Revolving Credit.
2.4.7. Uniform Customs and Practice. The most recent version of
the Uniform Customs and Practice for Documentary Credits approved by a
Congress of the International Chamber of Commerce and adhered to by the
Letter of Credit Issuer (the "Uniform Customs and Practice"), shall be
binding on the Borrower and the Letter of Credit Issuer except to the
extent otherwise provided herein, in any Letter of Credit or in any other
Credit Document. Anything in the Uniform Customs and Practice to the
contrary notwithstanding:
(a) Neither the Borrower nor any beneficiary of any Letter of
Credit shall be deemed an agent of any Letter of Credit Issuer.
(b) With respect to each Letter of Credit, neither the Letter of
Credit Issuer nor its correspondents shall be responsible for or shall
have any duty to ascertain (unless the Letter of Credit Issuer or such
correspondent is grossly negligent or willful in failing so to
ascertain):
(i) the genuineness of any signature;
(ii) the validity, form, sufficiency, accuracy, genuineness
or legal effect of any endorsements;
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(iii) delay in giving, or failure to give, notice of
arrival, notice of refusal of documents or of discrepancies in
respect of which any Letter of Credit Issuer refuses the documents
or any other notice, demand or protest;
(iv) the performance by any beneficiary under any Letter of
Credit of such beneficiary's obligations to the Borrower;
(v) inaccuracy in any notice received by the Letter of
Credit Issuer;
(vi) the validity, form, sufficiency, accuracy, genuineness
or legal effect of any instrument, draft, certificate or other
document required by such Letter of Credit to be presented before
payment of a draft if such instrument, draft, certificate or other
document appears on its face to comply with the requirements of
the Letter of Credit, or the office held by or the authority of
any Person signing any of the same; or
(vii) failure of any instrument to bear any reference or
adequate reference to such Letter of Credit, or failure of any
Person to note the amount of any instrument on the reverse of such
Letter of Credit or to surrender such Letter of Credit or to
forward documents in the manner required by such Letter of Credit.
(c) The occurrence of any of the events referred to in the Uniform
Customs and Practice or in the preceding clauses of this Section 2.4.7
shall not affect or prevent the vesting of any of the Letter of Credit
Issuer's rights or powers hereunder or the Borrower's obligation to make
reimbursement of amounts paid under any Letter of Credit or any draft
accepted thereunder.
(d) The Borrower will promptly examine (i) each Letter of Credit
(and any amendments thereof) sent to it by the Letter of Credit Issuer
and (ii) all instruments and documents delivered to it from time to time
by the Letter of Credit Issuer. The Borrower will notify the Letter of
Credit Issuer of any claim of noncompliance by notice actually received
within three Banking Days after receipt of any of the foregoing
documents, the Borrower being conclusively deemed to have waived any such
claim against such Letter of Credit Issuer and its correspondents unless
such notice is given. The Letter of Credit Issuer shall have no
obligation or responsibility to send any such Letter of Credit or any
such instrument or document to the Borrower.
(e) In the event of any conflict between the provisions of this
Agreement and the Uniform Customs and Practice, the provisions of this
Agreement shall govern.
2.4.8. Subrogation. Upon any payment by a Letter of Credit Issuer
under any Letter of Credit and until the reimbursement of such Letter of
Credit Issuer by the
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Borrower with respect to such payment, the Letter of Credit Issuer shall
be entitled to be subrogated to, and to acquire and retain, the rights
which the Person to whom such payment is made may have against the
Borrower, all for the benefit of the Lenders. The Borrower will take such
action as the Letter of Credit Issuer may reasonably request, including
requiring the beneficiary of any Letter of Credit to execute such
documents as the Letter of Credit Issuer may reasonably request, to
assure and confirm to the Letter of Credit Issuer such subrogation and
such rights, including the rights, if any, of the beneficiary to whom
such payment is made in accounts receivable, inventory and other
properties and assets of any Obligor.
2.4.9. Modification, Consent, etc. If the Borrower requests or
consents in writing to any modification or extension of any Letter of
Credit, or waives any failure of any draft, certificate or other document
to comply with the terms of such Letter of Credit, and if the Letter of
Credit Issuer consents thereto, the Letter of Credit Issuer shall be
entitled to rely on such request, consent or waiver. This Agreement shall
be binding upon the Borrower with respect to such Letter of Credit as so
modified or extended, and with respect to any action taken or omitted by
such Letter of Credit Issuer pursuant to any such request, consent or
waiver.
2.5. Application of Proceeds.
2.5.1. Revolving Loan. Subject to Section 2.5.4, the Borrower will
apply the proceeds of the Revolving Loan for working capital and other
lawful corporate purposes of the Holding Company and its Subsidiaries.
2.5.2. Term Loans. The Borrower will apply the proceeds of the
Term Loans to fund the Acquisition, to fund Capital Expenditures, to
refinance existing term debt and to pay fees and expenses related to the
foregoing.
2.5.3. Letters of Credit. Letters of Credit shall be issued only
for such lawful corporate purposes as the Borrower has requested in
writing and to which the Letter of Credit Issuer agrees.
2.5.4. Specifically Prohibited Applications. The Borrower will
not, directly or indirectly, apply any part of the proceeds of any
extension of credit made pursuant to the Credit Documents to purchase or
to carry Margin Stock or to any transaction prohibited by Legal
Requirements applicable to the Lenders or by the Credit Documents.
2.6. Nature of Obligations of Lenders to Make Extensions of Credit. The
Lenders' obligations to extend credit under this Agreement are several and are
not joint or joint and several. If on any Closing Date any Lender shall fail to
perform its obligations under this Agreement, the aggregate amount of
Commitments to make the extensions of credit under this
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Agreement shall be reduced by the amount of unborrowed Commitment of the Lender
so failing to perform and the Percentage Interests shall be appropriately
adjusted. Lenders that have not failed to perform their obligations to make the
extensions of credit contemplated by Section 2 may, if any such Lender so
desires, assume, in such proportions as such Lenders may agree, the obligations
of any Lender who has so failed and the Percentage Interests shall be
appropriately adjusted. The provisions of this Section 2.6 shall not affect the
rights of the Borrower against any Lender failing to perform its obligations
hereunder.
3. Interest; LIBOR Pricing Options; Fees.
3.1. Interest. The Loan shall accrue and bear interest at a rate per
annum which shall at all times equal the Applicable Rate. Prior to any stated or
accelerated maturity of the Loan, the Borrower will, on each Payment Date, pay
the accrued and unpaid interest on the portion of the Loan which was not subject
to a LIBOR Pricing Option. On the last day of each LIBOR Interest Period or on
any earlier termination of any LIBOR Pricing Option, the Borrower will pay the
accrued and unpaid interest on the portion of the Loan which was subject to the
LIBOR Pricing Option which expired or terminated on such date. In the case of
any LIBOR Interest Period longer than three months, the Borrower will also pay
the accrued and unpaid interest on the portion of the Loan subject to the LIBOR
Pricing Option having such LIBOR Interest Period at three-month intervals, the
first such payment to be made on the last Banking Day of the three-month period
which begins on the first day of such LIBOR Interest Period. On the stated or
any accelerated maturity of the Loan, the Borrower will pay all accrued and
unpaid interest on the Loan, including any accrued and unpaid interest on any
portion of the Loan which is subject to a LIBOR Pricing Option. Upon the
occurrence and during the continuance of an Event of Default, the Lenders may
require accrued interest to be payable on demand or at regular intervals more
frequent than each Payment Date. All payments of interest hereunder shall be
made to the Agent for the account of each Lender in accordance with such
▇▇▇▇▇▇'s Percentage Interest.
3.2. LIBOR Pricing Options.
3.2.1. Election of LIBOR Pricing Options. Subject to all of the
terms and conditions hereof and so long as no Default exists, the
Borrower may from time to time, by irrevocable notice to the Agent
actually received not less than three Banking Days prior to the
commencement of the LIBOR Interest Period selected in such notice, elect
to have such portion of the Loan as the Borrower may specify in such
notice accrue and bear interest during the LIBOR Interest Period so
selected at the Applicable Rate computed on the basis of the LIBOR Rate.
In the event the Borrower at any time fails to elect a LIBOR Pricing
Option under this Section 3.2.1 for any portion of the Loan (upon
termination of a LIBOR Pricing Option or otherwise), then such portion of
the Loan will accrue and bear interest at the Applicable Rate based on
the Base Rate. No election of a LIBOR Pricing Option shall become
effective:
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(a) if, prior to the commencement of any such LIBOR Interest
Period, the Agent determines that (i) the electing or granting of the
LIBOR Pricing Option in question would violate a Legal Requirement,
whether or not having the force of law so long as compliance therewith is
customary commercial practice, (ii) Eurodollar deposits in an amount
comparable to the principal amount of the Loan as to which such LIBOR
Pricing Option has been elected and which have a term corresponding to
the proposed LIBOR Interest Period are not readily available in the
London inter-bank Eurodollar market, or (iii) by reason of circumstances
affecting the London inter-bank Eurodollar market, adequate and
reasonable methods do not exist for ascertaining the interest rate
applicable to such deposits for the proposed LIBOR Interest Period; or
(b) if the Required Lenders shall have advised the Agent by
telephone or otherwise at or prior to noon (Boston time) on the second
Banking Day prior to the commencement of such proposed LIBOR Interest
Period (and shall have subsequently confirmed in writing) that, after
reasonable efforts to determine the availability of Eurodollar deposits,
the Required Lenders reasonably anticipate that Eurodollar deposits in an
amount equal to the Percentage Interest of the Required Lenders in the
portion of the Loan as to which such LIBOR Pricing Option has been
elected and which have a term corresponding to the LIBOR Interest Period
in question will not be offered in the Eurodollar market to the Required
Lenders at a rate of interest that does not exceed the anticipated LIBOR
Basic Rate.
3.2.2. Notice to Lenders and Borrower. The Agent will promptly
inform each Lender (by telephone or otherwise) of each notice received by
it from the Borrower pursuant to Section 3.2.1 and of the LIBOR Interest
Period specified in such notice. Upon determination by the Agent of the
LIBOR Rate for such LIBOR Interest Period or in the event such election
shall not become effective, the Agent will promptly notify the Borrower
and each Lender (by telephone or otherwise) of the LIBOR Rate so
determined or why such election did not become effective, as the case may
be.
3.2.3. Selection of LIBOR Interest Periods. LIBOR Interest Periods
shall be selected so that:
(a) the minimum portion of the Loan subject to any LIBOR Pricing
Option shall be $1,000,000 and an integral multiple of $500,000;
(b) no more than 10 LIBOR Pricing Options shall be outstanding at
any one time;
(c) a portion of each of Term Loan A and Term Loan B equal to or
greater than the amount of the next mandatory prepayment required by
Section 4.2 shall not be subject to a LIBOR Pricing Option on the date
such mandatory prepayment is required to be made; and
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(d) no LIBOR Interest Period with respect to any portion of the
Loan shall expire later than the Applicable Maturity Date for such
portion of the Loan.
3.2.4. Additional Interest. If any portion of the Loan subject to
a LIBOR Pricing Option is repaid, or any LIBOR Pricing Option is
terminated for any reason (including acceleration of maturity), on a date
which is prior to the last Banking Day of the LIBOR Interest Period
applicable to such LIBOR Pricing Option, the Borrower will pay to the
Agent for the account of each Lender in accordance with such Lender's
Percentage Interest, in addition to any amounts of interest otherwise
payable hereunder, an amount equal to the present value (calculated in
accordance with this Section 3.2.4) of interest for the unexpired portion
of such LIBOR Interest Period on the portion of the Loan so repaid, or as
to which a LIBOR Pricing Option was so terminated, at a per annum rate
equal to the excess, if any, of (a) the rate applicable to such LIBOR
Pricing Option minus (b) the rate of interest obtainable by the Agent
upon the purchase of debt securities customarily issued by the Treasury
of the United States of America which have a maturity date approximating
the last Banking Day of such LIBOR Interest Period. The present value of
such additional interest shall be calculated by discounting the amount of
such interest for each day in the unexpired portion of such LIBOR
Interest Period from such day to the date of such repayment or
termination at a per annum interest rate equal to the interest rate
determined pursuant to clause (b) of the preceding sentence, and by
adding all such amounts for all such days during such period. The
determination by the Agent of such amount of interest shall, in the
absence of manifest error, be conclusive. For purposes of this Section
3.2.4, if any portion of the Loan which was to have been subject to a
LIBOR Pricing Option is not outstanding on the first day of the LIBOR
Interest Period applicable to such LIBOR Pricing Option other than for
reasons described in Section 3.2.1, the Borrower shall be deemed to have
terminated such LIBOR Pricing Option.
3.2.5. Violation of Legal Requirements. If any Legal Requirement
shall prevent any Lender from funding or maintaining through the purchase
of deposits in the London interbank Eurodollar market any portion of the
Loan subject to a LIBOR Pricing Option or otherwise from giving effect to
such Lender's obligations as contemplated by Section 3.2, (a) the Agent
may by notice to the Borrower terminate all of the affected LIBOR Pricing
Options, (b) the portion of the Loan subject to such terminated LIBOR
Pricing Options shall immediately bear interest thereafter at the
Applicable Rate computed on the basis of the Base Rate and (c) the
Borrower shall make any payment required by Section 3.2.4.
3.2.6. Funding Procedure. The Lenders may fund any portion of the
Loan subject to a LIBOR Pricing Option out of any funds available to the
Lenders. Regardless of the source of the funds actually used by any of
the Lenders to fund any portion of the Loan subject to a LIBOR Pricing
Option, however, all amounts payable
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hereunder, including the interest rate applicable to any such portion of
the Loan and the amounts payable under Sections 3.2.4 and 3.5, shall be
computed as if each Lender had actually funded such Lender's Percentage
Interest in such portion of the Loan through the purchase of deposits in
such amount of the type by which the LIBOR Basic Rate was determined with
a maturity the same as the applicable LIBOR Interest Period relating
thereto and through the transfer of such deposits from an office of the
Lender having the same location as the applicable LIBOR Office to one of
such ▇▇▇▇▇▇'s offices in the United States of America.
3.3. Commitment Fees. In consideration of the Lenders' commitments to
make the extensions of credit provided for in Section 2.1, while such
commitments are outstanding, the Borrower will pay to the Agent for the account
of the Lenders in accordance with the Lenders' respective Commitments in the
Revolving Loan, on each Payment Date, an amount equal to interest computed at
the rate of 0.50% per annum on the amount by which (a) the average daily Maximum
Amount of Revolving Credit during the month or portion thereof ending on such
Payment Date exceeded (b) the sum of (i) the average daily Revolving Loan during
such month or portion thereof plus (ii) the average daily Letter of Credit
Exposure during such month or portion thereof; provided, however, that the first
such payment shall be for the period beginning on the Initial Closing Date and
ending on the first Payment Date.
3.4. Letter of Credit Fees. The Borrower will pay to the Agent for the
account of each of the Lenders having a Percentage Interest in the Letters of
Credit, in accordance with the Lenders' respective Percentage Interests, on each
Payment Date occurring in March, June, September and December, a Letter of
Credit fee equal to interest at a rate per annum equal to the Applicable Margin
indicated for the LIBOR Rate on the average daily Letter of Credit Exposure
during the three-month period or portion thereof ending on such Payment Date.
The Borrower will pay to the Agent for the account of the Letter of Credit
Issuer, on each Payment Date occurring in March, June, September and December, a
fronting fee equal to interest at a rate per annum equal to 0.25% on the average
daily Letter of Credit Exposure during the three-month period or portion thereof
ending on such Payment Date. The Borrower will pay to the Letter of Credit
Issuer customary service charges and expenses for its services in connection
with the Letters of Credit at the times and in the amounts from time to time in
effect in accordance with its general rate structure, including fees and
expenses relating to issuance, amendment, negotiation, cancellation and similar
operations.
3.5. Changes in Circumstances; Yield Protection.
3.5.1. Reserve Requirements, etc. If any Legal Requirement
(whether or not having the force of law so long as compliance therewith
is customary commercial practice) shall (a) impose, modify, increase or
deem applicable any insurance assessment, reserve, special deposit or
similar requirement against any Funding Liability or the Letters of
Credit, (b) impose, modify, increase or deem applicable any other
requirement or condition with respect to any Funding Liability or the
Letters of
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Credit, or (c) change the basis of taxation of Funding Liabilities or
payments in respect of any Letter of Credit (other than changes in the
rate of taxes measured by the overall net income of such Lender) and the
effect of any of the foregoing shall be to increase the cost to any
Lender of issuing, making, funding or maintaining its respective
Percentage Interest in any portion of the Loan subject to a LIBOR Pricing
Option or any Letter of Credit, to reduce the amounts received or
receivable by such Lender under this Agreement or to require such Lender
to make any payment or forego any amounts otherwise payable to such
Lender under this Agreement (other than any Tax or any reserves that are
included in computing the LIBOR Reserve Rate), then such Lender may claim
compensation from the Borrower under Section 3.5.5.
3.5.2. Taxes. All payments of the Credit Obligations shall be made
without set-off or counterclaim and free and clear of any deductions,
including deductions for Taxes, unless the Borrower is required by law to
make such deductions. If (a) any Lender shall be subject to any Tax with
respect to any payment of the Credit Obligations or its obligations
hereunder or (b) the Borrower shall be required to withhold or deduct any
Tax on any payment on the Credit Obligations, then such Lender may claim
compensation from the Borrower under Section 3.5.5 to the extent such
Lender is then in compliance with any applicable requirements of Section
13. Whenever Taxes must be withheld by the Borrower with respect to any
payments of the Credit Obligations, the Borrower shall promptly furnish
to the Agent for the account of the applicable Lender official receipts
(to the extent that the relevant governmental authority delivers such
receipts) evidencing payment of any such Taxes so withheld. If the
Borrower fails to pay any such Taxes when due or fails to remit to the
Agent for the account of the applicable Lender the required receipts
evidencing payment of any such Taxes so withheld or deducted, the
Borrower shall indemnify the affected Lender for any incremental Taxes
and interest or penalties that may become payable by such Lender as a
result of any such failure. In the event any Lender receives a refund of
any Taxes for which it has received payment from the Borrower under this
Section 3.5.2, such Lender shall promptly pay the amount of such refund
to the Borrower, together with any interest thereon actually earned by
such ▇▇▇▇▇▇.
3.5.3. Capital Adequacy. If any Lender shall determine that
compliance by such Lender with any Legal Requirement (whether or not
having the force of law so long as compliance therewith is customary
commercial practice) regarding capital adequacy of banks or bank holding
companies has or would have the effect of reducing the rate of return on
the capital of such Lender and its Affiliates as a consequence of such
▇▇▇▇▇▇'s commitment to make the extensions of credit contemplated hereby,
or such Lender's maintenance of the extensions of credit contemplated
hereby, to a level below that which such Lender could have achieved but
for such compliance (taking into consideration the policies of such
Lender and its Affiliates with respect to capital adequacy immediately
before such compliance and assuming that the capital of such Lender and
its Affiliates was fully utilized prior to such compliance) by an amount
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deemed by such Lender to be material, then such Lender may claim
compensation from the Borrower under Section 3.5.5.
3.5.4. Regulatory Changes. If any Lender shall determine that (a)
any change in any Legal Requirement (including any new Legal Requirement)
(whether or not having the force of law so long as compliance therewith
is customary commercial practice) after the date hereof shall directly or
indirectly (i) reduce the amount of any sum received or receivable by
such Lender with respect to the Loan or the Letters of Credit or the
return to be earned by such Lender on the Loan or the Letters of Credit,
(ii) impose a cost on such Lender or any Affiliate of such Lender that is
attributable to the making or maintaining of, or such Lender's commitment
to make, its portion of the Loan or the Letters of Credit, or (iii)
require such Lender or any Affiliate of such Lender to make any payment
on, or calculated by reference to, the gross amount of any amount
received by such Lender under any Credit Document (other than Taxes or
income or franchise taxes), and (b) such reduction, increased cost or
payment shall not be fully compensated for by an adjustment in the
Applicable Rate or the Letter of Credit fees, then such Lender may claim
compensation from the Borrower under Section 3.5.5.
3.5.5. Compensation Claims. Within 15 days after the receipt by
the Borrower of a certificate from any Lender setting forth why it is
claiming compensation under this Section 3.5 and computations (in
reasonable detail) of the amount thereof, the Borrower shall pay to such
Lender such additional amounts as such Lender sets forth in such
certificate as sufficient fully to compensate it on account of the
foregoing provisions of this Section 3.5, together with interest on such
amount from the 15th day after receipt of such certificate until payment
in full thereof at the Overdue Reimbursement Rate. The determination by
such Lender of the amount to be paid to it and the basis for computation
thereof hereunder shall be conclusive so long as (a) the Lender acts in
good faith, (b) the Lender's determination does not contain any manifest
error and (c) the Lender used reasonable averaging and attribution
methods. The Borrower shall be entitled to replace any such Lender in
accordance with Section 11.3.
3.5.6. Mitigation. Each Lender shall take such commercially
reasonable steps as it may determine are not disadvantageous to it,
including changing lending offices to the extent feasible, in order to
reduce amounts otherwise payable by the Borrower to such Lender pursuant
to Sections 3.2.4 and 3.5 or to make LIBOR Pricing Options available
under Sections 3.2.1 and 3.2.5. In addition, the Borrower shall not be
responsible for costs (a) under Section 3.5 arising more than 90 days
prior to receipt by the Borrower of the certificate from the affected
Lender pursuant to such Section 3.5 or (b) under Section 3.2.4 arising
from the termination of LIBOR Pricing Options more than 90 days prior to
the demand by the Agent for payment under Section 3.2.4.
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3.6. Computations of Interest and Fees. For purposes of this Agreement,
interest, commitment fees and Letter of Credit fees (and any other amount
expressed as interest or such fees) shall be computed on the basis of a 360-day
year for actual days elapsed. If any payment required by this Agreement becomes
due on any day that is not a Banking Day, such payment shall, except as
otherwise provided in the LIBOR Interest Period, be made on the next succeeding
Banking Day. If the due date for any payment of principal is extended as a
result of the immediately preceding sentence, interest shall be payable for the
time during which payment is extended at the Applicable Rate.
4. Payment.
4.1. Payment at Maturity. On the Applicable Maturity Date or any
accelerated maturity of the Loan, the Borrower will pay to the Agent for the
account of the Lenders an amount equal to the portion of the Loan then due,
together with all accrued and unpaid interest and fees with respect thereto and
on the latest Applicable Maturity Date or any accelerated maturity of the Loan,
all other Credit Obligations then outstanding.
4.2. Scheduled Required Prepayments.
4.2.1. Term Loan A.
4.2.1.1. Term Loan A1. On each Payment Date set forth
below, the Borrower will pay to the Agent for the account of the
Lenders as a prepayment of Term Loan A1 the lesser of (a) the
amount set forth below for such date, adjusted to the extent
required by Section 4.6.2 or (b) the principal amount of Term Loan
A1 then outstanding.
Payment Date Amount
March 31, 1999 $ 406,250
June 30, 1999 $1,531,250
September 30, 1999 $1,531,250
December 31, 1999 $1,531,250
March 31, 2000 $ 700,000
June 30, 2000 $2,600,000
September 30, 2000 $2,600,000
December 31, 2000 $2,600,000
March 31, 2001 $ 800,000
June 30, 2001 $2,900,000
September 30, 2001 $2,900,000
December 31, 2001 $2,900,000
March 31, 2002 $ 800,000
June 30, 2002 $2,900,000
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September 30, 2002 $2,900,000
December 31, 2002 $2,900,000
4.2.1.1. Term Loan A2. On each Payment Date set forth
below, the Borrower will pay to the Agent for the account of the
Lenders as a prepayment of Term Loan A2 the lesser of (a) the
amount set forth below for such date, adjusted to the extent
required by Section 4.6.2 or (b) the principal amount of Term Loan
A2 then outstanding.
Payment Date Amount
March 31, 1999 $ 0
June 30, 1999 $ 0
September 30, 1999 $ 0
December 31, 1999 $ 0
March 31, 2000 $25,000
June 30, 2000 $75,000
September 30, 2000 $75,000
December 31, 2000 $75,000
March 31, 2001 $75,000
June 30, 2001 $475,000
September 30, 2001 $475,000
December 31, 2001 $475,000
March 31, 2002 $300,000
June 30, 2002 $1,150,000
September 30, 2002 $1,150,000
December 31, 2002 $1,150,000
4.2.2. Term Loan B.
4.2.2.1. Term Loan B1. On each Payment Date set forth
below, the Borrower will pay to the Agent, for the account of the
Lenders as a prepayment of Term Loan B1, the lesser of (a) the
amount set forth below for such date, adjusted to the extent
required by Section 4.6.2, and (b) the principal amount of Term
Loan B1 then outstanding.
Payment Date Amount
June 30, 1999 $33,333
September 30, 1999 $33,333
December 31, 1999 $33,334
June 30, 2000 $33,333
September 30, 2000 $33,333
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December 31, 2000 $33,334
June 30, 2001 $33,333
September 30, 2001 $33,333
December 31, 2001 $33,334
June 30, 2002 $33,333
September 30, 2002 $33,333
December 31, 2002 $33,334
June 30, 2003 $4,000,000
4.2.2.2. Term Loan B2. On each Payment Date set forth
below, the Borrower will pay to the Agent, for the account of the
Lenders as a prepayment of Term Loan B2, the lesser of (a) the
amount set forth below for such date, adjusted to the extent
required by Section 4.6.2, and (b) the principal amount of Term
Loan B2 then outstanding.
Payment Date Amount
June 30, 1999 $33,333
September 30, 1999 $33,333
December 31, 1999 $33,334
June 30, 2000 $33,333
September 30, 2000 $33,333
December 31, 2000 $33,334
June 30, 2001 $33,333
September 30, 2001 $33,333
December 31, 2001 $33,334
June 30, 2002 $33,333
September 30, 2002 $33,333
December 31, 2002 $33,334
June 30, 2003 $4,200,000
4.3. Contingent Required Prepayments.
4.3.1. Excess Credit Exposure. If at any time the Revolving Loan
exceeds the limits set forth in Section 2.1, the Borrower shall within
one Banking Day pay the amount of such excess to the Agent as a
prepayment of the Revolving Loan. If at any time the Letter of Credit
Exposure exceeds the limits set forth in Section 2.3, the Borrower shall
within one Banking Day pay the amount of such excess to the Agent to be
applied as provided in Section 4.5.
4.3.2. Excess Cash Flow. Within five Banking Days after the date
annual financial statements have been (or are required to have been)
furnished by the Holding Company to the Lenders in accordance with
Section 6.4.1, beginning with the annual
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financial statements for the year ending December 31, 1999, the Borrower
shall pay to the Agent as a prepayment of the Loans, to be applied as
provided in Section 4.6.2 in an amount equal to (a) 75% of Consolidated
Excess Cash Flow for its most recently completed fiscal year if
Consolidated Total Debt as of the end of such year exceeds or is equal to
350% Consolidated EBITDA for such year or (b) 50% of Consolidated Excess
Cash Flow for its most recently completed year if Consolidated Total Debt
as of the end of such year is less than 350% of Consolidated EBITDA for
such year.
4.3.3. Net Asset Sale Proceeds. Within five days prior to the sale
or other disposition of any assets by the Borrower or any of its
Subsidiaries that would result in Net Asset Sale Proceeds, the Borrower
shall provide written notice to the Lenders of the closing date for such
asset sale or disposition and the amount of the Net Asset Sale Proceeds.
Upon receipt by the Borrower or any of its Subsidiaries of Net Asset Sale
Proceeds, the Borrower shall within three Banking Days pay to the Agent
as a prepayment of the Loan, to be applied as provided in Section 4.6.2
the lesser of (a) the amount of such Net Asset Sale Proceeds or (b) the
amount of the Loan.
4.3.4. Net Debt Proceeds. Within five days prior to the incurrence
of Designated Financing Debt by the Holding Company or any of its
Subsidiaries, the Borrower shall provide written notice to the Lenders of
the closing date for such Designated Financing Debt and the amount of the
Net Debt Proceeds. Within three Banking Days after the incurrence of such
Designated Financing Debt, the Borrower shall pay to the Agent as a
prepayment of the Loan, to be applied as provided in Section 4.6.2 the
lesser of (a) the amount of such Net Debt Proceeds or (b) the amount of
the Loan; provided; however, that the Borrower shall be required to pay
only 75% of Net Debt Proceeds under this Section 4.3.4 as a result of the
issuance of additional Convertible Subordinated Debentures after the
Initial Closing Date.
4.3.5. Net Equity Proceeds. Within five days prior to the issuance
of any equity securities by the Holding Company or any of its
Subsidiaries that would result in Net Equity Proceeds, the Borrower shall
provide written notice to the Lenders of the closing date for such
issuance and the amount of the Net Equity Proceeds. Within three Banking
Days after the receipt by the Holding Company or any of its Subsidiaries
of Net Equity Proceeds, the Borrower shall pay to the Agent as a
prepayment of the Loan to be applied as provided in Section 4.6.2 the
lesser of (a) 75% of the amount of such Net Equity Proceeds or (b) the
amount of the Loan.
4.4. Voluntary Prepayments. In addition to the prepayments required by
Sections 4.2 and 4.3, the Borrower may from time to time prepay all or any
portion of the Loan (in a minimum amount of $50,000 and an integral multiple of
$50,000, or such lesser amount as is then outstanding), without premium or
penalty of any type (except as provided in Section 3.2.4 with respect to the
early termination of LIBOR Pricing Options). Voluntary Term Loan prepayments
must be allocated between Term Loan A and Term Loan B pro rata
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based on the relative outstanding principal amounts thereof, and shall be
applied pro rata to the remaining amortization installments pursuant to Section
4.2.1 or 4.2.2, as the case may be. The Borrower shall give the Agent at least
one Banking Day prior notice of its intention to prepay the Revolving Loan under
this Section 4.4, specifying the date of payment, the total amount of the
Revolving Loan to be paid on such date and the amount of interest to be paid
with such prepayment.
The Borrower shall give the Lenders at least five days prior notice of
its intention to prepay the Term Loans under this Section 4.4, specifying the
date of payment, the total amount of Term Loan A and Term Loan B to be paid on
such date and the amount of interest to be paid with such prepayment.
4.5. Letters of Credit. If on the Final Revolving Maturity Date or any
accelerated maturity of the Credit Obligations the Lenders shall be obligated in
respect of a Letter of Credit or a draft accepted under a Letter of Credit, the
Borrower will either:
(a) prepay such obligation by depositing with the Agent an amount
of cash, or
(b) deliver to the Agent a standby letter of credit (designating
the Agent as beneficiary and issued by a bank and on terms reasonably
acceptable to the Agent),
in each case in an amount equal to the portion of the then Letter of Credit
Exposure issued for the account of the Borrower. Any such cash so deposited and
the cash proceeds of any draw under any standby Letter of Credit so furnished,
including any interest thereon, shall be returned by the Agent to the Borrower
only when, and to the extent that, the amount of such cash held by the Agent
exceeds the Letter of Credit Exposure at such time and no Default then exists;
provided, however, that if an Event of Default occurs and the Credit Obligations
become or are declared immediately due and payable, the Agent may apply such
cash, including any interest thereon, to the payment of any of the Credit
Obligations as provided in section 3.5.6 of the Guarantee and Security
Agreement.
4.6. Reborrowing; Application of Payments, etc.
4.6.1. Reborrowing. The amounts of the Revolving Loan prepaid
pursuant to Section 4.4 may be reborrowed from time to time prior to the
Final Maturity Date in accordance with Section 2.1, subject to the limits
set forth therein. No portion of the Term Loans prepaid hereunder may be
reborrowed.
4.6.2. Order of Application. Any prepayment of the Loan pursuant
to Sections 4.3.2, 4.3.3, 4.3.4 or 4.3.5 shall be applied first to Term
Loan A and Term Loan B, with any balance to the Revolving Loan and, only
in the case of prepayments under Sections 4.3.3 (Net Asset Sale Proceeds)
and 4.3.4 (Net Debt Proceeds), to the permanent reduction of the
Revolving Loan Commitments whether or not any
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Revolving Loan is then outstanding. Prepayments of Term Loan A and Term
Loan B made pursuant to Sections 4.3.2, 4.3.3, 4.3.4, 4.3.5 or 4.4 shall
be applied pro rata to the remaining amortization installments pursuant
to Section 4.2.1 or 4.2.2, as the case may be, and shall be allocated
between Term Loan A and Term Loan B (and between Term Loan A1 and Term
Loan A2 and between Term Loan B1 and Term Loan B2) pro rata based on the
relative outstanding principal amounts thereof, except as provided below.
Any Lender who does not wish to receive a prepayment of Term Loan B under
Sections 4.3 or 4.4 must notify the Agent and the Borrower within two
Banking Days after receipt of notice of such proposed prepayment. If the
Borrower accepts such ▇▇▇▇▇▇'s election not to receive such prepayment of
Term Loan B, the portion of the Net Asset Sale Proceeds that would have
been applied to the repayment of the portion of Term Loan B held by such
Lender shall instead be applied to the repayment of Term Loan A. If the
Borrower does not accept such ▇▇▇▇▇▇'s election not to receive such
prepayment of Term Loan B, the Borrower shall promptly provide notice
thereof to such Lender and the Agent, and shall allocate such prepayments
between Term Loan A and Term Loan B pro rata based on the relative
outstanding principal amounts thereof. Subject to the foregoing, any
prepayment of the Loan shall be applied first to the portion of the Loan
not then subject to LIBOR Pricing Options, then the balance of any such
prepayment shall be applied to the portion of the Loan then subject to
LIBOR Pricing Options, in the chronological order of the respective
maturities thereof (or as the Borrower may otherwise specify in writing),
together with any payments required by Section 3.2.4.
4.6.3. Payment with Accrued Interest, etc. Upon all prepayments of
the Term Loans, the Borrower shall pay to the Agent the principal amount
to be prepaid, together with unpaid interest in respect thereof accrued
to the date of prepayment. Notice of prepayment having been given in
accordance with Section 4.4, and whether or not notice is given of
prepayments pursuant to Sections 4.2 and 4.3, the amount specified to be
prepaid shall become due and payable on the date specified for
prepayment.
4.6.4. Payments for Lenders. All payments of principal hereunder
shall be made to the Agent for the account of the Lenders in accordance
with the Lenders' respective Percentage Interests.
5. Conditions to Extending Credit.
5.1. Conditions on Initial Closing Date. The obligations of the Lenders
to make any extension of credit pursuant to Section 2 shall be subject to the
satisfaction, on or before the Initial Closing Date, of the conditions set forth
in this Section 5.1 as well as the further conditions in Section 5.2. If the
conditions set forth in this Section 5.1 are not met on or prior to the Initial
Closing Date, the Lenders shall have no obligation to make any extensions of
credit hereunder.
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5.1.1. Notes. The Borrower shall have duly executed and delivered
to the Agent a Revolving Note, Term Loan A Notes for each Lender having a
Percentage Interest in such portion of the Loan and Term Loan B Notes for
each Lender having a Percentage Interest in such portion of the Loan.
5.1.2. Payment of Fees. The Borrower shall have paid to the Agent
the fees contemplated by the separate agreement between the Agent and the
Holding Company dated on or prior to the date hereof.
5.1.3. Legal Opinions. On the Initial Closing Date, the Lenders
shall have received from the following counsel their respective opinions
with respect to the transactions contemplated by the Credit Documents,
which opinions shall be in form and substance reasonably satisfactory to
the Required Lenders:
(a) ▇▇▇▇▇ & ▇▇▇▇▇▇▇, special counsel for the Holding
Company and its Subsidiaries.
(b) Confirmation to the Lenders of the opinion of ▇▇▇▇▇▇
▇▇▇▇▇▇ Flattau & Klimpl, LLP, counsel to Heartland and the
Heartland Sellers, delivered under the Acquisition Agreement.
(c) Ropes & Gray, special counsel for the Agent.
The Holding Company authorizes and directs its special
counsel to furnish the foregoing opinion.
5.1.4. Guarantee and Security Agreement. Each of the Borrower and
its Subsidiaries, including Heartland, shall have duly authorized,
executed and delivered to the Agent a Guarantee and Security Agreement in
substantially the form of Exhibit 5.1.4 (the "Guarantee and Security
Agreement") (or a joinder thereto in form reasonably satisfactory to the
Agent), as well as the patent and trademark security agreements
contemplated therein.
5.1.5. Guarantee and Pledge Agreement. The Holding Company shall
have duly authorized, executed and delivered to the Agent a Guarantee and
Pledge Agreement in substantially the form of Exhibit 5.1.5 (the
"Guarantee and Pledge Agreement").
5.1.6. Real Estate Collateral. The Obligors shall have duly
authorized, executed, acknowledged and delivered to the Agent a mortgage
on each material real property owned by the Borrower and its Subsidiaries
and a leasehold mortgage on each material real property leased by the
Borrower and its Subsidiaries (other than Heartland, none of whose
leaseholds is material to the Borrower and its Subsidiaries
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taken as a whole), with a landlord's consent and waiver and any other
documents required to allow for the recording or filing of a leasehold
mortgage, in each case in form and substance reasonably satisfactory to
the Agent, together with, for each such real property: (a) title
insurance with such insurer, in such amount, in such form and with such
exceptions as are reasonably satisfactory to the Agent, (b) an
environmental site assessment report in such form, with such conclusions
and from such environmental engineering firm as are reasonably
satisfactory to the Agent, (c) a survey on each real property owned by
the Borrower and its Subsidiaries that is reasonably satisfactory to the
Agent and (d) a legal opinion of local counsel with respect to the
recording and enforceability of such mortgages and leasehold mortgages in
form and substance reasonably satisfactory to the Agent.
5.1.7. Perfection of Security. Each Obligor shall have duly
authorized, executed, acknowledged, delivered, filed, registered and
recorded such security agreements, notices, financing statements and
other instruments as the Agent may have reasonably requested in order to
perfect the Liens purported or required pursuant to the Credit Documents
to be created in the Credit Security and shall have paid all filing or
recording fees or taxes required to be paid in connection therewith,
including any recording, mortgage, documentary, transfer or intangible
taxes.
5.1.8. Acquisition. Other than as consented to by the Agent in
writing, with the consent of the Required Lenders if such consent is
material:
(a) The provisions of the Acquisition Agreement shall not
have been amended, modified, waived or terminated.
(b) All of the representations and warranties of the
Heartland Sellers set forth in the Acquisition Agreement shall be
complete and correct in all material respects on and as of the
Initial Closing Date with the same force and effect as though made
on and as of such date.
(c) All of the other conditions to the obligations of the
Borrower and its Subsidiaries set forth in the Acquisition
Agreement shall have been satisfied.
(d) Any material consent, authorization, order or approval
of any Person required in connection with the transactions
contemplated by the Acquisition Agreement shall have been obtained
and shall be in full force and effect.
(e) All of the items required to be delivered under the
Acquisition Agreement shall have been so delivered.
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(f) The merger of HI Acquisition Corp. into Heartland shall
have been consummated in accordance with the Acquisition Agreement
and Wisconsin and Delaware corporate law.
(g) Contemporaneously with the making by the Lenders of the
first extension of credit hereunder, the Holding Company shall
have furnished to the Lenders a certificate of a Financial Officer
to the effect that the closing has occurred under the Acquisition
Agreement and to the effect that each of the conditions set forth
in this Section 5.1.8 has been satisfied.
5.1.9. Capitalization, etc.
(a) On the Initial Closing Date, (i) the lesser of (A) the
Maximum Amount of Revolving Credit and (B) the Borrowing Base
shall exceed (ii) the Revolving Loan by at least $2,000,000.
(b) On the Initial Closing Date, the Seller Subordinated
Debt owing to the Heartland Sellers shall be funded on terms
reasonably satisfactory to the Lenders.
(c) After giving effect to the Acquisition and the
incurrence of the Seller Subordinated Debt, the Senior
Subordinated Notes and the Credit Obligations, the Holding Company
and its Subsidiaries, taken as a whole:
(i) will be solvent;
(ii) will have assets having a fair saleable value
in excess of the amount required to pay their probable
liability on their existing debts as such debts become
absolute and mature;
(iii) will have access to adequate capital for the
conduct of their business; and
(iv) will have the ability to pay their debts from
time to time incurred as such debts mature.
(d) The Holding Company shall have furnished to the Lenders
a certificate of a Financial Officer to such effect, together with
detailed computations verifying the items in clause (a) above and
calculations pursuant to Section 7.2.1(e) demonstrating compliance
with the Computation Covenants, in each case giving pro forma
effect to the Acquisition and the incurrence of the Credit
Obligations.
5.1.10. Termination of Prior Credit Agreement. Contemporaneously
with the initial advances hereunder, Heartland shall have paid in full
all principal, interest and
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other accrued and outstanding amounts under the Prior Credit Agreement,
all commitments to extend further credit under the Prior Credit Agreement
shall have been terminated, all Liens securing amounts owing under the
Prior Credit Agreement shall have been released and the Prior Credit
Agreement shall have become terminated and of no further force or effect
(except for indemnity provisions that by their terms survive the
termination of the Prior Credit Agreement).
5.1.11. Unaudited Annual Financial Statements. The Holding Company
shall have furnished to the Lenders the respective unaudited Consolidated
balance sheets for the Holding Company and its Subsidiaries and for
Heartland as of December 31, 1998 and the respective unaudited
Consolidated income statements for the year then ended, together with the
pro forma balance sheet and income statement for the Holding Company and
its Subsidiaries, including Heartland on a pro forma basis, for such date
and period, all in a form reasonably satisfactory to the Agent.
5.1.12. Insurance. The Agent shall have reviewed the insurance
policies of the Holding Company and its Subsidiaries, including
Heartland, and the results of such review shall be satisfactory to the
Agent.
5.1.13. Environmental Review. A third party environmental
engineering firm reasonably acceptable to the Agent shall have reviewed
an environmental due diligence report with respect to Heartland and the
results of such review shall be satisfactory to the Agent.
5.1.14. Modification of Securities Purchase Agreements. The
Securities Purchase Agreements shall have been modified to permit the
Acquisition and to make other conforming changes in form and substance
reasonably satisfactory to the Agent.
5.1.15. Proper Proceedings. This Agreement, each other Credit
Document and the transactions contemplated hereby and thereby shall have
been authorized by all necessary corporate or other proceedings. All
necessary consents, approvals and authorizations of any governmental or
administrative agency or any other Person of any of the transactions
contemplated hereby or by any other Credit Document shall have been
obtained and shall be in full force and effect.
5.1.16. General. All legal and corporate proceedings in connection
with the transactions contemplated by this Agreement shall be reasonably
satisfactory in form and substance to the Agent and the Agent shall have
received copies of all documents, including certified copies of the
Charter and By-Laws of the Holding Company and the other Obligors,
records of corporate proceedings, certificates as to signatures and
incumbency of officers and opinions of counsel, which the Agent may have
reasonably requested in connection therewith, such documents where
appropriate to be certified by proper corporate or governmental
authorities.
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5.2. Conditions to Each Extension of Credit. The obligations of the
Lenders to make any extension of credit pursuant to Section 2 shall be subject
to the satisfaction, on or before the Closing Date for such extension of credit,
of the following conditions:
5.2.1. Officer's Certificate. The representations and warranties
contained in Section 7 shall be true and correct on and as of such
Closing Date with the same force and effect as though made on and as of
such date (except as to any representation or warranty which refers to a
specific earlier date); no Default shall exist on such Closing Date prior
to or immediately after giving effect to the requested extension of
credit; no Material Adverse Change shall have occurred since December 31,
1997, and the Borrower shall have furnished to the Agent in connection
with the requested extension of credit a certificate to these effects, in
substantially the form of Exhibit 5.2.1, signed by a Financial Officer.
5.2.2. Legality, etc. The making of the requested extension of
credit shall not (a) subject any Lender to any penalty or special tax
(other than a Tax for which the Borrower is required to reimburse the
Lenders under Section 3.5), (b) be prohibited by any Legal Requirement or
(c) violate any credit restraint program of the executive branch of the
government of the United States of America, the Board of Governors of the
Federal Reserve System or any other governmental or administrative agency
so long as any Lender reasonably believes that compliance therewith is in
the best interests of such Lender.
6. General Covenants. Each of the Holding Company, the Borrower and the other
Guarantors covenants that, until all of the Credit Obligations shall have been
paid in full and until the Lenders' commitments to extend credit under this
Agreement and any other Credit Document shall have been irrevocably terminated,
the Holding Company and its Subsidiaries will comply with the following
provisions:
6.1. Taxes and Other Charges; Accounts Payable.
6.1.1. Taxes and Other Charges. Each of the Holding Company and
its Subsidiaries shall duly pay and discharge, or cause to be paid and
discharged, before the same becomes in arrears, all taxes, assessments
and other governmental charges imposed upon such Person and its
properties, sales or activities, or upon the income or profits therefrom,
as well as all claims for labor, materials or supplies which if unpaid
might by law become a Lien upon any of its property; provided, however,
that any such tax, assessment, charge or claim need not be paid if the
validity or amount thereof shall at the time be contested in good faith
by appropriate proceedings and if such Person shall, in accordance with
GAAP, have set aside on its books adequate reserves with respect thereto;
and provided, further, that each of the Holding Company and its
Subsidiaries shall pay or bond, or cause to be paid or bonded, all such
taxes,
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assessments, charges or other governmental claims immediately upon the
commencement of proceedings to foreclose any Lien which may have attached
as security therefor (except to the extent such proceedings have been
dismissed or stayed).
6.1.2. Accounts Payable. Each of the Holding Company and its
Subsidiaries shall promptly pay when due, or in conformity with customary
trade terms, all accounts payable incident to the operations of such
Person not referred to in Section 6.1.1; provided, however, that any such
accounts payable need not be paid if the validity or amount thereof shall
at the time be contested in good faith and if such Person shall, in
accordance with GAAP, have set aside on its books adequate reserves with
respect thereto.
6.2. Conduct of Business, etc.
6.2.1. Types of Business. The Holding Company and its Subsidiaries
shall not substantially engage in any business other than (a) children's
consumer and commercial indoor and outdoor play products, (b) new
products that utilize the Borrower's metal fabrication or plastic forming
core competencies, (c) yard barns, storage sheds, stand-alone garages and
weekender cabins or (d) substantially similar products to those
identified in clauses (a), (b) and (c) that may be sold through home
centers, mass merchants or commercial and industrial trade classes, and
other activities related thereto.
6.2.2. Maintenance of Properties. Each of the Holding Company and
its Subsidiaries:
(a) shall keep its properties in such repair, working order
and condition, and shall from time to time make such repairs,
replacements, additions and improvements thereto as are necessary
for the efficient operation of its businesses and shall comply at
all times in all material respects with all material franchises,
licenses and leases to which it is party so as to prevent any loss
or forfeiture thereof or thereunder, except where (i) compliance
is at the time being contested in good faith by appropriate
proceedings and (ii) failure to comply with the provisions being
contested has not resulted, and does not create a material risk of
resulting, in the aggregate in any Material Adverse Change; and
(b) shall do all things necessary to preserve, renew and
keep in full force and effect and in good standing its legal
existence and authority necessary to continue its business;
provided, however, that this Section 6.2.2(b) shall not prevent
the merger, consolidation or liquidation of Subsidiaries permitted
by Section 6.11.
6.2.3. Statutory Compliance. Each of the Holding Company and its
Subsidiaries shall comply in all material respects with all valid and
applicable statutes,
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laws, ordinances, zoning and building codes and other rules and
regulations of the United States of America, of the states and
territories thereof and their counties, municipalities and other
subdivisions and of any foreign country or other jurisdictions applicable
to such Person, except where (a) compliance therewith shall at the time
be contested in good faith by appropriate proceedings and (b) failure so
to comply with the provisions being contested has not resulted, and does
not create a material risk of resulting, in the aggregate in any Material
Adverse Change.
6.2.4. Compliance with Material Agreements. Each of the Holding
Company and its Subsidiaries shall comply in all material respects with
the Material Agreements (to the extent not in violation of the other
provisions of this Agreement or any other Credit Document). Without the
prior written consent of the Required Lenders, no Material Agreement
shall be amended, modified, waived or terminated in any manner that would
have in any material respect an adverse effect on the interests of the
Lenders.
6.3. Insurance.
6.3.1. Business Interruption Insurance. Each of the Holding
Company and its Subsidiaries shall maintain with financially sound and
reputable insurers insurance related to interruption of business, either
for loss of revenues or for extra expense, in the manner customary for
businesses of similar size engaged in similar activities.
6.3.2. Property Insurance. Each of the Holding Company and its
Subsidiaries shall keep its assets which are of an insurable character
insured by financially sound and reputable insurers against theft and
fraud and against loss or damage by fire, explosion and hazards insured
against by extended coverage to the extent, in amounts and with
deductibles at least as favorable as those generally maintained by
businesses of similar size engaged in similar activities.
6.3.3. Liability Insurance. Each of the Holding Company and its
Subsidiaries shall maintain with financially sound and reputable insurers
insurance against liability for hazards, risks and liability to persons
and property, including product liability insurance, to the extent, in
amounts and with deductibles at least as favorable as those maintained as
of the date hereof and as generally maintained by businesses of similar
size engaged in similar activities; provided, however, that it may effect
workers' compensation insurance or similar coverage with respect to
operations in any particular state or other jurisdiction through an
insurance fund operated by such state or jurisdiction or by meeting the
self-insurance requirements of such state or jurisdiction.
6.3.4. Flood Insurance. Each of the Holding Company and its
Subsidiaries shall at all times keep each parcel of real property owned
or leased by it which is (a) included in the Credit Security, (b) in an
area determined by the Director of the Federal
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Emergency Management Agency to be subject to special flood hazard and (c)
in a community participating in the National Flood Insurance Program,
insured against such special flood hazards in an amount equal to the
maximum limit of coverage available for the particular type of property
under the federal National Flood Insurance Act of 1968.
6.4. Financial Statements and Reports. Each of the Holding Company and
its Subsidiaries shall maintain a system of accounting in which correct entries
shall be made of all transactions in relation to their business and affairs in
accordance with generally accepted accounting practice. The fiscal year of the
Holding Company and its Subsidiaries shall end on December 31 in each year and
the fiscal quarters of the Holding Company and its Subsidiaries shall end on
March 31, June 30, September 30 and December 31 in each year.
6.4.1. Annual Reports. The Holding Company shall furnish to the
Lenders as soon as available, and in any event within 90 days after the
end of each fiscal year, the Consolidated and Consolidating balance
sheets of the Holding Company and its Subsidiaries and of the Borrower
and its Subsidiaries as at the end of such fiscal year, the Consolidated
and Consolidating statements of income and Consolidated statements of
changes in shareholders' equity and of cash flows of the Holding Company
and its Subsidiaries and of the Borrower and its Subsidiaries for such
fiscal year (all in reasonable detail) and together, in the case of
Consolidated financial statements, with comparative figures for the
immediately preceding fiscal year, all accompanied by:
(a) Reports of Ernst & Young LLP (or, if they cease to be auditors
of the Holding Company and its Subsidiaries, other independent certified
public accountants of recognized national standing reasonably
satisfactory to the Required Lenders), containing no material
qualification, to the effect that they have audited the foregoing
Consolidated financial statements in accordance with generally accepted
auditing standards and that such Consolidated financial statements
present fairly, in all material respects, the financial position of the
Holding Company and its Subsidiaries and of the Borrower and its
Subsidiaries covered thereby at the dates thereof and the results of
their operations for the periods covered thereby in conformity with GAAP.
(b) The statement of such accountants that they have caused this
Agreement to be reviewed and that in the course of their audit of the
Holding Company and its Subsidiaries no facts have come to their
attention that cause them to believe that any Default exists and in
particular that they have no knowledge of any Default under Sections 6.5
through 6.20 or, if such is not the case, specifying such Default and the
nature thereof. This statement is furnished by such accountants with the
understanding that the examination of such accountants cannot be relied
upon to give such accountants knowledge of any such Default except as it
relates to accounting or auditing matters within the scope of their
audit.
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(c) A certificate of the Holding Company signed by a Financial
Officer to the effect that such officer has caused this Agreement to be
reviewed and has no knowledge of any Default, or if such officer has such
knowledge, specifying such Default and the nature thereof, and what
action the Holding Company has taken, is taking or proposes to take with
respect thereto.
(d) Computations by the Holding Company comparing the financial
statements referred to above with the most recent budget for such fiscal
year furnished to the Lenders in accordance with Section 6.4.5.
(e) Computations by the Holding Company in substantially the form
of Exhibit 6.4 demonstrating, as of the end of such fiscal year,
compliance with the Computation Covenants, certified by a Financial
Officer.
(f) Calculations, as at the end of such fiscal year, of (i) the
Accumulated Benefit Obligations for each Plan covered by Title IV of
ERISA (other than Multiemployer Plans) and (ii) the fair market value of
the assets of such Plan allocable to such benefits.
(g) Supplements to Exhibits 7.1 and 7.3, exhibit 3.3 to the
Guarantee and Security Agreement and exhibit 3.2 to the Guarantee and
Pledge Agreement showing any changes in the information set forth in such
exhibits not previously furnished to the Lenders in writing, as well as
any changes in the Charter, Bylaws or incumbency of officers of the
Obligors from those previously certified to the Agent.
(h) In the event of a change in GAAP after December 31, 1997,
computations by the Holding Company, certified by a Financial Officer,
reconciling the financial statements referred to above with financial
statements prepared in accordance with GAAP as applied to the other
covenants in Section 6 and related definitions.
(i) In reasonable detail, management's discussion and analysis of
the results of operations and the financial condition of the Holding
Company and its Subsidiaries and the Borrower and its Subsidiaries as at
the end of and for the year covered by such financial statements.
6.4.2. Quarterly Reports. The Holding Company shall furnish to the
Lenders as soon as available and, in any event, within 45 days after the
end of each of the first three fiscal quarters of the Holding Company,
the internally prepared Consolidated and Consolidating balance sheets of
the Holding Company and its Subsidiaries and the Borrower and its
Subsidiaries as of the end of such fiscal quarter, the Consolidated and
Consolidating statements of income and Consolidated statements of changes
in shareholders' equity and of cash flows of the Holding Company and its
Subsidiaries and the Borrower and its Subsidiaries for such fiscal
quarter and for the portion of the fiscal
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year then ended (all in reasonable detail) and together, in the case of
Consolidated statements, with comparative figures for the same period in
the preceding fiscal year, all accompanied by:
(a) A certificate of the Holding Company signed by a Financial
Officer to the effect that such Consolidated financial statements have
been prepared in accordance with GAAP and present fairly, in all material
respects, the financial position of the Holding Company and its
Subsidiaries and the Borrower and its Subsidiaries covered thereby at the
dates thereof and the results of their operations for the periods covered
thereby, subject only to normal year-end audit adjustments and the
addition of footnotes.
(b) A certificate of the Holding Company signed by a Financial
Officer to the effect that such officer has caused this Agreement to be
reviewed and has no knowledge of any Default, or if such officer has such
knowledge, specifying such Default and the nature thereof and what action
the Holding Company has taken, is taking or proposes to take with respect
thereto.
(c) Computations by the Holding Company comparing the financial
statements referred to above with the most recent budget for the period
covered thereby furnished to the Lenders in accordance with Section
6.4.5.
(d) Computations by the Holding Company in substantially the form
of Exhibit 6.4 demonstrating, as of the end of such quarter, compliance
with the Computation Covenants, certified by a Financial Officer.
(e) Supplements to Exhibits 7.1 and 7.3, exhibit 3.3 to the
Guarantee and Security Agreement and exhibit 3.2 to the Guarantee and
Pledge Agreement showing any changes in the information set forth in such
exhibits not previously furnished to the Lenders in writing, as well as
any changes in the Charter, Bylaws or incumbency of officers of the
Obligors from those previously certified to the Agent.
(f) In the event of a change in GAAP after December 31, 1997,
computations by the Holding Company, certified by a Financial Officer,
reconciling the financial statements referred to above with financial
statements prepared in accordance with GAAP as applied to the other
covenants in Section 6 and related definitions.
(g) In reasonable detail, management's discussion and analysis of
the results of operations and financial condition of the Holding Company
and its Subsidiaries and the Borrower and its Subsidiaries as at the end
of and for the fiscal period covered by the financial statements referred
to above.
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6.4.3. Monthly Reports. The Borrower shall furnish to the Lenders
as soon as available and, in any event, within 25 days after the end of
each month, the internally prepared Consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such month and the
Consolidated statement of income of the Borrower and its Subsidiaries for
such month (all in reasonable detail), all accompanied by a certificate
of the Holding Company signed by a Financial Officer to the effect that
such financial statements were prepared in accordance with GAAP and
present fairly, in all material respects, the financial position of the
Persons covered thereby at the dates thereof and the results of their
operations for the periods covered thereby, subject only to normal
year-end audit adjustments and the addition of footnotes.
6.4.4. Borrowing Base Reports. The Borrower shall furnish to the
Lenders, as soon as available and, in any event (a) within 20 days after
the end of each month, or (b) within 10 days following any request by the
Agent if more frequently than monthly, but not more frequently than once
per week, a certificate of a Financial Officer supplying computations of
the Borrowing Base at the end of such month (or week, as the case may
be).
6.4.5. Other Reports. The Holding Company shall promptly furnish
to the Lenders:
(a) As soon as prepared and in any event before the beginning of
each fiscal year, an annual budget and operating projections for such
fiscal year of the Holding Company and its Subsidiaries, prepared in a
manner consistent with the manner in which the financial projections
described in Section 7.2.1 were prepared.
(b) Any material updates of such budget and projections.
(c) Any management letters furnished to the Holding Company or any
of its Subsidiaries by the Holding Company's auditors.
(d) All budgets, projections, statements of operations and other
reports furnished generally to the shareholders of the Holding Company.
(e) Such registration statements, proxy statements and reports,
including Forms S-1, S-2, S-3, S-4, 10-K, 10-Q and 8-K, as may be filed
by the Holding Company or any of its Subsidiaries with the Securities and
Exchange Commission.
(f) Any 90-day letter or 30-day letter from the federal Internal
Revenue Service (or the equivalent notice received from state or other
taxing authorities) asserting tax deficiencies against the Holding
Company or any of its Subsidiaries.
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6.4.6. Notice of Litigation, Defaults, etc. The Holding Company
shall promptly furnish to the Lenders notice of any litigation or any
administrative or arbitration proceeding (a) which creates a material
risk of resulting, after giving effect to any applicable insurance, in
the payment by the Holding Company and its Subsidiaries of more than
$750,000 or (b) which results, or creates a material risk of resulting,
in a Material Adverse Change. Promptly upon acquiring knowledge thereof,
the Holding Company shall notify the Lenders of the existence of any
Default or Material Adverse Change, specifying the nature thereof and
what action the Holding Company or any Subsidiary has taken, is taking or
proposes to take with respect thereto.
6.4.7. ERISA Reports. The Holding Company shall furnish to the
Lenders as soon as available the following items with respect to any
Plan:
(a) any request for a waiver of the funding standards or an
extension of the amortization period,
(b) any reportable event (as defined in section 4043 of ERISA),
unless the notice requirement with respect thereto has been waived by
regulation,
(c) any notice received by any ERISA Group Person that the PBGC
has instituted or intends to institute proceedings to terminate any Plan,
or that any Multiemployer Plan is insolvent or in reorganization,
(d) notice of the possibility of the termination of any Plan by
its administrator pursuant to section 4041 of ERISA, and
(e) notice of the intention of any ERISA Group Person to withdraw,
in whole or in part, from any Multiemployer Plan.
6.4.8. Other Information; Audit. From time to time at reasonable
intervals upon request of any authorized officer of any Lender, each of
the Holding Company and its Subsidiaries shall furnish to such Lender
such other information regarding the business, assets, financial
condition, income or prospects of the Holding Company and its
Subsidiaries as such officer may reasonably request, including copies of
all tax returns, licenses, agreements, leases and instruments to which
any of the Holding Company or its Subsidiaries is party. Each Lender's
authorized officers and representatives shall have the right during
normal business hours upon reasonable notice and at reasonable intervals
to examine the books and records of the Holding Company and its
Subsidiaries, to make copies and notes therefrom for the purpose of
ascertaining compliance with or obtaining enforcement of this Agreement
or any other Credit Document. The Agent, upon reasonable advance notice,
may undertake to have
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the Borrower and its Subsidiaries reviewed by the Agent's commercial
financial examiners and fixed asset appraisers.
6.5. Certain Financial Tests.
6.5.1. Consolidated Net Worth. Consolidated Net Worth shall at all
times exceed the sum of (a) $14,000,000 plus (b) the amount by which
Consolidated Net Worth has been increased after the Initial Closing Date
as a result of capital contributions, the issuance of capital stock or
partnership interests of the Holding Company or any of its Subsidiaries,
the issuance of warrants, options or other rights to acquire such capital
stock or partnership interests or the exercise of warrants, options or
other rights or the conversion of securities into such capital stock plus
(c) 75% of Consolidated Net Income (if positive) for each fiscal quarter
of the Holding Company after December 31, 1998.
6.5.2. Consolidated EBITDA. For each period of four consecutive
fiscal quarters of the Holding Company, Consolidated EBITDA shall equal
or exceed the amount specified in the table below.
Period Ending Amount
March 31, 1999 $19,500,000
June 30, 1999 $20,250,000
September 30, 1999 $20,750,000
December 31, 1999 through
March 31, 2000 $21,250,000
June 30, 2000 $22,000,000
September 30, 2000 $23,000,000
December 31, 2000 through
March 31, 2001 $23,750,000
June 30, 2001 through
September 30, 2001 $24,500,000
December 31, 2001 through
September 30, 2002 $25,000,000
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December 31, 2002 through
September 30, 2003 $25,500,000
December 31, 2003 and thereafter $26,000,000
6.5.3. Consolidated Total Debt to Consolidated EBITDA.
Consolidated Total Debt shall not on any date exceed the percentage set
forth in the table below of Consolidated EBITDA for the most recently
completed period of four consecutive fiscal quarters for which financial
reports have been (or are required to have been) furnished to the Lenders
in accordance with Section 6.4.1 or 6.4.2.
Period Ending Percentage
March 31, 1999 400%
June 30, 1999 375%
September 30, 1999 through
March 31, 2000 350%
June 30, 2000 325%
September 30, 2000 300%
December 31, 2000 through
March 31, 2001 275%
June 30, 2001 through
September 30, 2001 265%
December 31, 2001 and thereafter 250%
6.5.4. Consolidated Adjusted EBITDA Plus Rent to Consolidated
Fixed Charges Plus Rent. For each period of four consecutive fiscal
quarters of the Holding Company, (a) the sum of Consolidated Adjusted
EBITDA plus one third of Consolidated Rental Obligations shall equal or
exceed the percentage specified in the table below of (b) the sum of
Consolidated Fixed Charges plus one third of Consolidated Rental
Obligations:
Period Ending Percentage
September 30, 1997 through
March 31, 2001 110%
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June 30, 2001 and thereafter 115%
6.5.5. Capital Expenditures. The aggregate amount of Capital
Expenditures in any fiscal year of the Holding Company ending on or after
December 31, 1998 shall not exceed the sum of (a) the amount set forth in
the table below plus (b) the amount by which Capital Expenditures made in
the immediately preceding fiscal year were less than the amount specified
in the table below for such preceding fiscal year.
Fiscal Year Ending Amount
December 31, 1999 $6,200,000
Thereafter $5,000,000
6.6. Indebtedness. Neither the Holding Company nor any of its
Subsidiaries shall create, incur, assume or otherwise become or remain liable
with respect to any Indebtedness (or become contractually committed to do so),
except the following:
6.6.1. Indebtedness in respect of the Credit Obligations.
6.6.2. Guarantees permitted by Section 6.7.
6.6.3. Current liabilities, other than Financing Debt, incurred in
the ordinary course of business.
6.6.4. To the extent that payment thereof shall not at the time be
required by Section 6.1, Indebtedness in respect of taxes, assessments,
governmental charges and claims for labor, materials and supplies.
6.6.5. Indebtedness secured by ▇▇▇▇▇ of carriers, warehouses,
mechanics and landlords permitted by Sections 6.8.5 and 6.8.6.
6.6.6. Indebtedness in respect of judgments or awards (a) which
have been in force for less than the applicable appeal period or (b) in
respect of which the Holding Company or any Subsidiary shall at the time
in good faith be prosecuting an appeal or proceedings for review and, in
the case of each of clauses (a) and (b), the Holding Company or such
Subsidiary shall have taken appropriate reserves therefor in accordance
with GAAP and execution of such judgment or award shall not be levied.
6.6.7. To the extent permitted by Section 6.8.7, Indebtedness in
respect of Capitalized Lease Obligations or secured by purchase money
security interests; provided, however, that the aggregate principal
amount of all Indebtedness permitted by this Section 6.6.7 at any one
time outstanding shall not exceed $1,000,000.
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6.6.8. Indebtedness in respect of deferred taxes arising in the
ordinary course of business.
6.6.9. Indebtedness in respect of intercompany loans and advances
among the Holding Company and its Subsidiaries which are not prohibited
by Section 6.9.
6.6.10. The Seller Subordinated Debt, the Convertible Subordinated
Debentures and the Senior Subordinated Notes.
6.6.11. Unfunded pension liabilities and obligations with respect
to Plans so long as the Holding Company and all ERISA Group Persons are
in compliance with Section 6.16.
6.6.12. Other Indebtedness outstanding on the date hereof and
described in Exhibit 7.3 and (except with respect to the Prior Credit
Agreement, which shall be terminated on the Initial Closing Date) all
renewals and extensions thereof not in excess of the amount thereof
outstanding immediately prior to such renewal or extension.
6.6.13. Indebtedness (other than Financing Debt) in addition to
the foregoing; provided, however, that the aggregate amount of all such
Indebtedness at any one time outstanding shall not exceed $2,000,000,
minus the amount of Indebtedness then outstanding under Section 6.6.7.
6.7. Guarantees; Letters of Credit. Neither the Holding Company nor any
of its Subsidiaries shall become or remain liable with respect to any Guarantee,
including reimbursement obligations, whether contingent or matured, under
letters of credit or other financial guarantees by third parties (or become
contractually committed do to so), except the following:
6.7.1. Letters of Credit and Guarantees of the Credit Obligations.
6.7.2. Guarantees by the Holding Company of Indebtedness and other
obligations incurred by its Subsidiaries and permitted by Section 6.6.
6.7.3. The Borrower and its Subsidiaries may join a consolidated
group for federal income tax purposes that includes only the Holding
Company and its Subsidiaries so long as the liability of the Borrower and
its Subsidiaries is limited by a tax sharing agreement among the members
of such group to the extent provided in Section 6.10.6.
6.7.4. Guarantees by the Guarantors of the Senior Subordinated
Notes.
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6.8. Liens. Neither the Holding Company nor any of its Subsidiaries shall
create, incur or enter into, or suffer to be created or incurred or to exist,
any Lien (or become contractually committed to do so), except the following:
6.8.1. Liens on the Credit Security that secure the Credit
Obligations.
6.8.2. Liens to secure taxes, assessments and other governmental
charges, to the extent that payment thereof shall not at the time be
required by Section 6.1.
6.8.3. Deposits or pledges made (a) in connection with, or to
secure payment of, workers' compensation, unemployment insurance, old age
pensions or other social security, (b) in connection with casualty
insurance maintained in accordance with Section 6.3, (c) to secure the
performance of bids, tenders, contracts (other than contracts relating to
Financing Debt) or leases, (d) to secure statutory obligations or surety
or appeal bonds, (e) to secure indemnity, performance or other similar
bonds in the ordinary course of business or (f) in connection with
contested amounts to the extent that payment thereof shall not at that
time be required by Section 6.1.
6.8.4. Liens in respect of judgments or awards, to the extent that
such judgments or awards are permitted by Section 6.6.6 but only to the
extent that such Liens are junior to the Liens on the Credit Security
granted to secure the Credit Obligations.
6.8.5. Liens of carriers, warehouses, mechanics and similar Liens,
in each case (a) in existence less than 90 days from the date of creation
thereof or (b) being contested in good faith by the Holding Company or
any Subsidiary in appropriate proceedings (so long as the Holding Company
or such Subsidiary shall, in accordance with GAAP, have set aside on its
books adequate reserves with respect thereto).
6.8.6. Encumbrances in the nature of (a) zoning restrictions, (b)
easements, (c) restrictions of record on the use of real property, (d)
landlords' and lessors' Liens on rented premises and (e) restrictions on
transfers or assignment of leases, which in each case do not materially
detract from the value of the encumbered property or impair the use
thereof in the business of the Holding Company or any Subsidiary.
6.8.7. Liens constituting (a) purchase money security interests
(including mortgages, conditional sales, Capitalized Leases and any other
title retention or deferred purchase devices) in real property, interests
in leases or tangible personal property (other than inventory) existing
or created on the date on which such property is acquired, and (b) the
renewal, extension or refunding of any security interest referred to in
the foregoing clause (a) in an amount not to exceed the amount thereof
remaining unpaid immediately prior to such renewal, extension or
refunding; provided, however, that (i) each such security interest shall
attach solely to the particular item of property
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so acquired, and the principal amount of Indebtedness (including
Indebtedness in respect of Capitalized Lease Obligations) secured thereby
shall not exceed the cost (including all such Indebtedness secured
thereby, whether or not assumed) of such item of property; and (ii) the
aggregate principal amount of all Indebtedness secured by Liens permitted
by this Section 6.8.7 shall not exceed the amount permitted by Section
6.6.7.
6.8.8. Restrictions under federal and state securities laws on the
transfer of securities.
6.8.9. Liens as in effect on the date hereof described in Exhibit
7.3 and securing Indebtedness permitted by Section 6.6.12.
6.9. Investments and Acquisitions. Neither the Holding Company nor any of
its Subsidiaries shall have outstanding, acquire or hold any Investment
(including any Investment consisting of the acquisition of any business) (or
become contractually committed to do so), except the following:
6.9.1. Investments of the Holding Company and its Subsidiaries in
Wholly Owned Subsidiaries which are Guarantors or the Borrower as of the
date hereof or which have become Wholly Owned Subsidiaries and Guarantors
after the date hereof to the extent permitted by the other provisions of
this Section 6.9; provided, however, that no such Investment shall
involve the transfer by the Holding Company or the Borrower of any
material assets other than cash.
6.9.2. Intercompany loans and advances from any Wholly Owned
Subsidiary to the Borrower but in each case only to the extent reasonably
necessary for Consolidated tax planning.
6.9.3. Investments in Cash Equivalents.
6.9.4. Guarantees permitted by Section 6.7.
6.9.5. The Acquisition on the Initial Closing Date contemplated by
the Acquisition Agreement.
6.9.6. So long as immediately before and after giving effect
thereto no Default exists, Investments by the Borrower and its Wholly
Owned Subsidiaries consisting of the negotiated acquisition of other
Persons and businesses; provided; however, that the amount of all such
Investments shall not exceed (a) $1,500,000 at all times prior to the
period described in clause (b) below and (b) $3,500,000 after the end of
the first fiscal quarter when the ratio of Consolidated Total Debt to
Consolidated EBITDA for the preceding four fiscal quarters is less than
325%.
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6.9.7. The Holding Company may acquire Unrestricted Affiliates so
long as (a) immediately before and after giving effect thereto no Default
exists, (b) the board of directors of the Person being acquired shall
have approved such acquisition and (c) the aggregate amount of all
Investments made pursuant to this Section 6.9.7 since the date hereof
shall not exceed 25% of the Net Equity Proceeds received after the date
hereof.
6.9.8. Loans and advances to employees of the Borrower and its
Subsidiaries to enable them to purchase capital stock of the Holding
Company in an amount not to exceed $250,000 at any one time outstanding.
6.9.9. Loans and advances to employees of the Borrower and its
Subsidiaries for business expenses or personal needs in an amount not to
exceed $500,000 at any one time outstanding.
6.10. Distributions. Neither the Holding Company nor any of its
Subsidiaries shall make any Distribution (or become contractually committed to
do so), except the following:
6.10.1. So long as immediately before and after giving effect
thereto no Default exists, Subsidiaries of the Borrower may make
Distributions to the Borrower or any Wholly Owned Subsidiary of the
Borrower and the Borrower and its Subsidiaries may make Investments
permitted by Sections 6.9.1 and 6.9.2.
6.10.2. The Borrower may make scheduled, mandatory cash payments
of interest on the Senior Subordinated Notes and the Seller Subordinated
Debt, and may pay mandatory payments of principal on the Senior
Subordinated Notes as scheduled of $50,000 on September 13, 2002,
$250,000 on March 13, 2003, $250,000 on September 13, 2003, $5,700,000 on
March 13, 2004 and $6,250,000 on March 13, 2005 and upon a mandatory put
of the Senior Subordinated Notes and "Put Securities" (as defined
therein) under the Securities Purchase Agreements upon a "Change in
Control" (as defined therein), all in accordance with their terms,
including subordination terms.
6.10.3. So long as immediately before and after giving effect
thereto no Default exists, the Borrower may make cash Distributions to
the Holding Company in an amount equal to the scheduled, mandatory cash
payments of interest on the Convertible Subordinated Debentures in
accordance with their terms, including subordination terms; provided,
however, that the aggregate cash payments made in respect of the
Convertible Subordinated Debentures shall not exceed the lesser of (a)
$1,110,000 per annum or (b) 10% of the outstanding principal amount of
the Convertible Subordinated Debentures at the time such payment is made.
6.10.4. The Borrower may make Distributions to the Holding Company
in an aggregate amount not exceeding (a) so long as immediately before
and after giving
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effect thereto no Default exists, $75,000 per calendar quarter to pay
management and consulting fees to Glencoe and ▇▇▇▇▇ Capital Management
Incorporated pursuant to the Management Consulting Agreement dated as of
February 16, 1996 among the Borrower, the Holding Company and such
Persons and (b) amounts paid by such Persons to third parties in
performing consulting services under such Management Consulting
Agreement.
6.10.5. So long as immediately before and after giving effect
thereto no Default exists, the Borrower may make Distributions up to
$200,000 per year to the Holding Company to repurchase Holding Company
stock and options to acquire such stock owned by employees whose
employment with the Borrower and its Subsidiaries has terminated.
6.10.6. So long as immediately before and after giving effect
thereto no Default exists, the Borrower may make Distributions to the
Holding Company on account of the proportionate share of the income taxes
of the Holding Company and its Subsidiaries properly allocable (to the
reasonable satisfaction of the Agent) to the Borrower and its
Subsidiaries.
Upon receipt of Distributions in cash by the Borrower to the Holding
Company permitted by Sections 6.10.3, 6.10.4, 6.10.5 and 6.10.6, the Holding
Company shall promptly make the payments contemplated by such respective
Sections.
6.11. Asset Dispositions and Mergers. Neither the Borrower nor any of its
Subsidiaries shall merge or enter into a consolidation or sell, lease, sell and
lease back, sublease or otherwise dispose of any of its assets (or become
contractually committed to do so), except the following:
6.11.1. The Borrower and any of its Subsidiaries may sell or
otherwise dispose of (a) inventory and Cash Equivalents in the ordinary
course of business, (b) tangible assets to be replaced in the ordinary
course of business within six months by other tangible assets of equal or
greater value and (c) tangible assets that are no longer used or useful
in the business of the Borrower or such Subsidiary; provided, however,
that the aggregate fair market value (book value, if greater) of all
assets disposed of in accordance with the foregoing clauses (b) and (c)
of Section 6.11.1 shall not exceed an aggregate of $250,000 per year.
6.11.2. Any Wholly Owned Subsidiary of the Borrower may merge or
be liquidated into the Borrower or any other Wholly Owned Subsidiary of
the Borrower so long as after giving effect to any such merger to which
the Borrower is a party the Borrower shall be the surviving or resulting
Person.
6.11.3. Mergers constituting Investments permitted by Sections
6.9.5 or 6.9.6.
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6.11.4. So long as immediately before and after giving effect
thereto no Default exists and the Net Asset Sale Proceeds thereof are
applied to repay the Loan as required by Section 4.3.3, the Borrower and
its Subsidiaries may sell for fair value assets during any fiscal year
having a fair market value (book value, if greater) not exceeding
$2,000,000; provided, however, that the sum of the fair market values
(book values, if greater) for all assets sold pursuant to this Section
6.11.4 since the date hereof shall not exceed $5,000,000.
6.11.5. Licensing of products and intangible assets for fair value
in the ordinary course of business.
6.12. Issuance of Stock by Subsidiaries; Subsidiary Distributions.
6.12.1. Issuance of Stock by Subsidiaries. No Subsidiary shall
issue or sell any shares of its capital stock or other evidence of
beneficial ownership to any Person other than (a) the Holding Company or
any Wholly Owned Subsidiary of the Holding Company, which shares shall
have been pledged to the Agent as part of the Credit Security to the
extent required by the Guarantee and Security Agreement and (b) directors
of Subsidiaries as qualifying shares to the extent required by Legal
Requirements.
6.12.2. No Restrictions on Subsidiary Distributions. Except for
this Agreement, the Credit Documents and the Securities Purchase
Agreements and related documents, neither the Holding Company nor any
Subsidiary shall enter into or be bound by any agreement (including
covenants requiring the maintenance of specified amounts of net worth or
working capital) restricting the right of any Subsidiary to make
Distributions or extensions of credit to the Borrower (directly or
indirectly through another Subsidiary).
6.13. Voluntary Prepayments of Other Indebtedness. Neither the Holding
Company nor any of its Subsidiaries shall make any voluntary prepayment of
principal of or interest on any Financing Debt (other than the Credit
Obligations) or make any voluntary redemptions or repurchases of Financing Debt
(other than the Credit Obligations); provided, however, that the Holding Company
may make such payments or redemptions solely through payments in the form of its
common stock.
6.14. Derivative Contracts. Neither the Holding Company nor any of its
Subsidiaries shall enter into any Interest Rate Protection Agreement, foreign
currency exchange contract or other financial or commodity derivative contracts
except to provide hedge protection for an underlying economic transaction in the
ordinary course of business.
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6.15. Negative Pledge Clauses. Neither the Holding Company nor any of its
Subsidiaries shall enter into any agreement, instrument, deed or lease which
prohibits or limits the ability of the Holding Company or any of its
Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of
their respective properties, assets or revenues, whether now owned or hereafter
acquired, or which requires the grant of any collateral for such obligation if
collateral is granted for another obligation, except the following:
6.15.1. This Agreement and the other Credit Documents.
6.15.2. Covenants contained in the Securities Purchase Agreements
with respect to the Senior Subordinated Notes.
6.15.3. Covenants in documents creating Liens permitted by Section
6.8 prohibiting further Liens on the assets encumbered thereby.
6.16. ERISA, etc. Each of the Holding Company and its Subsidiaries shall
comply, and shall cause all ERISA Group Persons to comply, in all material
respects, with the provisions of ERISA and the Code applicable to each Plan.
Each of the Holding Company and its Subsidiaries shall meet, and shall cause all
ERISA Group Persons to meet, all minimum funding requirements applicable to them
with respect to any Plan pursuant to section 302 of ERISA or section 412 of the
Code, without giving effect to any waivers of such requirements or extensions of
the related amortization periods which may be granted, except where the failure
to comply with such requirements would not be reasonably likely to result in a
Material Adverse Change to the Holding Company and its Subsidiaries. At no time
shall the Accumulated Benefit Obligations under any Plan that is not a
Multiemployer Plan exceed the fair market value of the assets of such Plan
allocable to such benefits by more than $500,000. The Holding Company and its
Subsidiaries shall not withdraw, and shall cause all other ERISA Group Persons
not to withdraw, in whole or in part, from any Multiemployer Plan so as to give
rise to withdrawal liability exceeding $500,000 in the aggregate. At no time
shall the actuarial present value of unfunded liabilities of the Holding Company
and its Subsidiaries for post-employment health care benefits other than COBRA
continuation coverage benefits, whether or not provided under a Plan, calculated
in a manner consistent with Statement No. 106 of the Financial Accounting
Standards Board, exceed $500,000.
6.17. Transactions with Affiliates. Neither the Holding Company nor any
of its Subsidiaries shall effect any transaction with any of their respective
Affiliates (except for the Borrower and its Subsidiaries) on a basis less
favorable to the Holding Company and its Subsidiaries than would be the case if
such transaction had been effected with a non-Affiliate; provided, however, that
the Holding Company may pay management fees to Glencoe and ▇▇▇▇▇ Capital
Management Incorporated in an aggregate amount not exceeding $300,000 during any
fiscal year in accordance with Section 6.10.4.
6.18. Interest Rate Protection. The Borrower shall obtain and thereafter
keep in effect one or more Interest Rate Protection Agreements conforming to
International Securities
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Dealers Association standards, each in form and substance reasonably
satisfactory to the Agent, covering a notional amount of at least $20,000,000 in
each case for an aggregate period of not less than two years (or, for the
initial Interest Rate Protection Agreement, through June 2000) .
6.19. Environmental Laws.
6.19.1. Compliance with Law and Permits. Each of the Holding
Company and its Subsidiaries shall use and operate all of its facilities
and properties in material compliance with all Environmental Laws, keep
all necessary permits, approvals, certificates, licenses and other
authorizations relating to environmental matters in effect and remain in
material compliance therewith, and handle all Hazardous Materials in
material compliance with all applicable Environmental Laws.
6.19.2. Notice of Claims, etc. Each of the Holding Company and its
Subsidiaries shall immediately notify the Agent, and provide copies upon
receipt, of all written claims, complaints, notices or inquiries from
governmental authorities relating to the condition of its facilities and
properties or compliance with Environmental Laws, and shall promptly cure
and have dismissed with prejudice to the reasonable satisfaction of the
Agent any actions and proceedings relating to compliance with
Environmental Laws.
6.20. Restricted Operations of Holding Company. The Holding Company will
conduct no operations other than acquiring and owning the capital stock of the
Borrower and Unrestricted Affiliates acquired in accordance with Section 6.9.7
and activities incidental thereto. The Holding Company will own no material
assets other than the stock of the Borrower and such Unrestricted Affiliates and
cash in an amount equal to 25% of Net Equity Proceeds as permitted by Section
6.9.7 or expected to be spent or distributed within 90 days in the ordinary
course of business.
7. Representations and Warranties. In order to induce the Lenders to extend
credit to the Borrower hereunder, each of the Holding Company, the Borrower and
the Guarantors jointly and severally represents and warrants as follows:
7.1. Organization and Business.
7.1.1. The Holding Company. The Holding Company is a duly
organized and validly existing corporation, in good standing under the
laws of Delaware, with all power and authority, corporate or otherwise,
necessary to (a) enter into and perform this Agreement and each other
Credit Document to which it is party, (b) guarantee the Credit
Obligations, (c) grant the Agent for the benefit of the Lenders the
security interests in the Credit Security owned by it to secure the
Credit Obligations and (d) own its properties and carry on the business
now conducted or proposed to be conducted by
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it. Certified copies of the Charter and By-laws of the Holding Company
have been previously delivered to the Agent and are correct and complete.
Exhibit 7.1, as from time to time hereafter supplemented in accordance
with Sections 6.4.1 and 6.4.2, sets forth, as of the later of the date
hereof or the end of the most recent fiscal quarter for which financial
statements are required to be furnished in accordance with such Sections,
(i) the jurisdiction of incorporation of the Holding Company, (ii) the
address of the Holding Company's principal executive office and chief
place of business, (iii) each name, including any trade name, under which
the Holding Company conducts its business and (iv) the jurisdictions in
which the Holding Company keeps tangible personal property.
7.1.2. Subsidiaries. Each Subsidiary of the Holding Company is
duly organized, validly existing and in good standing under the laws of
the jurisdiction in which it is organized, with all power and authority,
corporate or otherwise, necessary to (a) enter into and perform this
Agreement and each other Credit Document to which it is party, (b)
guarantee (in the case of the Borrower, incur) the Credit Obligations,
(c) grant the Agent for the benefit of the Lenders the security interest
in the Credit Security owned by such Subsidiary to secure the Credit
Obligations and (d) own its properties and carry on the business now
conducted or proposed to be conducted by it. Certified copies of the
Charter and By-laws of each Subsidiary of the Holding Company have been
previously delivered to the Agent and are correct and complete. Exhibit
7.1, as from time to time hereafter supplemented in accordance with
Sections 6.4.1 and 6.4.2, sets forth, as of the later of the date hereof
or the end of the most recent fiscal quarter for which financial
statements are required to be furnished in accordance with such Sections,
(i) the name and jurisdiction of organization of each Subsidiary of the
Holding Company, (ii) the address of the chief executive office and
principal place of business of each such Subsidiary, (iii) each name
under which each such Subsidiary conducts its business, (iv) each
jurisdiction in which each such Subsidiary keeps tangible personal
property, and (v) the number of authorized and issued shares and
ownership of each such Subsidiary.
7.1.3. Qualification. Each of the Holding Company and its
Subsidiaries is duly and legally qualified to do business as a foreign
corporation or other entity and is in good standing in each state or
jurisdiction in which such qualification is required and is duly
authorized, qualified and licensed under all laws, regulations,
ordinances or orders of public authorities, or otherwise, to carry on its
business in the places and in the manner in which it is conducted, except
for failures to be so qualified, authorized or licensed which would not
in the aggregate result, or create a material risk of resulting, in any
Material Adverse Change.
7.1.4. Capitalization. No options, warrants, conversion rights,
preemptive rights or other statutory or contractual rights to purchase
shares of capital stock or other securities of any Subsidiary now exist,
nor has any Subsidiary authorized any such
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right, nor is any Subsidiary obligated in any other manner to issue
shares of its capital stock or other securities.
7.2. Financial Statements and Other Information; Material Agreements.
7.2.1. Financial Statements and Other Information. The Holding
Company has previously furnished to the Lenders copies of the following:
(a) The audited Consolidated and unaudited Consolidating balance
sheets of the Holding Company and its Subsidiaries and of the Borrower
and its Subsidiaries as at December 31 in each of 1995, 1996 and 1997 and
the audited Consolidated and unaudited Consolidating statements of income
and the audited Consolidated statements of changes in shareholders'
equity and of cash flows of the Holding Company and its Subsidiaries and
of the Borrower and its Subsidiaries for the fiscal years then ended.
(b) The unaudited Consolidated and Consolidating balance sheets of
the Holding Company and its Subsidiaries and of the Borrower and its
Subsidiaries as at September 30, 1998 and the unaudited Consolidated
statements of income, of changes in shareholders' equity and of cash
flows of the Holding Company and its Subsidiaries and of the Borrower and
its Subsidiaries for the portion of the fiscal year then ended.
(c) The Holding Company's report on 10-K for its fiscal year ended
December 31, 1997, as filed with the Securities and Exchange Commission.
(d) The five-year financial and operational projections for the
Holding Company and its Subsidiaries dated December 1998.
(e) Calculations demonstrating pro forma compliance with the
Computation Covenants as of the end of the most recent month or quarter,
as applicable, preceding the date hereof.
(f) Confidential Memorandum for the proposed sale of Heartland
Industries, Inc. (DE) prepared by Stonebridge Associates, LLC.
(g) Heartland Industries, Inc. Due Diligence Report for PlayCore,
Inc. dated December 1998 prepared by ▇▇▇▇▇ & Young LLP.
The audited Consolidated financial statements (including the notes
thereto) referred to in clause (a) above were prepared in accordance with
GAAP and fairly present in all material respects the financial position
of the Holding Company and its Subsidiaries and of the Borrower and its
Subsidiaries on a Consolidated basis at the respective dates thereof and
the results of their operations for the periods covered thereby. The
unaudited Consolidating financial statements referred to in clause (a)
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above and the unaudited Consolidated and Consolidating financial
statements referred to in clause (b) above were prepared in accordance
with GAAP and fairly present in all material respects the financial
position of the Holding Company and its Subsidiaries and of the Borrower
and its Subsidiaries at the respective dates thereof and the results of
their operations for the periods covered thereby, subject to normal
year-end audit adjustment and the addition of footnotes in the case of
interim financial statements. Neither the Holding Company nor any of its
Subsidiaries has any known contingent liability material to the Holding
Company and its Subsidiaries on a Consolidated basis which is not
reflected in the balance sheets referred to in clauses (a) or (b) above
(or delivered pursuant to Sections 6.4.1 or 6.4.2) or in the notes
thereto.
The Form 10-K referred to in clause (c) above contained all
information required to be contained therein and otherwise complied in
all material respects with the Exchange Act and the rules and regulations
thereunder. Such Form 10-K did not contain any untrue statement of
material fact or omit to state a material fact necessary in order to make
the statements contained therein not misleading in the light of the
circumstances under which they were made.
In the Holding Company's judgment, the financial and operational
projections referred to in clause (d) above constitute a reasonable basis
as of the Initial Closing Date for the assessment of the future
performance of the Holding Company and its Subsidiaries during the
periods indicated therein, it being understood that any projected
financial information represents an estimate, based on various
assumptions, of future results of operations which may or may not in fact
occur.
As of December 1998 the Confidential Memorandum described in
clause (f) above and the Due Diligence Report described in clause (g)
above, taken as a whole, did not contain any untrue statement of material
fact or omit to state a material fact necessary in order to make the
statements contained therein not misleading in the light of the
circumstances under which they were made; provided, however, that the
descriptions in such Confidential Memorandum and Due Diligence Report of
other documents and agreements are intended to be summaries only and do
not provide comprehensive descriptions of the terms and conditions
contained in such documents and agreements.
7.2.2. Material Agreements. The Holding Company has previously
furnished to the Lenders correct and complete copies, including all
exhibits, schedules and amendments thereto, of the agreements, each as in
effect on the date hereof, listed in Exhibit 7.2.2 (the "Material
Agreements").
7.3. Agreements Relating to Financing Debt, Investments, etc. Exhibit
7.3, as from time to time hereafter supplemented in accordance with Sections
6.4.1 and 6.4.2, sets forth (a) the amounts (as of the dates indicated in
Exhibit 7.3, as so supplemented) of all Financing Debt
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of the Holding Company and its Subsidiaries and all agreements which relate to
such Financing Debt, (b) all Liens and Guarantees with respect to such Financing
Debt, (c) all agreements which directly or indirectly require the Holding
Company or any Subsidiary to make any Investment, (d) material license
agreements with respect to the products of the Holding Company and its
Subsidiaries, including the parties thereto and the expiration dates thereof and
(e) all trademarks, tradenames, service marks, service names and patents
registered with the federal Patent and Trademark Office (or with respect to
which applications for such registration have been filed). The Holding Company
has furnished the Lenders with correct and complete copies of any agreements
described in clauses (a) through (e) above requested by the Required Lenders.
7.4. Changes in Condition. Since December 31, 1997 no Material Adverse
Change has occurred and between December 31, 1997 and the date hereof, neither
the Holding Company nor any Subsidiary of the Holding Company has entered into
any material transaction outside the ordinary course of business except for the
transactions contemplated by this Agreement and the Material Agreements.
7.5. Title to Assets. The Holding Company and its Subsidiaries have good
and marketable title to all assets necessary for or used in the operations of
their business as now conducted by them and reflected in the most recent balance
sheet referred to in Section 7.2.1 (or the balance sheet most recently furnished
to the Lenders pursuant to Sections 6.4.1 or 6.4.2), and to all assets acquired
subsequent to the date of such balance sheet, subject to no Liens except for
Liens permitted by Section 6.8 and except for assets disposed of as permitted by
Section 6.11.
7.6. Operations in Conformity With Law, etc. The operations of the
Holding Company and its Subsidiaries as now conducted or proposed to be
conducted are not in violation of, nor is the Holding Company or its
Subsidiaries in default under, any Legal Requirement presently in effect, except
for such violations and defaults as do not and will not, in the aggregate,
result, or create a material risk of resulting, in any Material Adverse Change.
The Holding Company has received no notice of any such violation or default and
has no knowledge of any basis on which the operations of the Holding Company or
its Subsidiaries, as now conducted and as currently proposed to be conducted
after the date hereof, would be held so as to violate or to give rise to any
such violation or default.
7.7. Litigation. No litigation, at law or in equity, or any proceeding
before any court, board or other governmental or administrative agency or any
arbitrator is pending or, to the knowledge of the Holding Company, the Borrower
or any other Guarantor, threatened which involves any material risk of any final
judgment, order or liability which, after giving effect to any applicable
insurance, has resulted, or creates a material risk of resulting, in any
Material Adverse Change or which seeks to enjoin the consummation, or which
questions the validity, of any of the transactions contemplated by this
Agreement or any other Credit Document. No judgment, decree or order of any
court, board or other governmental or
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administrative agency or any arbitrator has been issued against or binds the
Holding Company or any of its Subsidiaries which has resulted, or creates a
material risk of resulting, in any Material Adverse Change.
7.8. Authorization and Enforceability. Each of the Holding Company and
each other Obligor has taken all corporate action required to execute, deliver
and perform this Agreement and each other Credit Document to which it is party.
No consent of stockholders of the Holding Company is necessary in order to
authorize the execution, delivery or performance of this Agreement or any other
Credit Document to which the Holding Company is party. Each of this Agreement
and each other Credit Document constitutes the legal, valid and binding
obligation of each Obligor party thereto and is enforceable against such Obligor
in accordance with its terms. The Credit Obligations constitute senior debt for
all purposes of the subordination provisions of the Senior Subordinated Notes,
the Seller Subordinated Debt and the Convertible Subordinated Debentures.
7.9. No Legal Obstacle to Agreements. Neither the execution and delivery
of this Agreement or any other Credit Document, nor the making of any borrowings
hereunder, nor the guaranteeing of the Credit Obligations, nor the securing of
the Credit Obligations with the Credit Security, nor the consummation of any
transaction (other than the Acquisition) referred to in or contemplated by this
Agreement or any other Credit Document, nor the fulfillment of the terms hereof
or thereof (other than the consummation of the Acquisition) or of any other
agreement, instrument, deed or lease contemplated by this Agreement or any other
Credit Document (other than the Acquisition Agreement), has constituted or
resulted in or will constitute or result in:
(a) any breach or termination of the provisions of any agreement,
instrument, deed or lease to which the Holding Company, any of its
Subsidiaries or any other Obligor is a party or by which it is bound, or
of the Charter or By-laws of the Holding Company, any of its Subsidiaries
or any other Obligor;
(b) the violation of any law, statute, judgment, decree or
governmental order, rule or regulation applicable to the Holding Company,
any of its Subsidiaries or any other Obligor;
(c) the creation under any agreement, instrument, deed or lease of
any Lien (other than Liens on the Credit Security which secure the Credit
Obligations) upon any of the assets of the Holding Company, any of its
Subsidiaries or any other Obligor; or
(d) any redemption, retirement or other repurchase obligation of
the Holding Company, any of its Subsidiaries or any other Obligor under
any Charter, By-law, agreement, instrument, deed or lease.
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No approval, authorization or other action by, or declaration to or filing with,
any governmental or administrative authority or any other Person is required to
be obtained or made by the Holding Company, any of its Subsidiaries or any other
Obligor in connection with the execution, delivery and performance of this
Agreement, the Notes or any other Credit Document, the transactions contemplated
hereby or thereby, the making of any borrowing hereunder, the guaranteeing of
the Credit Obligations or the securing of the Credit Obligations with the Credit
Security (other than filings necessary to perfect the Agent's security interest
in the Credit Security).
7.10. Defaults. Neither the Holding Company nor any of its Subsidiaries
is in default under any provision of its Charter or By-laws or of this Agreement
or any other Credit Document. Neither the Holding Company nor any of its
Subsidiaries is in default under any provision of any agreement, instrument,
deed or lease to which it is party or by which it or its property is bound so as
to result, or create a material risk of resulting, in any Material Adverse
Change. Neither the Holding Company nor any of its Subsidiaries has violated any
law, judgment, decree or governmental order, rule or regulation, in each case so
as to result, or create a material risk of resulting, in any Material Adverse
Change.
7.11. Licenses, etc. The Holding Company and its Subsidiaries have all
patents, patent applications, patent licenses, patent rights, trademarks,
trademark rights, trade names, trade name rights, copyrights, licenses,
franchises, permits, authorizations and other rights as are necessary for the
conduct of the business of the Holding Company and its Subsidiaries as now
conducted by them. All of the foregoing are in full force and effect in all
material respects, and each of the Holding Company and its Subsidiaries is in
substantial compliance with the foregoing without any known conflict with the
valid rights of others which has resulted, or creates a material risk of
resulting, in any Material Adverse Change. No event has occurred which permits,
or after notice or lapse of time or both would permit, the revocation or
termination of any such license, franchise or other right or which affects the
rights of any of the Holding Company and its Subsidiaries thereunder so as to
result, or to create a material risk of resulting, in any Material Adverse
Change. No litigation or other proceeding or dispute exists with respect to the
validity or, where applicable, the extension or renewal, of any of the foregoing
which has resulted, or creates a material risk of resulting, in any Material
Adverse Change.
7.12. Tax Returns. Each of the Holding Company and its Subsidiaries has
filed all material tax and information returns which are required to be filed by
it and has paid, or made adequate provision for the payment of, all taxes which
have or may become due pursuant to such returns or to any assessment received by
it, other than taxes and assessments being contested by the Holding Company and
its Subsidiaries in good faith by appropriate proceedings and for which adequate
reserves have been taken in accordance with GAAP. Neither the Holding Company
nor any of its Subsidiaries knows of any material additional assessments or any
basis therefor. The Holding Company reasonably believes that the charges,
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accruals and reserves on the books of the Holding Company and its Subsidiaries
in respect of taxes or other governmental charges are adequate.
7.13. Certain Business Representations.
7.13.1. Labor Relations. No dispute or controversy between the
Holding Company or any of its Subsidiaries and any of their respective
employees has resulted, or is reasonably likely to result, in any
Material Adverse Change, and neither the Holding Company nor any of its
Subsidiaries anticipates that its relationships with its unions or
employees will result, or are reasonably likely to result, in any
Material Adverse Change. The Holding Company and each of its Subsidiaries
is in compliance in all material respects with all federal and state laws
with respect to (a) non-discrimination in employment with which the
failure to comply, in the aggregate, has resulted, or creates a material
risk of resulting, in a Material Adverse Change and (b) the payment of
wages.
7.13.2. Antitrust. Each of the Holding Company and its
Subsidiaries is in compliance in all material respects with all federal
and state antitrust laws relating to its business and the geographic
concentration of its business.
7.13.3. Consumer Protection. Neither the Holding Company nor any
of its Subsidiaries is in violation of any rule, regulation, order, or
interpretation of any rule, regulation or order of the Federal Trade
Commission (including truth-in-lending), with which the failure to
comply, in the aggregate, has resulted, or creates a material risk of
resulting, in a Material Adverse Change.
7.13.4. Extraordinary Obligations. Neither the Holding Company nor
any of its Subsidiaries is party to or bound by any agreement,
instrument, deed or lease or is subject to any Charter, By-law or other
restriction, commitment or requirement which, in the opinion of the
management of such Person, is so burdensome as in the foreseeable future
to result, or create a material risk of resulting, in a Material Adverse
Change.
7.13.5. Future Expenditures. Neither the Holding Company nor any
of its Subsidiaries anticipate that the future expenditures, if any, by
the Holding Company and its Subsidiaries needed to meet the provisions of
any federal, state or foreign governmental statutes, orders, rules or
regulations will be so burdensome as to result, or create a material risk
of resulting, in any Material Adverse Change.
7.13.6. Year 2000 Issues. Based on a review of the operations of
the Holding Company and its Subsidiaries as they related to the
processing, storage and retrieval of data, the Borrower does not believe
that a Material Adverse Change is reasonably likely to occur as a result
of computer software and hardware that will not function with
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respect to periods commencing January 1, 2000 at least as effectively as
with respect to periods ending on or prior to December 31, 1999.
7.14. Environmental Regulations.
7.14.1. Environmental Compliance. Each of the Holding Company and
its Subsidiaries is in compliance in all material respects with the Clean
Air Act, the Federal Water Pollution Control Act, the Marine Protection
Research and Sanctuaries Act, RCRA, CERCLA and any other Environmental
Law in effect in any jurisdiction in which any properties of the Holding
Company or any of its Subsidiaries are located or where any of them
conducts its business, and with all applicable published rules and
regulations (and applicable standards and requirements) of the federal
Environmental Protection Agency and of any similar agencies in states or
foreign countries in which the Holding Company or its Subsidiaries
conducts its business other than those which in the aggregate have not
resulted, and do not create a material risk of resulting, in a Material
Adverse Change.
7.14.2. Environmental Litigation. No suit, claim, action or
proceeding of which the Holding Company or any of its Subsidiaries has
been given notice or otherwise has knowledge is now pending before any
court, governmental agency or board or other forum, or to the Holding
Company's or any of its Subsidiaries knowledge, threatened by any Person
(nor to the Holding Company's or any of its Subsidiaries' knowledge, does
any factual basis exist therefor) for, and neither the Holding Company
nor any of its Subsidiaries have received written correspondence from any
federal, state or local governmental authority with respect to:
(a) noncompliance by the Holding Company or any of its
Subsidiaries with any Environmental Law;
(b) personal injury, wrongful death or other tortious conduct
relating to materials, commodities or products used, generated, sold,
transferred or manufactured by the Holding Company or any of its
Subsidiaries (including products made of, containing or incorporating
asbestos, lead or other hazardous materials, commodities or toxic
substances); or
(c) the release into the environment by the Holding Company or any
of its Subsidiaries of any Hazardous Material generated by the Holding
Company or any of its Subsidiaries whether or not occurring at or on a
site owned, leased or operated by the Holding Company or any of its
Subsidiaries.
7.14.3. Hazardous Material. Exhibit 7.14 contains a list as of the
date hereof of all waste disposal or dump sites at which Hazardous
Material generated by either the Holding Company or any of its
Subsidiaries has been disposed of directly by the
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HoldingCompany or any of its Subsidiaries and all independent contractors
to whom the Holding Company and its Subsidiaries have delivered Hazardous
Material, or to the Holding Company's or any of its Subsidiaries'
knowledge, where Hazardous Material finally came to be located, and
indicates all such sites which are or have been included (including as a
potential or suspect site) in any published federal, state or local
"superfund" or other list of hazardous or toxic waste sites. Any waste
disposal or dump sites at which Hazardous Material generated by either
the Holding Company or any of its Subsidiaries has been disposed of
directly by the Holding Company or any of its Subsidiaries and all
independent contractors to whom the Holding Company or any of its
Subsidiaries have delivered Hazardous Material, or to the Holding
Company's or any of its Subsidiaries' knowledge, where Hazardous Material
finally came to be located, has not resulted, and does not create a
material risk of resulting, in a Material Adverse Change.
7.14.4. Environmental Condition of Properties. None of the
properties owned or leased by the Holding Company or any of its
Subsidiaries has been used as a treatment, storage or disposal site,
other than as disclosed in Exhibit 7.14. No Hazardous Material is present
in any real property currently or formerly owned or operated by the
Holding Company or any of its Subsidiaries except that which has not
resulted, and does not create a material risk of resulting, in a Material
Adverse Change.
7.15. Pension Plans. Neither the Holding Company nor any of its
Subsidiaries has a Plan or a Multiemployer Plan.
7.16. Acquisition Agreement, etc. The Acquisition Agreement is a valid
and binding contract as to the Borrower and, to the best of the Borrower's
knowledge, as to Heartland and the Heartland Sellers. The Borrower is not in
default in any material respect of its obligations under the Acquisition
Agreement and, to the best of the Borrower's knowledge, Heartland and the
Heartland Sellers are not in default in any material respect of any of their
obligations thereunder. The representations and warranties of the Borrower set
forth in the Acquisition Agreement are true and correct in all material respect
as of the date hereof with the same force and effect as though made on and as of
the date hereof. To the best of the Borrower's knowledge all of the
representations and warranties of Heartland and the Heartland Sellers set forth
in the Acquisition Agreement are true and correct in all material respects as of
the date hereof with the same force and effect as though made on and as of the
date hereof.
7.17. Government Regulation; Margin Stock.
7.17.1. Government Regulation. Neither the Borrower nor any of its
Subsidiaries, nor any Person controlling the Borrower or any of its
Subsidiaries or under common control with the Borrower or any of its
Subsidiaries, is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Investment Company Act,
the Interstate Commerce Act or any statute or
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regulation which regulates the incurring by the Borrower or any of its
Subsidiaries of Financing Debt as contemplated by this Agreement and the
other Credit Documents.
7.17.2. Margin Stock. Neither the Borrower nor any of its
Subsidiaries owns any Margin Stock.
7.18. Disclosure. Neither this Agreement nor any other Credit Document to
be furnished to the Lenders by or on behalf of the Holding Company or any of its
Subsidiaries in connection with the transactions contemplated hereby or by such
Credit Document contains any untrue statement of material fact or omits to state
a material fact necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances under which they were made.
No fact is actually known to the Holding Company or any of its Subsidiaries
which has resulted, or in the future (so far as the Holding Company or any of
its Subsidiaries can reasonably foresee) will result, or creates a material risk
of resulting, in any Material Adverse Change, except to the extent that present
or future general economic conditions may result in a Material Adverse Change.
8. Defaults.
8.1. Events of Default. The following events are referred to as "Events
of Default":
8.1.1. Payment. The Borrower shall fail to make any payment in
respect of: (a) interest or any fee on or in respect of any of the Credit
Obligations owed by it as the same shall become due and payable, and such
failure shall continue for a period of three Banking Days, or (b) any
Credit Obligation with respect to payments made by any Letter of Credit
Issuer under any Letter of Credit or any draft drawn thereunder within
three Banking Days after demand therefor by such Letter of Credit Issuer
or (c) principal of any of the Credit Obligations owed by it as the same
shall become due, whether at maturity or by acceleration or otherwise.
8.1.2. Specified Covenants. The Holding Company or any of its
Subsidiaries shall fail to perform or observe any of the provisions of
Sections 6.5 through 6.7 and Sections 6.9 through 6.20.
8.1.3. Other Covenants. The Holding Company, any of its
Subsidiaries or any other Obligor shall fail to perform or observe any
other covenant, agreement or provision to be performed or observed by it
under this Agreement or any other Credit Document, and such failure shall
not be rectified or cured within 30 days (or, in the case of Section 6.8,
five days) after the earlier of (a) notice thereof by the Agent to the
Holding Company or (b) a Financial Officer shall have actual knowledge
thereof.
8.1.4. Representations and Warranties. Any representation or
warranty of the Holding Company, any of its Subsidiaries or any other
Obligor made to the Lenders or
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the Agent in, pursuant to or in connection with this Agreement or any
other Credit Document, or in any financial statement, report, notice,
mortgage, assignment, UCC financing statement or certificate delivered to
the Agent or any of the Lenders by the Holding Company, any of its
Subsidiaries or any other Obligor in connection herewith or therewith,
shall be materially false on the date as of which it was made.
8.1.5. Cross Default, etc.
(a) The Holding Company or any of its Subsidiaries shall fail to
make any payment when due (after giving effect to any applicable grace
periods) in respect of any Financing Debt (other than the Credit
Obligations) outstanding in an aggregate amount of principal (whether or
not due) and accrued interest exceeding $750,000;
(b) the Holding Company or any of its Subsidiaries shall fail to
perform or observe the terms of any agreement or instrument relating to
such Financing Debt, and such failure shall continue, without having been
duly cured, waived or consented to, beyond the period of grace, if any,
specified in such agreement or instrument, and such failure shall permit
the acceleration of such Financing Debt;
(c) all or any part of such Financing Debt of the Holding Company
or any of its Subsidiaries shall be accelerated or shall become due or
payable prior to its stated maturity (except with respect to voluntary
prepayments thereof) for any reason whatsoever;
(d) any Lien on any property of the Holding Company or any of its
Subsidiaries securing any such Financing Debt shall be enforced by
foreclosure or similar action; or
(e) any holder of any such Financing Debt shall exercise any right
of rescission with respect to the issuance thereof or put or prepayment
or repurchase rights against any Obligor with respect to such Financing
Debt (other than any such rights that may be satisfied with "payment in
kind" notes or other similar securities).
8.1.6. Ownership; Liquidation; etc. Except as permitted by Section
6.11:
(a) the Holding Company shall cease to own, directly or
indirectly, all the capital stock of the Borrower, except to the extent
permitted by Section 6.13.1; or
(b) GreenGrass Holdings shall cease to own, beneficially and of
record, at least a majority of the voting stock and equity capital of the
Holding Company; or
(c) any Person other than GreenGrass Holdings, together with
"affiliates" and "associates" of such Person within the meaning of Rule
12b-2 of the Exchange Act, or
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any "group" including such Person under sections 13(d) and 14(d) of the
Exchange Act, shall acquire after the date hereof beneficial ownership
within the meaning of Rule 13d- 3 of the Exchange Act of more than 33% of
the voting stock of the Holding Company; or
(d) Glencoe shall cease to be a member, or shall cease to have a
designated representative serve on the board, of GreenGrass Holdings; or
(e) the Holding Company, the Borrower, any of the Borrower's
Subsidiaries or any other Obligor shall initiate any action to dissolve,
liquidate or otherwise terminate its existence.
8.1.7. Enforceability, etc. Any Credit Document shall cease for
any reason (other than the scheduled termination thereof in accordance
with its terms) to be enforceable in accordance with its terms or in full
force and effect; or any party to any Credit Document shall so assert in
a judicial or similar proceeding; or the security interests created by
this Agreement or any other Credit Documents shall cease to be
enforceable and of the same effect and priority purported to be created
hereby.
8.1.8. Judgments. A final judgment (a) which, with other
outstanding final judgments against the Holding Company and its
Subsidiaries, exceeds an aggregate of $750,000 in excess of applicable
insurance coverage shall be rendered against the Holding Company or any
of its Subsidiaries, or (b) which grants injunctive relief that results,
or creates a material risk of resulting, in a Material Adverse Change and
in either case if (i) within 60 days after entry thereof, such judgment
shall not have been discharged or execution thereof stayed pending appeal
or (ii) within 60 days after the expiration of any such stay, such
judgment shall not have been discharged.
8.1.9. ERISA. Any "reportable event" (as defined in section 4043
of ERISA) shall have occurred that reasonably could be expected to result
in termination of a Plan or the appointment by the appropriate United
States District Court of a trustee to administer any Plan or the
imposition of a Lien in favor of a Plan; or any ERISA Group Person shall
fail to pay when due amounts aggregating in excess of $500,000 which it
shall have become liable to pay to the PBGC or to a Plan under Title IV
of ERISA; or notice of intent to terminate a Plan shall be filed under
Title IV of ERISA by any ERISA Group Person or administrator; or the PBGC
shall institute proceedings under Title IV of ERISA to terminate or to
cause a trustee to be appointed to administer any Plan or a proceeding
shall be instituted by a fiduciary of any Plan against any ERISA Group
Person to enforce section 515 or 4219(c)(5) of ERISA and such proceeding
shall not have been dismissed within 60 days thereafter; or a condition
shall exist by reason of which the PBGC would be entitled to obtain a
decree adjudicating that any Plan must be terminated; provided, however,
that none of the foregoing shall constitute an Event
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of Default unless it has resulted in, or reasonably would be expected to
result in, a Material Adverse Change to the Holding Company and its
Subsidiaries.
8.1.10. Bankruptcy, etc. The Holding Company, any of its
Subsidiaries or any other Obligor shall:
(a) commence a voluntary case under the Bankruptcy Code or
authorize, by appropriate proceedings of its board of directors or other
governing body, the commencement of such a voluntary case;
(b) (i) have filed against it a petition commencing an involuntary
case under the Bankruptcy Code that shall not have been stayed, dismissed
or vacated within 60 days after the date on which such petition is filed,
or (ii) file an answer or other pleading within such 60-day period
admitting or failing to deny the material allegations of such a petition
or seeking, consenting to or acquiescing in the relief therein provided,
or (iii) have entered against it an order for relief in any involuntary
case commenced under the Bankruptcy Code;
(c) seek relief as a debtor under any applicable law, other than
the Bankruptcy Code, of any jurisdiction relating to the liquidation or
reorganization of debtors or to the modification or alteration of the
rights of creditors, or consent to or acquiesce in such relief;
(d) have entered against it an order by a court of competent
jurisdiction (i) finding it to be bankrupt or insolvent, (ii) ordering or
approving its liquidation or reorganization as a debtor or any
modification or alteration of the rights of its creditors or (iii)
assuming custody of, or appointing a receiver or other custodian for, all
or a substantial portion of its property; or
(e) make an assignment for the benefit of, or enter into a
composition with, its creditors, or appoint, or consent to the
appointment of, or suffer to exist a receiver or other custodian for, all
or a substantial portion of its property.
8.2. Certain Actions Following an Event of Default. If any one or more
Events of Default shall occur, then in each and every such case:
8.2.1. Terminate Obligation to Extend Credit. Upon written request
of the Required Lenders the Agent shall terminate the obligations of the
Lenders to make any further extensions of credit under the Credit
Documents by furnishing notice of such termination to the Borrower.
8.2.2. Specific Performance; Exercise of Rights. Upon written
request of the Required Lenders the Agent shall proceed to protect and
enforce the Lenders' rights by
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suit in equity, action at law and/or other appropriate proceeding, either
for specific performance of any covenant or condition contained in this
Agreement or any other Credit Document (other than Interest Rate
Protection Agreements) or in any instrument or assignment delivered to
the Lenders pursuant to this Agreement or any other Credit Document
(other than Interest Rate Protection Agreements), or in aid of the
exercise of any power granted in this Agreement or any other Credit
Document (other than Interest Rate Protection Agreements) or any such
instrument or assignment.
8.2.3. Acceleration. Upon written request of the Required Lenders
the Agent shall by notice in writing to the Borrower (a) declare all or
any part of the unpaid balance of the Credit Obligations (other than
Interest Rate Protection Agreements) then outstanding to be immediately
due and payable, and (b) require the Borrower immediately to deposit with
the Agent in cash an amount equal to the then Letter of Credit Exposure
(which cash shall be held and applied as provided in Section 4.5), and
thereupon such unpaid balance or part thereof and such amount equal to
the Letter of Credit Exposure shall become so due and payable without
presentation, protest or further demand or notice of any kind, all of
which are hereby expressly waived; provided, however, that if a
Bankruptcy Default shall have occurred, the unpaid balance of the Credit
Obligations (other than Interest Rate Protection Agreements) shall
automatically become immediately due and payable.
8.2.4. Enforcement of Payment; Credit Security; Setoff. Upon
written request of the Required Lenders the Agent shall proceed to
enforce payment of the Credit Obligations in such manner as the Required
Lenders shall direct, to cancel, or instruct other Letter of Credit
Issuers to cancel, any outstanding Letters of Credit which permit the
cancellation thereof and to realize upon any and all rights in the Credit
Security. The Lenders may offset and apply toward the payment of the
Credit Obligations (and/or toward the curing of any Event of Default) any
Indebtedness from the Lenders to the respective Obligors, including any
Indebtedness represented by deposits in any account maintained with the
Lenders, regardless of the adequacy of any security for the Credit
Obligations. The Lenders shall have no duty to determine the adequacy of
any such security in connection with any such offset.
8.2.5. Cumulative Remedies. To the extent not prohibited by
applicable law which cannot be waived, all of the Lenders' rights
hereunder and under each other Credit Document shall be cumulative.
8.3. Annulment of Defaults. Once an Event of Default has occurred, such
Event of Default shall be deemed to exist and be continuing for all purposes of
the Credit Documents (other than Interest Rate Protection Agreements) until the
Required Lenders or the Agent (with the consent of the Required Lenders) shall
have waived such Event of Default in writing, stated in writing that the same
has been cured to such Lenders' reasonable satisfaction or entered into an
amendment to this Agreement which by its express terms cures such Event of
Default, at
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which time such Event of Default shall no longer be deemed to exist or to have
continued. No such action by the Lenders or the Agent shall extend to or affect
any subsequent Event of Default or impair any rights of the Lenders upon the
occurrence thereof. The making of any extension of credit during the existence
of any Default or Event of Default shall not constitute a waiver thereof.
8.4. Waivers. To the extent that such waiver is not prohibited by the
provisions of applicable law that cannot be waived, each of the Holding Company
and the other Obligors waives:
(a) all presentments, demands for performance, notices of
nonperformance (except to the extent required by this Agreement or any
other Credit Document), protests, notices of protest and notices of
dishonor;
(b) any requirement of diligence or promptness on the part of the
Agent or any Lender in the enforcement of its rights under this
Agreement, the Notes or any other Credit Document;
(c) any and all notices of every kind and description which may be
required to be given by any statute or rule of law; and
(d) any defense (other than indefeasible payment in full) which it
may now or hereafter have with respect to its liability under this
Agreement, the Notes or any other Credit Document or with respect to the
Credit Obligations.
9. Expenses; Indemnity.
9.1. Expenses. Whether or not the transactions contemplated hereby shall
be consummated, the Borrower will pay:
(a) all reasonable expenses of the Agent (including the
out-of-pocket expenses related to forming the group of Lenders and
reasonable fees and disbursements of the counsel to the Agent) in
connection with the preparation and duplication of this Agreement and
each other Credit Document, examinations by, and reports of, the Agent's
commercial financial examiners, fixed asset appraisers and environmental
consultants, the transactions contemplated hereby and thereby and
amendments, waivers, consents and other operations hereunder and
thereunder;
(b) all recording and filing fees and transfer and documentary
stamp and similar taxes at any time payable in respect of this Agreement,
any other Credit Document, any Credit Security or the incurrence of the
Credit Obligations; and
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(c) all other reasonable expenses incurred by the Lenders or the
holder of any Credit Obligation in connection with the "work out" or
enforcement of any rights hereunder or under any other Credit Document,
including costs of collection and reasonable attorneys' fees.
9.2. General Indemnity. The Borrower shall indemnify the Lenders and the
Agent and hold them harmless from any liability, loss or damage resulting from
the violation by the Borrower of Section 2.5. In addition, the Borrower shall
indemnify each Lender, the Agent, each of the Lenders' or the Agent's directors,
officers, employees, agents, attorneys, accountants, consultants and each
Person, if any, who controls any Lender or the Agent (each Lender, the Agent and
each of such directors, officers, employees, agents, attorneys, accountants,
consultants and control Persons is referred to as an "Indemnified Party") and
hold each of them harmless from and against any and all claims, damages,
liabilities and reasonable expenses (including reasonable fees and disbursements
of counsel with whom any Indemnified Party may consult in connection therewith
and all reasonable expenses of litigation or preparation therefor) which any
Indemnified Party may incur or which may be asserted against any Indemnified
Party in connection with (a) the Indemnified Party's compliance with or contest
of any subpoena or other process issued against it in any proceeding involving
the Holding Company or any of its Subsidiaries or their Affiliates, (b) any
litigation or investigation involving the Holding Company, any of its
Subsidiaries or their Affiliates, or any officer, director or employee thereof,
(c) the existence or exercise of any security rights with respect to the Credit
Security in accordance with the Credit Documents, or (d) this Agreement, any
other Credit Document or any transaction contemplated hereby or thereby;
provided, however, that the foregoing indemnity shall not apply to litigation
commenced by the Borrower against the Lenders or the Agent which seeks
enforcement of any of the rights of the Borrower hereunder or under any other
Credit Document and is determined adversely to the Lenders or the Agent in a
final nonappealable judgment or to the extent such claims, damages, liabilities
and expenses result from an Indemnified Party's or the Agent's gross negligence
or willful misconduct.
9.3. Indemnity With Respect to Letters of Credit. The Borrower shall
indemnify each Letter of Credit Issuer and its correspondents and hold each of
them harmless from and against any and all claims, losses, liabilities, damages
and reasonable expenses (including reasonable attorneys' fees) arising from or
in connection with any Letter of Credit, including any such claim, loss,
liability, damage or expense arising out of any transfer, sale, delivery,
surrender or endorsement of any invoice, bill of lading, warehouse receipt or
other document at any time held by any Letter of Credit Issuer or held for their
respective accounts by any of their correspondents, in connection with any
Letter of Credit, except to the extent such claims, losses, liabilities, damages
and expenses result from gross negligence or willful misconduct on the part of
the Letter of Credit Issuer.
10. Operations; Agent.
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10.1. Interests in Credits. The Percentage Interest of each Lender in the
portions of the Loan and Letters of Credit, and the related Commitments, shall
be computed based on the maximum principal amount for each Lender as set forth
in the Register, as from time to time in effect. The current Percentage
Interests are set forth in Exhibit 10.1, which may be updated by the Agent from
time to time to conform to the Register.
10.2. Agent's Authority to Act, etc. Each of the Lenders appoints and
authorizes Fleet to act for the Lenders as the Lenders' Agent in connection with
the transactions contemplated by this Agreement and the other Credit Documents
(other than Interest Rate Protection Agreements) on the terms set forth herein.
In acting hereunder, the Agent is acting, pursuant to the direction of the
Lenders, for the account of Fleet to the extent of its Percentage Interest and
for the account of each other Lender to the extent of the Lenders' respective
Percentage Interests, and all action in connection with the enforcement of, or
the exercise of any remedies (other than the Lenders' rights of set-off as
provided in Section 8.2.4 or in any Credit Document) in respect of the Credit
Obligations and Credit Documents (other than Interest Rate Protection
Agreements) shall be taken by the Agent.
10.3. Borrower to Pay Agent, etc. The Borrower and each Guarantor shall
be fully protected in making all payments in respect of the Credit Obligations
to the Agent other than payments under Interest Rate Protection Agreements, in
relying upon consents, modifications and amendments executed by the Agent
purportedly on the Lenders' behalf, and in dealing with the Agent as herein
provided. The Agent may charge the accounts of the Borrower, on the dates when
the amounts thereof become due and payable, with the amounts of the principal of
and interest on the Loan, any amounts paid by the Letter of Credit Issuers to
third parties under Letters of Credit or drafts presented thereunder, commitment
fees, Letter of Credit fees and all other fees and amounts owing under any
Credit Document.
10.4. Lender Operations for Advances, Letters of Credit, etc.
10.4.1. Advances. On each Closing Date (subject to the further
provisions of this Section 10.4.1), each Lender shall advance to the
Agent in immediately available funds such ▇▇▇▇▇▇'s Percentage Interest in
the portion of the Loan advanced on such Closing Date prior to 12:00 noon
(Boston time). If such funds are not received at such time, but all
applicable conditions set forth in Section 5 have been satisfied, each
Lender authorizes and requests the Agent to advance for the Lender's
account, pursuant to the terms hereof, the Lender's respective Percentage
Interest in such portion of the Loan and agrees to reimburse the Agent in
immediately available funds for the amount thereof prior to 2:00 p.m.
(Boston time) on the day any portion of the Loan is advanced hereunder;
provided, however, that the Agent is not authorized to make any such
advance for the account of any Lender who has previously notified the
Agent in writing that such ▇▇▇▇▇▇ will not be performing its obligations
to make further advances hereunder; and provided, further, that the Agent
shall be under no obligation to make any such advance.
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Notwithstanding the foregoing provisions of this Section 10.4.1,
the Agent may elect in its discretion to settle advances and payments
with the Lenders on a weekly basis with respect to the portion of the
Revolving Loan for which the Applicable Rate is computed on the basis of
the Base Rate, as follows: During the week the Agent shall make advances,
and collect payments, with respect to such portion of the Revolving Loan
without involving advances from or payments to the other Lenders. By
12:00 noon (Boston time) on the second Banking Day of the following week,
the Agent shall provide to the other Lenders a notice summarizing (a) the
advances and payments made or received by the Agent with respect to such
portion of the Revolving Loan during the previous week and (b) the weekly
settlement amounts to be paid by or to each Lender. By 12:00 noon (Boston
time) on the third Banking Day of such week, each Lender shall pay to the
Agent its Percentage Interest in the net amount of such Revolving Loan
advances over such Revolving Loan payments during the previous week, and
the Agent shall pay to each Lender its Percentage Interest in the net
amount of such Revolving Loan payments over such Revolving Loan advances
during the previous week. Interest on such Revolving Loan advances made
by the Agent shall be for the Agent's account for the period prior to
weekly settlement. Interest on the portion of the Revolving Loan paid by
the Borrower, accruing from the date such payment was made to the weekly
settlement date, shall be the obligation of, and shall be payable by, the
Agent.
10.4.2. Letters of Credit. Each of the Lenders having a Percentage
Interest in the Letters of Credit authorizes and requests each Letter of
Credit Issuer to issue the Letters of Credit provided for in Section 2.4
and to grant each such Lender a participation in each of such Letters of
Credit in an amount equal to its Percentage Interest in the amount of
each such Letter of Credit. Promptly upon the request of the Letter of
Credit Issuer, each such Lender shall reimburse the Letter of Credit
Issuer in immediately available funds for such ▇▇▇▇▇▇'s Percentage
Interest in the amount of all obligations to third parties incurred by
the Letter of Credit Issuer in respect of each Letter of Credit and each
draft accepted under a Letter of Credit to the extent not reimbursed by
the Borrower by 2:00 p.m. (Boston time) on the Banking Day when due. The
Letter of Credit Issuer will notify each such Lender of the issuance of
any Letter of Credit, the amount and date of payment of any draft drawn
or accepted under a Letter of Credit and whether in connection with the
payment of any such draft the amount thereof was added to the Revolving
Loan or was reimbursed by the Borrower.
10.4.3. Agent to Allocate Payments, etc. All payments of principal
and interest in respect of the extensions of credit made pursuant to this
Agreement, reimbursement of amounts paid by any Letter of Credit Issuer
to third parties under Letters of Credit or drafts presented thereunder,
commitment fees, Letter of Credit fees and other fees under this
Agreement shall, as a matter of convenience, be made by the Borrower and
the Guarantors to the Agent in immediately available funds by noon
(Boston time) on any Banking Day. The share of each Lender shall be
credited to such
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Lender by the Agent in immediately available funds by 2:00 p.m. (Boston
time) on such Banking Day (except for the weekly settlements contemplated
by Section 10.4.1) in such manner that the principal amount of the Credit
Obligations to be paid shall be paid proportionately in accordance with
the Lenders' respective Percentage Interests in such Credit Obligations,
except as otherwise provided in this Agreement. Under no circumstances
shall any Lender be required to produce or present its Notes as evidence
of its interests in the Credit Obligations in any action or proceeding
relating to the Credit Obligations.
10.4.4. Delinquent Lenders; Nonperforming Lenders. In the event
that any Lender fails to reimburse the Agent pursuant to Section 10.4.1
for the Percentage Interest of such lender (a "Delinquent Lender") in any
credit advanced by the Agent pursuant hereto, overdue amounts (the
"Delinquent Payment") due from the Delinquent Lender to the Agent shall
bear interest, payable by the Delinquent Lender on demand, at a per annum
rate equal to (a) the Federal Funds Rate for the first three days overdue
and (b) the sum of 2% plus the Federal Funds Rate for any longer period.
Such interest shall be payable to the Agent for its own account for the
period commencing on the date of the Delinquent Payment and ending on the
date the Delinquent Lender reimburses the Agent on account of the
Delinquent Payment (to the extent not paid by any Obligor as provided
below) and the accrued interest thereon (the "Delinquency Period"),
whether pursuant to the assignments referred to below or otherwise. Upon
notice by the Agent, the Borrower will pay to the Agent the principal
(but not the interest) portion of the Delinquent Payment. During the
Delinquency Period, in order to make reimbursements for the Delinquent
Payment and accrued interest thereon, the Delinquent Lender shall be
deemed to have assigned to the Agent all interest, commitment fees and
other payments made by the Borrower under Section 3 that would have
thereafter otherwise been payable under the Credit Documents to the
Delinquent Lender. During any other period in which any Lender is not
performing its obligations to extend credit under Section 2 (a
"Nonperforming Lender"), the Nonperforming Lender shall be deemed to have
assigned to each Lender that is not a Nonperforming Lender (a "Performing
Lender") all principal and other payments made by the Borrower under
Section 4 that would have thereafter otherwise been payable under the
Credit Documents to the Nonperforming Lender. The Agent shall credit a
portion of such payments to each Performing Lender in an amount equal to
the Percentage Interest of such Performing Lender in an amount equal to
the Percentage Interest of such Performing Lender divided by one minus
the Percentage Interest of the Nonperforming Lender until the respective
portions of the Loan owed to all the Lenders are the same as the
Percentage Interests of the Lenders immediately prior to the failure of
the Nonperforming Lender to perform its obligations under Section 2. The
foregoing provisions shall be in addition to any other remedies the
Agent, the Performing Lenders or the Borrower may have under law or
equity against the Delinquent Lender as a result of the Delinquent
Payment or against the Nonperforming Lender as a result of its failure to
perform its obligations under Section 2.
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10.5. Sharing of Payments, etc. Each Lender agrees that (a) if by
exercising any right of set-off or counterclaim or otherwise, it shall receive
payment of (i) a proportion of the aggregate amount due with respect to its
Percentage Interest in the Loan and Letter of Credit Exposure which is greater
than (ii) the proportion received by any other Lender in respect of the
aggregate amount due with respect to such other Lender's Percentage Interest in
the Loan and Letter of Credit Exposure and (b) if such inequality shall continue
for more than 10 days, the Lender receiving such proportionately greater payment
shall purchase participations in the Percentage Interests in the Loan and Letter
of Credit Exposure held by the other Lenders, and such other adjustments shall
be made from time to time (including rescission of such purchases of
participations in the event the unequal payment originally received is recovered
from such Lender through bankruptcy proceedings or otherwise), as may be
required so that all such payments of principal and interest with respect to the
Loan and Letter of Credit Exposure held by the Lenders shall be shared by the
Lenders pro rata in accordance with their respective Percentage Interests;
provided, however, that this Section 10.5 shall not impair the right of any
Lender to exercise any right of set-off or counterclaim it may have and to apply
the amount subject to such exercise to the payment of Indebtedness of any
Obligor other than such Obligor's Indebtedness with respect to the Loan and
Letter of Credit Exposure. Each Lender that grants a participation in the Credit
Obligations to a Credit Participant shall require as a condition to the granting
of such participation that such Credit Participant agree to share payments
received in respect of the Credit Obligations as provided in this Section 10.5.
The provisions of this Section 10.5 are for the sole and exclusive benefit of
the Lenders and no failure of any Lender to comply with the terms hereof shall
be available to any Obligor as a defense to the payment of the Credit
Obligations.
10.6. Amendments, Consents, Waivers, etc. Except as otherwise set forth
herein, the Agent may (and upon the written request of the Required Lenders the
Agent shall) take or refrain from taking any action under this Agreement or any
other Credit Document, including giving its written consent to any modification
of or amendment to and waiving in writing compliance with any covenant or
condition in this Agreement or any other Credit Document (other than an Interest
Rate Protection Agreement) or any Default or Event of Default, all of which
actions shall be binding upon all of the Lenders; provided, however, that:
(a) Except as provided below, without the written consent of the
Lenders owning at least a majority of the Percentage Interests (other
than any Delinquent Lender during the existence of a Delinquency Period
or Nonperforming Lender so long as such Delinquent Lender is treated the
same as the other Lenders with respect to any actions enumerated below),
no written modification of, amendment to, consent with respect to, waiver
of compliance with or waiver of a Default under, any of the Credit
Documents (other than an Interest Rate Protection Agreement) or action
taken under Section 8.2 shall be made.
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(b) Without the written consent of such Lenders as own 100% of the
Percentage Interests (other than any Delinquent Lender during the
existence of a Delinquency Period or Nonperforming Lender so long as such
Lender is treated the same as the other Lenders with respect to any
actions enumerated below):
(i) No reduction shall be made in (A) the amount of
principal of the Loan or reimbursement obligations for payments
made under Letters of Credit, (B) the interest rate on the Loan
(other than amendments and waivers approved by the Required
Lenders pursuant to clause (a) that modify defined terms used in
calculating the Applicable Margin or that waive an increase in the
Applicable Rate as a result of an Event of Default) or (C) the
Letter of Credit fees or commitment fees with respect to the
credit facility provided herein.
(ii) No change shall be made in the stated, scheduled time
of payment of all or any portion of the Loan (other than
amendments and waivers approved by the Required Lenders pursuant
to clause (a) that modify defined terms used in calculating the
Applicable Margin or Consolidated Excess Cash Flow) or interest
thereon or reimbursement of payments made under Letters of Credit
or fees relating to any of the foregoing payable to the Lenders
and no waiver shall be made of any Default under Section 8.1.1.
(iii) No increase shall be made in the amount, or extension
of the term, of the stated Commitments beyond that provided for
under Section 2.
(iv) No alteration shall be made of the Lenders' rights of
set-off contained in Section 8.2.4.
(v) No release of all or a substantial portion of the
Credit Security or of the Guarantors shall be made (in any event,
the Agent may release particular items of Credit Security or
particular Guarantors in dispositions permitted by Section 6.11
and may release all Credit Security pursuant to Section 17 upon
payment in full of the Credit Obligations and termination of the
Commitments without the written consent of the Lenders).
(vi) No amendment to or modification of this Section
10.6(b) shall be made.
(c) Without the written consent of (i) such Lenders owning at
least a majority of the Percentage Interests (other than Delinquent
Lenders during the existence of a Delinquency Period so long as such
Delinquent Lender is treated the same as the other Lenders with respect
to any actions enumerated below) and (ii) such Lenders holding a majority
of the Percentage Interests in Term Loan B (other than Delinquent Lenders
during the existence of a Delinquency Period so long as such Delinquent
Lender is
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treated the same as the other Lenders with respect to any actions
enumerated below), voting as a separate class, no change may be made in
the allocation of mandatory prepayments under Section 4.2 and 4.3 between
Term Loan A and Term Loan B.
10.7. Agent's Resignation. The Agent may resign at any time by giving at
least 60 days' prior written notice of its intention to do so to each of the
Lenders and the Holding Company and upon the appointment by the Required Lenders
of a successor Agent satisfactory to the Holding Company. If no successor Agent
shall have been so appointed and shall have accepted such appointment within 45
days after the retiring Agent's giving of such notice of resignation, then the
retiring Agent may with the consent of the Holding Company, which shall not be
unreasonably withheld, appoint a successor Agent which shall be a bank or a
trust company organized under the laws of the United States of America or any
state thereof and having a combined capital, surplus and undivided profit of at
least $100,000,000; provided, however, that any successor Agent appointed under
this sentence may be removed upon the written request of the Required Lenders,
which request shall also appoint a successor Agent reasonably satisfactory to
the Holding Company. Upon the appointment of a new Agent hereunder, the term
"Agent" shall for all purposes of this Agreement thereafter mean such successor.
After any retiring Agent's resignation hereunder as Agent, or the removal
hereunder of any successor Agent, the provisions of this Agreement shall
continue to inure to the benefit of such Agent as to any actions taken or
omitted to be taken by it while it was Agent under this Agreement.
10.8. Concerning the Agent.
10.8.1. Action in Good Faith, etc. The Agent and its officers,
directors, employees and agents shall be under no liability to any of the
Lenders or to any future holder of any interest in the Credit Obligations
for any action or failure to act taken or suffered in good faith, and any
action or failure to act in accordance with an opinion of its counsel
shall conclusively be deemed to be in good faith. The Agent shall in all
cases be entitled to rely, and shall be fully protected in relying, on
instructions given to the Agent by the Required Lenders.
10.8.2. No Implied Duties, etc. The Agent shall have and may
exercise such powers as are specifically delegated to the Agent under
this Agreement or any other Credit Document together with all other
powers incidental thereto. The Agent shall have no implied duties to any
Person or any obligation to take any action under this Agreement or any
other Credit Document except for action specifically provided for in this
Agreement or any other Credit Document to be taken by the Agent. Before
taking any action under this Agreement or any other Credit Document, the
Agent may request an appropriate specific indemnity satisfactory to it
from each Lender in addition to the general indemnity provided for in
Section 10.11. Until the Agent has received such specific indemnity, the
Agent shall not be obligated to take (although it may in its sole
discretion take) any such action under this Agreement or any other Credit
Document.
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Each Lender confirms that the Agent does not have a fiduciary
relationship to it under the Credit Documents. Each of the Borrower and
each Guarantor confirms that neither the Agent nor any other Lender has a
fiduciary relationship to it under the Credit Documents.
10.8.3. Validity, etc. The Agent shall not be responsible to any
Lender or any future holder of any interest in the Credit Obligations (a)
for the legality, validity, enforceability or effectiveness of this
Agreement or any other Credit Document, (b) for any recitals, reports,
representations, warranties or statements contained in or made in
connection with this Agreement or any other Credit Document, (c) for the
existence or value of any assets included in any security for the Credit
Obligations, (d) for the effectiveness of any Lien purported to be
included in the Credit Security, (e) for the specification or failure to
specify any particular assets to be included in the Credit Security, or
(f) unless the Agent shall have failed to comply with Section 10.8.1, for
the perfection of the security interests in the Credit Security.
10.8.4. Compliance. The Agent shall not be obligated to ascertain
or inquire as to the performance or observance of any of the terms of
this Agreement or any other Credit Document; and in connection with any
extension of credit under this Agreement or any other Credit Document,
the Agent shall be fully protected in relying on a certificate of the
Borrower as to the fulfillment by the Borrower of any conditions to such
extension of credit.
10.8.5. Employment of Agents and Counsel. The Agent may execute
any of its duties as Agent under this Agreement or any other Credit
Document by or through employees, agents and attorneys-in-fact and shall
not be responsible to any of the Lenders, the Holding Company or any
other Obligor for the default or misconduct of any such agents or
attorneys-in-fact selected by the Agent acting in good faith. The Agent
shall be entitled to advice of counsel concerning all matters pertaining
to the agency hereby created and its duties hereunder or under any other
Credit Document.
10.8.6. Reliance on Documents and Counsel. The Agent shall be
entitled to rely, and shall be fully protected in relying, upon any
affidavit, certificate, cablegram, consent, instrument, letter, notice,
order, document, statement, telecopy, telegram, telex or teletype message
or writing reasonably believed in good faith by the Agent to be genuine
and correct and to have been signed, sent or made by the Person in
question, including any telephonic or oral statement made by such Person,
and, with respect to legal matters, upon an opinion or the advice of
counsel selected by the Agent.
10.8.7. Agent's Reimbursement. Each of the Lenders severally
agrees to reimburse the Agent, pro rata in accordance with such ▇▇▇▇▇▇'s
Percentage Interest, for any reasonable expenses not reimbursed by the
Borrower or the Guarantors (without limiting the obligation of the
Borrower or the Guarantors to make such reimbursement):
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(a) for which the Agent is entitled to reimbursement by the Borrower or
the Guarantors under this Agreement or any other Credit Document, and (b)
after the occurrence of a Default, for any other reasonable expenses
incurred by the Agent on the Lenders' behalf in connection with the
enforcement of the Lenders' rights under this Agreement or any other
Credit Document; provided, however, that the Agent shall not be
reimbursed for any such expenses arising as a result of its gross
negligence or willful misconduct.
10.9. Rights as a Lender. With respect to any credit extended by it
hereunder, Fleet shall have the same rights, obligations and powers hereunder as
any other Lender and may exercise such rights and powers as though it were not
the Agent, and unless the context otherwise specifies, Fleet shall be treated in
its individual capacity as though it were not the Agent hereunder. Without
limiting the generality of the foregoing, the Percentage Interest of Fleet shall
be included in any computations of Percentage Interests. Fleet and its
Affiliates (as well as any other Lender and its Affiliates) may accept deposits
from, lend money to, act as trustee for and generally engage in any kind of
banking or trust business with the Holding Company, any of its Subsidiaries or
any Affiliate of any of them and any Person who may do business with or own an
equity interest in the Holding Company, any of its Subsidiaries or any Affiliate
of any of them, all as if Fleet were not the Agent and without any duty to
account therefor to the other Lenders.
10.10. Independent Credit Decision. Each of the Lenders acknowledges that
it has independently and without reliance upon the Agent, based on the financial
statements and other documents referred to in Section 7.2, on the other
representations and warranties contained herein and on such other information
with respect to the Holding Company and its Subsidiaries as such Lender deemed
appropriate, made such ▇▇▇▇▇▇'s own credit analysis and decision to enter into
this Agreement and to make the extensions of credit provided for hereunder. Each
Lender represents to the Agent that such Lender will continue to make its own
independent credit and other decisions in taking or not taking action under this
Agreement or any other Credit Document. Each Lender expressly acknowledges that
neither the Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates has made any representations or warranties to
such Lender, and no act by the Agent taken under this Agreement or any other
Credit Document, including any review of the affairs of the Holding Company and
its Subsidiaries, shall be deemed to constitute any representation or warranty
by the Agent. Except for notices, reports and other documents expressly required
to be furnished to each Lender by the Agent under this Agreement or any other
Credit Document, the Agent shall not have any duty or responsibility to provide
any Lender with any credit or other information concerning the business,
operations, property, condition, financial or otherwise, or creditworthiness of
the Holding Company or any Subsidiary which may come into the possession of the
Agent or any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates; provided, however, that the Agent shall furnish to the Lenders all
written reports and financial data received by it from the Holding Company and
its Subsidiaries that has not been furnished directly to the Lenders.
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10.11. Indemnification. The holders of the Credit Obligations severally
shall indemnify the Agent and its officers, directors, employees, agents,
attorneys, accountants, consultants and controlling Persons (to the extent not
reimbursed by the Obligors and without limiting the obligation of any of the
Obligors to do so), pro rata in accordance with their respective Percentage
Interests, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time be imposed on, incurred by or
asserted against the Agent or such Persons relating to or arising out of this
Agreement, any other Credit Document, the transactions contemplated hereby or
thereby, or any action taken or omitted by the Agent in connection with any of
the foregoing; provided, however, that the foregoing shall not extend to actions
or omissions which are taken by the Agent with gross negligence or willful
misconduct.
11. Successors and Assigns; Lender Assignments and Participations. Any reference
in this Agreement or any other Credit Document to any of the parties hereto
shall be deemed to include the successors and assigns of such party, and all
covenants and agreements by or on behalf of the Holding Company, the other
Obligors, the Agent or the Lenders that are contained in this Agreement or any
other Credit Document shall bind and inure to the benefit of their respective
successors and assigns; provided, however, that (a) the Holding Company and its
Subsidiaries may not assign their rights or obligations under this Agreement or
any other Credit Document except for mergers or liquidations permitted by
Section 6.11, and (b) the Lenders shall be not entitled to assign their
respective Percentage Interests in the credits extended hereunder or their
Commitments except as set forth below in this Section 11.
11.1. Assignments by ▇▇▇▇▇▇▇.
11.1.1. Assignees and Assignment Procedures. Each Lender may (a)
without the consent of the Agent or the Holding Company if the proposed
assignee is already a Lender hereunder or a Wholly Owned Subsidiary of
the same corporate parent of which the assigning Lender is a Subsidiary
or a Related Fund, or (b) otherwise with the consents of the Agent and
(so long as no Event of Default exists) the Holding Company (which
consents will not be unreasonably withheld), in compliance with
applicable laws in connection with such assignment, assign to one or more
commercial banks or other financial institutions or mutual funds (each,
an "Assignee") all or a portion of its interests, rights and obligations
under this Agreement and the other Credit Documents, including all or a
portion, which need not be pro rata between the Loan and the Letter of
Credit Exposure, of its Commitment, the portion of the Term Loan A, Term
Loan B, Revolving Loan and Letter of Credit Exposure at the time owing to
it and the Notes held by it, but excluding its rights and obligations as
a Letter of Credit Issuer; provided, however, that:
(i) the aggregate amount of the Commitment of the assigning
Lender subject to each such assignment to any Assignee other than
another Lender
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(determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to the Agent) shall be in
a minimum amount of $2,500,000 and in increments of $1,000,000
(or, if less, the entire remaining amount of the assigning
▇▇▇▇▇▇'s Commitment); and
(ii) the parties to each such assignment shall execute and
deliver to the Agent an Assignment and Acceptance (the "Assignment
and Acceptance") substantially in the form of Exhibit 11.1.1,
together with the Note subject to such assignment and, except in
the event of a transfer pursuant to clause (a) above or Section
11.3, a processing and recordation fee of $3,000 payable to the
Agent by the assigning Lender or the Assignee.
Upon acceptance and recording pursuant to Section 11.1.4, from and after
the effective date specified in each Assignment and Acceptance (which
effective date shall be at least five Banking Days after the execution
thereof unless waived by the Agent):
(A) the Assignee shall be a party hereto and, to the extent
provided in such Assignment and Acceptance, have the rights
and obligations of a Lender under this Agreement and
(B) the assigning Lender shall, to the extent provided in such
assignment, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance
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 but shall continue
to be entitled to the benefits of Sections 3.2.4, 3.5 and
9, as well as to any fees accrued for its account hereunder
and not yet paid).
11.1.2. Terms of Assignment and Acceptance. By executing and
delivering an Assignment and Acceptance, the assigning Lender and
Assignee shall be deemed to confirm to and agree with each other and the
other parties hereto as follows:
(a) other than the representation and warranty that it is the
legal and beneficial owner of the interest being assigned thereby free
and clear of any adverse claim, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to
any statements, warranties or representations made in or in connection
with this Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement, any other Credit
Document or any other instrument or document furnished pursuant hereto;
(b) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Holding Company and its Subsidiaries or the performance or observance by
the Holding Company or any of its
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Subsidiaries of any of its obligations under this Agreement, any other
Credit Document or any other instrument or document furnished pursuant
hereto;
(c) such Assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 7.2 or Section 6.4 and such other documents
and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance;
(d) such Assignee will independently and without reliance upon the
Agent, such assigning Lender or any other Lender, and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Agreement;
(e) such Assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to the Agent by the terms hereof, together
with such powers as are reasonably incidental thereto; and
(f) such Assignee agrees that it will perform in accordance with
the terms of this Agreement all the obligations which are required to be
performed by it as a Lender.
11.1.3. Register. The Agent shall maintain at the Boston Office a
register (the "Register") for the recordation of (a) the names and
addresses of the Lenders and the Assignees which assume rights and
obligations pursuant to an assignment under Section 11.1.1, (b) the
Percentage Interest of each such Lender as set forth in Exhibit 10.1 and
(c) the amount of the Loan and Letter of Credit Exposure owing to each
Lender from time to time. The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrower, the Agent
and the Lenders may treat each Person whose name is registered therein
for all purposes as a party to this Agreement. The Register shall be
available for inspection by the Borrower or any Lender at any reasonable
time and from time to time upon reasonable prior notice.
11.1.4. Acceptance of Assignment and Assumption. Upon its receipt
of a completed Assignment and Acceptance executed by an assigning ▇▇▇▇▇▇
and an Assignee (and any necessary consent of the Agent and the Holding
Company) together with the Note subject to such assignment, and the
processing and recordation fee referred to in Section 11.1.1, the Agent
shall (a) accept such Assignment and Acceptance, (b) record the
information contained therein in the Register and (c) give prompt notice
thereof to the Borrower. Within five Banking Days after receipt of
notice, the Borrower, at its own expense, shall execute and deliver to
the Agent, in exchange for the surrendered Note, a new Note to the order
of such Assignee in a principal amount equal to the applicable Commitment
and Loan assumed by it pursuant
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to such Assignment and Acceptance and, if the assigning Lender has
retained a Commitment and Loan, a new Note to the order of such assigning
Lender in a principal amount equal to the applicable Commitment and Loan
retained by it. Such new Note shall be in an aggregate principal amount
equal to the aggregate principal amount of such surrendered Note, and
shall be dated the date of the surrendered Note which it replaces.
11.1.5. Federal Reserve Bank. Notwithstanding the foregoing
provisions of this Section 11, any Lender may at any time pledge or
assign all or any portion of such Lender's rights under this Agreement
and the other Credit Documents to a Federal Reserve Bank; provided,
however, that no such pledge or assignment shall release such Lender from
such ▇▇▇▇▇▇'s obligations hereunder or under any other Credit Document.
11.1.6. Further Assurances. The Holding Company and its
Subsidiaries shall sign such documents and take such other actions from
time to time reasonably requested by an Assignee to enable it to share in
the benefits of the rights created by the Credit Documents.
11.2. Credit Participants. Each Lender may, without the consent of the
Holding Company or the Agent, in compliance with applicable laws in connection
with such participation, sell to one or more commercial banks or other financial
institutions or mutual funds (each a "Credit Participant") participations in all
or a portion of its interests, rights and obligations under this Agreement and
the other Credit Documents (including all or a portion of its Commitment, the
Loan and Letter of Credit Exposure owing to it and the Note held by it);
provided, however, that:
(a) such Lender's obligations under this Agreement shall remain
unchanged;
(b) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations;
(c) the Credit Participant shall be entitled to the benefit of the
cost protection provisions contained in Sections 3.2.4, 3.5 and 9, but
shall not be entitled to receive any greater payment thereunder than the
selling Lender would have been entitled to receive with respect to the
interest so sold if such interest had not been sold; and
(d) the Borrower, the Agent and the other Lenders shall continue
to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement, and such Lender
shall retain the sole right as one of the Lenders to vote with respect to
the enforcement of the obligations of the Obligors relating to the Loan
and Letter of Credit Exposure and the approval of any amendment,
modification or waiver of any provision of this Agreement (other than
amendments, modifications, consents or waivers described in clause (b) of
the proviso to Section 10.6).
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Each Obligor agrees, to the fullest extent permitted by applicable law, that any
Credit Participant and any Lender purchasing a participation from another Lender
pursuant to Section 10.5 may exercise all rights of payment (including the right
of set-off), with respect to its participation as fully as if such Credit
Participant or such Lender were the direct creditor of the Obligors and a Lender
hereunder in the amount of such participation.
11.3. Replacement of Lender. In the event that any Lender or, to the
extent applicable, any Credit Participant (the "Affected Lender"):
(a) fails to perform its obligations to fund any portion of the
Loan or to issue any Letter of Credit on any Closing Date when required
to do so by the terms of the Credit Documents, or fails to provide its
portion of any LIBOR Pricing Option pursuant to Section 3.2.1 or on
account of a Legal Requirement as contemplated by Section 3.2.5;
(b) demands payment under the provisions of Section 3.5 in an
amount materially in excess of the amounts with respect thereto demanded
by the other Lenders;
(c) refuses to consent to a proposed extension of the Applicable
Maturity Date that is consented to by all of the other Lenders; or
(d) refuses to consent to a proposed amendment, modification,
waiver or other action requiring consent of the holders of 100% of the
Percentage Interests under Section 10.6(b) that is consented to by all of
the other Lenders;
then, so long as no Event of Default exists, the Holding Company shall have the
right to seek a replacement lender which is reasonably satisfactory to the Agent
(the "Replacement Lender"). The Replacement Lender shall purchase the interests
of the Affected Lender in the Loan, Letters of Credit and its Commitment and
shall assume the obligations of the Affected Lender hereunder and under the
other Credit Documents upon execution by the Replacement Lender of an Assignment
and Acceptance and the tender by it to the Affected Lender of a purchase price
agreed between it and the Affected Lender (or, if they are unable to agree, a
purchase price in the amount of the Affected Lender's Percentage Interest in the
Loan and Letter of Credit Exposure, or appropriate credit support for contingent
amounts included therein, and all other outstanding Credit Obligations then owed
to the Affected Lender). No assignment fee pursuant to Section 11.1.1(ii) shall
be required in connection with such assignment. Such assignment by the Affected
Lender shall be deemed an early termination of any LIBOR Pricing Option to the
extent of the Affected Lender's portion thereof, and the Borrower will pay to
the Affected Lender any resulting amounts due under Section 3.2.4. Upon
consummation of such assignment, the Replacement Lender shall become party to
this Agreement as a signatory hereto and shall have all the rights and
obligations of the Affected Lender under this
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Agreement and the other Credit Documents with a Percentage Interest equal to the
Percentage Interest of the Affected Lender, the Affected Lender shall be
released from its obligations hereunder and under the other Credit Documents,
and no further consent or action by any party shall be required. Upon the
consummation of such assignment, the Borrower, the Agent and the Affected Lender
shall make appropriate arrangements so that a new Revolving Note is issued to
the Replacement Lender if it has acquired a portion of the Revolving Loan. The
Borrower and the Guarantors shall sign such documents and take such other
actions reasonably requested by the Replacement Lender to enable it to share in
the benefits of the rights created by the Credit Documents. Until the
consummation of an assignment in accordance with the foregoing provisions of
this Section 11.3, the Borrower shall continue to pay to the Affected Lender any
Credit Obligations as they become due and payable.
12. Confidentiality. Each Lender will make no disclosure of confidential
information furnished to it by the Holding Company or any of its Subsidiaries
unless such information shall have become public, except:
(a) in connection with operations under or the enforcement of this
Agreement or any other Credit Document to Persons who have a reasonable
need to be furnished such confidential information and who agree to
comply with the restrictions contained in this Section 12 with respect to
such information;
(b) pursuant to any statutory or regulatory requirement or any
mandatory court order, subpoena or other legal process;
(c) to any parent or corporate Affiliate of such Lender or to any
Credit Participant, proposed Credit Participant or proposed Assignee;
provided, however, that any such Person shall agree to comply with the
restrictions set forth in this Section 12 with respect to such
information;
(d) to its independent counsel, auditors and other professional
advisors with an instruction to such Person to keep such information
confidential; and
(e) with the prior written consent of the Holding Company, to any
other Person.
13. Foreign Lenders. If any Lender is not created or organized in, or under the
laws of, the United States of America or any state thereof, such Lender shall
deliver to the Borrower and the Agent the forms described in one of the
following two clauses:
(a) Two fully completed and duly executed United States Internal
Revenue Service Form 1001 or 4224 or any successor form, as the case may
be, certifying that such Lender is entitled to receive payments of the
Credit Obligations payable to it without deduction or withholding of any
United States federal income taxes; or
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(b) A statement, executed by such Lender under penalty of perjury,
certifying that such Lender is not a "bank" within the meaning of section
881(c)(3)(A) of the Code and two fully completed and duly executed United
States Internal Revenue Service Forms W-8 or any successor form,
certifying that such Lender is not a "United States person" within the
meaning of section 7701(a)(30) of the Code.
Each Lender that delivers any form or statement pursuant to this Section 13
further undertakes to renew such forms and statements by delivering to the
Borrower and the Agent any updated form, successor form or other certification,
as the case may be, on or before the date that any form or statement previously
delivered pursuant to this Section 13 expires or becomes obsolete or after the
occurrence of any event requiring a change in such most recent form or
statement. If at any time the Borrower and the Agent have not received all forms
and statements (including any renewals thereof) required to be provided by any
Lender pursuant to this Section 13, Section 3.5 shall not apply with respect to
any amount of United States federal income taxes required to be withheld from
payments of the Credit Obligations to such Lender.
14. Notices. Except as otherwise specified in this Agreement or any other Credit
Document, any notice required to be given pursuant to this Agreement or any
other Credit Document shall be given in writing. Any notice, consent, approval,
demand or other communication in connection with this Agreement or any other
Credit Document shall be deemed to be given if given in writing (including
telex, telecopy or similar teletransmission) addressed as provided below (or to
the addressee at such other address as the addressee shall have specified by
notice actually received by the addressor), and if either (a) actually delivered
in fully legible form to such address (evidenced in the case of a telex by
receipt of the correct answerback) or (b) in the case of a letter, unless actual
receipt of the notice is required by any Credit Document five days shall have
elapsed after the same shall have been deposited in the United States mails,
with first-class postage prepaid and registered or certified.
If to the Holding Company or any of its Subsidiaries, to it at its
address set forth in Exhibit 7.1 (as supplemented pursuant to Sections 6.4.1 and
6.4.2), to the attention of the chief financial officer.
If to any Lender or the Agent, to it at its address set forth on the
signature pages of this Agreement or in the Register, with a copy to the Agent.
15. Course of Dealing; Amendments and Waivers. No course of dealing between any
Lender or the Agent, on one hand, and the Borrower or any other Obligor, on the
other hand, shall operate as a waiver of any of the Lenders' or the Agent's
rights under this Agreement or any other Credit Document or with respect to the
Credit Obligations. Each of the Borrower and the Guarantors acknowledges that if
the Lenders or the Agent, without being required to do so by this Agreement or
any other Credit Document, give any notice or information to, or obtain any
consent from, the Borrower or any other Obligor, the Lenders and the Agent shall
not by implication have amended, waived or modified any provision of this
Agreement or any
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other Credit Document, or created any duty to give any such notice or
information or to obtain any such consent on any future occasion. No delay or
omission on the part of any Lender or the Agent in exercising any right under
this Agreement or any other Credit Document or with respect to the Credit
Obligations shall operate as a waiver of such right or any other right hereunder
or thereunder. A waiver on any one occasion shall not be construed as a bar to
or waiver of any right or remedy on any future occasion. No waiver, consent or
amendment with respect to this Agreement or any other Credit Document shall be
binding unless it is in writing and signed by the Agent or the Required Lenders.
16. No Strict Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement and the other Credit Documents with
counsel sophisticated in financing transactions. In the event an ambiguity or
question of intent or interpretation arises, this Agreement and the other Credit
Documents shall be construed as if drafted jointly by the parties and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement and the other
Credit Documents.
17. Defeasance. When all Credit Obligations have been paid, performed and
reasonably determined by the Lenders to have been indefeasibly discharged in
full, and if at the time no Lender continues to be committed to extend any
credit to the Holding Company hereunder or under any other Credit Document, this
Agreement and the other Credit Documents shall terminate and, at the Holding
Company's written request, accompanied by such certificates and other items as
the Agent shall reasonably deem necessary, the Credit Security shall revert to
the Obligors and the right, title and interest of the Lenders therein shall
terminate. Thereupon, on the Obligors' demand and at their cost and expense, the
Agent shall execute proper instruments, acknowledging satisfaction of and
discharging this Agreement and the other Credit Documents, and shall redeliver
to the Obligors any Credit Security then in its possession; provided, however,
that Sections 3.2.4, 3.5, 9, 10.8.7, 10.11, 12, 18 and 19 shall survive the
termination of this Agreement.
18. Venue; Service of Process. Each of the Borrower and the other Obligors:
(a) Irrevocably submits to the nonexclusive jurisdiction of the
state courts of The Commonwealth of Massachusetts and to the nonexclusive
jurisdiction of the United States District Court for the District of
Massachusetts for the purpose of any suit, action or other proceeding
arising out of or based upon this Agreement or any other Credit Document
or the subject matter hereof or thereof.
(b) Waives to the extent not prohibited by applicable law that
cannot be waived, and agrees not to assert, by way of motion, as a
defense or otherwise, in any such proceeding brought in any of the
above-named courts, any claim that it is not subject personally to the
jurisdiction of such court, that its property is exempt or immune from
attachment or execution, that such proceeding is brought in an
inconvenient forum, that the venue of such proceeding is improper, or
that this
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Agreement or any other Credit Document, or the subject matter hereof or
thereof, may not be enforced in or by such court.
Each of the Borrower and the other Obligors consents to service of process in
any such proceeding in any manner at the time permitted by Chapter 223A of the
General Laws of The Commonwealth of Massachusetts and agrees that service of
process by registered or certified mail, return receipt requested, at its
address specified in or pursuant to Section 14 is reasonably calculated to give
actual notice.
19. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT
CANNOT BE WAIVED, EACH OF THE BORROWER, THE OTHER OBLIGORS, THE AGENT AND THE
LENDERS WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF,
DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF
ANY ISSUE, CLAIM OR PROCEEDING ARISING OUT OF THIS AGREEMENT OR ANY OTHER CREDIT
DOCUMENT OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY CREDIT OBLIGATION OR IN
ANY WAY CONNECTED WITH THE DEALINGS OF THE LENDERS, THE AGENT, THE BORROWER OR
ANY OTHER OBLIGOR IN CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT, TORT OR OTHERWISE. Each
of the Borrower and the other Obligors acknowledges that it has been informed by
the Agent that the provisions of this Section 19 constitute a material
inducement upon which each of the Lenders has relied and will rely in entering
into this Agreement and any other Credit Document, and that it has reviewed the
provisions of this Section 19 with its counsel. Any Lender, the Agent, the
Borrower or any other Obligor may file an original counterpart or a copy of this
Section 19 with any court as written evidence of the consent of the Borrower,
the other Obligors, the Agent and the Lenders to the waiver of their rights to
trial by jury.
20. General. Time is (and shall be) of the essence in this Agreement and the
other Credit Documents. All covenants, agreements, representations and
warranties made in this Agreement or any other Credit Document or in
certificates delivered pursuant hereto or thereto shall be deemed to have been
relied on by each Lender, notwithstanding any investigation made by any Lender
on its behalf, and shall survive the execution and delivery to the Lenders
hereof and thereof. The invalidity or unenforceability of any provision hereof
shall not affect the validity or enforceability of any other provision hereof.
The headings in this Agreement are for convenience of reference only and shall
not limit or otherwise affect the meaning hereof. This Agreement and the other
Credit Documents constitute the entire understanding of the parties with respect
to the subject matter hereof and thereof and supersede all prior and
contemporaneous understandings and agreements, whether written or oral. This
Agreement may be executed in any number of counterparts which together shall
constitute one instrument. This Agreement shall be governed by and construed in
accordance with the laws (other than the conflict of laws rules) of The
Commonwealth of Massachusetts.
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Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
date first above written.
PLAYCORE, INC.
By /s/
Title: Vice President
PLAYCORE WISCONSIN, INC.
By /s/
Title: Vice President
FLEET NATIONAL BANK
By /s/
Title: Vice President
FLEET NATIONAL BANK
Acquisition Finance Division
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Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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BANKBOSTON, N.A.
By /s/
Title: Vice President
BANKBOSTON, N.A.
Diversified Finance
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LASALLE NATIONAL BANK
By /s/
Title: Vice President
LASALLE NATIONAL BANK
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Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY
By/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:Vice President
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY
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Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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MASSMUTUAL HIGH YIELD PARTNERS II, LLC
By HYP MANAGEMENT, INC.,
as Managing Member
By/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:Vice President
MASSMUTUAL HIGH YIELD PARTNERS II, LLC
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Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
FIRSTAR BANK MILWAUKEE, N.A.
By/s/
Title:Vice President
FIRSTAR BANK MILWAUKEE, N.A.
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M & I ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ BANK
By/s/
Title:Vice President
By/s/
Title:Senior Vice President
M & I ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ BANK
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KEY CORPORATE CAPITAL INC.
By/s/
Title: Vice President
KEY CORPORATE CAPITAL INC.
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The undersigned joins in and becomes
party to the foregoing Agreement as a
Guarantor as of the Initial Closing
Date:
HEARTLAND INDUSTRIES, INC. (DE)
By/s/
Title:Vice President, and
Chief Financial Officer
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