EXHIBIT 10.23
AMENDED AND RESTATED
CREDIT AGREEMENT
among
THE MAXIM GROUP, INC.
as Borrower,
AND
THE DOMESTIC SUBSIDIARIES OF THE BORROWER
as Guarantors,
AND
THE LENDERS IDENTIFIED HEREIN,
AND
NATIONSBANK, N.A.,
as Administrative Agent
DATED AS OF MAY 18, 1999
Arranged by:
BANC OF AMERICA SECURITIES LLC,
as Sole Lead Arranger and Sole Book Manager
TABLE OF CONTENTS
-----------------
SECTION 1 DEFINITIONS AND ACCOUNTING TERMS.......................................................................1
1.1 DEFINITIONS..........................................................................................1
1.2 COMPUTATION OF TIME PERIODS AND OTHER DEFINITIONAL PROVISIONS.......................................26
1.3 ACCOUNTING TERMS....................................................................................26
SECTION 2 CREDIT FACILITIES.....................................................................................26
2.1 REVOLVING LOANS.....................................................................................26
2.2 LETTER OF CREDIT SUBFACILITY........................................................................29
2.3 INDEMNIFICATION OF ISSUING LENDER...................................................................33
2.4 CONTINUATIONS AND CONVERSIONS.......................................................................34
2.5 MINIMUM AMOUNTS.....................................................................................35
SECTION 3 GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT..........................................35
3.1 INTEREST. .........................................................................................35
3.2 PLACE AND MANNER OF PAYMENTS........................................................................36
3.3 PREPAYMENTS.........................................................................................36
3.4 FEES. .........................................................................................37
3.5 PAYMENT IN FULL AT MATURITY.........................................................................39
3.6 COMPUTATIONS OF INTEREST AND FEES...................................................................39
3.7 PRO RATA TREATMENT..................................................................................40
3.8 SHARING OF PAYMENTS.................................................................................41
3.9 CAPITAL ADEQUACY....................................................................................41
3.10 INABILITY TO DETERMINE INTEREST RATE...............................................................42
3.11 ILLEGALITY.........................................................................................42
3.12 REQUIREMENTS OF LAW................................................................................43
3.13 TAXES. .........................................................................................44
3.14 COMPENSATION.......................................................................................46
3.15 EVIDENCE OF DEBT...................................................................................46
3.16 REPLACEMENT OF LENDERS.............................................................................47
SECTION 4 GUARANTY..............................................................................................47
4.1 GUARANTY OF PAYMENT.................................................................................47
4.2 OBLIGATIONS UNCONDITIONAL...........................................................................48
4.3 MODIFICATIONS.......................................................................................49
4.4 WAIVER OF RIGHTS....................................................................................49
4.5 REINSTATEMENT.......................................................................................49
4.6 REMEDIES............................................................................................50
4.7 LIMITATION OF GUARANTY..............................................................................50
4.8 RIGHTS OF CONTRIBUTION..............................................................................50
SECTION 5 CONDITIONS PRECEDENT..................................................................................50
5.1 CLOSING CONDITIONS..................................................................................50
5.2 CONDITIONS TO ALL EXTENSIONS OF CREDIT..............................................................54
SECTION 6 REPRESENTATIONS AND WARRANTIES........................................................................55
6.1 FINANCIAL CONDITION.................................................................................55
6.2 NO MATERIAL CHANGE..................................................................................56
6.3 ORGANIZATION AND GOOD STANDING......................................................................56
6.4 DUE AUTHORIZATION...................................................................................56
6.5 NO CONFLICTS........................................................................................56
6.6 CONSENTS............................................................................................57
6.7 ENFORCEABLE OBLIGATIONS.............................................................................57
6.8 NO DEFAULT..........................................................................................57
6.9 OWNERSHIP...........................................................................................57
6.10 INDEBTEDNESS.......................................................................................58
6.11 LITIGATION.........................................................................................58
6.12 TAXES. .........................................................................................58
6.13 COMPLIANCE WITH LAW................................................................................58
6.14 ERISA..............................................................................................58
6.15 SUBSIDIARIES.......................................................................................59
6.16 USE OF PROCEEDS....................................................................................60
6.17 GOVERNMENT REGULATION..............................................................................60
6.18 ENVIRONMENTAL MATTERS..............................................................................61
6.19 INTELLECTUAL PROPERTY..............................................................................62
6.20 SOLVENCY...........................................................................................63
6.21 INVESTMENTS........................................................................................63
6.22 LOCATION OF COLLATERAL.............................................................................63
6.23 DISCLOSURE.........................................................................................63
6.24 LICENSES, ETC......................................................................................63
6.25 COLLATERAL DOCUMENTS...............................................................................63
6.26 BURDENSOME RESTRICTIONS............................................................................63
SECTION 7 AFFIRMATIVE COVENANTS.................................................................................64
7.1 INFORMATION COVENANTS...............................................................................64
7.2 FINANCIAL COVENANTS.................................................................................68
7.3 PRESERVATION OF EXISTENCE AND FRANCHISES............................................................71
7.4 BOOKS AND RECORDS...................................................................................71
7.5 COMPLIANCE WITH LAW.................................................................................71
7.6 PAYMENT OF TAXES AND OTHER INDEBTEDNESS.............................................................71
7.7 INSURANCE...........................................................................................72
7.8 MAINTENANCE OF PROPERTY.............................................................................73
7.9 PERFORMANCE OF OBLIGATIONS..........................................................................73
7.10 COLLATERAL.........................................................................................73
7.11 USE OF PROCEEDS....................................................................................73
7.12 AUDITS/INSPECTIONS.................................................................................73
7.13 ADDITIONAL CREDIT PARTIES..........................................................................74
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7.14 YEAR 2000 COMPLIANCE...............................................................................74
7.15 POST-CLOSING REQUIREMENTS..........................................................................75
SECTION 8 NEGATIVE COVENANTS....................................................................................77
8.1 INDEBTEDNESS........................................................................................77
8.2 LIENS. .........................................................................................78
8.3 NATURE OF BUSINESS..................................................................................78
8.4 CONSOLIDATION AND MERGER............................................................................78
8.5 SALE OR LEASE OF ASSETS.............................................................................79
8.6 SALE LEASEBACKS.....................................................................................79
8.7 ADVANCES, INVESTMENTS AND LOANS.....................................................................79
8.8 RESTRICTED PAYMENTS.................................................................................80
8.9 TRANSACTIONS WITH AFFILIATES........................................................................80
8.10 FISCAL YEAR; ORGANIZATIONAL DOCUMENTS..............................................................80
8.11 NO LIMITATIONS.....................................................................................80
8.12 NO OTHER NEGATIVE PLEDGES..........................................................................81
8.13 LIMITATION ON FOREIGN OPERATIONS...................................................................81
8.14 CAPITAL EXPENDITURES...............................................................................81
8.15 PREPAYMENTS OF INDEBTEDNESS........................................................................81
8.16 SUBORDINATED DEBT..................................................................................81
8.17 LIMITATION ON STORE OPENINGS.......................................................................82
8.18 LIMITATION ON FEES AND EXPENSES....................................................................82
SECTION 9 EVENTS OF DEFAULT.....................................................................................83
9.1 EVENTS OF DEFAULT...................................................................................83
9.2 ACCELERATION; REMEDIES..............................................................................86
9.3 ALLOCATION OF PAYMENTS AFTER EVENT OF DEFAULT.......................................................87
SECTION 10 AGENCY PROVISIONS....................................................................................88
10.1 APPOINTMENT........................................................................................88
10.2 DELEGATION OF DUTIES...............................................................................88
10.3 EXCULPATORY PROVISIONS.............................................................................89
10.4 RELIANCE ON COMMUNICATIONS.........................................................................89
10.5 NOTICE OF DEFAULT..................................................................................90
10.6 NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS.............................................90
10.7 INDEMNIFICATION....................................................................................91
10.8 ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY....................................................91
10.9 SUCCESSOR ADMINISTRATIVE AGENT.....................................................................91
SECTION 11 MISCELLANEOUS........................................................................................92
11.1 NOTICES............................................................................................92
11.2 RIGHT OF SET-OFF...................................................................................92
11.3 BENEFIT OF AGREEMENT...............................................................................92
11.4 NO WAIVER; REMEDIES CUMULATIVE.....................................................................95
11.5 PAYMENT OF EXPENSES; INDEMNIFICATION...............................................................96
11.6 AMENDMENTS, WAIVERS AND CONSENTS...................................................................96
iii
11.7 COUNTERPARTS/TELECOPY..............................................................................98
11.8 HEADINGS...........................................................................................98
11.9 DEFAULTING LENDER..................................................................................98
11.10 SURVIVAL OF INDEMNIFICATION AND REPRESENTATIONS AND WARRANTIES....................................98
11.11 GOVERNING LAW; JURISDICTION.......................................................................98
11.12 WAIVER OF JURY TRIAL..............................................................................99
11.13 TIME..............................................................................................99
11.14 SEVERABILITY......................................................................................99
11.15 FURTHER ASSURANCES................................................................................99
11.16 CONFIDENTIALITY...................................................................................99
11.17 ENTIRETY.........................................................................................100
11.18 BINDING EFFECT; CONTINUING AGREEMENT.............................................................100
SCHEDULES
Schedule 1.1(a) Commitment Percentages
Schedule 1.1(b) Indenture Default
Schedule 1.1(c) Permitted Liens
Schedule 2.2(c) Existing Letters of Credit
Schedule 6.10 Indebtedness
Schedule 6.15 Subsidiaries
Schedule 6.19 Intellectual Property
Schedule 6.22(a) Real Property Locations
Schedule 6.22(b) Personal Property Locations
Schedule 6.22(c) Chief Executive Offices
Schedule 7.7 Insurance
Schedule 11.1 Notices
EXHIBITS
Exhibit 2.1(b) Form of Notice of Borrowing
Exhibit 2.1(f) Form of Revolving Note
Exhibit 2.4 Form of Notice of Continuation/Conversion
Exhibit 7.1(c) Form of Officer's Certificate
Exhibit 7.1(d) Form of Borrowing Base Certificate
Exhibit 7.13 Form of Joinder Agreement
Exhibit 11.3(b) Form of Assignment Agreement
iv
AMENDED AND RESTATED
CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT (this "CREDIT AGREEMENT"),
is entered into as of May 18, 1999 among THE MAXIM GROUP, INC., a Delaware
corporation (the "BORROWER"), each of the Domestic Subsidiaries of the Borrower
(individually a "GUARANTOR" and collectively the "GUARANTORS"), the Lenders (as
defined herein) and NATIONSBANK, N.A., as Administrative Agent for the Lenders
(in such capacity, the "ADMINISTRATIVE AGENT")
RECITALS
WHEREAS, the Borrower and the Guarantors entered into that certain
Credit Agreement dated as of November 25, 1998 (as amended or modified from time
to time, the "PRIOR CREDIT AGREEMENT"); and
WHEREAS, the Borrower and the Guarantors have requested that the
Lenders provide an amended and restated credit facility comprised of a
$75,000,000 revolving credit facility; and
WHEREAS, the Lenders have agreed to make the requested amended and
restated credit facility available to the Borrower on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
1.1 DEFINITIONS.
As used herein, the following terms shall have the meanings herein
specified unless the context otherwise requires. Defined terms herein shall
include in the singular number the plural and in the plural the singular:
"ACCELERATION EVENT" means the acceleration of the
Subordinated Debt prior to its stated maturity.
"ACCELERATION EVENT FEE" has the meaning set forth in Section
3.4(g).
"ADDITIONAL CREDIT PARTY" means each Person that becomes a
Guarantor after the Closing Date, as provided in Section 7.13.
"ADJUSTED BASE RATE" means the Base Rate plus the Applicable
Percentage.
"ADJUSTED EURODOLLAR RATE" means the Eurodollar Rate plus the
Applicable Percentage.
"ADJUSTED SENIOR DEBT RATIO" means, with respect to the Credit
Parties on a consolidated basis for the twelve month period ending on
the last day of any fiscal quarter of the Borrower, the ratio of (a)
Total Senior Debt plus Adjusted Rent Expense to (b) EBITDAR.
"ADJUSTED RENT EXPENSE" means the product of Rent Expense
multiplied by eight (8).
"ADMINISTRATIVE AGENT" shall have the meaning assigned to such
term in the heading hereof (or any successor thereto) or any successor
agent appointed pursuant to Section 10.9.
"AFFILIATE" means, with respect to any Person, any other
Person directly or indirectly controlling (including but not limited to
all directors and officers of such Person), controlled by or under
direct or indirect common control with such Person. A Person shall be
deemed to control a corporation if such Person possesses, directly or
indirectly, the power (a) to vote 10% or more of the securities having
ordinary voting power for the election of directors of such corporation
or (b) to direct or cause direction of the management and policies of
such corporation, whether through the ownership of voting securities,
by contract or otherwise.
"AGENCY SERVICES ADDRESS" means NationsBank, N.A.,
NC1-001-15-04, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attn: Agency Services, or such other address as may be identified by
written notice from the Administrative Agent to the Borrower.
"APPLICABLE PERCENTAGE" means the appropriate applicable
percentages corresponding to the Fixed Charge Coverage Ratio in effect
as of the most recent Calculation Date as shown below:
2
Applicable Applicable
Fixed Charge Applicable Applicable Percentage for Percentage for Applicable
Pricing Coverage Percentage for Percentage for Standby Letter Trade Letter of Percentage for
Level Ratio Eurodollar Loans Base Rate Loans of Credit Fees Credit Fees Commitment Fees
------------- ---------------- ----------------- ---------------- ----------------- ----------------- ------------------
------------- ---------------- ----------------- ---------------- ----------------- ----------------- ------------------
equal to or
greater than
I 2.00 to 1.0 1.00% 0.0% 1.00% 0.625% 0.250%
------------- ---------------- ----------------- ---------------- ----------------- ----------------- ------------------
------------- ---------------- ----------------- ---------------- ----------------- ----------------- ------------------
equal to or
greater than
II 1.75 to 1.0 1.25% 0.0% 1.25% 0.625% 0.250%
but
less than
2.00 to 1.0
------------- ---------------- ----------------- ---------------- ----------------- ----------------- ------------------
------------- ---------------- ----------------- ---------------- ----------------- ----------------- ------------------
equal to or
greater than
III 1.50 to 1.0 1.50% 0.0% 1.50% 0.625% 0.300%
but
less than
1.75 to 1.0
------------- ---------------- ----------------- ---------------- ----------------- ----------------- ------------------
------------- ---------------- ----------------- ---------------- ----------------- ----------------- ------------------
equal to or
greater than
IV 1.30 to 1.0 1.75% 0.25% 1.75% 0.625% 0.375%
but
less than
1.50 to 1.0
------------- ---------------- ----------------- ---------------- ----------------- ----------------- ------------------
------------- ---------------- ----------------- ---------------- ----------------- ----------------- ------------------
less than
V 1.30 to 1.0 2.00% 0.50% 2.00% 0.625% 0.500%
------------- ---------------- ----------------- ---------------- ----------------- ----------------- ------------------
The Applicable Percentage for Loans, the Standby Letter of
Credit Fees, the Trade Letter of Credit Fees and the Commitment Fees
shall, in each case, be determined and adjusted quarterly on the date
(each a "CALCULATION DATE") five Business Days after the date by which
the Borrower is required to provide the officer's certificate in
accordance with the provisions of Section 7.1(c); PROVIDED THAT the
initial Applicable Percentage for Loans, the Standby Letter of Credit
Fees, the Trade Letter of Credit Fees and the Commitment Fees shall be
based on Pricing Level V (as shown above) and shall remain at Pricing
Level V until the first Calculation Date subsequent to the fiscal
quarter of the Borrower ending July 31, 1999, and, thereafter, the
Applicable Percentage shall be determined by the Fixed Charge Coverage
Ratio calculated as of the most recent Calculation Date; and PROVIDED
FURTHER THAT if the Borrower fails to provide the officer's certificate
required by Section 7.1(c) on or before the most recent Calculation
Date, the Applicable Percentage for Loans, the Standby Letter of Credit
Fees, the Trade Letter of Credit Fees and the Commitment Fees from such
Calculation Date shall be based on Pricing Level V until such time that
an appropriate officer's certificate is provided whereupon the
Applicable Percentage shall be determined by the then current Fixed
Charge Coverage Ratio. Each Applicable Percentage shall be effective
from one Calculation Date until the next Calculation Date. Any
adjustment in the Applicable Percentage shall be applicable to all
existing Loans and Letters of Credit as well as any new Loans made or
Letters of Credit issued.
The Borrower shall promptly deliver to the Administrative
Agent, at the address set forth on SCHEDULE 11.1 and at the Agency
Services Address, at the time the officer's certificate is required to
be delivered by Section 7.1(c), information regarding any change in the
Fixed Charge Coverage Ratio that would change the existing Applicable
Percentage pursuant to the preceding paragraph.
Upon the occurrence of a Repurchase Event, the Applicable
Percentages for Loans and the Standby Letter of Credit Fees at each
Pricing Level will be permanently increased
3
by 0.50%. Upon the occurrence of an Acceleration Event, the Applicable
Percentages for Loans and the Standby Letter of Credit Fees at each
Pricing Level will be permanently increased by 1.00%.
"ASSET DISPOSITION" means the disposition of any or all of the
assets of a Credit Party or any of its Subsidiaries whether by sale,
lease, transfer or otherwise, other than (a) transfers of assets
permitted by Section 8.5 and (b) losses of assets or destroyed assets
permitted by clauses (a) and (b) of Section 7.7.
"ASSIGNMENT OF CASH COLLATERAL ACCOUNT" means that certain
Assignment of Cash Collateral Account, dated as of the Closing Date,
executed by the Credit Parties in favor of the Administrative Agent, as
amended, modified, extended, renewed or replaced from time to time.
"BANKRUPTCY CODE" means the Bankruptcy Code in Title 11 of the
United States Code, as amended, modified, succeeded or replaced from
time to time.
"BASE RATE" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest whole multiple of 1/100 of 1%)
equal to the greater of (a) the Federal Funds Rate in effect on such
day PLUS 1/2 of 1% or (b) the Prime Rate in effect on such day. If for
any reason the Administrative Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is
unable after due inquiry to ascertain the Federal Funds Rate for any
reason, including the inability or failure of the Administrative Agent
to obtain sufficient quotations in accordance with the terms hereof,
the Base Rate shall be determined without regard to clause (a) of the
first sentence of this definition until the circumstances giving rise
to such inability no longer exist. Any change in the Base Rate due to a
change in the Prime Rate or the Federal Funds Rate shall be effective
on the effective date of such change in the Prime Rate or the Federal
Funds Rate, respectively.
"BASE RATE LOAN" means any Loan bearing interest at a rate
determined by reference to the Base Rate.
"▇▇▇▇" means Banc of America Securities LLC f/k/a NationsBanc
▇▇▇▇▇▇▇▇▇▇ Securities LLC.
"BORROWER" means The Maxim Group, Inc., a Delaware
corporation, together with any successors and permitted assigns.
"BORROWING BASE ASSETS" means, as of any date of
determination, the sum of (a) 80% of Eligible Receivable plus (b) 40%
of Eligible Warehouse Inventory plus (c) 25% of Eligible Inventory plus
(d) (i) prior to satisfaction of the requirements set forth in Section
7.15(e), 50% of the net book value of the Executive Buildings (such
value not to exceed $5 million) and (ii) upon satisfaction of the
requirements set forth in Section 7.15(e), 75% of the orderly
liquidation value of the Executive Buildings (such value not to exceed
$7 million).
4
"BORROWING BASE CERTIFICATE" means a certificate,
substantially in the form of Exhibit 7.1(d), describing the Borrowing
Base Assets as of a particular date.
"BUSINESS DAY" means any day other than a Saturday, a Sunday,
a legal holiday or a day on which banking institutions are authorized
or required by law or other governmental action to close in Charlotte,
North Carolina; provided that in the case of Eurodollar Loans, such day
is also a day on which dealings between banks are carried on in U.S.
dollar deposits in the London interbank market.
"CALCULATION DATE" has the meaning set forth in the definition
of Applicable Percentage.
"CAPITAL EXPENDITURES" means all expenditures of the Credit
Parties and their Subsidiaries which, in accordance with GAAP, would be
classified as capital expenditures, including, without limitation,
Capital Leases.
"CAPITAL LEASE" means, as applied to any Person, any lease of
any property (whether real, personal or mixed) by that Person as lessee
which, in accordance with GAAP, is or should be accounted for as a
capital lease on the balance sheet of that Person and the amount of
such obligation shall be the capitalized amount thereof determined in
accordance with GAAP.
"CAPITAL LEASE PAYMENTS" means, for any period, with respect
to the Credit Parties on a consolidated basis, all payments made by the
Credit Parties under Capital Leases, as determined in accordance with
GAAP.
"CAPITALIZATION" means, as of any date of determination, with
respect to the Credit Parties on a consolidated basis, the sum of (a)
Funded Debt of the Credit Parties and (b) Net Worth.
"CASH COLLATERAL ACCOUNT" means the deposit account(s)
referenced in the Assignment of Cash Collateral Account.
"CASH EQUIVALENTS" means (a) securities issued or directly and
fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and
credit of the United States of America is pledged in support thereof)
having maturities of not more than twelve months from the date of
acquisition, (b) U.S. dollar denominated time and demand deposits and
certificates of deposit of (i) any Lender, (ii) any domestic commercial
bank having capital and surplus in excess of $500,000,000 or (iii) any
bank whose short-term commercial paper rating from S&P is at least A-1
or the equivalent thereof or from ▇▇▇▇▇'▇ is at least P-1 or the
equivalent thereof (any such bank being an "APPROVED BANK"), in each
case with maturities of not more than 270 days from the date of
acquisition, (c) commercial paper and variable or fixed rate notes
issued by any Approved Bank (or by the parent company thereof) or any
variable rate notes issued by, or
5
guaranteed by, any domestic corporation rated A-1 (or the equivalent
thereof) or better by S&P or P-1 (or the equivalent thereof) or better
by Moody's and maturing within six months of the date of acquisition,
(d) repurchase agreements with a bank or trust company (including any
of the Lenders) or recognized securities dealer having capital and
surplus in excess of $500,000,000 for direct obligations issued by or
fully guaranteed by the United States of America in which the Borrower
shall have a perfected first priority security interest (subject to no
other Liens) and having, on the date of purchase thereof, a fair market
value of at least 100% of the amount of the repurchase obligations and
(e) Investments, classified in accordance with GAAP as current assets,
in money market investment programs registered under the Investment
Company Act of 1940, as amended, which are administered by reputable
financial institutions having capital of at least $500,000,000 and the
portfolios of which are limited to Investments of the character
described in the foregoing subdivisions (a) through (d).
"CHANGE OF CONTROL" means either of the following: (a) any
"person" or "group" (within the meaning of Section 13(d) or 14(d) of
the Exchange Act), has become, directly or indirectly, the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that a Person shall be deemed to have "beneficial ownership" of
all shares that any such Person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time), by
way of merger, consolidation or otherwise, of 25% or more of the Voting
Stock of the Borrower on a fully-diluted basis, after giving effect to
the conversion and exercise of all outstanding warrants, options and
other securities of the Borrower (whether or not such securities are
then currently convertible or exercisable); or (b) during any period of
two consecutive calendar years, individuals who at the beginning of
such period constituted the board of directors of the Borrower cease
for any reason to constitute a majority of the directors of the
Borrower then in office unless such new directors were elected by the
directors of the Borrower who constituted the board of directors of the
Borrower at the beginning of such period.
"CLOSING DATE" means the date hereof.
"CODE" means the Internal Revenue Code of 1986 and the rules
and regulations promulgated thereunder, as amended, modified, succeeded
or replaced from time to time.
"COLLATERAL" means all assets of the Credit Parties in which,
pursuant to the Collateral Documents, a Lien has been granted in favor
of the Administrative Agent, for the benefit of the Lenders.
"COLLATERAL DOCUMENTS" means the Security Agreements, the
Pledge Agreements, the Assignment of Cash Collateral Account, any deed
to secure debt and security agreement executed by the Borrower in favor
of the Administrative Agent pursuant to Section 7.15(e) and such other
documents executed and delivered in connection with the attachment and
perfection of the Administrative Agent's security interests in the
assets of the Credit Parties, including without limitation, the UCC
financing statements.
6
"COMMITMENT FEES" means the fees payable to the Lenders
pursuant to Section 3.4(a).
"COMMITMENTS" means (i) with respect to each Lender, the
Revolving Loan Commitment and (ii) with respect to the Issuing Lender,
the LOC Commitment.
"CREDIT DOCUMENTS" means this Credit Agreement, the Notes, any
Joinder Agreement, the Collateral Documents, the LOC Documents, the
Syndication Side Letter and all other related agreements and documents
issued or delivered hereunder or thereunder or pursuant hereto or
thereto.
"CREDIT PARTIES" means the Borrower and the Guarantors and
"CREDIT PARTY" means any one of them.
"CREDIT PARTY OBLIGATIONS" means, without duplication, (a) all
of the obligations of the Credit Parties to the Lenders (including the
Issuing Lender) and the Administrative Agent, whenever arising, under
this Credit Agreement, the Notes, the Collateral Documents or any of
the other Credit Documents to which any Credit Party is a party and (b)
all liabilities and obligations owing from such Credit Party to any
Lender, or any Affiliate of a Lender, arising under Hedging Agreements.
"DEBT ISSUANCE" means the issuance of any Indebtedness for
borrowed money by a Credit Party or any of its Subsidiaries, other than
Indebtedness permitted by Section 8.1.
"DEFAULT" means any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"DEFAULTING LENDER" means, at any time, any Lender that, (a)
has failed to make a Loan or purchase a Participation Interest required
pursuant to the terms of this Credit Agreement (but only for so long as
such Loan is not made or such Participation Interest is not purchased),
(b) has failed to pay to the Administrative Agent or any Lender an
amount owed by such Lender pursuant to the terms of this Credit
Agreement (but only for so long as such amount has not been repaid) or
(c) has been deemed insolvent or has become subject to a bankruptcy or
insolvency proceeding or to a receiver, trustee or similar official.
"DOLLARS" and "$" means dollars in lawful currency of the
United States of America.
"DOMESTIC SUBSIDIARY" means each direct and indirect
Subsidiary of the Borrower that is domiciled, incorporated or organized
under the laws of any state of the United States or the District of
Columbia whether existing as of the date hereof or hereafter created or
acquired. As of the Closing Date, the Domestic Subsidiaries are as set
forth on SCHEDULE 6.15.
"EBITDA" means, for any period, with respect to the Credit
Parties on a consolidated basis, without duplication, the sum of (a)
Net Income for such period
7
(excluding the effect of any extraordinary or other non-recurring
gains (including any gain from the sale of property) or non-cash
losses plus (b) an amount which, in the determination of Net
Income for such period has been deducted for (i) Interest Expense for
such period, (ii) total Federal, state, foreign or other income or
franchise taxes for such period and (iii) all depreciation and
amortization for such period, all as determined in accordance with
GAAP.
"EBITDAR" means, for any period, with respect to the Credit
Parties on a consolidated basis, without duplication, the sum of (a)
Net Income for such period (excluding the effect of any
extraordinary or other non-recurring gains (including any gain from the
sale of property) or non-cash losses plus (b) an amount which, in the
determination of Net Income for such period has been deducted for (i)
Interest Expense for such period, (ii) total Federal, state, foreign
or other income or franchise taxes for such period, (iii) all
depreciation and amortization for such period, and (iv) Rent Expense
for such period, all as determined in accordance with GAAP.
"EFFECTIVE DATE" means the date on which the conditions set
forth in Section 5.1 shall have been fulfilled (or waived in the sole
discretion of the Lenders) and on which the initial Loans shall have
been made and/or the initial Letters of Credit shall have been issued.
"ELIGIBLE ASSIGNEE" means (a) any Lender; (b) an Affiliate of
a Lender; and (c) any other Person approved by the Administrative Agent
and the Borrower (such approval not to be unreasonably withheld or
delayed); PROVIDED THAT (i) the Borrower's consent is not required
during the existence and continuation of an Event of Default, (ii)
approval by the Borrower shall be deemed given if no objection is
received by the assigning Lender and the Administrative Agent from the
Borrower within two Business Days after notice of such proposed
assignment has been received by the Borrower; and (iii) neither the
Borrower nor an Affiliate of the Borrower shall qualify as an Eligible
Assignee.
"ELIGIBLE INVENTORY" means, as of any date of determination
and without duplication, the lower of (a) the aggregate book value
(based on a FIFO or a moving average cost valuation, consistently
applied) or (b) fair market value of all raw materials and finished
goods inventory, other than Eligible Warehouse Inventory, owned by any
Credit Party and in which NationsBank, in its capacity as agent for the
benefit of the Lenders and the TROL Lenders, has a first priority
security interest, in either case, less appropriate reserves determined
in accordance with GAAP, but excluding in any event (i) inventory
subject to any Lien other than liens in favor of NationsBank, in its
capacity as agent for the benefit of the Lenders and the TROL Lenders,
(ii) inventory which is not in good condition or fails to meet
standards for sale or use imposed by governmental agencies, departments
or divisions having regulatory authority over such goods, (iii)
inventory which is discontinued or not useable or saleable at prices
approximating their cost in the ordinary course of the applicable
Credit Party's business (including without duplication the amount of
any reserves for obsolescence, unsalability or decline in value), (iv)
inventory located outside of the
8
United States, (v) inventory located at a location not owned or leased
by the applicable Credit Party unless the Administrative Agent has
received a waiver and estoppel agreement, reasonably satisfactory to
the Administrative Agent, from the owner/operator of such location,
and, if deemed appropriate by the Administrative Agent, a UCC financing
statement has been filed with respect to such location, (vi) inventory
located at a location leased by the applicable Credit Party at which
such Credit Party maintains in excess of $400,000 of inventory and with
respect to which the Administrative Agent shall not have received a
landlord's waiver and estoppel agreement in a form reasonably
satisfactory to the Administrative Agent and (vii) inventory which is
leased or on consignment.
"ELIGIBLE RECEIVABLES" means, at any time, the aggregate book
value of all accounts receivable, receivables, and obligations for
payment created or arising from the sale of inventory or the rendering
of services in the ordinary course of business (collectively, the
"RECEIVABLES") owned by or owing to the Credit Parties, net of
allowances and reserves for doubtful or uncollectible accounts and
sales adjustments consistent with the Borrower's internal policies and
in any event in accordance with GAAP but excluding in any event (i)
Receivables subject to any Lien, other than Liens securing Credit Party
Obligations and Liens in favor of NationsBank, in its capacity as agent
for the benefit of the TROL Lenders, (ii) Receivables which are more
than 90 days past due (net of reserves for bad debts in connection with
any such Receivables) and (iii) Receivables owing by an account debtor
located outside of the United States (unless payment for the goods
shipped is secured by an irrevocable letter of credit in a form and
from an institution acceptable to the Administrative Agent). It is
specifically understood and agreed that the accounts receivable and
receivables purchased or established by GE Capital under the GE Capital
Program and accounts receivable and receivables purchased or
established by Monogram under the Monogram Program are not owned or
owing to the Credit Parties, and therefore will not be included in the
definition of Eligible Receivables.
"ELIGIBLE WAREHOUSE INVENTORY" means, as of any date of
determination and without duplication, the lower of (a) the aggregate
book value (based on a FIFO or a moving average cost valuation,
consistently applied) or (b) fair market value of all raw materials and
finished goods inventory owned by any Credit Party, located at a
location designated as a warehouse location on SCHEDULE 6.22(a) and in
which NationsBank, in its capacity as agent for the benefit of the
Lenders and the TROL Lenders, has a first priority security interest,
in either case, less appropriate reserves determined in accordance with
GAAP, but excluding in any event (i) inventory subject to any Lien
other than liens in favor of NationsBank, in its capacity as agent for
the benefit of the Lenders and the TROL Lenders, (ii) inventory which
is not in good condition or fails to meet standards for sale or use
imposed by governmental agencies, departments or divisions having
regulatory authority over such goods, (iii) inventory which is
discontinued or not useable or saleable at prices approximating their
cost in the ordinary course of the applicable Credit Party's business
(including without duplication the amount of any reserves for
obsolescence, unsalability or decline in value), (iv) inventory located
outside of the United States, (v) inventory located at a location not
owned or leased by the applicable Credit Party unless the
Administrative Agent has received a waiver and estoppel agreement,
reasonably satisfactory to the Administrative
9
Agent, from the owner/operator of such location, and, if deemed
appropriate by the Administrative Agent, a UCC financing statement has
been filed with respect to such location, (vi) inventory located at a
location leased by the applicable Credit Party at which such Credit
Party maintains in excess of $400,000 of inventory and with respect to
which the Administrative Agent shall not have received a landlord's
waiver and estoppel agreement in a form reasonably satisfactory to the
Administrative Agent and (vii) inventory which is leased or on
consignment.
"ENVIRONMENTAL CLAIM" means any investigation, written notice,
violation, written demand, written allegation, action, suit,
injunction, judgment, order, consent decree, penalty, fine, lien,
proceeding, or written claim whether administrative, judicial, or
private in nature arising (a) pursuant to, or in connection with, an
actual or alleged violation of, any Environmental Law, (b) in
connection with any Hazardous Material, (c) from any assessment,
abatement, removal, remedial, corrective, or other response action in
connection with an Environmental Law or other order of a Governmental
Authority or (d) from any actual or alleged damage, injury, threat, or
harm to health, safety, natural resources, or the environment.
"ENVIRONMENTAL LAWS" means any current or future legal
requirement of any Governmental Authority pertaining to (a) the
protection of health, safety, and the indoor or outdoor environment,
(b) the conservation, management, or use of natural resources and
wildlife, (c) the protection or use of surface water and groundwater or
(d) the management, manufacture, possession, presence, use, generation,
transportation, treatment, storage, disposal, release, threatened
release, abatement, removal, remediation or handling of, or exposure
to, any hazardous or toxic substance or material or (e) pollution
(including any release to land surface water and groundwater) and
includes, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, 42 USC 9601 ET SEQ., Solid
Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act of 1976 and Hazardous and Solid Waste Amendments of 1984,
42 USC 6901 ET SEQ., Federal Water Pollution Control Act, as amended by
the Clean Water Act of 1977, 33 USC 1251 ET SEQ., Clean Air Act of
1966, as amended, 42 USC 7401 ET SEQ., Toxic Substances Control Act of
1976, 15 USC 2601 ET SEQ., Hazardous Materials Transportation Act, 49
USC App. 1801 ET SEQ., Occupational Safety and Health Act of 1970, as
amended, 29 USC 651 ET SEQ., Oil Pollution Act of 1990, 33 USC 2701 ET
SEQ., Emergency Planning and Community Right-to-Know Act of 1986, 42
USC 11001 ET SEQ., National Environmental Policy Act of 1969, 42 USC
4321 ET SEQ., Safe Drinking Water Act of 1974, as amended, 42 USC
300(f) ET SEQ., any analogous implementing or successor law, and any
amendment, rule, regulation, order, or directive issued thereunder.
"EQUITY ISSUANCE" means any issuance by a Credit Party to any
Person of (a) shares of its capital stock or other equity interests,
(b) any shares of its capital stock or other equity interests pursuant
to the exercise of options or warrants or (c) any shares of its capital
stock or other equity interests pursuant to the conversion of any debt
securities to equity.
10
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto, as interpreted by
the rules and regulations thereunder, all as the same may be in effect
from time to time. References to sections of ERISA shall be construed
also to refer to any successor sections.
"ERISA AFFILIATE" means an entity, whether or not
incorporated, which is under common control with any Credit Party or
any of its Subsidiaries within the meaning of Section 4001(a)(14) of
ERISA, or is a member of a group which includes any Credit Party or any
of its Subsidiaries and which is treated as a single employer under
Sections 414(b), (c), (m), or (o) of the Code.
"EURODOLLAR LOAN" means a Loan bearing interest based at a
rate determined by reference to the Eurodollar Rate.
"EURODOLLAR RATE" means, for the Interest Period for each
Eurodollar Loan comprising part of the same borrowing (including
conversions, extensions and renewals), a per annum interest rate
determined pursuant to the following formula:
Eurodollar Rate = London Interbank Offered Rate
---------------------------------
1 - Eurodollar Reserve Percentage
"EURODOLLAR RESERVE PERCENTAGE" means for any day, that
percentage (expressed as a decimal) which is in effect from time to
time under Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as such regulation may be amended
from time to time or any successor regulation, as the maximum reserve
requirement (including, without limitation, any basic, supplemental,
emergency, special, or marginal reserves) applicable with respect to
Eurocurrency liabilities as that term is defined in Regulation D (or
against any other category of liabilities that includes deposits by
reference to which the interest rate of Eurodollar Loans is
determined), whether or not a Lender has any Eurocurrency liabilities
subject to such reserve requirement at that time. Eurodollar Loans
shall be deemed to constitute Eurocurrency liabilities and as such
shall be deemed subject to reserve requirements without benefits of
credits for proration, exceptions or offsets that may be available from
time to time to a Lender. The Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in the
Eurodollar Reserve Percentage.
"EVENT OF DEFAULT" means any of the events or circumstances
specified in Section 9.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, as
amended, modified, succeeded or replaced from time to time.
11
"EXECUTIVE BUILDINGS" means (a) the Borrower's current
executive office building located at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and (b) the Borrower's former executive office
building located in ▇▇▇▇ County, Georgia.
"EXECUTIVE OFFICER" means any chief executive officer, chief
operating officer, executive vice president of finance, chief financial
officer, president, vice president or treasurer of the Borrower.
"EXISTING LETTERS OF CREDIT" means the letters of credit
described on SCHEDULE 2.2(c).
"EXTENSION OF CREDIT" means, as to any Lender, the making of a
Loan by such Lender (or a participation therein by a Lender) or the
issuance of, or participation in, a Letter of Credit by such Lender.
"FEDERAL FUNDS RATE" means for any day the rate per annum
(rounded upward, if necessary, to the nearest 1/100th of 1%) equal to
the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the Federal Reserve
Bank of New York on the Business Day next succeeding such day; provided
that (a) if such day is not a Business Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next preceding
Business Day and (b) if no such rate is so published on such next
preceding Business Day, the Federal Funds Rate for such day shall be
the average rate quoted to the Administrative Agent on such day on such
transactions as determined by the Administrative Agent.
"FEE LETTER" means that certain letter agreement among the
Borrower, ▇▇▇▇ and the Administrative Agent dated as of May 18, 1999.
"FIRST TIER FOREIGN SUBSIDIARY" means each Foreign Subsidiary
which is owned directly by a Credit Party.
"FIXED CHARGE COVERAGE RATIO" means, with respect to the
Credit Parties on a consolidated basis for the twelve month period
ending on the last day of any fiscal quarter of the Credit Parties, the
ratio of (a) EBITDAR to (b) Fixed Charges.
"FIXED CHARGES" means, for any period, the sum of (a) Rent
Expense plus (b) Interest Expense plus (c) Scheduled Funded Debt
Payments plus (d) Capital Lease Payments.
"FOREIGN SUBSIDIARY" means any Subsidiary of the Borrower or
any other Credit Party that is not a Domestic Subsidiary.
"FUNDED DEBT" means, with respect to any Person without
duplication, the sum of (a) all Indebtedness of such Person for
borrowed money, (b) all purchase money
12
Indebtedness of such Person, (c) the principal portion of all
obligations of such Person under Capital Leases, (d) all obligations,
contingent or otherwise, relative to the face amount of all letters of
credit (other than letters of credit supporting inventory purchases in
the ordinary course of business), whether or not drawn, and banker's
acceptances issued for the account of such Person (it being understood
that, to the extent an undrawn letter of credit supports another
obligation consisting of Indebtedness, in calculating aggregated
Indebtedness only such other obligation shall be included), (e) all
Guaranty Obligations of such Person with respect to Funded Debt of
another Person, (f) all Funded Debt of another entity secured by a Lien
on any property of such Person whether or not such Funded Debt has been
assumed by such Person, (g) all Funded Debt of any partnership or
unincorporated joint venture to the extent such Person is legally
obligated or has a reasonable expectation of being liable with respect
thereto, net of any assets of such partnership or joint venture and (h)
the principal portion of all obligations of such Person under Synthetic
Leases (including without limitation the principal portion of
obligations due under the Participation Agreement and the Operative
Agreements (as defined in the Participation Agreement)).
"GAAP" means generally accepted accounting principles in the
United States applied on a consistent basis and subject to Section 1.3.
"GE CAPITAL" means General Electric Capital Corporation, a New
York corporation.
"GE CAPITAL DEALER AGREEMENT" means any ▇▇▇▇ Business
Revolving Credit Card Program Business Revolving Charge Dealer
Agreement by and among Maxim Retail, C&S Textiles, Inc., the Borrower
and GE Capital and any other credit card program revolving charge
dealer agreement entered into by and among Maxim Retail, C&S Textiles,
Borrower and GE Capital.
"GE CAPITAL PROGRAM" means any program established by GE
Capital under which GE Capital extends credit to certain customers of
Maxim Retail and C&S Textiles, Inc. for the purchase of goods, services
and other products from Maxim Retail and C&S Textiles, Inc.
"GOVERNMENTAL AUTHORITY" means any Federal, state, local,
provincial or foreign court or governmental agency, authority,
instrumentality or regulatory body.
"GUARANTOR" means each of the Domestic Subsidiaries of the
Borrower (other than Maxim Industries) and each Additional Credit Party
which has executed a Joinder Agreement or otherwise become a Guarantor
hereunder, together with their successors and assigns.
"GUARANTY OBLIGATIONS" means, with respect to any Person,
without duplication, any obligations (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or
collection) guaranteeing any Indebtedness of any other Person in any
manner, whether direct or indirect, and including without limitation
any obligation, whether or not contingent, (a) to purchase any such
Indebtedness or other obligation or any
13
property constituting security therefor, (b) to advance or provide
funds or other support for the payment or purchase of such Indebtedness
or obligation or to maintain working capital, solvency or other balance
sheet condition of such other Person (including, without limitation,
maintenance agreements, comfort letters, take or pay arrangements, put
agreements or similar agreements or arrangements) for the benefit of
the holder of Indebtedness of such other Person, (c) to lease or
purchase property, securities or services primarily for the purpose of
assuring the owner of such Indebtedness or (d) to otherwise assure or
hold harmless the owner of such Indebtedness or obligation against loss
in respect thereof. The amount of any Guaranty Obligation hereunder
shall (subject to any limitations set forth therein) be deemed to be an
amount equal to the outstanding principal amount (or maximum principal
amount, if larger) of the Indebtedness in respect of which such
Guaranty Obligation is made.
"HAZARDOUS MATERIALS" means any substance, material or waste
defined in or regulated under any Environmental Laws.
"HEDGING AGREEMENTS" means any interest rate protection
agreements, foreign currency exchange agreements, or other interest or
exchange rate hedging agreements, in each case, entered into or
purchased by a Credit Party by or from any Lender or any Affiliate of
any Lender.
"INDEBTEDNESS" of any Person means, without duplication, (a)
all obligations of such Person for borrowed money, (b) all obligations
of such Person evidenced by bonds, debentures, notes or similar
instruments, or upon which interest payments are customarily made (c)
all obligations of such Person under conditional sale or other title
retention agreements relating to property purchased by such Person to
the extent of the value of such property (other than customary
reservations or retentions of title under agreements with suppliers
entered into in the ordinary course of business), (d) all obligations,
other than intercompany items, of such Person issued or assumed as the
deferred purchase price of property or services purchased by such
Person which would appear as liabilities on a balance sheet of such
Person, (e) all Indebtedness of others secured by (or for which the
holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on, or payable out of the
proceeds of production from, property owned or acquired by such Person,
whether or not the obligations secured thereby have been assumed, (f)
all Guaranty Obligations of such Person, (g) the principal portion of
all obligations of such Person under (i) Capital Leases and (ii)
Synthetic Leases, (h) all net obligations of such Person in respect of
hedging agreements, foreign currency exchange obligations, and
commodity futures agreements, (i) the maximum amount of all performance
and standby letters of credit issued or bankers' acceptances facilities
created for the account of such Person and, without duplication, all
drafts drawn thereunder (to the extent unreimbursed), (j) all preferred
stock issued by such Person and required by the terms thereof to be
redeemed, or for which mandatory sinking fund payments are due by a
fixed date, (k) the aggregate amount of uncollected accounts receivable
of such Person subject at such time to a sale of receivables (or
similar transaction) regardless of whether such transaction is effected
without recourse to such Person or in a manner that would not be
reflected on the
14
balance sheet of such Person in accordance with GAAP, and (l) all
obligations of such Person to repurchase any securities which
repurchase obligation is related to the issuance thereof, including,
without limitation, obligations commonly known as residual equity
appreciation potential shares. The Indebtedness of any Person shall
include the Indebtedness of any partnership or unincorporated joint
venture in which such Person is legally obligated. The Indebtedness of
any Person shall not include any obligations of such Person under
Operating Leases which are not Capital Leases or Synthetic Leases.
"INDENTURE" means that certain Indenture dated as of October
16, 1997 among the Borrower, as issuer, the Borrower and certain
Subsidiaries of the Borrower, as guarantors and State Street Bank and
Trust Company, as trustee, as the same may be modified, supplemented or
amended from time to time.
"INDENTURE DEFAULT" means the existing default by the Credit
Parties in the performance or observance of Section 1009 of the
Indenture described in SCHEDULE 1.1(b), which default has been
disclosed to the Lenders prior to the Closing Date.
"INTEREST EXPENSE" means, for any period, with respect to the
Credit Parties on a consolidated basis, all interest expense, including
the interest component under Capital Leases, as determined in
accordance with GAAP.
"INTEREST PAYMENT DATE" means (a) as to Base Rate Loans, the
last day of each calendar month and the Maturity Date and (b) as to
Eurodollar Loans, the last day of each applicable Interest Period and
the Maturity Date, and in addition where the applicable Interest Period
for a Eurodollar Loan is greater than three months, then also the date
three months from the beginning of the Interest Period and each three
months thereafter.
"INTEREST PERIOD" means, as to Eurodollar Loans, a period of
one, two, three or six months' duration, as the Borrower may elect,
commencing, in each case, on the date of the borrowing (including
continuations and conversions thereof); provided, however, (a) if any
Interest Period would end on a day which is not a Business Day, such
Interest Period shall be extended to the next succeeding Business Day
(except that where the next succeeding Business Day falls in the next
succeeding calendar month, then on the next preceding Business Day),
(b) no Interest Period shall extend beyond the Maturity Date and (c)
where an Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month in which the
Interest Period is to end, such Interest Period shall end on the last
Business Day of such calendar month.
"INVESTMENT" means (a) the acquisition (whether for cash,
property, services, assumption of Indebtedness, securities or
otherwise) of assets, shares of capital stock, bonds, notes,
debentures, partnership, joint ventures or other ownership interests or
other securities of any Person or (b) any deposit with, or advance,
loan or other extension of credit to, any Person (other than deposits
made in connection with the purchase of equipment or other assets in
the ordinary course of business) or (c) any other capital contribution
to or investment in any Person, including, without limitation, any
Guaranty Obligation (including
15
any support for a Letter of Credit issued on behalf of such Person)
incurred for the benefit of such Person.
"ISP98" has the meaning set forth in Section 2.2(g).
"ISSUING LENDER" means NationsBank, N.A. or any successor
Administrative Agent.
"ISSUING LENDER FEES" has the meaning set forth in Section
3.4(d).
"JOINDER AGREEMENT" means a Joinder Agreement substantially in
the form of EXHIBIT 7.13.
"LENDER" means any of the Persons identified as a "Lender" on
the signature pages hereto, and any Eligible Assignee which may become
a Lender by way of assignment in accordance with the terms hereof,
together with their successors and permitted assigns.
"LETTER OF CREDIT" means any standby or trade Letter of Credit
issued for the account of a Credit Party by the Issuing Lender pursuant
to Section 2.2 hereof or any Existing Letter of Credit, as such letter
of credit may be amended, modified, extended, renewed or replaced.
"LIEN" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, security interest, encumbrance, lien (statutory or
otherwise), preference, priority or charge of any kind, including,
without limitation, any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, and any lease in
the nature thereof.
"LOAN" or "LOANS" means the Revolving Loans (or a portion of
any Revolving Loan), individually or collectively, as appropriate.
"LOC COMMITTED AMOUNT" means FIVE MILLION DOLLARS
($5,000,000).
"LOC COMMITMENT" means the commitment of the Issuing Lender to
issue Letters of Credit for the account of a Credit Party in an
aggregate face amount any time outstanding (together with the amounts
of any unreimbursed drawings thereon) of up to the LOC Committed
Amount.
"LOC DOCUMENTS" means, with respect to any Letter of Credit,
such Letter of Credit, any amendments thereto, any documents delivered
in connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in
application or applicable only to such Letter of Credit) governing or
providing for (a) the rights and obligations of the parties concerned
or at risk or (b) any collateral security for such obligations.
"LOC OBLIGATIONS" means, at any time, the sum of (a) the
maximum amount which is, or at any time thereafter may become,
available to be drawn under Letters of Credit
16
(including the Existing Letters of Credit) then outstanding, assuming
compliance with all requirements for drawings referred to in such
Letters of Credit PLUS (b) the aggregate amount of all drawings under
Letters of Credit honored by the Issuing Lender but not theretofore
reimbursed.
"LOC PARTICIPANTS" means the Lenders.
"LONDON INTERBANK OFFERED RATE" means, with respect to any
Eurodollar Loan for the Interest Period applicable thereto, the rate of
interest per annum (rounded upwards, if necessary, to the nearest 1/100
of 1%) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at approximately
11:00 A.M. (London time) two Business Days prior to the first day of
such Interest Period for a term comparable to such Interest Period;
provided, however, if more than one rate is specified on Telerate Page
3750, the applicable rate shall be the arithmetic mean of all such
rates. If, for any reason, such rate is not available, the term "LONDON
INTERBANK OFFERED RATE" shall mean, with respect to any Eurodollar Loan
for the Interest Period applicable thereto, the rate of interest per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Reuters Screen LIBO Page as the London interbank offered
rate for deposits in Dollars at approximately 11:00 A.M. (London time)
two Business Days prior to the first day of such Interest Period for a
term comparable to such Interest Period; provided, however, if more
than one rate is specified on Reuters Screen LIBO Page, the applicable
rate shall be the arithmetic mean of all such rates.
"MANDATORY BORROWING" has the meaning set forth in Section
2.2(e).
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
(a) the operations, financial condition, business or prospects of the
Credit Parties and their Subsidiaries taken as a whole, (b) the ability
of a Credit Party to perform its obligations under this Credit
Agreement or any of the other Credit Documents, or (c) the validity or
enforceability of this Credit Agreement, any of the other Credit
Documents, or the rights and remedies of the Lenders hereunder or
thereunder taken as a whole.
"MATURITY DATE" means May 18, 2002.
"MAXIM RETAIL" means Maxim Retail Stores, Inc., a Georgia
corporation.
"MAXIM INDUSTRIES" means Maxim Industries, Inc., a Delaware
corporation.
"MONOGRAM" means Monogram Credit Card Bank of Georgia.
"MONOGRAM PROGRAM" means any program established by Monogram
under which Monogram may extend credit to certain customers of Maxim
Retail and C&S Textiles, Inc. for the purchase of goods, services and
other products from Maxim Retail and C&S Textiles, Inc.
17
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc., or any
successor or assignee of the business of such company in the business
of rating securities.
"MULTIEMPLOYER PLAN" means a Plan covered by Title IV of ERISA
which is a multiemployer plan as defined in Section 3(37) or 4001(a)(3)
of ERISA.
"MULTIPLE EMPLOYER PLAN" means a Plan covered by Title IV of
ERISA, other than a Multiemployer Plan, which any Credit Party or any
of its Subsidiaries or any ERISA Affiliate and at least one employer
other than a Credit Party or any of its Subsidiaries or any ERISA
Affiliate are contributing sponsors.
"NATIONSBANK" means NationsBank, N.A. or any successor
thereto.
"NET CASH PROCEEDS" means the aggregate cash proceeds received
from an Asset Disposition, an Equity Issuance or a Debt Issuance net of
(a) reasonable transaction costs payable to third parties, and (b)
taxes paid or a good faith estimate of the taxes payable with respect
to such proceeds.
"NET INCOME" means, for any period, the net income after taxes
for such period of the Credit Parties on a consolidated basis, as
determined in accordance with GAAP.
"NET WORTH" means, as of any date, shareholders' equity or net
worth of the Credit Parties on a consolidated basis, as determined in
accordance with GAAP.
"NEW SUBSIDIARIES" means Colorado Carpet & Rugs, Inc., a
Colorado corporation, Manasota Carpet, Inc., a Florida corporation and
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ Decorating Center, Inc., a Florida corporation.
"NON-EXCLUDED TAXES" has the meaning set forth in Section
3.13.
"NOTE" or "NOTES" means the Revolving Notes, individually or
collectively, as appropriate.
"NOTICE OF BORROWING" means a request by the Borrower for a
Revolving Loan, in the form of EXHIBIT 2.1(b).
"NOTICE OF CONTINUATION/CONVERSION" means a request by the
Borrower to continue an existing Eurodollar Loan to a new Interest
Period or to convert a Eurodollar Loan to a Base Rate Loan or a Base
Rate Loan to a Eurodollar Loan, in the form of EXHIBIT 2.4.
"OPERATING LEASE" means, as applied to any Person, any lease
(including, without limitation, leases which may be terminated by the
lessee at any time) of any Property (whether real, personal or mixed)
which is not a Capital Lease other than any such lease in which that
Person is the lessor.
18
"PARTICIPATION AGREEMENT" means that certain Participation
Agreement dated as of November 25, 1998 among the Borrower, as
construction agent and lessee, the guarantors party thereto, First
Security Bank, National Association, as co-owner trustee, ▇▇▇ ▇. ▇▇▇▇▇,
as co-owner trustee, the lenders identified therein, as holders, the
lenders identified therein, as lenders and NationsBank, as agent, as
amended or modified from time to time.
"PARTICIPATION INTEREST" means the Extension of Credit by a
Lender by way of a purchase of a participation in Letters of Credit or
LOC Obligations as provided in Section 2.2 or in any Loans as provided
in Section 2.3 or Section 3.8.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA and any
successor thereto.
"PERMITTED ACQUISITION" means the acquisition by a Credit
Party of all or a majority of the capital stock of another Person or
all or substantially all of the business or a line of business of
another Person, provided that each of the following conditions are
satisfied: (a) prior to such acquisition, the Borrower shall deliver to
the Administrative Agent and Lenders evidence reasonably satisfactory
to the Administrative Agent and Required Lenders demonstrating that
after giving effect to such acquisition, including without limitation,
any Indebtedness incurred or assumed by such Credit Party as a result
of such acquisition, on a pro forma basis, as if such acquisition had
occurred on the first day of the twelve month period ending on the last
day of the Borrower's most recently completed fiscal quarter, the
Credit Parties would have been in compliance with all the financial
covenants set forth in Section 7.2, (b) simultaneously with any such
acquisition, the Borrower shall have taken all action required under
applicable law, or reasonably requested by the Administrative Agent, to
grant to the Administrative Agent, for the benefit of the Lenders, a
valid and perfected first-priority security interest in all the assets
acquired pursuant to such acquisition, (c) the acquisition is
consummated pursuant to a negotiated acquisition agreement and involves
the purchase of a company, business or property in the same line of
business as the Borrower or any Subsidiary of the Borrower, (d) the
total cash and non-cash consideration (including, without limitation,
Indebtedness assumed in connection with any single acquisition) paid in
the aggregate for all such acquisitions in any fiscal year of the
Borrower does not exceed $10,000,000, (e) after giving effect to the
acquisition, the representations and warranties set forth in Section 6
hereof shall be true and correct in all material respects on and as of
the date of such acquisition with the same effect as though made on and
as of such date, (f) no Default or Event of Default exists and is
continuing or would result from such acquisition and (g) with respect
each such acquisition other than an acquisition consummated prior to
the Closing Date or for which the Borrower has executed a letter of
intent prior to the Closing Date, no Event of Default (as defined in
the Indenture) (including, without limitation, the Indenture Default)
exists and is continuing or would result from such acquisition.
"PERMITTED INVESTMENTS" means Investments which are (a) cash
or Cash Equivalents, (b) accounts receivable created, acquired or made
in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms, (c) inventory, raw
19
materials, furniture, fixtures, equipment and general intangibles
acquired in the ordinary course of business, (d) subject to the terms
of Section 8.14 and Section 8.17, leasehold improvements acquired in
the ordinary course of business, (e) Investments by a Credit Party in
any Credit Party, (f) loans to directors, officers or employees of any
Credit Party in the ordinary course of business for reasonable business
expenses, not to exceed, in the aggregate, $1,250,000 at any one time,
(g) Permitted Acquisitions, (h) the purchase, redemption, acquisition
or retirement by the Borrower of any shares of its capital stock of any
class or any warrants or options to purchase any such shares (each a
"STOCK REPURCHASE") in an amount not to exceed, in the aggregate, the
sum of (i) $15,000,000 plus (ii) 50% of Net Income earned subsequent to
January 31, 1999; provided that (A) no Default or Event of Default, or
Event of Default (as defined in the Indenture) (including, without
limitation, the Indenture Default) shall exist immediately prior to or
after giving effect to such Stock Repurchase, (B) unless otherwise
permitted pursuant to the terms of Section 8.16, the sum of the
aggregate amount of all Stock Repurchases plus the aggregate amount of
all Subordinated Debt Prepayments (including, without limitation, the
purchase of 4,000,000 Series B Securities for the aggregate purchase
price of $4,128,000 on March 9, 1999 and March 16, 1999) shall not
exceed $15,000,000, and (C) no such Stock Repurchase shall be permitted
pursuant to this definition until the Borrower has demonstrated to the
Lenders that it is in compliance with Section 7.2(e) for the period
ending July 31, 1999 or any period subsequent thereto, (i) loans to
franchisees so long as (after giving effect to such proposed loan) (i)
the amount of any single such loan by the Borrower or any Subsidiary
does not exceed $4,000,000 and (ii) the aggregate amount of such loans
to franchisees by the Borrower and its Subsidiaries does not exceed
$12,000,000 in the aggregate during the term of this Credit Agreement,
(j) the repurchases of Subordinated Debt permitted by Section 8.16, and
(k) other Investments (in addition to those set forth above) not to
exceed, in the aggregate, $500,000 at any one time.
"PERMITTED LIENS" means (a) Liens securing Credit Party
Obligations, (b) Liens securing Indebtedness permitted by Section
8.1(i), (c) Liens for taxes not yet due or Liens for taxes being
contested in good faith by appropriate proceedings for which adequate
reserves determined in accordance with GAAP have been established (and
as to which the property subject to any such Lien is not yet subject to
foreclosure, sale, collection, levy or loss on account thereof), (d)
Liens in respect of property imposed by law arising in the ordinary
course of business such as materialmen's, mechanics', warehousemen's,
carrier's, landlords' and other nonconsensual statutory Liens which are
not yet due and payable or which are being contested in good faith by
appropriate proceedings for which adequate reserves determined in
accordance with GAAP have been established (and as to which the
property subject to any such Lien is not yet subject to foreclosure,
sale or loss on account thereof), (e) pledges or deposits made in the
ordinary course of business to secure payment of worker's compensation
insurance, unemployment insurance, pensions or social security
programs, (f) Liens arising from good faith deposits in connection with
or to secure performance of tenders, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations incurred in the ordinary course of business (other than
obligations in respect of the payment of borrowed money), (g) Liens
arising from good faith deposits in connection with or to secure
performance of statutory obligations and
20
surety and appeal bonds, (h) easements, rights-of-way, restrictions
(including zoning restrictions), matters of plat, minor defects or
irregularities in title and other similar charges or encumbrances not,
in any material respect, impairing the use of the encumbered property
for its intended purposes, (i) judgment Liens that would not constitute
an Event of Default, (j) Liens in connection with Indebtedness
permitted by Section 8.1(e), (k) Liens arising by virtue of any
statutory or common law provision relating to banker's liens, rights of
setoff or similar rights as to deposit accounts or other funds
maintained with a creditor depository institution and (l) Liens
existing on the date hereof and identified on SCHEDULE 1.1(c); PROVIDED
THAT no such Lien shall extend to any property other than the property
subject thereto on the Closing Date.
"PERSON" means any individual, partnership, joint venture,
firm, corporation, limited liability company, association, trust or
other enterprise (whether or not incorporated), or any Governmental
Authority.
"PLAN" means any employee benefit plan (as defined in Section
3(3) of ERISA) which is covered by ERISA and with respect to which any
Credit Party or any of its Subsidiaries or any ERISA Affiliate is (or,
if such plan were terminated at such time, would under Section 4069 of
ERISA be deemed to be) an "employer" within the meaning of Section 3(5)
of ERISA.
"PLEDGE AGREEMENTS" means any pledge agreement executed and
delivered by a Credit Party in favor of NationsBank, in its capacity as
agent, for the benefit of the Lenders and the TROL Lenders, to secure
its obligations under the Credit Documents, the Participation Agreement
and Operative Agreements (as defined in the Participation Agreement) as
amended, modified, extended, renewed or replaced from time to time.
"PRIME RATE" means the per annum rate of interest established
from time to time by the Administrative Agent at its principal office
in Charlotte, North Carolina (or such other principal office of the
Administrative Agent as communicated in writing to the Borrower and the
Lenders) as its Prime Rate. Any change in the interest rate resulting
from a change in the Prime Rate shall become effective as of 12:01 a.m.
of the Business Day on which each change in the Prime Rate is announced
by the Administrative Agent. The Prime Rate is a reference rate used by
the Administrative Agent in determining interest rates on certain loans
and is not intended to be the lowest rate of interest charged on any
extension of credit to any debtor.
"PRIOR CREDIT AGREEMENT" means that certain Credit Agreement,
dated as of November 25, 1998, by and among the Borrower and certain of
its subsidiaries, as borrowers, the lenders referred to therein,
NationsBank, N.A., as administrative agent, SunTrust Bank, Atlanta, as
documentation agent and Fleet National Bank, as co-agent, as amended or
modified from time to time.
"REAL PROPERTIES" means the real properties that the Credit
Parties may own or lease (as lessee or sublessee) from third parties
from time to time.
21
"REGULATION D, U, OR X" means Regulation D, U or X,
respectively, of the Board of Governors of the Federal Reserve System
as from time to time in effect and any successor to all or a portion
thereof.
"RENT EXPENSE" means, for any period, with respect to the
Credit Parties on a consolidated basis, all rent payable under an
Operating Lease (whether a lease of real property, personal property or
mixed), as determined in accordance with GAAP.
"REPORTABLE EVENT" means a "reportable event" as defined in
Section 4043 of ERISA with respect to which the notice requirements to
the PBGC have not been waived.
"REPURCHASE EVENT" means the aggregate repurchase of
Securities by the Credit Parties in an aggregate principal amount of
more than $15 million (including, without limitation, the purchase of
4,000,000 Series B Securities for the aggregate purchase price of
$4,128,000 on March 9, 1999 and March 16, 1999).
"REPURCHASE EVENT FEE" has the meaning set forth in Section
3.4(f).
"REQUIRED LENDERS" means Lenders whose aggregate Credit
Exposure (as hereinafter defined) constitutes more than 50% of the
Credit Exposure of all Lenders at such time; PROVIDED, HOWEVER, that if
any Lender shall be a Defaulting Lender at such time then there shall
be excluded from the determination of Required Lenders the aggregate
principal amount of Credit Exposure of such Lender at such time. For
purposes of the preceding sentence, the term "Credit Exposure" as
applied to each Lender shall mean (a) at any time prior to the
termination of the Commitments, the sum of the Revolving Loan
Commitment Percentage of such Lender multiplied by the Revolving
Committed Amount and (b) at any time after the termination of the
Commitments, the sum of (i) the principal balance of the outstanding
Loans of such Lender plus (ii) such Lender's Participation Interests in
the face amount of the outstanding Letters of Credit.
"REQUIREMENT OF LAW" means, as to any Person, the articles or
certificate of incorporation and by-laws or other organizational or
governing documents of such Person, and any law, treaty, rule or
regulation or final, non-appealable determination of an arbitrator or a
court or other Governmental Authority, in each case applicable to or
binding upon such Person or to which any of its material property is
subject.
"REVOLVING COMMITTED AMOUNT" means SEVENTY-FIVE MILLION
DOLLARS ($75,000,000) or such lesser amount as the Revolving Committed
Amount may be reduced pursuant to Section 2.1(d) or 3.3(c).
"REVOLVING LOAN COMMITMENT" means, with respect to each
Lender, the commitment of such Lender to make its portion of the
Revolving Loans in a principal amount equal to such Lender's Revolving
Loan Commitment Percentage of the Revolving Committed Amount.
22
"REVOLVING LOAN COMMITMENT PERCENTAGE" means, for each Lender,
the percentage identified as its Revolving Loan Commitment Percentage
on SCHEDULE 1.1(a), as such percentage may be modified in connection
with any assignment made in accordance with the provisions of Section
11.3.
"REVOLVING LOAN UNUSED COMMITMENT" means, for any period, the
amount by which (a) the then applicable aggregate Revolving Committed
Amount exceeds (b) the daily average sum for such period of the
outstanding aggregate principal amount of all Revolving Loans plus the
aggregate amount of LOC Obligations outstanding.
"REVOLVING LOANS" means the Revolving Loans made to the
Borrower pursuant to Section 2.1.
"REVOLVING NOTE" or "REVOLVING NOTES" means the promissory
notes of the Borrower in favor of each of the Lenders evidencing the
Revolving Loans provided pursuant to Section 2.1, individually or
collectively, as appropriate, as such promissory notes may be amended,
modified, supplemented, extended, renewed or replaced from time to time
and as evidenced in the form of EXHIBIT 2.1(f).
"S&P" means Standard & Poor's Ratings Services, a division of
The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. or any successor or assignee of the
business of such division in the business of rating securities.
"SCHEDULED FUNDED DEBT PAYMENTS" means, as of the date of
determination, for the Credit Parties on a consolidated basis, the sum
of all scheduled payments of principal on Funded Debt for any period
ending on the date of determination (including the principal component
of payments due on leases that are required to be capitalized in
accordance with GAAP during such period ending on the date of
determination); it being understood that Scheduled Funded Debt Payments
shall not include voluntary prepayments or the mandatory prepayments
required pursuant to Section 3.3.
"SECURITIES" means the collective reference to the Series A
Securities and the Series B Securities and "SECURITY" means any one of
them.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"SECURITY AGREEMENTS" means any security agreement executed
and delivered by a Credit Party in favor of NationsBank, in its
capacity as agent for the benefit of the Lenders and the TROL Lenders
to secure its obligations under the Credit Documents, the Participation
Agreement and the Operative Agreements (as defined in the Participation
Agreement) as such may be amended, modified, extended, renewed,
restated or replaced from time to time.
23
"SERIES A SECURITIES" means the 9 1/4% Senior Subordinated
Notes due 2007, Series A, issued pursuant to the terms of the
Indenture.
"SERIES B SECURITIES" means the 9 1/4% Senior Subordinated
Notes due 2007, Series B, issued pursuant to the terms of the
Indenture.
"▇▇▇▇ PROMISSORY NOTE" means that certain Subordinated
Promissory Note dated August 9, 1998 issued by the Borrower in favor of
▇▇▇▇ Industries, Inc. in the amount of $11,927,000.
"SINGLE EMPLOYER PLAN" means any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
"SOLVENT" means, with respect to any Person as of a particular
date, that on such date (a) such Person is able to pay its debts and
other liabilities, contingent obligations and other commitments as they
mature in the normal course of business, (b) such Person does not
intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and
liabilities mature in their ordinary course, (c) such Person is not
engaged in a business or a transaction, and is not about to engage in a
business or a transaction, for which such Person's assets would
constitute unreasonably small capital after giving due consideration to
the prevailing practice in the industry in which such Person is engaged
or is to engage, (d) the fair value of the assets of such Person is
greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person and (e) the present
fair saleable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured. In computing
the amount of contingent liabilities at any time, it is intended that
such liabilities will be computed at the amount which, in light of all
the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured
liability.
"STOCK REPURCHASE" has the meaning set forth in the definition
of Permitted Investments.
"SUBORDINATED DEBT" means the Indebtedness evidenced by the
Indenture or by the guarantees thereof in an aggregate amount not to
exceed $100,000,000.
"SUBORDINATED DEBT PREPAYMENT" has the meaning set forth in
Section 8.16.
"SUBSIDIARY" means, as to any Person, (a) any corporation more
than 50% of whose stock of any class or classes having by the terms
thereof ordinary voting power to elect a majority of the directors of
such corporation (irrespective of whether or not at the time, any class
or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time owned by
such Person directly or indirectly through Subsidiaries, and (b) any
partnership, association, joint venture or other entity in
24
which such person directly or indirectly through Subsidiaries has more
than a 50% equity interest at any time.
"SYNDICATION SIDE LETTER" has the meaning set forth in Section
5.1.
"SYNTHETIC LEASE" means any synthetic lease, tax retention
operating lease, off-balance sheet loan or similar off-balance sheet
financing product where such transaction is considered borrowed money
indebtedness for tax purposes, but is classified as an Operating Lease.
"SYNTHETIC LEASE OBLIGATIONS" means any and all obligations of
the Borrower, non-existing or hereafter arising under the Participation
Agreement and/or any other Operative Agreement (as defined in the
Participation Agreement).
"TERMINATION EVENT" means (a) with respect to any Single
Employer Plan, the occurrence of a Reportable Event or the substantial
cessation of operations (within the meaning of Section 4062(e) of
ERISA); (b) the withdrawal of any Credit Party or any of its
Subsidiaries or any ERISA Affiliate from a Multiple Employer Plan
during a plan year in which it was a substantial employer (as such term
is defined in Section 4001(a)(2) of ERISA), or the termination of a
Multiple Employer Plan; (c) the distribution of a notice of intent to
terminate or the actual termination of a Plan pursuant to Section
4041(a)(2) or 4041A of ERISA; (d) the institution of proceedings to
terminate or the actual termination of a Plan by the PBGC under Section
4042 of ERISA; (e) any event or condition which might reasonably
constitute grounds under Section 4042 of ERISA for the termination of,
or the appointment of a trustee to administer, any Plan; or (f) the
complete or partial withdrawal of any Credit Party or any of its
Subsidiaries or any ERISA Affiliate from a Multiemployer Plan.
"TOTAL ASSETS" means all items which in accordance with GAAP
would be classified as assets of the Borrower and its Subsidiaries on a
consolidated basis.
"TOTAL DEBT TO CAPITALIZATION RATIO" means, as of any date of
determination, the ratio of (a) Funded Debt to (b) Capitalization.
"TOTAL SENIOR DEBT" means, as of any date of determination,
all Funded Debt of the Credit Parties other than Subordinated Debt.
"TRADE LETTER OF CREDIT FEES" has the meaning set forth in
Section 3.4(c).
"TROL LENDERS" means the lenders, holders and other Financing
Parties (as defined in the Participation Agreement) from time to time
party to the Participation Agreement.
"UCP" has the meaning set forth in Section 2.2(g).
25
"VOTING STOCK" of a corporation means all classes of the
capital stock of such corporation then outstanding and normally
entitled to vote in the election of directors.
"YEAR 2000 COMPLIANT" has the meaning set forth in Section
6.27.
"YEAR 2000 PROBLEM" means any risk that any computer hardware,
software or other equipment used by a Credit Party or any of its
Subsidiaries will not function as effectively and reliably on and after
January 1, 2000 as it does prior to January 1, 2000, to the extent such
risk would cause or be reasonably expected to cause a Material Adverse
Effect.
1.2 COMPUTATION OF TIME PERIODS AND OTHER DEFINITIONAL PROVISIONS.
For purposes of computation of periods of time hereunder, the word
"from" means "from and including" and the words "to" and "until" each mean "to
but excluding." References in this Agreement to "Articles", "Sections",
"Schedules" or "Exhibits" shall be to Articles, Sections, Schedules or Exhibits
of or to this Agreement unless otherwise specifically provided.
1.3 ACCOUNTING TERMS.
Except as otherwise expressly provided herein, all accounting terms
used herein shall be interpreted, and all financial statements and certificates
and reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP applied on a consistent
basis. All calculations made for the purposes of determining compliance with
this Credit Agreement shall (except as otherwise expressly provided herein) be
made by application of GAAP applied on a basis consistent with the most recent
annual or quarterly financial statements delivered pursuant to Section 7.1 (or,
prior to the delivery of the first financial statements pursuant to Section 7.1,
consistent with the financial statements described in Section 5.1(d); provided,
however, if (a) the Borrower shall object to determining such compliance on such
basis at the time of delivery of such financial statements due to any change in
GAAP or the rules promulgated with respect thereto or (b) the Administrative
Agent or the Required Lenders shall so object in writing within 30 days after
delivery of such financial statements, then such calculations shall be made on a
basis consistent with GAAP as in effect as of the date of the most recent
financial statements delivered by the Borrower to the Lenders to which no such
objection shall have been made.
SECTION 2
CREDIT FACILITIES
2.1 REVOLVING LOANS.
(a) REVOLVING LOAN COMMITMENT. Subject to the terms and
conditions set forth herein, each Lender severally agrees to make
revolving loans (each a "REVOLVING LOAN" and collectively the
"REVOLVING LOANS") to the Borrower, in Dollars, at any time and from
time
26
to time, during the period from and including the Effective Date to but
not including the Maturity Date (or such earlier date if the Revolving
Committed Amount has been terminated as provided herein); PROVIDED,
HOWEVER, that (i) the sum of the aggregate amount of Revolving Loans
outstanding plus the aggregate amount of LOC Obligations outstanding
plus the aggregate amount of Synthetic Lease Obligations outstanding
shall not exceed (A) the lesser of (x) the Revolving Committed Amount
and (y) the Borrowing Base Assets and (B) until such time as the
Indenture Default is cured or an Acceleration Event occurs,
$15,000,000; PROVIDED FURTHER, HOWEVER, that if an Acceleration Event
occurs, the sum of the aggregate amount of Revolving Loans outstanding
plus the aggregate amount of LOC Obligations outstanding plus the
aggregate amount of Synthetic Lease Obligations outstanding may only
exceed $15,000,000 if such excess amount is used to retire the
Securities and (ii) with respect to each individual Lender, the
Lender's pro rata share of outstanding Revolving Loans plus such
Lender's pro rata share of outstanding LOC Obligations plus such
Lender's pro rata share of the aggregate amount of the outstanding
Synthetic Lease Obligations shall not exceed such Lender's Revolving
Loan Commitment Percentage of the Revolving Committed Amount. Subject
to the terms of this Credit Agreement (including Section 3.3), the
Borrower may borrow, repay and reborrow Revolving Loans.
(b) METHOD OF BORROWING FOR REVOLVING LOANS. By no later than
11:00 a.m. (i) on the date of the requested borrowing of Revolving
Loans that will be Base Rate Loans or (ii) three Business Days prior to
the date of the requested borrowing of Revolving Loans that will be
Eurodollar Loans, the Borrower shall telephone the Administrative Agent
with the information described below as well as submit a written Notice
of Borrowing in the form of EXHIBIT 2.1(b) to the Administrative Agent
setting forth (A) the amount requested, (B) whether such Revolving
Loans shall accrue interest at the Adjusted Base Rate or the Adjusted
Eurodollar Rate, (C) with respect to Revolving Loans that will be
Eurodollar Loans, the Interest Period applicable thereto and (D)
certification that the Borrower has complied in all respects with
Section 5.2. All Revolving Loans made on the Effective Date shall be
Base Rate Loans. Thereafter, all or any portion of such Revolving Loans
may be converted into Eurodollar Loans in accordance with the terms of
Section 2.4.
(c) FUNDING OF REVOLVING LOANS. Upon receipt of a Notice of
Borrowing, the Administrative Agent shall promptly inform the Lenders
as to the terms thereof. Each Lender shall make its Revolving Loan
Commitment Percentage of the requested Revolving Loans available to the
Administrative Agent by 1:00 p.m. on the date specified in the Notice
of Borrowing by deposit, in Dollars, of immediately available funds at
the offices of the Administrative Agent at its principal office in
Charlotte, North Carolina or at such other address as the
Administrative Agent may designate in writing. The amount of the
requested Revolving Loans will then be made available to the Borrower
by the Administrative Agent by crediting the account of the Borrower on
the books of such office of the Administrative Agent, to the extent the
amount of such Revolving Loans are made available to the Administrative
Agent.
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No Lender shall be responsible for the failure or delay by any
other Lender in its obligation to make Revolving Loans hereunder;
provided, however, that the failure of any Lender to fulfill its
obligations hereunder shall not relieve any other Lender of its
obligations hereunder. Unless the Administrative Agent shall have been
notified by any Lender prior to the date of any such Revolving Loan
that such Lender does not intend to make available to the
Administrative Agent its portion of the Revolving Loans to be made on
such date, the Administrative Agent may assume that such Lender has
made such amount available to the Administrative Agent on the date of
such Revolving Loans, and the Administrative Agent in reliance upon
such assumption, may (in its sole discretion but without any obligation
to do so) make available to the Borrower a corresponding amount. If
such corresponding amount is not in fact made available to the
Administrative Agent, the Administrative Agent shall be able to recover
such corresponding amount from such Lender. If such Lender does not pay
such corresponding amount forthwith upon the Administrative Agent's
demand therefor, the Administrative Agent will promptly notify the
Borrower, and the Borrower shall immediately pay such corresponding
amount to the Administrative Agent. The Administrative Agent shall also
be entitled to recover from the Lender or the Borrower, as the case may
be, interest on such corresponding amount in respect of each day from
the date such corresponding amount was made available by the
Administrative Agent to the Borrower to the date such corresponding
amount is recovered by the Administrative Agent at a per annum rate
equal to (i) from the Borrower at the applicable rate for such
Revolving Loan pursuant to the Notice of Borrowing and (ii) from a
Lender at the Federal Funds Rate.
(d) REDUCTIONS OF REVOLVING COMMITTED AMOUNT. Upon at
least three Business Days' notice, the Borrower shall have the right to
permanently reduce, without premium or penalty, all or part of the
aggregate unused amount of the Revolving Committed Amount at any time
or from time to time; provided that (i) each partial reduction shall be
in an aggregate amount at least equal to $1,000,000 and in integral
multiples of $500,000 above such amount and (ii) no reduction shall be
made which would reduce the Revolving Committed Amount to an amount
less than the aggregate amount of outstanding Revolving Loans plus the
aggregate amount of outstanding LOC Obligations plus the aggregate
amount of outstanding Synthetic Lease Obligations. Any reduction in (or
termination of) the Revolving Committed Amount shall be permanent and
may not be reinstated. The Administrative Agent shall immediately
notify the Lenders of any reduction in the Revolving Committed Amount.
(e) INTEREST. Subject to the provisions of Section 3.1,
(i) BASE RATE LOANS. During such periods as Revolving
Loans shall be comprised in whole or in part of Base Rate
Loans, such Base Rate Loans shall bear interest at a per annum
rate equal to the Adjusted Base Rate.
(ii) EURODOLLAR LOANS. During such periods as
Revolving Loans shall be comprised in whole or in part of
Eurodollar Loans, such Eurodollar Loans shall bear interest at
a per annum rate equal to the Adjusted Eurodollar Rate.
28
(f) REVOLVING NOTES. The Revolving Loans made by each Lender
shall be evidenced by a duly executed promissory note of the Borrower
to such Lender in an original principal amount equal to such Lender's
Revolving Loan Commitment Percentage of the Revolving Committed Amount
and in substantially the form of EXHIBIT 2.1(f).
2.2 LETTER OF CREDIT SUBFACILITY.
(a) ISSUANCE. Subject to the terms and conditions hereof and
of the LOC Documents, if any, and any other terms and conditions which
the Issuing Lender may reasonably require and in reliance upon the
representations and warranties set forth herein, the Issuing Lender
shall from time to time upon request issue (from the Effective Date to
the Maturity Date and in a form reasonably acceptable to the Issuing
Lender), in Dollars, and the LOC Participants shall participate in,
Letters of Credit for the account of a Credit Party; PROVIDED, HOWEVER,
that (i) the aggregate amount of LOC Obligations shall not at any time
exceed the LOC Committed Amount, (ii) the sum of the aggregate amount
of LOC Obligations outstanding plus the Revolving Loans outstanding
plus the Synthetic Lease Obligations outstanding shall not exceed the
lesser of (A) the Revolving Committed Amount and (B) the Borrowing Base
Assets and (iii) with respect to each individual LOC Participant, the
LOC Participant's pro rata share of outstanding Revolving Loans plus
its pro rata share of outstanding LOC Obligations plus its pro rata
share of Synthetic Lease Obligations shall not exceed such LOC
Participant's Revolving Loan Commitment Percentage of the Revolving
Committed Amount. The Issuing Lender may require the issuance and
expiry date of each Letter of Credit to be a Business Day. Each Letter
of Credit shall be a standby letter of credit issued to support the
obligations (including pension or insurance obligations), contingent or
otherwise, of a Credit Party or a commercial trade letter of credit in
respect of the purchase of goods and services by a Credit Party in the
ordinary course of business. Except as otherwise expressly agreed upon
by all the LOC Participants, no Letter of Credit shall have an original
expiry date more than one year from the date of issuance, or as
extended, shall have an expiry date extending beyond the Maturity Date.
Each Letter of Credit shall comply with the related LOC Documents.
(b) NOTICE AND REPORTS. The request for the issuance of a
Letter of Credit shall be submitted to the Issuing Lender at least
three Business Days prior to the requested date of issuance. The
Issuing Lender will, at least quarterly and more frequently upon
request, provide to the Administrative Agent for dissemination to the
Lenders a detailed report specifying the Letters of Credit which are
then issued and outstanding and any activity with respect thereto which
may have occurred since the date of the prior report, and including
therein, among other things, the account party, the beneficiary, the
face amount, and the expiry date as well as any payments or expirations
which may have occurred. The Issuing Lender will further provide to the
Administrative Agent, promptly upon request, copies of the Letters of
Credit and the other LOC Documents. Notwithstanding anything to the
contrary set forth in this Credit Agreement, with respect to any Letter
of Credit issued for the account of a Credit Party other than the
Borrower, the Borrower shall be the actual account party for all
purposes of this Credit Agreement for such Letter of Credit and the
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Borrower shall have the reimbursement obligations hereunder with
respect to such Letter of Credit.
(c) PARTICIPATIONS.
(i) Each LOC Participant acknowledges and confirms
that it has a Participation Interest in the liability of the
Issuing Lender under each Existing Letter of Credit in an
amount equal to its Revolving Loan Commitment Percentage of
such Existing Letters of Credit. The Borrower's reimbursement
obligations in respect of each Existing Letter of Credit, and
each LOC Participant's obligations in connection therewith,
shall be governed by the terms of this Credit Agreement.
(ii) Each LOC Participant, upon issuance of a Letter
of Credit, shall be deemed to have purchased without recourse
a risk participation from the Issuing Lender in such Letter of
Credit and each LOC Document related thereto and the rights
and obligations arising thereunder and any collateral relating
thereto, in each case in an amount equal to its Revolving Loan
Commitment Percentage of the obligations under such Letter of
Credit, and shall absolutely, unconditionally and irrevocably
assume, as primary obligor and not as surety, and be obligated
to pay to the Issuing Lender therefor and discharge when due,
its Revolving Loan Commitment Percentage of the obligations
arising under such Letter of Credit. Without limiting the
scope and nature of each LOC Participant's participation in
any Letter of Credit, to the extent that the Issuing Lender
has not been reimbursed as required hereunder or under any
such Letter of Credit, each such LOC Participant shall pay to
the Issuing Lender its Revolving Loan Commitment Percentage of
such unreimbursed drawing in same day funds on the day of
notification by the Issuing Lender of an unreimbursed drawing
pursuant to the provisions of subsection (d) or (e) hereof.
The obligation of each LOC Participant to so reimburse the
Issuing Lender shall be absolute and unconditional and shall
not be affected by the occurrence of a Default, an Event of
Default or any other occurrence or event. Any such
reimbursement shall not relieve or otherwise impair the
obligation of the Borrower or any other Credit Party to
reimburse the Issuing Lender under any Letter of Credit,
together with interest as hereinafter provided.
(d) REIMBURSEMENT. In the event of any drawing under any
Letter of Credit, the Issuing Lender will promptly notify the Borrower.
Unless the Borrower shall immediately notify the Issuing Lender of its
intent to otherwise reimburse the Issuing Lender, the Borrower shall be
deemed to have requested that the Lenders make a Revolving Loan in the
amount of the drawing as provided in subsection (e) below on the
related Letter of Credit, the proceeds of which will be used to satisfy
the related reimbursement obligations. The Borrower shall reimburse the
Issuing Lender on the day of drawing under any Letter of Credit with
the proceeds of such Revolving Loan obtained hereunder or otherwise in
same day funds as provided herein or in the LOC Documents. If the
Borrower shall fail to reimburse the Issuing Lender as provided
hereinabove, the unreimbursed amount of such drawing shall bear
interest at a per annum rate equal to the Base Rate plus the Applicable
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Percentage for the Base Rate Loans that are Revolving Loans plus two
percent (2%). The Borrower's reimbursement obligations hereunder shall
be absolute and unconditional under all circumstances irrespective of
(but without waiver of) any rights of set-off, counterclaim or defense
to payment the applicable account party or the Borrower may claim or
have against an Issuing Lender, the Administrative Agent, the Lenders,
the beneficiary of the Letter of Credit drawn upon or any other Person,
including without limitation, any defense based on any failure of the
applicable account party, the Borrower or any other Credit Party to
receive consideration or the legality, validity, regularity or
unenforceability of the Letter of Credit. The Issuing Lender will
promptly notify the LOC Participants of the amount of any unreimbursed
drawing and each LOC Participant shall promptly pay to the Issuing
Lender, in Dollars and in immediately available funds, the amount of
such LOC Participant's Revolving Loan Commitment Percentage of such
unreimbursed drawing. Such payment shall be made on the day such notice
is received by such Lender from the Issuing Lender if such notice is
received at or before 12:00 Noon, otherwise such payment shall be made
at or before 12:00 Noon on the Business Day next succeeding the day
such notice is received. If such LOC Participant does not pay such
amount to the Issuing Lender in full upon such request, such LOC
Participant shall, on demand, pay to the Issuing Lender interest on the
unpaid amount during the period from the date the LOC Participant
received the notice regarding the unreimbursed drawing until such LOC
Participant pays such amount to the Issuing Lender in full at a rate
per annum equal to, if paid within two Business Days of the date of
drawing, the Federal Funds Rate and thereafter at a rate equal to the
Base Rate. Each LOC Participant's obligation to make such payment to
the Issuing Lender, and the right of the Issuing Lender to receive the
same, shall be absolute and unconditional, shall not be affected by any
circumstance whatsoever and without regard to the termination of this
Credit Agreement or the Commitments hereunder, the existence of a
Default or Event of Default or the acceleration of the obligations
hereunder and shall be made without any offset, abatement, withholding
or reduction whatsoever. Simultaneously with the making of each such
payment by a LOC Participant to the Issuing Lender, such LOC
Participant shall, automatically and without any further action on the
part of the Issuing Lender or such LOC Participant, acquire a
participation in an amount equal to such payment (excluding the portion
of such payment constituting interest owing to the Issuing Lender) in
the related unreimbursed drawing portion of the LOC Obligation and in
the interest thereon and in the related LOC Documents, and shall have a
claim against the Borrower and the other Credit Parties with respect
thereto.
(e) REPAYMENT WITH REVOLVING LOANS. On any day on which the
Borrower shall have requested, or been deemed to have requested, a
Revolving Loan borrowing to reimburse a drawing under a Letter of
Credit (as set forth in clause (d) above), the Administrative Agent
shall give notice to the applicable Lenders that a Revolving Loan has
been requested or deemed requested in connection with a drawing under a
Letter of Credit, in which case a Revolving Loan borrowing comprised
solely of Base Rate Loans (each such borrowing, a "MANDATORY
BORROWING") shall be immediately made from all applicable Lenders
(without giving effect to any termination of the Commitments pursuant
to Section 9.2) PRO RATA based on each Lender's respective Revolving
Loan Commitment Percentage and the proceeds thereof shall be paid
directly to the Issuing Lender for application to the
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respective LOC Obligations. Each such Lender hereby irrevocably agrees
to make such Revolving Loans immediately upon any such request or
deemed request on account of each such Mandatory Borrowing in the
amount and in the manner specified in the preceding sentence and on the
same such date NOTWITHSTANDING (i) the amount of Mandatory Borrowing
may not comply with the minimum amount for borrowings of Revolving
Loans otherwise required hereunder, (ii) whether any conditions
specified in Section 5.2 are then satisfied, (iii) whether a Default or
Event of Default then exists, (iv) failure of any such request or
deemed request for Revolving Loans to be made by the time otherwise
required hereunder, (v) the date of such Mandatory Borrowing, or (vi)
any reduction in the Revolving Committed Amount or any termination of
the Commitments. In the event that any Mandatory Borrowing cannot for
any reason be made on the date otherwise required above (including,
without limitation, as a result of the commencement of a proceeding
under the Bankruptcy Code with respect to the Borrower or any other
Credit Party), then each such Lender hereby agrees that it shall
forthwith fund (as of the date the Mandatory Borrowing would otherwise
have occurred, but adjusted for any payments received from the Borrower
on or after such date and prior to such purchase) its Participation
Interest in the outstanding LOC Obligations; PROVIDED, FURTHER, that in
the event any Lender shall fail to fund its Participation Interest on
the day the Mandatory Borrowing would otherwise have occurred, then the
amount of such Lender's unfunded Participation Interest therein shall
bear interest payable to the Issuing Lender upon demand, at the rate
equal to, if paid within two Business Days of such date, the Federal
Funds Rate, and thereafter at a rate equal to the Base Rate.
(f) MODIFICATION AND EXTENSION. The issuance of any
supplement, modification, amendment, renewal, or extensions to any
Letter of Credit shall, for purposes hereof, be treated in all respects
the same as the issuance of a new Letter of Credit hereunder.
(g) UNIFORM CUSTOMS AND PRACTICES. The Issuing Lender may have
the Letters of Credit be subject to The Uniform Customs and Practice
for Documentary Credits (the "UCP") or the International Standby
Practices 1998 (the "ISP98"), in either case as published as of the
date of issue by the International Chamber of Commerce , in which case
the UCP or ISP98, as applicable, may be incorporated therein and deemed
in all respects to be a part thereof.
(h) RESPONSIBILITY OF ISSUING LENDER. It is expressly
understood and agreed as between the Lenders that the obligations of
the Issuing Lender hereunder to the LOC Participants are only those
expressly set forth in this Credit Agreement and that the Issuing
Lender shall be entitled to assume that the conditions precedent set
forth in Section 5.2 have been satisfied unless it shall have acquired
actual knowledge that any such condition precedent has not been
satisfied; provided, however, that nothing set forth in this Section
2.2 shall be deemed to prejudice the right of any LOC Participant to
recover from the Issuing Lender any amounts made available by such LOC
Participant to the Issuing Lender pursuant to this Section 2.2 in the
event that it is determined by a court of competent jurisdiction that
the payment with respect to a Letter of Credit constituted gross
negligence or willful misconduct on the part of the Issuing Lender.
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(i) CONFLICT WITH LOC DOCUMENTS. In the event of any conflict
between this Credit Agreement and any LOC Document, this Credit
Agreement shall govern.
2.3 INDEMNIFICATION OF ISSUING LENDER.
(a) In addition to its other obligations under this
Credit Agreement, the Borrower hereby agrees to protect,
indemnify, pay and save the Issuing Lender harmless from and
against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable
attorneys' fees) that the Issuing Lender may incur or be
subject to as a consequence, direct or indirect, of (A) the
issuance of any Letter of Credit or (B) the failure of the
Issuing Lender to honor a drawing under a Letter of Credit as
a result of any act or omission, whether rightful or wrongful,
of any present or future de jure or de facto Governmental
Authority (all such acts or omissions, herein called
"GOVERNMENT ACTS").
(b) As between the Borrower and the Issuing Lender,
the Borrower shall assume all risks of the acts, omissions or
misuse of any Letter of Credit by the beneficiary thereof. The
Issuing Lender shall not be responsible for: (A) the form,
validity, sufficiency, accuracy, genuineness or legal effect
of any document submitted by any party in connection with the
application for and issuance of any Letter of Credit, even if
it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) the
validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any Letter of
Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, that may prove to be invalid or
ineffective for any reason; (C) failure of the beneficiary of
a Letter of Credit to comply fully with conditions required in
order to draw upon a Letter of Credit; (D) errors, omissions,
interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise,
whether or not they be in cipher; (E) errors in interpretation
of technical terms; (F) any loss or delay in the transmission
or otherwise of any document required in order to make a
drawing under a Letter of Credit or of the proceeds thereof;
and (G) any consequences arising from causes beyond the
control of the Issuing Lender, including, without limitation,
any Government Acts. None of the above shall affect, impair,
or prevent the vesting of the Issuing Lender's rights or
powers hereunder.
(c) In furtherance and extension and not in
limitation of the specific provisions hereinabove set forth,
any action taken or omitted by the Issuing Lender, under or in
connection with any Letter of Credit or the related
certificates, if taken or omitted in good faith, shall not put
the Issuing Lender under any resulting liability to the
Borrower or any other Credit Party. It is the intention of the
parties that this Credit Agreement shall be construed and
applied to protect and indemnify the Issuing Lender against
any and all risks involved in the issuance of the Letters of
Credit, all of which risks are hereby assumed by the Borrower,
including, without
33
limitation, any and all risks of the acts or omissions,
whether rightful or wrongful, of any present or future
Government Acts. The Issuing Lender shall not, in any way, be
liable for any failure by the Issuing Lender or anyone else to
pay any drawing under any Letter of Credit as a result of any
Government Acts or any other cause beyond the control of the
Issuing Lender.
(d) Nothing in this Section 2.3 is intended to limit
the reimbursement obligation of the Borrower contained in
Section 2.2. The obligations of the Borrower under this
Section 2.3 shall survive the termination of this Credit
Agreement. No act or omission of any current or prior
beneficiary of a Letter of Credit shall in any way affect or
impair the rights of the Issuing Lender to enforce any right,
power or benefit under this Credit Agreement.
(e) Notwithstanding anything to the contrary
contained in this Section 2.3, the Borrower shall have no
obligation to indemnify the Issuing Lender in respect of any
liability incurred by the Issuing Lender arising solely out of
the gross negligence or willful misconduct of the Issuing
Lender, as determined by a court of competent jurisdiction.
(f) To the extent the Borrower does not fulfill any
or all of its obligations under this Section 2.3, each LOC
Participant agrees to reimburse the Issuing Lender for any
losses incurred thereby ratably in accordance with each such
LOC Participant's LOC Commitment Percentage.
2.4 CONTINUATIONS AND CONVERSIONS.
The Borrower shall have the option, on any Business Day, to continue
existing Eurodollar Loans for a subsequent Interest Period, to convert Base Rate
Loans into Eurodollar Loans or to convert Eurodollar Loans into Base Rate Loans;
provided, however, that (i) each such continuation or conversion must be
requested by the Borrower pursuant to a written Notice of
Continuation/Conversion, in the form of EXHIBIT 2.4, in compliance with the
terms set forth below, (ii) except as provided in Section 3.11, Eurodollar Loans
may only be continued or converted into Base Rate Loans on the last day of the
Interest Period applicable thereto, (iii) Eurodollar Loans may not be continued
nor may Base Rate Loans be converted into Eurodollar Loans during the existence
and continuation of a Default or an Event of Default and (iv) any request to
continue a Eurodollar Loan that fails to comply with the terms hereof or any
failure to request a continuation of a Eurodollar Loan at the end of an Interest
Period shall constitute a conversion to a Base Rate Loan on the last day of the
applicable Interest Period. Each continuation or conversion must be requested by
the Borrower no later than 11:00 a.m. (A) on the date for a requested conversion
of a Eurodollar Loan to a Base Rate Loan or (B) three Business Days prior to the
date for a requested continuation of a Eurodollar Loan or conversion of a Base
Rate Loan to a Eurodollar Loan, in each case pursuant to a written Notice of
Continuation/Conversion submitted to the Administrative Agent which shall set
forth (x) whether the Borrower wishes to continue or convert such Loans and (y)
if the request is to continue a Eurodollar Loan or convert a Base Rate Loan to a
Eurodollar Loan, the Interest Period applicable thereto.
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2.5 MINIMUM AMOUNTS.
Each request for a borrowing, conversion or continuation shall be
subject to the requirements that (a) each Eurodollar Loan shall be in a minimum
amount of $1,000,000 and in integral multiples of $100,000 in excess thereof,
(b) each Base Rate Loan shall be in a minimum amount of the lesser of $500,000
(and integral multiples of $100,000 in excess thereof) or the remaining amount
available under the Revolving Committed Amount and (c) no more than six (6)
Eurodollar Loans shall be outstanding hereunder at any one time. For the
purposes of this Section, all Eurodollar Loans with the same Interest Periods
that begin and end on the same date shall be considered as one Eurodollar Loan,
but Eurodollar Loans with different Interest Periods, even if they begin on the
same date, shall be considered as separate Eurodollar Loans.
2.6 MODIFICATION OF BORROWING BASE.
Upon receipt of the results from the asset field examination required
pursuant to Section 7.15(b), the Required Lenders shall have the right, in their
sole reasonable discretion, to modify the percentages set forth in the
definition of Borrowing Base Assets and/or to amend or modify the definitions of
Eligible Inventory and Eligible Receivables in a manner consistent with the
results from such asset field examination.
SECTION 3
GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT
3.1 INTEREST.
(a) DEFAULT RATE OF INTEREST. Upon the occurrence, and during
the continuance, of an Event of Default, the principal of and, to the
extent permitted by law, interest on the Loans and any other amounts
owing hereunder or under the other Credit Documents (including without
limitation fees and expenses) shall bear interest, payable on demand,
at a per annum rate equal to 2% plus the rate which would otherwise be
applicable (or if no rate is applicable, then the rate for Revolving
Loans that are Base Rate Loans plus two percent (2%) per annum).
(b) INTEREST PAYMENTS. Interest on Loans shall be due and
payable in arrears on each Interest Payment Date. If an Interest
Payment Date falls on a date which is not a Business Day, such Interest
Payment Date shall be deemed to be the next succeeding Business Day,
except that in the case of Eurodollar Loans where the next succeeding
Business Day falls in the next succeeding calendar month, then on the
next preceding day.
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3.2 PLACE AND MANNER OF PAYMENTS.
All payments of principal, interest, fees, expenses and other amounts
to be made by a Credit Party under this Credit Agreement shall be made without
setoff, deduction or counterclaim and received not later than 2:00 p.m. on the
date when due, in Dollars and in immediately available funds, by the
Administrative Agent at its offices in Charlotte, North Carolina. Payments
received after such time shall be deemed to have been received on the next
Business Day. The Borrower shall, at the time it makes any payment under this
Credit Agreement, specify to the Administrative Agent, the Loans, Letters of
Credit, fees or other amounts payable by the Borrower hereunder to which such
payment is to be applied (and in the event that it fails to specify, or if such
application would be inconsistent with the terms hereof, the Administrative
Agent shall, subject to Section 3.7, distribute such payment to the Lenders in
such manner as the Administrative Agent may deem appropriate). The
Administrative Agent will distribute such payments to the applicable Lenders on
the same Business Day if any such payment is received prior to 2:00 p.m.;
otherwise the Administrative Agent will distribute such payment to the
applicable Lenders on the next succeeding Business Day. Whenever any payment
hereunder shall be stated to be due on a day which is not a Business Day, the
due date thereof shall be extended to the next succeeding Business Day (subject
to accrual of interest and fees for the period of such extension), except that
in the case of Eurodollar Loans, if the extension would cause the payment to be
made in the next following calendar month, then such payment shall instead be
made on the next preceding Business Day.
3.3 PREPAYMENTS.
(a) VOLUNTARY PREPAYMENTS. The Borrower shall have the right
to prepay Loans in whole or in part from time to time without premium
or penalty; provided, however, that (i) Eurodollar Loans may only be
prepaid on three Business Days' prior written notice to the
Administrative Agent and (ii) each such partial prepayment of Loans
shall be in the minimum principal amount of $1,000,000 and integral
multiples of $500,000 in excess thereof. All prepayments under this
Section shall be subject to Section 3.14 and be accompanied by interest
on the principal amount prepaid through the date of prepayment.
(b) MANDATORY PREPAYMENTS.
(i) REVOLVING COMMITTED AMOUNT. If at any time the
sum of the aggregate amount of Revolving Loans outstanding
plus LOC Obligations outstanding plus the Synthetic Lease
Obligations outstanding exceeds the lesser of (A) the
Revolving Committed Amount and (B) the Borrowing Base Assets,
the Borrower shall immediately make a principal payment to the
Administrative Agent in the manner and in an amount such that
the sum of the aggregate amount of Revolving Loans outstanding
plus LOC Obligations outstanding plus the Synthetic Lease
Obligations outstanding is less than or equal to the lesser of
(A) Revolving Committed Amount and (B) the Borrowing Base
Assets (to be applied as set forth in Section 3.3(c) below).
36
(ii) ASSET SALES. Immediately upon receipt by a
Credit Party or any of its Subsidiaries of proceeds from
any Asset Disposition, the Borrower shall forward an amount
equal to 100% of the Net Cash Proceeds of such Asset
Disposition to the Lenders as a prepayment of the Loans (to be
applied as set forth in Section 3.3(c) below).
(iii) ISSUANCES OF EQUITY. Immediately upon receipt
by a Credit Party or any of its Subsidiaries of proceeds from
any Equity Issuance, the Borrower shall forward 100% of the
Net Cash Proceeds of such Equity Issuance to the Lenders as a
prepayment of the Loans (to be applied as set forth in Section
3.3(c) below).
(iv) ISSUANCE OF DEBT. Immediately upon receipt by a
Credit Party or any of its Subsidiaries of proceeds from any
Debt Issuance, the Borrower shall forward 100% of the Net Cash
Proceeds of such Debt Issuance to the Lenders as a prepayment
of the Loans (to be applied as set forth in Section 3.3(c)
below).
(c) APPLICATION OF PREPAYMENTS. All amounts required to be
paid pursuant to Section 3.3(b)(i) shall be applied FIRST to Revolving
Loans and SECOND to a cash collateral account in respect of LOC
Obligations. All amounts required to be paid pursuant to Sections
3.3(b)(ii), (iii) and (iv) above shall be applied FIRST to the
Revolving Loans (with a corresponding permanent reduction in the
Revolving Committed Amount) and SECOND, to a cash collateral account in
respect of LOC Obligations. Within the parameters of the applications
set forth above, prepayments shall be applied first to Base Rate Loans
and then to Eurodollar Loans in direct order of Interest Period
maturities. All prepayments hereunder shall be subject to Section 3.14
and shall be accompanied by interest on the principal amount prepaid
through the date of prepayment.
3.4 FEES.
(a) COMMITMENT FEES. In consideration of the Revolving
Committed Amount being made available by the Lenders hereunder, the
Borrower agrees to pay to the Administrative Agent, for the pro rata
benefit of each Lender (based on each Lender's Revolving Loan
Commitment Percentage of the Revolving Committed Amount), a per annum
fee equal to the Applicable Percentage for Commitment Fees multiplied
by the Revolving Loan Unused Commitment (the "COMMITMENT FEES"). The
Commitment Fees shall commence to accrue on the Effective Date and
shall be due and payable in arrears on the last day of each fiscal
quarter of the Borrower (as well as on the Maturity Date and on any
date that the Revolving Committed Amount is reduced) for the
immediately preceding fiscal quarter (or portion thereof), beginning
with the first of such dates to occur after the Closing Date.
(b) STANDBY LETTER OF CREDIT FEE. In consideration of the
issuance of standby Letters of Credit hereunder, the Borrower agrees to
pay to the Issuing Lender for the pro rata benefit of each Lender
(based on each Lender's Revolving Loan Commitment Percentage of the
Revolving Committed Amount), a per annum fee (the "STANDBY LETTER OF
CREDIT FEES")
37
equal to the Applicable Percentage for the Standby Letter of Credit
Fees on the average daily maximum amount available to be drawn under
each such Letter of Credit from the date of issuance to the date of
expiration. The Standby Letter of Credit Fees will be payable in
arrears on the last day of each fiscal quarter of the Borrower (as well
as on the Maturity Date) for the immediately preceding fiscal quarter
(or portion thereof), beginning with the first of such dates to occur
after the Closing Date.
(c) TRADE LETTER OF CREDIT FEE. In consideration of the
issuance of trade Letters of Credit hereunder, the Borrower agrees to
pay to the Issuing Lender for the pro rata benefit of each Lender
(based on each Lender's Revolving Loan Commitment Percentage of the
Revolving Committed Amount) a per annum fee (the "TRADE LETTER OF
CREDIT FEES") equal to the Applicable Percentage for the Trade Letter
of Credit Fees on the average daily maximum amount available to be
drawn under each such Letter of Credit from the date of issuance to the
date of expiration. The Trade Letter of Credit Fees will be payable in
arrears on the last day of each fiscal quarter of the Borrower (as well
as on the Maturity Date) for the immediately preceding fiscal quarter
(or portion thereof), beginning with the first of such dates to occur
after the Closing Date.
(d) ISSUING LENDER FEES. In addition to the Standby Letter of
Credit Fees payable pursuant to clause (b) above and the Trade Letter
of Credit Fees payable pursuant to clause (c) above, the Borrower shall
pay to the Issuing Lender for its own account, without sharing by the
other Lenders, (i) the customary charges from time to time to the
Issuing Lender for its services in connection with the issuance,
amendment, payment, transfer, administration, cancellation and
conversion of, and drawings under, Letters of Credit, and (ii) a letter
of credit fronting fee of 0.125% of the face amount of each Letter of
Credit (collectively, the "ISSUING LENDER FEES").
(e) ADMINISTRATIVE FEES. The Borrower agrees to pay to the
Administrative Agent, for its own account, an annual fee in accordance
with the terms of the Fee Letter.
(f) REPURCHASE EVENT FEE. Upon the occurrence of a Repurchase
Event, the Borrower agrees to pay to the Administrative Agent for the
pro rata benefit of each Lender (based on each Lender's Revolving Loan
Commitment Percentage of the Revolving Committed Amount) a fee equal to
0.75% of the Revolving Committed Amount (the "REPURCHASE EVENT FEE");
provided, however, if (i) the Repurchase Event occurs after July 31,
1999 and (ii) EBITDAR of the Borrower and its Subsidiaries for the
twelve month period ending as of the last day of the most recent fiscal
quarter of the Borrower prior to such Repurchase Event is at least
$67.5 million, then the Repurchase Event Fee shall be equal to 0.375%
of the Revolving Committed Amount.
(g) ACCELERATION EVENT FEE. Upon the occurrence of an
Acceleration Event, the Borrower agrees to pay to the Administrative
Agent for the pro rata benefit of each Lender (based on each Lender's
Revolving Loan Commitment Percentage of the Revolving Committed Amount)
a fee equal to 0.75% of the Revolving Committed Amount (the
"ACCELERATION EVENT FEE"); provided, however, if (i) the Acceleration
Event occurs after
38
July 31, 1999 and (ii) EBITDAR of the Borrower and its Subsidiaries for
the twelve month period ending as of the last day of the most recent
fiscal quarter of the Borrower prior to such Acceleration Event is at
least $67.5 million, then the Acceleration Event Fee shall only be
equal to 0.375% of the Revolving Committed Amount.
3.5 PAYMENT IN FULL AT MATURITY.
On the Maturity Date, the entire outstanding principal balance of all
Loans and all LOC Obligations, together with accrued but unpaid interest and all
other sums owing with respect thereto, shall be due and payable in full, unless
accelerated sooner pursuant to Section 9.2.
3.6 COMPUTATIONS OF INTEREST AND FEES.
(a) Except for Base Rate Loans, in which case interest shall
be computed on the basis of a 365 or 366 day year as the case may be,
all computations of interest and fees hereunder shall be made on the
basis of the actual number of days elapsed over a year of 360 days.
Interest shall accrue from and include the date of borrowing (or
continuation or conversion) but exclude the date of payment.
(b) It is the intent of the Lenders and the Credit Parties to
conform to and contract in strict compliance with applicable usury law
from time to time in effect. All agreements between the Lenders and the
Credit Parties are hereby limited by the provisions of this paragraph
which shall override and control all such agreements, whether now
existing or hereafter arising and whether written or oral. In no way,
nor in any event or contingency (including but not limited to
prepayment or acceleration of the maturity of any obligation), shall
the interest taken, reserved, contracted for, charged, or received
under this Credit Agreement, under the Notes or otherwise, exceed the
maximum nonusurious amount permissible under applicable law. If, from
any possible construction of any of the Credit Documents or any other
document, interest would otherwise be payable in excess of the maximum
nonusurious amount, any such construction shall be subject to the
provisions of this paragraph and such documents shall be automatically
reduced to the maximum nonusurious amount permitted under applicable
law, without the necessity of execution of any amendment or new
document. If any Lender shall ever receive anything of value which is
characterized as interest on the Loans under applicable law and which
would, apart from this provision, be in excess of the maximum lawful
amount, an amount equal to the amount which would have been excessive
interest shall, without penalty, be applied to the reduction of the
principal amount owing on the Loans and not to the payment of interest,
or refunded to the Borrower or the other payor thereof if and to the
extent such amount which would have been excessive exceeds such unpaid
principal amount of the Loans. The right to demand payment of the Loans
or any other indebtedness evidenced by any of the Credit Documents does
not include the right to accelerate the payment of any interest which
has not otherwise accrued on the date of such demand, and the Lenders
do not intend to charge or receive any unearned interest in the event
of such demand. All interest paid or agreed to be paid to the Lenders
with respect to the Loans shall, to the extent permitted by applicable
law, be amortized, prorated, allocated, and spread throughout the full
stated term (including
39
any renewal or extension) of the Loans so that the amount of interest
on account of such indebtedness does not exceed the maximum nonusurious
amount permitted by applicable law.
3.7 PRO RATA TREATMENT.
Except to the extent otherwise provided herein:
(a) LOANS. Each Revolving Loan borrowing (including, without
limitation, each Mandatory Borrowing), each payment or prepayment of
principal of any Loan, each payment of fees (other than the Issuing
Lender Fees retained by the Issuing Lender for its own account and the
fees retained by the Administrative Agent for its own account), each
reduction of the Revolving Committed Amount, and each conversion or
continuation of any Loan, shall (except as otherwise provided in
Section 3.11) be allocated pro rata among the relevant Lenders in
accordance with the respective Revolving Loan Commitment Percentages of
such Lenders (or, if the Commitments of such Lenders have expired or
been terminated, in accordance with the respective principal amounts of
the outstanding Loans and Participation Interests of such Lenders);
PROVIDED that, if any Lender shall have failed to pay its applicable
pro rata share of any Revolving Loan, then any amount to which such
Lender would otherwise be entitled pursuant to this subsection (a)
shall instead be payable to the Administrative Agent until the share of
such Loan not funded by such Lender has been repaid; PROVIDED FURTHER,
that in the event any amount paid to any Lender pursuant to this
subsection (a) is rescinded or must otherwise be returned by the
Administrative Agent, each Lender shall, upon the request of the
Administrative Agent, repay to the Administrative Agent the amount so
paid to such Lender, with interest for the period commencing on the
date such payment is returned by the Administrative Agent until the
date the Administrative Agent receives such repayment at a rate per
annum equal to, during the period to but excluding the date two
Business Days after such request, the Federal Funds Rate, and
thereafter, the Base Rate PLUS two percent (2%) per annum; and
(b) LETTERS OF CREDIT. Each payment of unreimbursed drawings
in respect of LOC Obligations shall be allocated to each LOC
Participant pro rata in accordance with its Revolving Loan Commitment
Percentage; PROVIDED that, if any LOC Participant shall have failed to
pay its applicable pro rata share of any drawing under any Letter of
Credit, then any amount to which such LOC Participant would otherwise
be entitled pursuant to this subsection (b) shall instead be payable to
the Issuing Lender until the share of such unreimbursed drawing not
funded by such Lender has been repaid; PROVIDED FURTHER, that in the
event any amount paid to any LOC Participant pursuant to this
subsection (b) is rescinded or must otherwise be returned by the
Issuing Lender, each LOC Participant shall, upon the request of the
Issuing Lender, repay to the Administrative Agent for the account of
the Issuing Lender the amount so paid to such LOC Participant, with
interest for the period commencing on the date such payment is returned
by the Issuing Lender until the date the Issuing Lender receives such
repayment at a rate per annum equal to, during the period to but
excluding the date two Business Days after such request, the Federal
Funds Rate, and thereafter, the Base Rate PLUS two percent (2%) per
annum.
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3.8 SHARING OF PAYMENTS.
The Lenders agree among themselves that, except to the extent otherwise
provided herein, in the event that any Lender shall obtain payment in respect of
any Loan, unreimbursed drawing with respect to any LOC Obligations or any other
obligation owing to such Lender under this Credit Agreement through the exercise
of a right of setoff, banker's lien or counterclaim, or pursuant to a secured
claim under Section 506 of the Bankruptcy Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other similar law or otherwise, or by
any other means, in excess of its pro rata share of such payment as provided for
in this Credit Agreement, such Lender shall promptly pay in cash or purchase
from the other Lenders a participation in such Loans, LOC Obligations, and other
obligations in such amounts, and make such other adjustments from time to time,
as shall be equitable to the end that all Lenders share such payment in
accordance with their respective ratable shares as provided for in this Credit
Agreement. The Lenders further agree among themselves that if payment to a
Lender obtained by such Lender through the exercise of a right of setoff,
banker's lien, counterclaim or other event as aforesaid shall be rescinded or
must otherwise be restored, each Lender which shall have shared the benefit of
such payment shall, by payment in cash or a repurchase of a participation
theretofore sold, return its share of that benefit (together with its share of
any accrued interest payable with respect thereto) to each Lender whose payment
shall have been rescinded or otherwise restored. The Borrower agrees that any
Lender so purchasing such a participation may, to the fullest extent permitted
by law, exercise all rights of payment, including setoff, banker's lien or
counterclaim, with respect to such participation as fully as if such Lender were
a holder of such Loan, LOC Obligation or other obligation in the amount of such
participation. Except as otherwise expressly provided in this Credit Agreement,
if any Lender or the Administrative Agent shall fail to remit to the
Administrative Agent or any other Lender an amount payable by such Lender or
such Administrative Agent to the Administrative Agent or such other Lender
pursuant to this Credit Agreement on the date when such amount is due, such
payments shall be made together with interest thereon for each date from the
date such amount is due until the date such amount is paid to the Administrative
Agent or such other Lender at a rate per annum equal to the Federal Funds Rate.
If under any applicable bankruptcy, insolvency or other similar law, any Lender
receives a secured claim in lieu of a setoff to which this Section 3.8 applies,
such Lender shall, to the extent practicable, exercise its rights in respect of
such secured claim in a manner consistent with the rights of the Lenders under
this Section 3.8 to share in the benefits of any recovery on such secured claim.
3.9 CAPITAL ADEQUACY.
If, after the date hereof, any Lender has determined that the adoption
or the becoming effective of, or any change in, or any change by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof in the interpretation or administration
of, any applicable law, rule or regulation regarding capital adequacy, or
compliance by such Lender, or its parent corporation, with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Lender's (or parent
41
corporation's) capital or assets as a consequence of its commitments or
obligations hereunder to a level below that which such Lender, or its parent
corporation, could have achieved but for such adoption, effectiveness, change or
compliance (taking into consideration such Lender's (or parent corporation's)
policies with respect to capital adequacy), then, upon notice from such Lender
to the Borrower, the Borrower shall be obligated to pay to such Lender such
additional amount or amounts as will compensate such Lender on an after-tax
basis (after taking into account applicable deductions and credits in respect of
the amount indemnified) for such reduction. Each determination by any such
Lender of amounts owing under this Section shall, absent manifest error, be
conclusive and binding on the parties hereto. This covenant shall survive the
termination of this Credit Agreement and the payment of the Loans and all other
amounts payable hereunder.
3.10 INABILITY TO DETERMINE INTEREST RATE.
If prior to the first day of any Interest Period, the Administrative
Agent shall have determined in good faith (which determination shall be
conclusive and binding upon the Borrower) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period, the Administrative
Agent shall give telecopy or telephonic notice thereof to the Borrower and the
Lenders as soon as practicable thereafter, and will also give prompt written
notice to the Borrower when such conditions no longer exist. If such notice is
given (a) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as Base Rate Loans, (b) any Loans that were to
have been converted on the first day of such Interest Period to or continued as
Eurodollar Loans shall be converted to or continued as Base Rate Loans and (c)
any outstanding Eurodollar Loans shall be converted, on the first day of such
Interest Period, to Base Rate Loans. Until such notice is withdrawn by the
Administrative Agent, no further Eurodollar Loans shall be made or continued as
such, nor shall the Borrower have the right to convert Base Rate Loans to
Eurodollar Loans.
3.11 ILLEGALITY.
Notwithstanding any other provision herein, if the adoption of or any
change in any Requirement of Law or in the interpretation or application thereof
occurring after the Closing Date shall make it unlawful for any Lender to make
or maintain Eurodollar Loans as contemplated by this Credit Agreement, (a) such
Lender shall promptly give written notice of such circumstances to the Borrower
and the Administrative Agent (which notice shall be withdrawn whenever such
circumstances no longer exist), (b) the commitment of such Lender hereunder to
make Eurodollar Loans, continue Eurodollar Loans as such and convert a Base Rate
Loan to Eurodollar Loans shall forthwith be canceled and, until such time as it
shall no longer be unlawful for such Lender to make or maintain Eurodollar
Loans, such Lender shall then have a commitment only to make a Base Rate Loan
when a Eurodollar Loan is requested and (c) such Lender's Loans then outstanding
as Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans
on the respective last days or the then current Interest Periods with respect to
such Loans or within such earlier period as required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of the
then current Interest Period with respect thereto, the Borrower shall pay to
such Lender such amounts, if any, as may be required pursuant to Section 3.14.
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3.12 REQUIREMENTS OF LAW.
If the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof applicable to any Lender, or compliance by
any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority, in each case made
subsequent to the Closing Date (or, if later, the date on which such Lender
becomes a Lender):
(a) shall subject such Lender to any tax of any kind
whatsoever with respect to any Letter of Credit, any Eurodollar Loans
made by it or its obligation to make Eurodollar Loans, or change the
basis of taxation of payments to such Lender in respect thereof (except
for Non-Excluded Taxes covered by Section 3.13 (including Non-Excluded
Taxes imposed solely by reason of any failure of such Lender to comply
with its obligations under Section 3.13(b)) and changes in taxes
measured by or imposed upon the overall net income, or franchise tax
(imposed in lieu of such net income tax), of such Lender or its
applicable lending office, branch, or any affiliate thereof);
(b) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(c) shall impose on such Lender any other condition (excluding
any tax of any kind whatsoever);
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, upon notice to the Borrower from such Lender,
through the Administrative Agent, in accordance herewith, the Borrower shall be
obligated to promptly pay such Lender, upon its demand, any additional amounts
necessary to compensate such Lender on an after-tax basis (after taking into
account applicable deductions and credits in respect of the amount indemnified)
for such increased cost or reduced amount receivable, PROVIDED that, in any such
case, the Borrower may elect to convert the Eurodollar Loans made by such Lender
hereunder to Base Rate Loans by giving the Administrative Agent at least one
Business Day's notice of such election, in which case the Borrower shall
promptly pay to such Lender, upon demand, without duplication, such amounts, if
any, as may be required pursuant to Section 3.14. If any Lender becomes entitled
to claim any additional amounts pursuant to this Section 3.12, it shall provide
prompt notice thereof to the Borrower, through the Administrative Agent,
certifying (x) that one of the events described in this Section 3.12 has
occurred and describing in reasonable detail the nature of such event, (y) as to
the increased cost or reduced amount resulting from such event and (z) as to the
additional amount demanded by such Lender and a reasonably detailed explanation
of the calculation thereof. Such a certificate as to any additional amounts
payable pursuant to this Section 3.12 submitted by such Lender, through the
Administrative Agent, to the Borrower shall be conclusive and binding on the
43
parties hereto in the absence of manifest error. This covenant shall survive the
termination of this Credit Agreement and the payment of the Loans and all other
amounts payable hereunder.
3.13 TAXES.
(a) Except as provided below in this Section 3.13, all
payments made by the Borrower under this Credit Agreement and any Notes
shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any court, or governmental body, agency or other official,
excluding taxes measured by or imposed upon the net income of any
Lender or its applicable lending office, or any branch or affiliate
thereof, and all franchise taxes, branch taxes, taxes on doing business
or taxes on the capital or net worth of any Lender or its applicable
lending office, or any branch or affiliate thereof, in each case
imposed in lieu of net income taxes: (i) by the jurisdiction under the
laws of which such Lender, applicable lending office, branch or
affiliate is organized or is located, or in which its principal
executive office is located, or any nation within which such
jurisdiction is located or any political subdivision thereof; or (ii)
by reason of any connection between the jurisdiction imposing such tax
and such Lender, applicable lending office, branch or affiliate other
than a connection arising solely from such Lender having executed,
delivered or performed its obligations, or received payment under or
enforced, this Credit Agreement or any Notes. If any such non-excluded
taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("NON-EXCLUDED TAXES") are required to be withheld from
any amounts payable to the Administrative Agent or any Lender hereunder
or under any Notes, (A) the amounts so payable to the Administrative
Agent or such Lender shall be increased to the extent necessary to
yield to the Administrative Agent or such Lender (after payment of all
Non-Excluded Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Credit
Agreement and any Notes, PROVIDED, HOWEVER, that the Borrower shall be
entitled to deduct and withhold any Non-Excluded Taxes and shall not be
required to increase any such amounts payable to any Lender that is not
organized under the laws of the United States of America or a state
thereof if such Lender fails to comply with the requirements of
paragraph (b) of this Section 3.13 whenever any Non-Excluded Taxes are
payable by the Borrower, and (B) as promptly as possible after
requested the Borrower shall send to the Administrative Agent for its
own account or for the account of such Lender, as the case may be, a
certified copy of an original official receipt received by the Borrower
showing payment thereof. If the Borrower fails to pay any Non-Excluded
Taxes when due to the appropriate taxing authority or fails to remit to
the Administrative Agent the required receipts or other required
documentary evidence, the Borrower shall indemnify the Administrative
Agent and any Lender for any incremental Non-Excluded Taxes, interest
or penalties that may become payable by the Administrative Agent or any
Lender as a result of any such failure. The agreements in this
subsection shall survive the termination of this Credit Agreement and
the payment of the Loans and all other amounts payable hereunder.
44
(b) Each Lender that is not incorporated under the laws of the
United States of America or a state thereof shall:
(i) (A) on or before the date of any payment by the
Borrower under this Credit Agreement or Notes to such Lender,
deliver to the Borrower and the Administrative Agent (x) two
duly completed copies of United States Internal Revenue
Service Form 1001 or 4224, or successor applicable form, as
the case may be, certifying that it is entitled to receive
payments under this Credit Agreement and any Notes without
deduction or withholding of any United States federal income
taxes and (y) an Internal Revenue Service Form W-8 or W-9, or
successor applicable form, as the case may be, certifying that
it is entitled to an exemption from United States backup
withholding tax;
(B) deliver to the Borrower and the
Administrative Agent two further copies of any such form or
certification on or before the date that any such form or
certification expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent
form previously delivered by it to the Borrower; and
(C) obtain such extensions of time for
filing and complete such forms or certifications as may
reasonably be requested by the Borrower or the Administrative
Agent; or
(ii) in the case of any such Lender that is not a
"bank" within the meaning of Section 881(c)(3)(A) of the
Internal Revenue Code, (A) represent to the Borrower (for the
benefit of the Borrower and the Administrative Agent) that it
is not a bank within the meaning of Section 881(c)(3)(A) of
the Internal Revenue Code, (B) agree to furnish to the
Borrower, on or before the date of any payment by the
Borrower, with a copy to the Administrative Agent, two
accurate and complete original signed copies of Internal
Revenue Service Form W-8, or successor applicable form
certifying to such Lender's legal entitlement at the date of
such certificate to an exemption from U.S. withholding tax
under the provisions of Section 881(c) of the Internal Revenue
Code with respect to payments to be made under this Credit
Agreement and any Notes (and to deliver to the Borrower and
the Administrative Agent two further copies of such form on or
before the date it expires or becomes obsolete and after the
occurrence of any event requiring a change in the most
recently provided form and, if necessary, obtain any
extensions of time reasonably requested by the Borrower or the
Administrative Agent for filing and completing such forms),
and (C) agree, to the extent legally entitled to do so, upon
reasonable request by the Borrower, to provide to the Borrower
(for the benefit of the Borrower and the Administrative Agent)
such other forms as may be reasonably required in order to
establish the legal entitlement of such Lender to an exemption
from withholding with respect to payments under this Credit
Agreement and any Notes.
45
Notwithstanding the above, if any change in treaty, law or regulation
has occurred after the date such Person becomes a Lender hereunder
which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with respect
to it and such Lender so advises the Borrower and the Administrative
Agent, then such Lender shall be exempt from such requirements. Each
Person that shall become a Lender or a participant of a Lender pursuant
to Section 11.3 shall, upon the effectiveness of the related transfer,
be required to provide all of the forms, certifications and statements
required pursuant to this subsection (b); PROVIDED that in the case of
a participant of a Lender, the obligations of such participant of a
Lender pursuant to this subsection (b) shall be determined as if the
participant of a Lender were a Lender except that such participant of a
Lender shall furnish all such required forms, certifications and
statements to the Lender from which the related participation shall
have been purchased.
3.14 COMPENSATION.
The Borrower promises to indemnify each Lender and to hold each Lender
harmless from any loss or expense which such Lender may sustain or incur as a
consequence of (a) default by the Borrower in making a borrowing of, conversion
into or continuation of Eurodollar Loans after the Borrower has given a notice
requesting the same in accordance with the provisions of this Credit Agreement,
(b) default by the Borrower in making any prepayment of a Eurodollar Loan after
the Borrower has given a notice thereof in accordance with the provisions of
this Credit Agreement and (c) the making of a prepayment of Eurodollar Loans on
a day which is not the last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to (i) the amount of interest which
would have accrued on the amount so prepaid, or not so borrowed, converted or
continued, for the period from the date of such prepayment or of such failure to
borrow, convert or continue to the last day of the applicable Interest Period
(or, in the case of a failure to borrow, convert or continue, the Interest
Period that would have commenced on the date of such failure) in each case at
the applicable rate of interest for such Eurodollar Loans provided for herein
(excluding, however, the Applicable Percentage included therein, if any) minus
(ii) the amount of interest (as reasonably determined by such Lender) which
would have accrued to such Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank Eurodollar
market. The agreements in this Section shall survive the termination of this
Credit Agreement and the payment of the Loans and all other amounts payable
hereunder.
3.15 EVIDENCE OF DEBT.
(a) Each Lender shall maintain an account or accounts evidencing each
Loan made by such Lender to the Borrower from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Credit Agreement. Each Lender will make reasonable efforts to
maintain the accuracy of its account or accounts and to promptly update its
account or accounts from time to time, as necessary.
(b) The Administrative Agent shall maintain the Register pursuant to
Section 11.3(c), and a subaccount for each Lender, in which Register and
subaccounts (taken together) shall be recorded (i) the amount, type and Interest
Period of each such Loan hereunder, (ii) the amount of
46
any principal or interest due and payable or to become due and payable to each
Lender hereunder, and (iii) the amount of any sum received by the Administrative
Agent hereunder from or for the account of the Borrower and each Lender's share
thereof, if any. The Administrative Agent will make reasonable efforts to
maintain the accuracy of the subaccounts referred to in the preceding sentence
and to promptly update such subaccounts from time to time, as necessary.
(c) The entries made in the accounts, Register and subaccounts
maintained pursuant to subsection (b) of this Section 3.16 (and, if consistent
with the entries of the Administrative Agent, subsection (a)) shall be prima
facie evidence of the existence and amounts of the obligations of the Borrower
therein recorded; PROVIDED, HOWEVER, that the failure of any Lender or the
Administrative Agent to maintain such account, such Register, or such
subaccount, as applicable, or any error therein, shall not in any manner affect
the obligation of the Borrower to repay the Loans made by such Lender in
accordance with the terms hereof.
3.16 REPLACEMENT OF LENDERS.
In the event any Lender delivers to the Borrower any notice in
accordance with Section 3.9, 3.11 or 3.12, then the Borrower shall have the
right, if no Default or Event of Default then exists, to replace such Lender
(the "REPLACED LENDER") with one or more additional banks or financial
institutions (collectively, the "REPLACEMENT LENDER"), PROVIDED, that (a) the
Replacement Lender is acceptable to the Administrative Agent, (b) at the time of
any replacement pursuant to this Section 3.16, the Replacement Lender shall
enter into one or more Assignment and Acceptance agreements pursuant to, and in
accordance with the terms of, Section 11.3(b) (and with all processing and
recordation fees payable pursuant to said Section 11.3(b) to be paid by the
Replacement Lender or, at its option, the Borrower) pursuant to which the
Replacement Lender shall acquire all of the rights and obligations of the
Replaced Lender hereunder and, in connection therewith, shall pay to the
Replaced Lender in respect thereof an amount equal to the sum of (i) the
principal of, and all accrued interest on, all outstanding Loans of the Replaced
Lender, and (ii) all accrued, but theretofore unpaid, fees owing to the Replaced
Lender pursuant to Section 3.4, (c) all other obligations of the Borrower owing
to the Replaced Lender (including all other obligations, if any, owing pursuant
to Sections 3.9, 3.11 and 3.12) shall be paid in full to such Replaced Lender
concurrently with such replacement and (d) the Administrative Agent and the
Lenders shall not be obligated to assist the Borrower in identifying any
Replacement Lender.
SECTION 4
GUARANTY
4.1 GUARANTY OF PAYMENT.
Subject to Section 4.7 below, each of the Guarantors hereby, jointly
and severally, unconditionally guarantees to each Lender, each Affiliate of
Lender that enters into a Hedging Agreement and the Administrative Agent the
prompt payment of the Credit Party Obligations in
47
full when due (whether at stated maturity, as a mandatory prepayment, by
acceleration or otherwise). This Guaranty is a guaranty of payment and not of
collection and is a continuing guaranty and shall apply to all Credit Party
Obligations whenever arising.
4.2 OBLIGATIONS UNCONDITIONAL.
The obligations of the Guarantors hereunder are absolute and
unconditional, irrespective of the value, genuineness, validity, regularity or
enforceability of any of the Credit Documents or the Hedging Agreements, or any
other agreement or instrument referred to therein, to the fullest extent
permitted by applicable law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor. Each Guarantor agrees that this Guaranty may be enforced by
the Lenders without the necessity at any time of resorting to or exhausting any
other security or collateral and without the necessity at any time of having
recourse to the Notes or any other of the Credit Documents or any collateral, if
any, hereafter securing the Credit Party Obligations or otherwise and each
Guarantor hereby waives the right to require the Lenders to proceed against the
Borrower or any other Person (including a co-guarantor) or to require the
Lenders to pursue any other remedy or enforce any other right. Each Guarantor
further agrees that it shall have no right of subrogation, indemnity,
reimbursement or contribution against the Borrower or any other Guarantor of the
Credit Party Obligations for amounts paid under this Guaranty until such time as
the Lenders (and any Affiliates of Lenders entering into Hedging Agreements)
have been paid in full, all Commitments under the Credit Agreement have been
terminated and no Person or Governmental Authority shall have any right to
request any return or reimbursement of funds from the Lenders in connection with
monies received under the Credit Documents. Each Guarantor further agrees that
nothing contained herein shall prevent the Lenders from suing on the Notes or
any of the other Credit Documents or any of the Hedging Agreements or
foreclosing its security interest in or Lien on any collateral, if any, securing
the Credit Party Obligations or from exercising any other rights available to it
under this Credit Agreement, the Notes, any other of the Credit Documents, or
any other instrument of security, if any, and the exercise of any of the
aforesaid rights and the completion of any foreclosure proceedings shall not
constitute a discharge of any of any Guarantor's obligations hereunder; it being
the purpose and intent of each Guarantor that its obligations hereunder shall be
absolute, independent and unconditional under any and all circumstances. Neither
any Guarantor's obligations under this Guaranty nor any remedy for the
enforcement thereof shall be impaired, modified, changed or released in any
manner whatsoever by an impairment, modification, change, release or limitation
of the liability of the Borrower or by reason of the bankruptcy or insolvency of
the Borrower. Each Guarantor waives any and all notice of the creation, renewal,
extension or accrual of any of the Credit Party Obligations and notice of or
proof of reliance of by the Administrative Agent or any Lender upon this
Guarantee or acceptance of this Guarantee. The Credit Party Obligations, and any
of them, shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon this
Guarantee. All dealings between the Borrower and any of the Guarantors, on the
one hand, and the Administrative Agent and the Lenders, on the other hand,
likewise shall be conclusively presumed to have been had or consummated in
reliance upon this Guarantee. The Guarantors further agree to all rights of
set-off as set forth in Section 11.2.
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4.3 MODIFICATIONS.
Each Guarantor agrees that (a) all or any part of the Collateral now or
hereafter held for the Credit Party Obligations, if any, may be exchanged,
compromised or surrendered from time to time; (b) the Lenders shall not have any
obligation to protect, perfect, secure or insure any such security interests,
liens or encumbrances now or hereafter held, if any, for the Credit Party
Obligations or the properties subject thereto; (c) the time or place of payment
of the Credit Party Obligations may be changed or extended, in whole or in part,
to a time certain or otherwise, and may be renewed or accelerated, in whole or
in part; (d) the Borrower and any other party liable for payment under the
Credit Documents may be granted indulgences generally; (e) any of the provisions
of the Notes or any of the other Credit Documents may be modified, amended or
waived; (f) any party (including any co-guarantor) liable for the payment
thereof may be granted indulgences or be released; and (g) any deposit balance
for the credit of the Borrower or any other party liable for the payment of the
Credit Party Obligations or liable upon any security therefor may be released,
in whole or in part, at, before or after the stated, extended or accelerated
maturity of the Credit Party Obligations, all without notice to or further
assent by such Guarantor, which shall remain bound thereon, notwithstanding any
such exchange, compromise, surrender, extension, renewal, acceleration,
modification, indulgence or release.
4.4 WAIVER OF RIGHTS.
Each Guarantor expressly waives to the fullest extent permitted by
applicable law: (a) notice of acceptance of this Guaranty by the Lenders and of
all extensions of credit to the Borrower by the Lenders; (b) presentment and
demand for payment or performance of any of the Credit Party Obligations; (c)
protest and notice of dishonor or of default (except as specifically required in
the Credit Agreement) with respect to the Credit Party Obligations or with
respect to any security therefor; (d) notice of the Lenders obtaining, amending,
substituting for, releasing, waiving or modifying any security interest, lien or
encumbrance, if any, hereafter securing the Credit Party Obligations, or the
Lenders' subordinating, compromising, discharging or releasing such security
interests, liens or encumbrances, if any; (e) all other notices to which such
Guarantor might otherwise be entitled; and (f) demand for payment under this
Guaranty.
4.5 REINSTATEMENT.
The obligations of the Guarantors under this Section 4 shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Credit Party Obligations is
rescinded or must be otherwise restored by any holder of any of the Credit Party
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Administrative Agent and each Lender on demand for all reasonable costs and
expenses (including, without limitation, reasonable fees of counsel) incurred by
the Administrative Agent or such Lender in connection with such rescission or
restoration, including any such costs and expenses incurred in defending against
any claim alleging that such payment constituted a preference, fraudulent
transfer or similar payment under any bankruptcy, insolvency or similar law.
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4.6 REMEDIES.
The Guarantors agree that, as between the Guarantors, on the one hand,
and the Administrative Agent and the Lenders, on the other hand, the Credit
Party Obligations may be declared to be forthwith due and payable as provided in
Section 9 (and shall be deemed to have become automatically due and payable in
the circumstances provided in Section 9) notwithstanding any stay, injunction or
other prohibition preventing such declaration (or preventing such Credit Party
Obligations from becoming automatically due and payable) as against any other
Person and that, in the event of such declaration (or such Credit Party
Obligations being deemed to have become automatically due and payable), such
Credit Party Obligations (whether or not due and payable by any other Person)
shall forthwith become due and payable by the Guarantors. The Guarantors
acknowledge and agree that their obligations hereunder are secured in accordance
with the terms of the Security Agreements and the other Collateral Documents and
that the Lenders may exercise their remedies thereunder in accordance with the
terms thereof.
4.7 LIMITATION OF GUARANTY.
Notwithstanding any provision to the contrary contained herein or in
any of the other Credit Documents, to the extent the obligations of any
Guarantor shall be adjudicated to be invalid or unenforceable for any reason
(including, without limitation, because of any applicable state or federal law
relating to fraudulent conveyances or transfers) then the obligations of such
Guarantor hereunder shall be limited to the maximum amount that is permissible
under applicable law (whether federal or state and including, without
limitation, the Bankruptcy Code).
4.8 RIGHTS OF CONTRIBUTION.
The Credit Parties agree among themselves that, in connection with
payments made hereunder, each Credit Party shall have contribution rights
against the other Credit Parties as permitted under applicable law. Such
contribution rights shall be subordinate and subject in right of payment to the
obligations of the Credit Parties under the Credit Documents and no Credit Party
shall exercise such rights of contribution until all Credit Party Obligations
have been paid in full and the Commitments terminated.
SECTION 5
CONDITIONS PRECEDENT
5.1 CLOSING CONDITIONS.
The obligation of the Lenders to enter into this Credit Agreement and
make the initial Extension of Credit is subject to satisfaction (or waiver by
each of the Lenders) of the following conditions:
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(a) EXECUTED CREDIT DOCUMENTS. Receipt by the Administrative
Agent of duly executed copies of: (i) this Credit Agreement; (ii) the
Notes; (iii) the Collateral Documents; and (iv) all other Credit
Documents, each in form and substance reasonably acceptable to the
Administrative Agent.
(b) CORPORATE DOCUMENTS. With respect to each Credit Party
that is a corporation, receipt by the Administrative Agent of the
following:
(i) CHARTER DOCUMENTS. Copies of the articles or
certificates of incorporation or other charter documents of
each Credit Party certified by a secretary or assistant
secretary of such Credit Party to be true and correct as of
the Effective Date.
(ii) BYLAWS. A copy of the bylaws of each Credit
Party certified by a secretary or assistant secretary of such
Credit Party to be true and correct as of the Effective Date.
(iii) RESOLUTIONS. Copies of resolutions of the Board
of Directors of each Credit Party approving and adopting the
Credit Documents to which it is a party, the transactions
contemplated therein and authorizing execution and delivery
thereof, certified by a secretary or assistant secretary of
such Credit Party to be true and correct and in force and
effect as of the Effective Date.
(iv) INCUMBENCY. An incumbency certificate of each
Credit Party certified by a secretary or assistant secretary
to be true and correct as of the Effective Date.
(c) PARTNERSHIP DOCUMENTS. With respect to each Credit Party
that is a partnership, receipt by the Administrative Agent of the
following:
(i) AUTHORIZATION. Authorization of the general
partner(s) of such Credit Party, as of the Closing Date,
approving and adopting the Credit Documents to be executed by
such Credit Party and authorizing the execution and delivery
thereof., certified by a secretary or assistant secretary of
such general partner to be true and correct as of the Closing
Date.
(ii) PARTNERSHIP AGREEMENTS. The partnership
agreement of such Credit Party, together with all amendments
thereto, certified by a secretary or assistant secretary of
such general partner to be true and correct as of the Closing
Date.
(iii) INCUMBENCY. An incumbency certificate of the
general partner(s) of such Credit Party, certified by a
secretary or assistant secretary of such general partner to be
true and correct as of the Closing Date.
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(d) OPINION OF COUNSEL. Receipt by the Administrative Agent of
an opinion or opinions (which shall cover, among other things,
authority, legality, validity, binding effect, and enforceability of
the Credit Documents and the attachment, perfection, and validity of
liens), reasonably satisfactory to the Administrative Agent, addressed
to the Administrative Agent and the Lenders and dated as of the
Effective Date, from legal counsel to the Credit Parties.
(e) FINANCIAL STATEMENTS. Receipt by the Lenders of such
financial information regarding the Credit Parties as they may request,
including, but not limited to, (i) the consolidated financial
statements of the Credit Parties for the fiscal year 1998, including
balance sheets, income statements and cash flow statements audited by
independent public accountants of recognized national standing and
prepared in accordance with GAAP and (ii) interim unaudited quarterly
financial statements for the Credit Parties.
(f) OPENING BORROWING BASE CERTIFICATE. Receipt by the
Administrative Agent of a Borrowing Base Certificate, in the form of
EXHIBIT 7.1(D), dated as of the Closing Date.
(g) PERSONAL PROPERTY COLLATERAL. The Administrative Agent
shall have received, in form and substance reasonably satisfactory to
the Administrative Agent:
(i) all stock certificates evidencing the stock
pledged to the Administrative Agent pursuant to the Pledge
Agreements, together with duly executed in blank undated stock
powers attached thereto; and
(ii) all instruments and chattel paper in the
possession of a Credit Party, as required by the Security
Agreements, together with allonges or assignments as may be
necessary to perfect the Administrative Agent's security
interest in such Collateral.
(h) MATERIAL ADVERSE EFFECT. No material adverse change shall
have occurred since January 31, 1998 in the condition (financial or
otherwise), business, management or prospects of the Borrower and its
Subsidiaries taken as a whole; it being understood and agreed that the
adjustments for the (i) recognition of income with respect to vendor
merchandising support payments and (ii) the accrual of employee benefit
bonuses for the Borrower's fiscal year 1999, as such adjustments have
been described to the Lenders by the Borrower and presented in any
draft of the Borrower's 1999 annual financial statements provided to
the Lenders, shall not constitute a material adverse change.
(i) LITIGATION. There shall not exist any pending or, to the
knowledge of any Credit Party, threatened action, suit, investigation
or proceeding against a Credit Party or any of their Subsidiaries that
would have or would reasonably be expected to have a Material Adverse
Effect.
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(j) OFFICER'S CERTIFICATES. The Administrative Agent shall
have received a certificate or certificates executed by an Executive
Officer of the Borrower as of the Effective Date stating that (i)
except for the Indenture Default under the Indenture, the Borrower and
each of its Subsidiaries are in compliance with all existing financial
obligations, (ii) no action, suit, investigation or proceeding is
pending or, to the knowledge of any Credit Party, threatened in any
court or before any arbitrator or governmental instrumentality that
purports to effect the Borrower, any of the its Subsidiaries or any
transaction contemplated by the Credit Documents, if such action, suit,
investigation or proceeding would have or might reasonably be expected
to have a Material Adverse Effect, (iii) the financial statements and
information delivered to the Administrative Agent on or before the
Effective Date were prepared in good faith and in accordance with GAAP
and (iv) immediately after giving effect to this Credit Agreement, the
other Credit Documents and all the transactions contemplated therein to
occur on such date, (A) the Borrower and each of its Subsidiaries is
Solvent, (B) no Default or Event of Default exists, (C) all
representations and warranties contained herein and in the other Credit
Documents are true and correct in all material respects, and (D) the
Credit Parties are in compliance with each of the financial covenants
set forth in Section 7.2.
(k) CONSENTS. Receipt of all governmental, shareholder and
third party consents (including the consent, if necessary, of any
existing lenders, lessors and/or bondholders of the Borrower to the
extent that such indebtedness is to remain in place after the
transactions contemplated hereby) and approvals necessary or, in the
opinion of the Administrative Agent, desirable in connection with the
transactions contemplated hereby and expiration of all applicable
waiting periods without any action being taken by any authority that
could restrain, prevent or impose any material adverse conditions on
the transactions contemplated hereby or that could seek or threaten any
of the foregoing, and no law or regulation shall be applicable which in
the judgment of the Administrative Agent could have such effect.
(l) PRIOR CREDIT AGREEMENT. Receipt by the Administrative
Agent of (i) evidence that all obligations outstanding under the Prior
Credit Agreement have been paid in full or are now evidenced by the
Credit Documents and (ii) an Assignment Agreement between NationsBank
and each Lender party to the Prior Credit Agreement, pursuant to which
each such Lender will assign its Commitment and its rights and
obligations under the Prior Credit Agreement to NationsBank.
(m) WAIVER AGREEMENT. Receipt by the Administrative Agent of a
waiver agreement between the Credit Parties and the Lenders, pursuant
to which the Lenders agree to waive certain Events of Default under the
Prior Credit Agreement; it is understood and agreed that the Assignment
Agreements referenced in Section 5.1(l) shall be effective prior to
giving effect to such waiver letter.
(n) TROL AMENDMENT. Receipt by the Administrative Agent of an
executed copy of any Amendment to the Participation or any Operative
Agreement (as defined in the
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Participation Agreement) executed in conjunction with the closing of
this Credit Agreement.
(o) SYNDICATION SIDE LETTER. Receipt by the Administrative
Agent of the Syndication Side Letter, dated as of the date hereof,
among the Borrower, the Administrative Agent and ▇▇▇▇ (the "SYNDICATION
SIDE LETTER").
(p) AVAILABILITY. The Administrative Agent shall be satisfied
that (i) the amount of committed financing available to the Borrower
shall be sufficient to meet the ongoing financing needs of the Borrower
and its Subsidiaries and (ii) after giving effect to the initial Loans
made on the Effective Date and the Letters of Credit issued on or prior
to the Effective Date, there shall be at least $5,000,000 of
availability existing under the Revolving Committed Amount.
(q) CASH COLLATERAL ACCOUNT. Receipt by the Administrative
Agent of evidence of the deposit by the Credit Parties of $35 million
in the Cash Collateral Account.
(r) FEES AND EXPENSES. Payment by the Credit Parties of the
fees and expenses owed by them to the Administrative Agent, as set
forth in the Fee Letter.
(s) PRIORITY OF LIENS. The Administrative Agent shall have
received satisfactory evidence that none of the Collateral is subject
to any Liens other than Permitted Liens.
(t) YEAR 2000. Receipt by the Administrative Agent of evidence
that (a) the Borrower and its Subsidiaries are taking all necessary and
appropriate steps to ascertain the extent of, and to quantify and
successfully address, business and financial risks facing the Borrower
and such Subsidiary as a result of what is commonly referred to as the
`Year 2000 problem' (i.e., the inability of certain computer
applications to recognize correctly and perform date-sensitive
functions involving certain dates prior to and after December 31,
1999), including risks resulting from the failure of key vendors and
customers of the Borrower or any Subsidiary to successfully address the
Year 2000 problem, and (b) the Borrower and each Subsidiary's material
computer applications and those of its key vendors and customers will,
on a timely basis, adequately address the Year 2000 problem in all
material respects.
(u) OTHER. Receipt and satisfactory review by the
Administrative Agent of such other documents, instruments, agreements
or information as reasonably and timely requested by the Administrative
Agent or any Lender, including, but not limited to, information
regarding litigation, tax, accounting, labor, insurance, pension
liabilities (actual or contingent), real estate leases, material
contracts, debt agreements, property ownership and contingent
liabilities of the Borrower and its Subsidiaries.
5.2 CONDITIONS TO ALL EXTENSIONS OF CREDIT.
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In addition to the conditions precedent stated elsewhere herein, the
Lenders shall not be obligated to make Loans nor shall an Issuing Lender be
required to issue or extend a Letter of Credit unless:
(a) NOTICE. The Borrower shall have delivered (i) in the case
of any new Revolving Loan, a Notice of Borrowing, duly executed and
completed, by the time specified in Section 2.1 and (ii) in the case of
any Letter of Credit, the Issuing Lender shall have received an
appropriate request for issuance in accordance with the provisions of
Section 2.2;
(b) REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Credit Parties in any Credit Document are true
and correct in all material respects at and as if made as of such date
except to the extent they expressly relate to an earlier date;
(c) NO DEFAULT. No Default or Event of Default shall exist or
be continuing either prior to or after giving effect thereto; and
(d) AVAILABILITY. Immediately after giving effect to the
making of a Loan (and the application of the proceeds thereof) or to
the issuance of a Letter of Credit, as the case may be, the sum of the
Revolving Loans outstanding plus LOC Obligations outstanding plus the
aggregate amount of Synthetic Lease Obligations outstanding shall not
exceed the lesser of (i) the Revolving Committed Amount and (ii) the
Borrowing Base Assets.
(e) SECTION 1008 OF INDENTURE. Immediately after giving effect
to the making of a Loan (and the application of the proceeds thereof)
or to the issuance of a Letter of Credit, as the case may be, the
Borrower and its Subsidiaries shall be in compliance with the terms of
Section 1008 of the Indenture.
The delivery of each Notice of Borrowing and each request for a Letter of Credit
shall constitute a representation and warranty by the Borrower of the
correctness of the matters specified in subsections (b), (c), (d) and (e) above.
SECTION 6
REPRESENTATIONS AND WARRANTIES
The Credit Parties hereby represent to the Administrative Agent and
each Lender that:
6.1 FINANCIAL CONDITION.
(a) The financial statements delivered to the Lenders prior to
the Effective Date and pursuant to Section 7.1(a) and (b): (i) have
been prepared in accordance with GAAP and (ii) present fairly the
consolidated and consolidating (as applicable) financial condition,
55
results of operations and cash flows of the Credit Parties and their
Subsidiaries as of such date and for such periods.
(b) Since January 31, 1998, (i) there has been no sale,
transfer or other disposition by any Credit Party or any of their
Subsidiaries of any material part of the business or property of the
Credit Parties, taken as a whole, and (ii) there has been no purchase
or other acquisition by any Credit Party or any of their Subsidiaries
of any business or property (including any capital stock of any other
Person) material in relation to the consolidated financial condition of
the Credit Parties, taken as a whole, in each case, which, is not (A)
reflected in the most recent financial statements delivered to the
Lenders pursuant to Section 7.1 or in the notes thereto or (B)
otherwise permitted by the terms of this Credit Agreement and
communicated to the Administrative Agent.
6.2 NO MATERIAL CHANGE.
Since the Effective Date, there has been no development or event
relating to or affecting a Credit Party or any of their Subsidiaries which has
had or would be reasonably expected to have a Material Adverse Effect. To the
knowledge of any Credit Party, since January 31, 1998, there has been no
development or event relating to or affecting a Credit Party or any of its
Subsidiaries which has had or would be reasonably expected to have a Material
Adverse Effect; it being understood and agreed that the adjustments for the (i)
recognition of income with respect to vendor merchandising support payments and
(ii) the accrual of employee benefit bonuses for the Borrower's fiscal year
1999, as such adjustments have been described to the Lenders by the Borrower and
presented in any draft of the Borrower's 1999 annual financial statements
provided to the Lenders, shall not constitute a Material Adverse Effect.
6.3 ORGANIZATION AND GOOD STANDING.
Each Credit Party (a) is duly organized, validly existing and in good
standing under the laws of the State (or other jurisdiction) of its
incorporation or formation, (b) is duly qualified and in good standing and
authorized to do business in every jurisdiction unless the failure to be so
qualified, in good standing or authorized would have a Material Adverse Effect
and (c) has the right, power and authority to own its properties and to carry on
its business as now conducted and as proposed to be conducted.
6.4 DUE AUTHORIZATION.
Each Credit Party (a) has the right, power and authority to execute,
deliver and perform this Credit Agreement and the other Credit Documents to
which it is a party and to incur the obligations herein and therein provided for
and (b) is duly authorized to, and has been authorized by all necessary
corporate and other action, to execute, deliver and perform this Credit
Agreement and the other Credit Documents to which it is a party.
6.5 NO CONFLICTS.
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Neither the execution and delivery of the Credit Documents, nor the
consummation of the transactions contemplated therein, nor performance of and
compliance with the terms and provisions thereof by such Credit Party will (a)
violate or conflict with any provision of the articles or certificate of
incorporation, bylaws or other organizational documents of the Borrower or any
of its Subsidiaries, (b) violate, contravene or materially conflict with any
Requirement of Law or any other law, regulation (including, without limitation,
Regulation U or Regulation X), order, writ, judgment, injunction, decree or
permit applicable to it, (c) violate, contravene or conflict with contractual
provisions of, or cause an event of default under, any indenture, loan
agreement, mortgage, deed of trust, contract or other agreement or instrument to
which it is a party or by which it may be bound, the violation of which could
have or might be reasonably expected to have a Material Adverse Effect, or (d)
result in or require the creation of any Lien (other than those contemplated in
or created in connection with the Credit Documents) upon or with respect to its
properties.
6.6 CONSENTS.
Except for consents, approvals and authorizations which have been
obtained, no consent, approval, authorization or order of, or filing,
registration or qualification with, any court or Governmental Authority or third
party in respect of any Credit Party is required in connection with the
execution, delivery or performance of this Credit Agreement or any of the other
Credit Documents by such Credit Party.
6.7 ENFORCEABLE OBLIGATIONS.
This Credit Agreement and the other Credit Documents have been duly
executed and delivered and constitute legal, valid and binding obligations of
each Credit Party enforceable against such Credit Party in accordance with their
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization or moratorium laws or similar laws relating to or affecting
creditors' rights generally or by general equitable principles.
6.8 NO DEFAULT.
Except for the Indenture Default, no Credit Party, nor any of their
Subsidiaries, is in default in any respect under any contract, lease, loan
agreement, indenture, mortgage, security agreement or other agreement or
obligation to which it is a party or by which any of its properties is bound
which default would have or would be reasonably expected to have a Material
Adverse Effect. No Default or Event of Default exists except as previously
disclosed in writing to the Lenders.
6.9 OWNERSHIP.
Each Credit Party, and each of its Subsidiaries, is the owner of, and
has good and marketable title to, or has a valid license to use all of its
respective assets and none of such assets is subject to any Lien other than
Permitted Liens.
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6.10 INDEBTEDNESS.
The Credit Parties and their Subsidiaries have no Indebtedness except
(a) as disclosed in the financial statements referenced in Section 6.1, (b) as
set forth on SCHEDULE 6.10 and (c) as otherwise permitted by this Credit
Agreement.
6.11 LITIGATION.
There are no actions, suits or legal, equitable, arbitration or
administrative proceedings, pending or, to the knowledge of any Credit Party,
threatened against, any Credit Party or any of its Subsidiaries which could have
or might be reasonably expected to have a Material Adverse Effect.
6.12 TAXES.
Each Credit Party, and each of its Subsidiaries, has filed, or caused
to be filed, all material tax returns (federal, state, local and foreign)
required to be filed and paid (a) all material amounts of taxes shown thereon to
be due and payable (including interest and penalties) and (b) all material other
taxes, fees, assessments and other governmental charges (including documentary
stamp taxes and intangibles taxes) that are due and payable, except for such
taxes (i) which are not yet delinquent or (ii) that are being contested in good
faith and by proper proceedings, and against which adequate reserves are being
maintained in accordance with GAAP. To the knowledge of the Credit Parties,
there are no material amounts claimed to be due against any of them by any
Governmental Authority.
6.13 COMPLIANCE WITH LAW.
Each Credit Party, and each of its Subsidiaries, is in compliance with
all Requirements of Law and all other laws, rules, regulations, orders and
decrees (including without limitation Environmental Laws) applicable to it, or
to its properties, unless such failure to comply would not have or would not be
reasonably expected to have a Material Adverse Effect.
6.14 ERISA.
Except as would not result or be reasonably expected to result in a
Material Adverse Effect:
(a) During the five-year period prior to the date on which
this representation is made or deemed made: (i) no Termination Event
has occurred, and, to the knowledge of the Credit Parties, no event or
condition has occurred or exists as a result of which any Termination
Event could reasonably be expected to occur, with respect to any Plan;
(ii) no "accumulated funding deficiency," as such term is defined in
Section 302 of ERISA and Section 412 of the Code, whether or not
waived, has occurred with respect to any Plan; (iii) each Plan has been
maintained, operated, and funded in compliance with its own terms and
in material compliance with the provisions of ERISA, the Code, and any
other applicable federal or state laws; and (iv) no lien in favor or
the PBGC or a Plan has arisen or is reasonably likely to arise on
account of any Plan.
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(b) The actuarial present value of all "benefit liabilities"
under each Single Employer Plan (determined within the meaning of
Section 401(a)(2) of the Code, utilizing the actuarial assumptions used
to fund such Plans), whether or not vested, did not, as of the last
annual valuation date prior to the date on which this representation is
made or deemed made, exceed the current value of the assets of such
Plan allocable to such accrued liabilities.
(c) Neither the Borrower, nor any of its Subsidiaries nor any
ERISA Affiliate has incurred, or, to the knowledge of the Credit
Parties, are reasonably expected to incur, any withdrawal liability
under ERISA to any Multiemployer Plan or Multiple Employer Plan.
Neither the Borrower, any of its Subsidiaries nor any ERISA Affiliate
has received any notification that any Multiemployer Plan is in
reorganization (within the meaning of Section 4241 of ERISA), is
insolvent (within the meaning of Section 4245 of ERISA), or has been
terminated (within the meaning of Title IV of ERISA), and no
Multiemployer Plan is, to the best knowledge of the Credit Parties,
reasonably expected to be in reorganization, insolvent, or terminated.
(d) No prohibited transaction (within the meaning of Section
406 of ERISA or Section 4975 of the Code) or breach of fiduciary
responsibility has occurred with respect to a Plan which has subjected
or is reasonably likely to subject the Borrower or any of its
Subsidiaries or any ERISA Affiliate to any liability under Sections
406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the Code, or
under any agreement or other instrument pursuant to which the Borrower
or any of its Subsidiaries or any ERISA Affiliate has agreed or is
required to indemnify any person against any such liability.
(e) The present value (determined using actuarial and other
assumptions which are reasonable with respect to the benefits provided
and the employees participating) of the liability of the Borrower and
its Subsidiaries and each ERISA Affiliate for post-retirement welfare
benefits to be provided to their current and former employees under
Plans which are welfare benefit plans (as defined in Section 3(1) of
ERISA), net of all assets under all such Plans allocable to such
benefits, are reflected on the Financial Statements in accordance with
FASB 106.
(f) Each Plan which is a welfare plan (as defined in Section
3(1) of ERISA) to which Sections 601-609 of ERISA and Section 4980B of
the Code apply has been administered in material compliance with such
sections.
6.15 SUBSIDIARIES.
Set forth on SCHEDULE 6.15 is a complete and accurate list of all
Subsidiaries of each Credit Party. Information on SCHEDULE 6.15 includes
jurisdiction of incorporation or organization, the number of shares of each
class of capital stock or other equity interests outstanding, the number and
percentage of outstanding shares of each class owned (directly or indirectly) by
such Credit Party; and the number and effect, if exercised, of all outstanding
options, warrants, rights of conversion or
59
purchase and all other similar rights with respect thereto. The outstanding
capital stock and other equity interests of all such Subsidiaries is validly
issued, fully paid and non-assessable and is owned by each such Credit Party,
directly or indirectly, free and clear of all Liens (other than those arising
under or contemplated in connection with the Credit Documents). Other than as
set forth in SCHEDULE 6.15, neither any Credit Party nor any Subsidiary thereof
has outstanding any securities convertible into or exchangeable for its capital
stock nor does any such Person have outstanding any rights to subscribe for or
to purchase or any options for the purchase of, or any agreements providing for
the issuance (contingent or otherwise) of, or any calls, commitments or claims
of any character relating to its capital stock. SCHEDULE 6.15 may be updated
from time to time by the Borrower by giving written notice thereof to the
Administrative Agent. As of the Closing Date, none of the Credit Parties owns
any shares of capital stock in any Foreign Subsidiaries.
6.16 USE OF PROCEEDS.
The proceeds of the Loans hereunder will be used solely for the
purposes specified in Section 7.11. No proceeds of the Loans hereunder have been
or will be used (a) to acquire, directly or indirectly, any security in any
transaction which is subject to Sections 13 or 14 of the Securities Exchange Act
of 1934, as amended, (including, without limitation, Sections 13(d) and 14(d)
thereof) or to refinance any Indebtedness used to acquire any such securities or
(b) for the acquisition of another Person unless the board of directors (or
other comparable governing body) or stockholders, as appropriate, of such Person
has approved such acquisition.
6.17 GOVERNMENT REGULATION.
(a) No part of the Letters of Credit or proceeds of the Loans
will be used, directly or indirectly, for the purpose of purchasing or
carrying any "margin stock" within the meaning of Regulation U, or for
the purpose of purchasing or carrying or trading in any securities. If
requested by any Lender or the Administrative Agent, the Borrower will
furnish to the Administrative Agent and each Lender a statement to the
foregoing effect in conformity with the requirements of FR Form U-1
referred to in Regulation U. No Indebtedness being reduced or retired
out of the proceeds of the Loans was or will be incurred for the
purpose of purchasing or carrying any margin stock within the meaning
of Regulation U or any "margin security" within the meaning of
Regulation T. "Margin stock" within the meaning of Regulation U does
not constitute more than 25% of the value of the consolidated assets of
the Credit Parties and their Subsidiaries. None of the transactions
contemplated by the Credit Documents (including, without limitation,
the direct or indirect use of the proceeds of the Loans) will violate
or result in a violation of the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, or regulations issued
pursuant thereto, or Regulation T, U or X.
(b) No Credit Party, nor any of their Subsidiaries, is subject
to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act or the Investment Company Act of 1940, each as
amended. In addition, no Credit Party, nor any of their Subsidiaries,
is (i) an "investment company" registered or required to be registered
under the Investment Company Act of 1940, as amended, and is not
controlled
60
by such a company, or (ii) a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary" of a "holding company", within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
(c) No director, executive officer or principal shareholder of
any Credit Party or any of their Subsidiaries is a director, executive
officer or principal shareholder of any Lender. For the purposes hereof
the terms "director", "executive officer" and "principal shareholder"
(when used with reference to any Lender) have the respective meanings
assigned thereto in Regulation O issued by the Board of Governors of
the Federal Reserve System.
6.18 ENVIRONMENTAL MATTERS.
(a) Except as would not cause or reasonably be expected to
cause a Material Adverse Effect:
(i) Each of the Real Properties and all operations at
the Real Properties are in compliance with all applicable
Environmental Laws, and there is no violation of any
Environmental Law with respect to the Real Properties or the
businesses operated by the Credit Parties or any of their
Subsidiaries (the "BUSINESSES"), and there are no conditions
relating to the Businesses or Real Properties that would
reasonably be expected to give rise to liability under any
applicable Environmental Laws.
(ii) No Credit Party has received any written notice
of, or inquiry from any Governmental Authority regarding, any
violation, alleged violation, non-compliance, liability or
potential liability regarding Hazardous Materials or
compliance with Environmental Laws with regard to any of the
Real Properties or the Businesses, nor, to the knowledge of a
Credit Party or any of its Subsidiaries, is any such notice
being threatened.
(iii) Hazardous Materials have not been transported
or disposed of from the Real Properties, or generated,
treated, stored or disposed of at, on or under any of the Real
Properties or any other location, in each case by, or on
behalf or with the permission of, a Credit Party or any of its
Subsidiaries in a manner that would give rise to liability
under any applicable Environmental Laws.
(iv) No judicial proceeding or governmental or
administrative action is pending or, to the knowledge of a
Credit Party or any of its Subsidiaries, threatened, under any
Environmental Law to which a Credit Party or any of its
Subsidiaries is or will be named as a party, nor are there any
consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative
or judicial requirements outstanding under any Environmental
Law with respect to a Credit Party or any of its Subsidiaries,
the Real Properties or the Businesses.
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(v) There has been no release (including, without
limitation, disposal) or threat of release of Hazardous
Materials at or from the Real Properties, or arising from or
related to the operations of a Credit Party or any of its
Subsidiaries in connection with the Real Properties or
otherwise in connection with the Businesses where such release
constituted a violation of, or would give rise to liability
under, any applicable Environmental Laws.
(vi) None of the Real Properties contains, or has
previously contained, any Hazardous Materials at, on or under
the Real Properties in amounts or concentrations that, if
released, constitute or constituted a violation of, or could
give rise to liability under, Environmental Laws.
(vii) No Credit Party, nor any of its Subsidiaries,
has assumed any liability of any Person (other than another
Credit Party, or one of its Subsidiaries) under any
Environmental Law.
(b) The Credit Parties have adopted procedures that are
designed to (i) ensure that each Credit Party, any of its operations
and each of the properties owned or leased by each Credit Party
complies with applicable Environmental Laws and (ii) minimize any
liabilities or potential liabilities that each Credit Party, any of its
operations and each of the properties owned or leased by each Credit
Party may have under applicable Environmental Laws.
6.19 INTELLECTUAL PROPERTY.
Each Credit Party owns, or has the legal right to use, all patents,
trademarks, tradenames, copyrights, technology, know-how and processes (the
"INTELLECTUAL PROPERTY") necessary for each of them to conduct its business as
currently conducted except for those the failure to own or have such legal right
to use would not have or be reasonably expected to have a Material Adverse
Effect. Set forth on SCHEDULE 6.19 is a list of all patents, registered and
material unregistered trademarks, tradenames and registered copyrights owned by
each Credit Party or that any Credit Party has the right to use. Except as
provided on SCHEDULE 6.19, none of the Intellectual Property is subject to any
licensing or franchise agreement. Furthermore, except as provided on SCHEDULE
6.19, no claim been asserted against any Credit Party or its Subsidiaries in
writing and is pending by any Person challenging or questioning the use of any
Intellectual Property owned by a Credit Party or that any Credit Party has a
right to use or the validity or effectiveness of any such Intellectual Property,
nor does any Credit Party have knowledge of any such claim, and to the Credit
Parties' knowledge the use of any Intellectual Property by the Credit Parties or
any of their Subsidiaries does not infringe on the rights of any Person, except
for such claims and infringements that in the aggregate, would not have or be
reasonably expected to have a Material Adverse Effect. Maxim Industries does not
own, or have the legal right to use, any registered copyrights. SCHEDULE 6.19
may be updated from time to time by the Borrower by giving written notice
thereof to the Administrative Agent.
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6.20 SOLVENCY.
Each Credit Party is and, after consummation of the transactions
contemplated by this Credit Agreement, will be Solvent.
6.21 INVESTMENTS.
All Investments of each Credit Party and its Subsidiaries are Permitted
Investments.
6.22 LOCATION OF COLLATERAL.
Set forth on SCHEDULE 6.22(a) is a list of all Real Properties with
street address, county and state where located. Set forth on SCHEDULE 6.22(b) is
a list of all locations where any personal property of a Credit Party is
located, including county and state where located. Set forth on SCHEDULE 6.22(c)
is the chief executive office and principal place of business of each Credit
Party. SCHEDULES 6.22(a), 6.22(b) and 6.22(c) may be updated from time to time
by the Borrower by giving written notice thereof to the Administrative Agent.
6.23 DISCLOSURE.
Neither this Credit Agreement nor any financial statements delivered to
the Lenders nor any other document, certificate or statement furnished to the
Lenders by or on behalf of any Credit Party in connection with the transactions
contemplated hereby contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained
therein or herein, taken as a whole, not misleading.
6.24 LICENSES, ETC.
The Credit Parties have obtained and hold in full force and effect, all
franchises, licenses, permits, certificates, authorizations, qualifications,
accreditations, easements, rights of way and other rights, consents and
approvals which are necessary for the operation of their respective businesses
as presently conducted, except where the failure to obtain same would not have a
Material Adverse Effect.
6.25 COLLATERAL DOCUMENTS.
The Collateral Documents create valid security interests in, and Liens
on, the Collateral purported to be covered thereby, which security interests and
Liens are prior to all other Liens other than Permitted Liens.
6.26 BURDENSOME RESTRICTIONS.
No Credit Party, nor any of this Subsidiaries, is a party to any
agreement or instrument or subject to any other obligation or any charter or
corporate restriction or any provision of any
63
applicable law, rule or regulation which, individually or in the aggregate,
would have or be reasonably expected to have a Material Adverse Effect.
6.27 YEAR 2000 COMPLIANCE.
Each Credit Party has (i) initiated a review and assessment of
all areas within its and each of its Subsidiaries' business and operations
(including those affected by suppliers, vendors and customers) that could be
adversely affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by such Credit Party or any of its Subsidiaries may be unable
to recognize and perform properly date-sensitive functions involving certain
dates prior to and any date after December 31, 1999), (ii) developed a plan and
timeline for addressing the Year 2000 Problem on a timely basis, and (iii) to
date, implemented that plan in accordance with the timetable. Based on the
foregoing, each Credit Party believes that all computer applications (including
those of its suppliers, vendors and customers) that are material to its and any
of its Subsidiaries' business and operations are reasonably expected on a timely
basis to be able to perform properly date-sensitive functions for all dates
before and after January 1, 2000 (that is, be "Year 2000 Compliant"), except to
the extent that a failure to do so could not reasonably be expected to have
Material Adverse Effect.
6.28 LABOR CONTRACTS AND DISPUTES.
(i) There is no collective bargaining agreement or other labor contract
covering employees of any Credit Party; (ii) no union or other labor
organization is seeking to organize, or be recognized as, a collective
bargaining unit of employees of any Credit Party; (iii) there is no pending, or
to any Credit Party's knowledge, threatened, strike, work stoppage, material
unfair lease practice claim or other material labor dispute against or effecting
any Credit Party or its employees.
SECTION 7
AFFIRMATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as this
Credit Agreement is in effect and until the Loans and LOC Obligations, together
with interest and fees and other obligations then due and payable hereunder,
have been paid in full and the Commitments and Letters of Credit hereunder shall
have terminated:
7.1 INFORMATION COVENANTS.
The Credit Parties will furnish, or cause to be furnished, to the
Administrative Agent and each of the Lenders:
(a) ANNUAL FINANCIAL STATEMENTS. As soon as available, and in
any event within 90 days after the close of each fiscal year of the
Borrower (or, with respect to fiscal year
64
1999, within 7 days after the Closing Date), a consolidated and
consolidating balance sheet and income statement of the Borrower and
its Subsidiaries, as of the end of such fiscal year, together with
related consolidated and consolidating statements of operations and
retained earnings and of cash flows for such fiscal year, setting forth
in comparative form consolidated and consolidating figures for the
preceding fiscal year, all such consolidated financial information
described above to be in reasonable form and detail and audited by
independent certified public accountants of recognized national
standing reasonably acceptable to the Administrative Agent and whose
opinion shall be to the effect that such financial statements have been
prepared in accordance with GAAP (except for changes with which such
accountants concur) and shall not be limited as to the scope of the
audit or qualified in any manner.
(b) INTERIM FINANCIAL STATEMENTS.
(i) QUARTERLY FINANCIAL STATEMENTS. As soon as
available, and in any event within 45 days after the close of
each fiscal quarter of the Borrower, a consolidated and
consolidating balance sheet and income statement of the
Borrower and its Subsidiaries, as of the end of such fiscal
quarter, together with related consolidated and consolidating
statements of operations and retained earnings and of cash
flows for such fiscal quarter in each case setting forth in
comparative form consolidated and consolidating figures for
the corresponding period of the preceding fiscal year, all
such financial information described above to be in reasonable
form and detail and reasonably acceptable to the
Administrative Agent, and accompanied by a certificate of the
chief financial officer of the Borrower to the effect that
such quarterly financial statements fairly present in all
material respects the financial condition of the Borrower and
its Subsidiaries and have been prepared in accordance with
GAAP, subject to changes resulting from audit and normal
year-end audit adjustments.
(ii) MONTHLY FINANCIAL STATEMENTS. As soon as
available, and in any event within 30 days after the end of
each calendar month, a consolidated balance sheet and income
statement of the Borrower and its Subsidiaries, as of the end
of such month, in each case setting forth in comparative form
consolidated figures for the corresponding period of the
preceding fiscal year, all such financial information
described above to be in reasonable form and detail and
reasonably acceptable to the Administrative Agent, and
accompanied by a certificate of the chief financial officer of
the Borrower to the effect that such monthly financial
statements fairly present in all material respects the
financial condition of the Borrower and its Subsidiaries and
have been prepared in accordance with GAAP, subject to changes
resulting from audit and normal year-end audit adjustments.
(c) OFFICER'S CERTIFICATE. At the time of delivery of the
financial statements provided for in Sections 7.1(a) and 7.1(b)(i)
above, a certificate of an Executive Officer of the Borrower
substantially in the form of EXHIBIT 7.1(c), (i) demonstrating
compliance with the financial covenants contained in Section 7.2 by
calculation thereof as of the end of each
65
such fiscal period, (ii) demonstrating compliance with any other terms
of this Credit Agreement as requested by the Administrative Agent and
(iii) stating that no Default or Event of Default exists, or if any
Default or Event of Default does exist, specifying the nature and
extent thereof and what action the Borrower proposes to take with
respect thereto.
(d) BORROWING BASE CERTIFICATE. As soon as available, and in
any event within 30 days after the end of each calendar month, a
Borrowing Base Certificate as of the last Business Day of the preceding
calendar month, substantially in the form of EXHIBIT 7.1(d) and
certified by an Executive Officer of the Borrower to be true and
correct as of the date thereof.
(e) ANNUAL BUSINESS PLAN AND BUDGETS. Prior to the end of each
fiscal year of the Borrower, an annual business plan and budget of the
Borrower and its Subsidiaries on a consolidated basis containing, among
other things, pro forma financial projections (including without
limitation, income statement, balance sheet and statement of cash
flows) for the next fiscal year.
(f) ACCOUNTANT'S CERTIFICATE. Within the period for delivery
of the annual financial statements provided in Section 7.1(a), a
certificate of the accountants conducting the annual audit stating that
they have reviewed this Credit Agreement and stating further whether,
in the course of their audit, they have become aware of any Default or
Event of Default and, if any such Default or Event of Default exists,
specifying the nature and extent thereof.
(g) AUDITOR'S REPORTS. Promptly upon receipt thereof, a copy
of any "management letter" submitted by independent accountants to the
Borrower or any of its Subsidiaries in connection with any annual,
interim or special audit of the books of the Borrower or any of its
Subsidiaries.
(h) REPORTS. Promptly upon transmission or receipt thereof,
(a) copies of any public filings and registrations with, and reports to
or from, the Securities and Exchange Commission, or any successor
agency, and copies of all financial statements, proxy statements,
notices and reports as the Borrower or any of its Subsidiaries shall
send to its shareholders generally and (b) upon the written request of
the Administrative Agent, all reports and written information to and
from the United States Environmental Protection Agency, or any state or
local agency responsible for environmental matters, the United States
Occupational Health and Safety Administration, or any state or local
agency responsible for health and safety matters, or any successor
agencies or authorities concerning environmental, health or safety
matters.
(i) NOTICES. Upon an officer of a Credit Party obtaining
knowledge thereof, the Borrower will give written notice to the
Administrative Agent promptly (and in any event within two Business
Days) of (a) the occurrence of an event or condition consisting of a
Default or Event of Default, specifying the nature and existence
thereof and what action the
66
Borrower proposes to take with respect thereto, and (b) the occurrence
of any of the following with respect to the Borrower or any of its
Subsidiaries: (i) the pendency or commencement of any litigation,
arbitral or governmental proceeding against a Credit Party or any of
its Subsidiaries which if adversely determined would have or would be
reasonably expected to have a Material Adverse Effect, (ii) the
institution of any proceedings against a Credit Party or any of its
Subsidiaries with respect to, or the receipt of written notice by such
Person of potential liability or responsibility for violation, or
alleged violation of any federal, state or local law, rule or
regulation, (including but not limited to, Environmental Laws) the
violation of which would have or would be reasonably expected to have a
Material Adverse Effect, or (iii) any information that a Credit Party
may have a Year 2000 Problem on or after January 1, 2000.
(j) ERISA. Upon any of the Credit Parties or any ERISA
Affiliate obtaining knowledge thereof, the Borrower will give written
notice to the Administrative Agent promptly (and in any event within
two Business Days) of: (i) any event or condition, including, but not
limited to, any Reportable Event, that constitutes, or might reasonably
lead to, a Termination Event; (ii) with respect to any Multiemployer
Plan, the receipt of notice as prescribed in ERISA or otherwise of any
withdrawal liability assessed against the Credit Parties or any of
their ERISA Affiliates, or of a determination that any Multiemployer
Plan is in reorganization or insolvent (both within the meaning of
Title IV of ERISA); (iii) the failure to make full payment on or before
the due date (including extensions) thereof of all amounts which a
Credit Party or any of its Subsidiaries or ERISA Affiliates is required
to contribute to each Plan pursuant to its terms and as required to
meet the minimum funding standard set forth in ERISA and the Code with
respect thereto; or (iv) any change in the funding status of any Plan
that could have a Material Adverse Effect; together, with a description
of any such event or condition or a copy of any such notice and a
statement by the principal financial officer of the Borrower briefly
setting forth the details regarding such event, condition, or notice,
and the action, if any, which has been or is being taken or is proposed
to be taken by the Credit Parties with respect thereto. Promptly upon
request, a Credit Party shall furnish the Administrative Agent and each
of the Lenders with such additional information concerning any Plan as
may be reasonably requested, including, but not limited to, copies of
each annual report/return (Form 5500 series), as well as all schedules
and attachments thereto required to be filed with the Department of
Labor and/or the Internal Revenue Service pursuant to ERISA and the
Code, respectively, for each "plan year" (within the meaning of Section
3(39) of ERISA).
(k) ENVIRONMENTAL.
(i) Subsequent to a notice from any Governmental
Authority where the subject matter of such notice would
reasonably cause concern, or during the existence of an Event
of Default, and upon the written request of Administrative
Agent, the Credit Parties will furnish or cause to be
furnished to the Administrative Agent, at the Credit Parties'
expense, a report of an environmental assessment of reasonable
scope, form and depth, including, where appropriate, invasive
soil or groundwater sampling, by a consultant reasonably
acceptable to the Administrative
67
Agent addressing the subject of such notice or, if during the
existence of an Event of Default, regarding any release or
threat of release of Hazardous Materials on any property
owned, leased or operated by a Credit Party and the compliance
by the Credit Parties with Environmental Laws. If the Credit
Parties fail to deliver such an environmental report within
sixty (60) days after receipt of such written request, then
the Administrative Agent may arrange for same, and the Credit
Parties hereby grant to the Administrative Agent and its
representatives access to the Real Properties and a license of
a scope reasonably necessary to undertake such an assessment
(including, where appropriate, invasive soil or groundwater
sampling). The reasonable cost of any assessment arranged for
by the Administrative Agent pursuant to this provision will be
payable by the Credit Parties on demand and added to the
obligations secured by the Collateral Documents.
(ii) Each Credit Party will conduct and complete all
investigations, studies, sampling, and testing and all
remedial, removal, and other actions necessary to address all
Hazardous Materials on, from, or affecting any real property
owned or leased by a Credit Party to the extent necessary to
be in compliance with all Environmental Laws and all other
applicable federal, state, and local laws, regulations, rules
and policies and with the orders and directives of all
Governmental Authorities exercising jurisdiction over such
real property to the extent any failure would have or be
reasonably expected to have a Material Adverse Effect.
(l) OTHER INFORMATION. With reasonable promptness upon any
such request, such other information regarding the business, properties
or financial condition of the Credit Parties and their Subsidiaries as
the Administrative Agent may reasonably request.
7.2 FINANCIAL COVENANTS.
(a) FIXED CHARGE COVERAGE RATIO. The Fixed Charge Coverage
Ratio, measured as of the last day of each fiscal quarter of the Credit
Parties, shall be greater than or equal to:
Fiscal Quarter Ending Fixed Charge Coverage Ratio
--------------------- -------------------------------------
4/30/99 greater than or equal to 1.05 to 1.00
7/31/99 greater than or equal to 1.10 to 1.00
10/31/99 greater than or equal to 1.15 to 1.00
1/31/00 greater than or equal to 1.20 to 1.00
4/30/00 and thereafter greater than or equal to 1.25 to 1.00
The Fixed Charge Coverage Ratio shall be calculated as
follows:
(i) As of the last day of the fiscal quarter ending
April 30, 1999, the Fixed Charge Coverage Ratio shall be based
on the ratio of (A) EBITDAR for the
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one fiscal-quarter period then ended to (B) Fixed Charges for
the one fiscal-quarter period then ended;
(ii) As of the last day of the fiscal quarter ending
July 31, 1999, the Fixed Charge Coverage Ratio shall be based
on the ratio of (A) EBITDAR for the two fiscal-quarter period
then ended to (B) Fixed Charges for the two fiscal-quarter
period then ended;
(iii) As of the last day of the fiscal quarter ending
October 31, 1999, the Fixed Charge Coverage Ratio shall be
based on the ratio of (A) EBITDAR for the three fiscal-quarter
period then ended to (B) Fixed Charges for the three
fiscal-quarter period then ended; and
(iv) As of the last day of the fiscal quarter ending
January 31, 2000 and each fiscal quarter thereafter, the Fixed
Charge Coverage Ratio shall be based on the ratio of (A)
EBITDAR for the four fiscal-quarter period then ended to (B)
Fixed Charges for the four fiscal-quarter period then ended.
(b) ADJUSTED SENIOR DEBT RATIO. The Adjusted Senior Debt
Ratio, measured as of the last day of each fiscal quarter of the Credit
Parties, shall be less than or equal to:
Fiscal Quarter Ending Adjusted Senior Debt Ratio
--------------------- ----------------------------------
4/30/99 less than or equal to 6.25 to 1.00
7/31/99 less than or equal to 5.50 to 1.00
10/31/99 less than or equal to 5.00 to 1.00
1/31/00 less than or equal to 4.90 to 1.00
4/30/00 less than or equal to 4.50 to 1.00
7/31/00 and thereafter less than or equal to 4.25 to 1.00
The Adjusted Senior Debt Ratio shall be calculated as follows:
(i) As of the last day of the fiscal quarter ending
April 30, 1999, the Adjusted Senior Debt Ratio shall be based
on the ratio of (A) Total Senior Debt as of the last day of
such fiscal quarter PLUS ((Adjusted Rent Expense for the one
fiscal-quarter period then ended) MULTIPLIED BY 4) to (B)
(EBITDAR for the one fiscal-quarter period then ended)
MULTIPLIED BY 4;
(ii) As of the last day of the fiscal quarter ending
July 31, 1999, the Adjusted Senior Debt Ratio shall be based
on the ratio of (A) Total Senior Debt as of the last day of
such fiscal quarter PLUS ((Adjusted Rent Expense for the two
fiscal-quarter period then ended) MULTIPLIED BY 2) to (B)
(EBITDAR for the two fiscal-quarter period then ended)
MULTIPLIED BY 2;
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(iii) As of the last day of the fiscal quarter ending
October 31, 1999, the Adjusted Senior Debt Ratio shall be
based on the ratio of (A) Total Senior Debt as of the last day
of such fiscal quarter PLUS ((Adjusted Rent Expense for the
three fiscal-quarter period then ended) MULTIPLIED BY 1.33) to
(B) (EBITDAR for the three fiscal-quarter period then ended)
MULTIPLIED BY 1.33; and
(iv) As of the last day of the fiscal quarter ending
January 31, 2000 and each fiscal quarter thereafter, the
Adjusted Senior Debt Ratio shall be based on the ratio of (A)
Total Senior Debt as of the last day of such fiscal quarter
PLUS Adjusted Rent Expense for the four fiscal-quarter period
then ended to (B) EBITDAR for the four fiscal-quarter period
then ended.
(c) TOTAL DEBT TO CAPITALIZATION RATIO. The Total Debt to
Capitalization Ratio shall at all times be less than 0.45 to 1.00.
(d) NET WORTH. As of the last day of each fiscal quarter of
the Credit Parties, the Net Worth shall be greater than or equal to the
sum of (i) $165 million PLUS (ii) 50% of the cumulative Net Income
(without deduction for losses) earned for each completed fiscal quarter
subsequent to the Closing Date to the date of determination PLUS (iii)
100% of the amount of Net Cash Proceeds from any Equity Issuance.
(e) MINIMUM EBITDAR. As of the last day of each fiscal quarter
of the Credit Parties, EBITDAR shall be greater than or equal to:
Fiscal Quarter Ending Minimum EBITDAR
--------------------- ---------------
4/30/99 $13,250,000
7/31/99 $31,000,000
10/31/99 $51,500,000
1/31/00 $67,000,000
4/30/00 and thereafter $67,500,000
EBITDAR shall be calculated as follows:
(i) As of the last day of the fiscal quarter ending
April 30, 1999, EBITDAR shall be based on EBITDAR for the one
fiscal-quarter period then ended;
(ii) As of the last day of the fiscal quarter ending
July 31, 1999, EBITDAR shall be based on EBITDAR for the two
fiscal-quarter period then ended;
(iii) As of the last day of the fiscal quarter ending
October 31, 1999, EBITDAR shall be based on EBITDAR for the
three fiscal-quarter period then ended; and
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(iv) As of the last day of the fiscal quarter ending
January 31, 2000 and each fiscal quarter thereafter, EBITDAR
shall be based on EBITDAR for the four fiscal-quarter period
then ended.
7.3 PRESERVATION OF EXISTENCE AND FRANCHISES.
Each of the Credit Parties will do all things necessary to (a) preserve
and keep in full force and effect its existence and (b) take all reasonable
action to maintain all rights, franchises and authority necessary or desirable
in the normal conduct of its business, except as permitted by Section 8.4.
7.4 BOOKS AND RECORDS.
Each of the Credit Parties will, and cause its Subsidiaries to, keep
complete and accurate books and records of its transactions in accordance with
GAAP (including the establishment and maintenance of appropriate reserves).
7.5 COMPLIANCE WITH LAW.
Each of the Credit Parties will, and cause its Subsidiaries to, comply
with all material laws, rules, regulations and orders, and all applicable
material restrictions imposed by all Governmental Authorities, applicable to it
and its property (including, without limitation, Environmental Laws).
7.6 PAYMENT OF TAXES AND OTHER INDEBTEDNESS.
Each of the Credit Parties will, and cause its Subsidiaries to, pay,
settle or discharge (a) all taxes, assessments and governmental charges or
levies imposed upon it, or upon its income or profits, or upon any of its
properties, before they shall become delinquent, (b) all lawful claims
(including claims for labor, materials and supplies) which, if unpaid, might
give rise to a Lien upon any of its properties, and (c) all of its other
Indebtedness as it shall become due (to the extent such repayment is not
otherwise prohibited by this Credit Agreement); PROVIDED, HOWEVER, that a Credit
Party or any of its Subsidiaries shall not be required to pay any such tax,
assessment, charge, levy, claim or Indebtedness which is being contested in good
faith by appropriate proceedings and as to which adequate reserves therefor have
been established in accordance with GAAP, unless the failure to make any such
payment (i) would give rise to an immediate right to foreclose or collect on a
Lien securing such amounts or (ii) would have or reasonably be expected to have
a Material Adverse Effect.
7.7 INSURANCE.
Each of the Credit Parties will at all times maintain in full force and
effect insurance (including worker's compensation insurance, liability
insurance, casualty insurance and business interruption insurance) in such
amounts, covering such risks and liabilities and with such deductibles or
self-insurance retentions as are in accordance with normal industry practice.
All
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policies shall have the Administrative Agent, on behalf of the Lenders, named as
an additional insured and loss payee.
In the event there occurs any material loss, damage to or destruction of the
Collateral of any Credit Party or any part thereof, such Credit Party shall
promptly give written notice thereof to the Administrative Agent generally
describing the nature and extent of such damage or destruction. Subsequent to
any loss, damage to or destruction of the Collateral of any Credit Party or any
part thereof, such Credit Party, whether or not the insurance proceeds, if any,
received on account of such damage or destruction shall be sufficient for that
purpose, at such Credit Party's cost and expense, will promptly repair or
replace the Collateral of such Credit Party so lost, damaged or destroyed;
PROVIDED, HOWEVER, that such Credit Party need not repair or replace the
Collateral of such Credit Party so lost, damaged or destroyed to the extent the
failure to make such repair or replacement (a) is desirable to the proper
conduct of the business of such Credit Party in the ordinary course and
otherwise is in the best interest of such Credit Party and (b) would not
materially impair the rights and benefits of the Administrative Agent or the
Lenders under this Credit Agreement or any other Credit Document. In the event a
Credit Party shall receive any insurance proceeds, as a result of any loss,
damage or destruction of Collateral, in a net amount in excess of $1,000,000,
such Credit Party will immediately pay over such proceeds to the Administrative
Agent as cash collateral for the Credit Party Obligations. The Administrative
Agent agrees to release such insurance proceeds to such Credit Party for
replacement or restoration of the portion of the Collateral of such Credit Party
lost, damaged or destroyed if (A) within 30 days from the date the
Administrative Agent receives such insurance proceeds, the Administrative Agent
has received written application for such release from such Credit Party
together with evidence reasonably satisfactory to it that the Collateral lost,
damaged or destroyed has been or will be replaced or restored to its condition
(or by Collateral having a value at least equal to the condition of the asset
subject to the loss, damage or destruction) immediately prior to the loss,
destruction or other event giving rise to the payment of such insurance proceeds
and (B) on the date of such release no Default or Event of Default exists. If
the conditions in the preceding sentence are not met, the Administrative Agent
may or, upon the request of the Required Lenders, shall at any time after the
first Business Day subsequent to the date 30 days after it received such
insurance proceeds, apply such insurance proceeds as a mandatory prepayment of
the Credit Party Obligations for application in accordance with the terms of
Section 3.3(b)(iii). All insurance proceeds shall be subject to the security
interest of the Lenders under the Collateral Documents.
The present insurance coverage of the Credit Parties and their Subsidiaries is
outlined as to carrier, policy number, expiration date, type and amount on
SCHEDULE 7.7. SCHEDULE 7.7 shall be amended and updated by the Credit Parties on
an at least annual basis or upon the request of the Administrative Agent.
7.8 MAINTENANCE OF PROPERTY.
Each of the Credit Parties will, and cause its Subsidiaries to,
maintain and preserve its properties and equipment in good repair, working order
and condition, normal wear and tear excepted, and will make, or cause to be
made, in such properties and equipment from time to time all repairs, renewals,
replacements, extensions, additions, betterments and improvements thereto as
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may be needed or proper, to the extent and in the manner customary for companies
in similar businesses.
7.9 PERFORMANCE OF OBLIGATIONS.
Each of the Credit Parties will, and cause its Subsidiaries to, perform
in all material respects all of its obligations under the terms of all material
agreements, indentures, mortgages, security agreements or other debt instruments
to which it is a party or by which it is bound.
7.10 COLLATERAL.
If, subsequent to the Closing Date, a Credit Party shall (a) acquire
any patented, registered or applied for intellectual property or any securities
or (b) acquire any other personal property required to be delivered to the
Administrative Agent as Collateral hereunder or under any of the Collateral
Documents, the Borrower shall immediately notify the Administrative Agent of
same. Each Credit Party shall take such action (including, but not limited to,
the actions set forth in Sections 5.1(g) and 7.15(d)), as reasonably requested
by the Administrative Agent and at its own expense, to ensure that the
Administrative Agent has a perfected Lien in all owned personal property of the
Credit Parties as set forth in the Security Agreements and the Pledge Agreements
(whether now owned or hereafter acquired), subject only to Permitted Liens. Each
Credit Party shall adhere to the covenants regarding the location of personal
property as set forth in the Security Agreements.
7.11 USE OF PROCEEDS.
The Credit Parties will use the proceeds of the Loans solely (a) to
refinance the Indebtedness owing under the Prior Credit Agreement, (b) to
provide working capital, (c) to repurchase Securities, subject to the terms and
conditions of the Credit Documents, (d) to make Permitted Acquisitions and (e)
for general corporate purposes. The Credit Parties will use the Letters of
Credit solely for the purposes set forth in Section 2.2(a).
7.12 AUDITS/INSPECTIONS.
Upon reasonable notice and during normal business hours, each Credit
Party will permit representatives appointed by the Administrative Agent or any
Lender, including, without limitation, independent accountants, agents,
attorneys and appraisers to visit and inspect such Credit Party's property,
including its books and records, its accounts receivable and inventory, its
facilities and its other business assets, and to make photocopies or photographs
thereof and to write down and record any information such representative obtains
and shall permit the Administrative Agent or its representatives or any Lender
or its representatives to investigate and verify the accuracy of information
provided to the Lenders, including, without limitation, the performance of
collateral valuation reviews from time to time to assess the composition of the
Borrowing Base Assets, and to discuss all such matters with the officers,
employees and representatives of the Credit Parties. The Credit Parties agree
that the Administrative Agent may conduct such collateral reviews, at the Credit
Parties' expense, as it reasonably deems appropriate.
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7.13 ADDITIONAL CREDIT PARTIES.
At the time any Person becomes a Subsidiary of a Credit Party, the
Borrower shall so notify the Administrative Agent and promptly thereafter (but
in any event within 30 days after the date thereof) shall cause such Person to
(a) if it is a Domestic Subsidiary, execute a Joinder Agreement in substantially
the same form as EXHIBIT 7.13, (b) cause all of the capital stock of such Person
(if it is a Domestic Subsidiary) or 65% of the capital stock of such Person (if
it is a First Tier Foreign Subsidiary) to be delivered to the Administrative
Agent (together with undated stock powers signed in blank) and pledged to the
Administrative Agent pursuant to an appropriate pledge agreement in
substantially the form of the Pledge Agreement (or a joinder to the existing
Pledge Agreement) and otherwise in a form reasonably acceptable to the
Administrative Agent, (c) if such Person is a Domestic Subsidiary, pledge all of
its assets to the Administrative Agent pursuant to a security agreement in
substantially the form of the Security Agreement (or a joinder to the existing
Security Agreement) and otherwise in a form reasonably acceptable to the
Administrative Agent, and (d) if such Person is a Domestic Subsidiary and has
any Subsidiaries, (A) deliver all of the capital stock of such Domestic
Subsidiaries owned by it and 65% of the stock of the First Tier Foreign
Subsidiaries owned by it (together with undated stock powers signed in blank) to
the Administrative Agent and (B) execute a pledge agreement in substantially the
form of the Pledge Agreement (or a joinder to the existing Pledge Agreement) and
otherwise in a form acceptable to the Administrative Agent, (e) if such Person
is a Domestic Subsidiary and leases any real property, cause to be delivered in
a commercially reasonable manner a landlord waiver or estoppel letter with
respect thereto in a form acceptable to the Administrative Agent) and (f)
deliver such other documentation as the Administrative Agent may reasonably
request in connection with the foregoing, including, without limitation,
appropriate UCC-1 financing statements, environmental reports, landlord's
waivers, certified resolutions and other organizational and authorizing
documents of such Person and favorable opinions of counsel to such Person (which
shall cover, among other things, the legality, validity, binding effect and
enforceability of the documentation referred to above), all in form, content and
scope reasonably satisfactory to the Administrative Agent.
7.14 YEAR 2000 COMPLIANCE.
Each Credit Party will promptly notify the Administrative Agent in the
event such Credit Party discovers or determines that any computer application
that is material to its or any of its Subsidiaries' business and operations will
not be Year 2000 Compliant, except to the extent that such failure could
reasonably be expected to have a Material Adverse Effect.
7.15 POST-CLOSING REQUIREMENTS.
(a) Within 21 days after the Closing Date, the Credit Parties
shall deposit $5 million into the Cash Collateral Account, which
deposit shall be in addition to the deposit required pursuant to
Section 5.1(q).
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(b) Within 30 days after the Closing Date, the Administrative
Agent shall have completed a field examination (whether through
internal or third party appraisers or both), at the Borrower's expense,
with respect to the Borrower's accounts receivable and inventory, the
results of which demonstrate that the margined value of the Borrower's
accounts receivable and inventory, together with the value attributed
to the Executive Buildings (such value not to exceed $7 million), when
added to the amount of cash in the Cash Collateral Account is at least
equal to $112.5 million.
(c) Within 30 days after the Closing Date, the Borrower shall
deliver to the Administrative Agent (i) copies of certificates of good
standing, existence or their equivalent with respect to each Credit
Party certified as of a recent date by the appropriate Governmental
Authorities of the state or other jurisdiction of incorporation or
organization and each other jurisdiction in which the failure to so
qualify and be in good standing would have a Material Adverse Effect on
the business or operations of a Credit Party in such jurisdiction and
(ii) copies of the articles or certificates of incorporation or other
charter documents of each Credit Party certified to be true and
complete as of a recent date by the appropriate Governmental Authority
of the state or other jurisdiction of its incorporation or
organization.
(d) Within 30 days after the Closing Date, the Borrower shall
deliver to the Administrative Agent the following:
(i) searches of Uniform Commercial Code ("UCC")
filings in the jurisdiction of the chief executive office of
each New Subsidiary (and each other Credit Party which the
Administrative Agent deems appropriate) and each jurisdiction
where any Collateral is located or where a filing would need
to be made (and has not previously been made) in order to
perfect the Administrative Agent's security interest in the
Collateral, copies of the financing statements on file in such
jurisdictions, evidence that no Liens exist other than
Permitted Liens and such payoff letters and UCC termination
statements as required by the Administrative Agent in
connection with such UCC search results;
(ii) duly executed UCC financing statements (or
amendments to UCC financing statements) for each appropriate
jurisdiction as is necessary, in the Administrative Agent's
sole discretion, to perfect the Administrative Agent's
security interest in the Collateral;
(iii) searches of ownership of the intellectual
property of each New Subsidiary (and each other Credit Party
which the Administrative Agent deems appropriate) in the
appropriate governmental offices as requested by the
Administrative Agent and such patent, trademark and copyright
filings as requested by the Administrative Agent in connection
therewith;
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(iv) evidence of the transfer of all assets of Maxim
Industries (other than immaterial assets not to exceed $1000
in the aggregate) to a Credit Party, such evidence to be in
form and substance satisfactory to the Administrative Agent;
(v) copies of insurance policies or certificates of
insurance of the New Subsidiaries evidencing liability and
casualty insurance meeting the requirements set forth in the
Credit Documents, including, but not limited to, naming the
Administrative Agent as additional insured or loss payee on
behalf of the Lenders;
(vi) to the extent not previously delivered to the
Administrative Agent, evidence of any merger of a Credit Party
under the Prior Credit Agreement with and into another Credit
Party under the Prior Credit Agreement, in form and substance
satisfactory to the Administrative Agent;
(vii) with respect to each leased location of a
Credit Party (i) on which such Credit Party maintains in
excess of $400,000 of inventory and (ii) for which the
Administrative Agent in its sole discretion determines that a
landlord consent is required, receipt by the Administrative
Agent of a landlord consent from the respective landlord in
form and substance satisfactory to the Administrative Agent;
and
(viii) all original executed note receivables owing
to a Credit Party, together with duly executed allonges, in
form and substance acceptable to the Administrative Agent,
attached thereto.
(e) Within 30 days after the Closing Date (or such later date
as the Administrative Agent may agree), the Borrower shall deliver to
the Administrative Agent, with respect to the Real Property on which
each of the Executive Buildings is located, (i) a deed to secure debt
and security agreement executed by the Borrower in favor of the
Administrative Agent, in form and substance satisfactory to the
Administrative Agent, (ii) duly executed UCC fixture financing
statements for each appropriate jurisdiction as is necessary, in the
Administrative Agent's sole discretion, to perfect the Administrative
Agent's security interest in the Collateral described therein, (iii) an
opinion of counsel to the Borrower in form and substance satisfactory
to the Administrative Agent, (iv) a mortgagee title policy, in form and
substance satisfactory to the Administrative Agent, together with such
title endorsements as the Administrative Agent may require, (v) an
appraiser from a qualified appraiser satisfactory to the Administrative
Agent, (vi) an environmental site assessment from an environmental
consultant satisfactory to the Administrative Agent, (viii) an ALTA
survey, in form and substance satisfactory to the Administrative Agent
and (ix) such other real estate collateral documentation as the
Administrative Agent may require.
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SECTION 8
NEGATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as this
Credit Agreement is in effect and until the Loans and LOC Obligations, together
with interest, fees and other obligations then due and payable hereunder, have
been paid in full and the Commitments and Letters of Credit hereunder shall have
terminated:
8.1 INDEBTEDNESS.
No Credit Party will, nor will it permit any of its Subsidiaries to,
contract, create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness arising under this Credit Agreement and the
other Credit Documents;
(b) Indebtedness existing as of the Closing Date as referenced
in Section 6.10 (and renewals, refinancings, replacements or extensions
thereof on terms and conditions no more favorable, in the aggregate, to
such creditor than such existing Indebtedness and in a principal amount
not in excess of that outstanding as of the date of such renewal,
refinancing, replacement or extension);
(c) Indebtedness in respect of current accounts payable and
accrued expenses incurred in the ordinary course of business and to the
extent not current, accounts payable and accrued expenses that are
subject to bona fide dispute;
(d) Indebtedness owing by a Credit Party to another Credit
Party;
(e) purchase money Indebtedness (including obligations in
respect of Capital Leases or Synthetic Leases) to finance the purchase
of fixed assets (including equipment); PROVIDED that (i) the total of
all such Indebtedness (including any such Indebtedness referred to in
subsection (b) above) for all such Persons taken together shall not
exceed at any one time outstanding the sum of (A) an aggregate
principal amount of $7,500,000 PLUS (B) the principal amount of
Indebtedness outstanding under the Participation Agreement and
Operative Agreements; (ii) such Indebtedness when incurred shall not
exceed the purchase price of the asset(s) financed; and (iii) no such
Indebtedness shall be refinanced for a principal amount in excess of
the principal balance outstanding thereon at the time of such
refinancing;
(f) Indebtedness assumed or seller debt incurred in connection
with Permitted Acquisitions permitted by Section 8.7 (so long as such
Indebtedness assumed or incurred in connection with a Permitted
Acquisition was not assumed or incurred in anticipation of the
respective Permitted Acquisition);
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(g) Indebtedness arising from Hedging Agreements entered into
in the ordinary course of business and not for speculative purposes;
(h) the Subordinated Debt;
(i) Indebtedness up to $10,000,000 under the Participation
Agreement and the Operative Agreements (as defined in the Participation
Agreement);
(j) Indebtedness up to $11,927,000 under the ▇▇▇▇ Promissory
Note; and
(k) other unsecured Indebtedness up to $2,000,000, in the
aggregate, at any one time outstanding.
8.2 LIENS.
No Credit Party will, nor will it permit its Subsidiaries to, contract,
create, incur, assume or permit to exist any Lien with respect to any of its
property or assets of any kind (whether real or personal, tangible or
intangible), whether now owned or after acquired, except for Permitted Liens.
8.3 NATURE OF BUSINESS.
No Credit Party will, nor will it permit its Subsidiaries to, alter the
character of its business from that conducted as of the Effective Date or engage
in any business other than the business conducted as of the Effective Date and
activities which are substantially similar or related thereto or logical
extensions thereof.
8.4 CONSOLIDATION AND MERGER.
No Credit Party will, nor will it permit any Subsidiary to, enter into
any transaction of merger or consolidation or liquidate, wind up or dissolve
itself; provided that any Credit Party may merge or consolidate with or into
another Credit Party, if the following conditions are satisfied:
(a) the Administrative Agent is given prior written notice of
such action;
(b) the Person formed by such consolidation or into which a
Credit Party is merged shall either (A) be such Credit Party or (B) be
a Domestic Subsidiary of such Credit Party and expressly assume in
writing all of the obligations of such Credit Party under the Credit
Documents; provided that if the transaction is between the Borrower and
another Person, the Borrower must be the surviving entity;
(c) the Credit Parties execute and deliver such documents,
instruments and certificates as the Administrative Agent may request
(including, if necessary, to maintain its perfection and priority in
the Collateral pledged pursuant to the Collateral Documents);
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(d) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing; and
(e) the Borrower delivers to the Administrative Agent an
officer's certificate demonstrating compliance with clause (b) or (c)
above, as applicable, and an opinion of counsel stating that such
consolidation or merger and any written agreement entered into in
connection therewith, comply with this Section 8.4.
8.5 SALE OR LEASE OF ASSETS.
No Credit Party will, nor will it permit its Subsidiaries to, convey,
sell, lease, transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business or assets whether now owned or
hereafter acquired, including, without limitation, inventory, receivables,
equipment, real property interests (whether owned or leasehold), and securities,
other than (a) any inventory sold or otherwise disposed of in the ordinary
course of business; (b) the sale, lease, transfer or other disposal by a Credit
Party (other than the Borrower) of any or all of its assets to another Credit
Party; (c) obsolete, slow-moving, idle or worn-out assets no longer used or
useful in its business or the trade in of equipment for equipment in better
condition or of better quality; (d) the transfer of assets which constitute a
Permitted Investment; (e) the lease or sublease of real property interests in
the ordinary course of business; (f) accounts receivable and related rights and
interests sold to GE Capital pursuant to the terms of the GE Capital Dealer
Agreement; (g) leases related to vans for MaxCare franchises not to exceed
$3,500,000, in the aggregate, during the term of this Credit Agreement and (g)
other sales of assets not to exceed $2,500,000, in the aggregate, during the
term of this Credit Agreement in connection with the closing and liquidation of
retail stores.
Upon a sale of assets permitted by this Section 8.5, the Administrative
Agent shall promptly deliver to the Borrower, upon the Borrower's request and at
the Borrower's expense, such documentation as is reasonably necessary to
evidence the release of the Administrative Agent's security interest in such
assets, including, without limitation, amendments or terminations of UCC
financing statements.
8.6 SALE LEASEBACKS.
No Credit Party will, nor will it permit its Subsidiaries to, directly
or indirectly become or remain liable as lessee or as guarantor or other surety
with respect to any lease of any property (whether real or personal or mixed),
whether now owned or hereafter acquired, (a) which such Credit Party or its
Subsidiary has sold or transferred or is to sell or transfer to any other Person
other than another Credit Party or (b) which such Credit Party or its Subsidiary
intends to use for substantially the same purpose as any other property which
has been sold or is to be sold or transferred by such Credit Party to any Person
in connection with such lease.
8.7 ADVANCES, INVESTMENTS AND LOANS.
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No Credit Party will, nor will it permit its Subsidiaries to, make any
Investments except for Permitted Investments.
8.8 RESTRICTED PAYMENTS.
No Credit Party will, nor will it permit its Subsidiaries to, directly
or indirectly, (a) declare or pay any dividends or make any other distribution
upon any shares of its capital stock of any class other than payment of
dividends by any Subsidiary of the Borrower to its parent or (b) purchase,
redeem or otherwise acquire or retire or make any provisions for redemption,
acquisition or retirement of any shares of its capital stock of any class or any
warrants or options to purchase any such shares other than the purchase of
shares by the Borrower permitted pursuant to clause (h) of the definition of
Permitted Investments;
8.9 TRANSACTIONS WITH AFFILIATES.
No Credit Party will, nor will it permit its Subsidiaries to, enter
into any transaction or series of transactions, whether or not in the ordinary
course of business, with any officer, director, shareholder, Subsidiary or
Affiliate other than on terms and conditions substantially as favorable as would
be obtainable in a comparable arm's-length transaction with a Person other than
an officer, director, shareholder, Subsidiary or Affiliate.
8.10 FISCAL YEAR; ORGANIZATIONAL DOCUMENTS.
No Credit Party will, nor will it permit its Subsidiaries to, (a)
change its fiscal year or (b) in any manner that would reasonably be likely to
adversely affect the rights of the Lenders, change its articles or certificate
of incorporation or its bylaws.
8.11 NO LIMITATIONS.
No Credit Party will, nor will it permit its Subsidiaries to, directly
or indirectly, create or otherwise cause, incur, assume, suffer or permit to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any such Person to (a) pay dividends or make any other
distribution on any of such Person's capital stock, (b) pay any Indebtedness
owed to any other Credit Party, (c) make loans or advances to any other Credit
Party or (d) transfer any of its property to any other Credit Party, except for
encumbrances or restrictions existing under or by reason of (i) customary
non-assignment or net worth provisions in any lease governing a leasehold
interest, (ii) any agreement or other instrument of a Person existing at the
time it becomes a Subsidiary of a Credit Party; PROVIDED that such encumbrance
or restriction is not applicable to any other Person, or any property of any
other Person, other than such Person becoming a Subsidiary of a Credit Party and
was not entered into in contemplation of such Person becoming a Subsidiary of a
Credit Party, (iii) this Credit Agreement and the other Credit Documents and
(iv) the Indenture.
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8.12 NO OTHER NEGATIVE PLEDGES.
No Credit Party will, nor will it permit its Subsidiaries to, enter
into, assume or become subject to any agreement prohibiting or otherwise
restricting the creation or assumption of any Lien upon its properties or
assets, whether now owned or hereafter acquired, or requiring the grant of any
security for such obligation if security is given for some other obligation
except as set forth in (a) the Credit Documents and (b) the Indenture.
8.13 LIMITATION ON FOREIGN OPERATIONS.
The Credit Parties will not, nor will they permit any of their
Subsidiaries to, allow the Foreign Subsidiaries to have assets which in the
aggregate constitute more than 5% of Total Assets at any time.
8.14 CAPITAL EXPENDITURES.
The Credit Parties shall not make Capital Expenditures of more than
$30,000,000 in the aggregate in any fiscal year of the Borrower.
8.15 PREPAYMENTS OF INDEBTEDNESS.
No Credit Party will, nor will it permit any of its Subsidiaries to,
(a) amend or modify (or permit the amendment or modification of) any of the
terms of any Indebtedness if such amendment or modification would add or change
any terms in a manner adverse to the Lenders, including but not limited to,
shortening final maturity or average life to maturity of such Indebtedness or
requiring any payment to be made sooner than originally scheduled or increasing
the interest rate applicable thereto or change any subordination provision
thereof, (b) during the existence of a Default or Event of Default, or if a
Default or Event of Default would be caused as a result thereof, make (or give
any notice with respect thereto) any voluntary or optional payment or prepayment
or redemption or acquisition for value of (including, without limitation, by way
of depositing money or securities with the trustee with respect thereto before
due for the purpose of paying when due), refund, refinance or exchange of any
other Indebtedness.
8.16 SUBORDINATED DEBT.
No Credit Party will (a) make or offer to make any principal payments
with respect to the Subordinated Debt, (b) redeem or offer to redeem any of the
Subordinated Debt, or (c) deposit any funds intended to discharge or defease any
or all of the Subordinated Debt; PROVIDED, HOWEVER, (i) the Borrower may
repurchase portions of the Subordinated Debt (each a "SUBORDINATED DEBT
PREPAYMENT") so long as (A) no Default or Event of Default, or Event of Default
(as defined in the Indenture) (including, without limitation, the Indenture
Default), shall have occurred and be continuing or would result from such
Subordinated Debt Prepayment, (B) with respect to the repurchase of any
Securities, the purchase price for any Security shall not exceed 110% of the
principal amount of such Security and (C) the repurchase by the Borrower of the
Subordinated Debt (including, without limitation, the purchase of 4,000,000
Series B
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Securities for the aggregate purchase price of $4,128,000 on March 9, 1999 and
March 16, 1999), together with the aggregate amount of all Stock Repurchases,
shall not exceed $15,000,000 in the aggregate during the term of this Credit
Agreement (such amount to include any accrued interest, premiums or penalties
associated therewith); provided that the aggregate amount of Subordinated Debt
Prepayments (including, without limitation, the purchase of 4,000,000 Series B
Securities for the aggregate purchase price of $4,128,000 on March 9, 1999 and
March 16, 1999) plus the aggregate amount of Stock Repurchases may exceed
$15,000,000 (which shall be considered a Repurchase Event) if (x) Lenders whose
aggregate Credit Exposure (as defined in, and subject to the terms of, the
definition of Required Lenders) constitutes more than 70% of the Credit Exposure
of all Lenders at such time consent to such excess prepayment or repurchase, (y)
the Applicable Percentages for Loans and the Standby Letter of Credit Fees are
increased in accordance with the terms of the definition of Applicable
Percentage and (z) the Repurchase Event Fee is paid to the Administrative Agent,
on behalf of the Lenders, and (ii) upon the occurrence of an Acceleration Event,
the Borrower may repurchase portions of the Subordinated Debt at a price not to
exceed 100% of par so long as (A) no Default or Event of Default, or Event of
Default (as defined in the Indenture) other than the Indenture Default, shall
have occurred and be continuing or would result from such Subordinated Debt
Payment, (B) the Acceleration Event Fee is paid to the Administrative Agent, on
behalf of the Lenders, (C) the Borrower shall have delivered to the
Administrative Agent a certificate of Executive Officer, in form and substance
satisfactory to the Administrative Agent, (x) certifying that no Default or
Event of Default, or Event of Default (as defined in the Indenture) other than
the Indenture Default, has occurred and is continuing or would result from such
Subordinated Debt Payment, (y) demonstrating that after giving effect to such
repurchase on a pro forma basis, as if such repurchase had occurred on the first
day of the twelve month period ending on the last day of the Borrower's most
recently completed fiscal quarter, the Credit Parties would have been in
compliance with all the financial covenants set forth in Section 7.2 and (z)
certifying that after giving effect to such repurchase, the sum of the aggregate
amount of Revolving Loans outstanding plus the aggregate amount of LOC
Obligations outstanding plus the aggregate amount of Synthetic Lease Obligations
outstanding shall be less than the sum of (1) the lesser of (a) the Revolving
Committed Amount and (b) the Borrowing Base Assets MINUS (2) $5 million. The
Subordinated Debt may not be amended or modified in any material manner without
the prior written consent of the Required Lenders.
8.17 LIMITATION ON STORE OPENINGS.
The Credit Parties will not, nor will they permit their Subsidiaries
to, open or start up, in the aggregate, more than (a) fifteen (15) new stores in
the fiscal year 2000 of the Borrower and (b) twenty-five (25) new stores in any
fiscal year of the Borrower thereafter.
8.18 LIMITATION ON FEES AND EXPENSES.
The fees and expenses of the Credit Parties in connection with curing
or obtaining a waiver of the Indenture Default shall not exceed $5 million in
the aggregate.
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SECTION 9
EVENTS OF DEFAULT
9.1 EVENTS OF DEFAULT.
An Event of Default shall exist upon the occurrence, and during the
continuance, of any of the following specified events (each an "EVENT OF
DEFAULT"):
(a) PAYMENT. Any Credit Party shall default in the payment (i)
when due of any principal of any of the Loans or any reimbursement
obligation arising from drawings under Letters of Credit or (ii) within
three Business Days of when due of any interest on the Loans or any
fees or other amounts owing hereunder, under any of the other Credit
Documents or in connection herewith.
(b) REPRESENTATIONS. Any representation, warranty or statement
made or deemed to be made by any Credit Party herein, in any of the
other Credit Documents, or in any statement or certificate delivered or
required to be delivered pursuant hereto or thereto shall prove untrue
in any material respect on the date as of which it was made or deemed
to have been made.
(c) COVENANTS. Any Credit Party shall:
(i) default in the due performance or observance of
any term, covenant or agreement contained in Sections 7.2,
7.3, 7.5, 7.11, 7.12, or 8.1 through 8.18 inclusive;
(ii) default in the due performance or observance by
it of any term, covenant or agreement contained in Sections
7.1 and such default shall continue unremedied for a period of
five Business Days;
(iii) default in the due performance or observance by
it of any term, covenant or agreement (other than those
referred to in subsections (a), (b) or (c)(i) or (ii) of this
Section 9.1) contained in this Credit Agreement and such
default shall continue unremedied for a period of at least 30
days after the earlier of a Credit Party becoming aware of
such default or notice thereof given by the Administrative
Agent.
(d) OTHER CREDIT DOCUMENTS. (i) Any Credit Party shall default
in the due performance or observance of any term, covenant or agreement
in any of the other Credit Documents and such default shall continue
unremedied for a period of at least 30 days after the earlier of a
Credit Party becoming aware of such default or notice thereof given by
the Administrative Agent, or (ii) any Credit Document shall fail to be
in full force and effect or any Credit Party shall so assert or any
Credit Document shall fail to give the Administrative
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Agent and/or the Lenders the security interests, liens, rights, powers
and privileges purported to be created thereby.
(e) GUARANTIES. The guaranty given by the Credit Parties
hereunder or by any Additional Credit Party hereafter or any provision
thereof shall cease to be in full force and effect, or any guarantor
thereunder or any Person acting by or on behalf of such guarantor shall
deny or disaffirm such Guarantor's obligations under such guaranty.
(f) BANKRUPTCY, ETC. The occurrence of any of the following:
(i) a court or governmental agency having jurisdiction in the premises
shall enter a decree or order for relief in respect of any Credit Party
or any of its Subsidiaries in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect,
or appoint a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of any Credit Party or any of its
Subsidiaries or for any substantial part of its property or ordering
the winding up or liquidation of its affairs; or (ii) an involuntary
case under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect is commenced against any Credit Party or any
of its Subsidiaries and such petition remains unstayed and in effect
for a period of 60 consecutive days; or (iii) any Credit Party or any
of its Subsidiaries shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, or consent to the entry of an order for relief in an
involuntary case under any such law, or consent to the appointment or
taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of such Person or any
substantial part of its property or make any general assignment for the
benefit of creditors; or (iv) any Credit Party or any of its
Subsidiaries shall admit in writing its inability to pay its debts
generally as they become due or any action shall be taken by such
Person in furtherance of any of the aforesaid purposes.
(g) DEFAULTS UNDER OTHER AGREEMENTS.
(i) Except for the Indenture Default, a Credit Party
or any of its Subsidiaries shall default in the due
performance or observance (beyond the applicable grace period
with respect thereto) of any material obligation or condition
of any contract or lease to which it is a party; or
(ii) With respect to any Indebtedness in excess of
$2,000,000 (other than Indebtedness outstanding under this
Credit Agreement) of a Credit Party or any of their
Subsidiaries (i) such Person shall (A) default in any payment
(beyond the applicable grace period with respect thereto, if
any) with respect to any such Indebtedness, or (B) except for
the Indenture Default, default (after giving effect to any
applicable grace period) in the observance or performance
relating to such Indebtedness or contained in any instrument
or agreement evidencing, securing or relating thereto, or any
other event or condition shall occur or condition exist, the
effect of which default or other event or condition is to
cause, or permit, the holder or holders of such Indebtedness
(or trustee or agent on behalf of such holders) to cause
(determined without regard to whether any notice or lapse of
time is required)
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any such Indebtedness to become due prior to its stated
maturity; or (ii) any such Indebtedness shall be declared due
and payable, or required to be prepaid other than by a
regularly scheduled required prepayment prior to the stated
maturity thereof; or (iii) any such Indebtedness shall mature
and remain unpaid.
(h) JUDGMENTS. One or more judgments, orders, or decrees shall
be entered against any one or more of the Credit Parties and its
Subsidiaries involving a liability of $2,000,000 or more, in the
aggregate, (to the extent not paid or covered by insurance provided by
a carrier who has acknowledged coverage) and such judgments, orders or
decrees (i) are the subject of any enforcement proceeding commenced by
any creditor or (ii) shall continue unsatisfied, undischarged and
unstayed for a period ending on the first to occur of (A) the last day
on which such judgment, order or decree becomes final and unappealable
or (B) 60 days.
(i) ERISA. The occurrence of any of the following events or
conditions: (A) any "accumulated funding deficiency," as such term is
defined in Section 302 of ERISA and Section 412 of the Code, whether or
not waived, shall exist with respect to any Plan, or any lien shall
arise on the assets of any Credit Party or any ERISA Affiliate in favor
of the PBGC or a Plan; (B) a Termination Event shall occur with respect
to a Single Employer Plan, which is, in the reasonable opinion of the
Administrative Agent, likely to result in the termination of such Plan
for purposes of Title IV of ERISA; (C) a Termination Event shall occur
with respect to a Multiemployer Plan or Multiple Employer Plan, which
is, in the reasonable opinion of the Administrative Agent, likely to
result in (i) the termination of such Plan for purposes of Title IV of
ERISA, or (ii) any Credit Party or any ERISA Affiliate incurring any
liability in connection with a withdrawal from, reorganization of
(within the meaning of Section 4241 of ERISA), or insolvency (within
the meaning of Section 4245 of ERISA) of such Plan; or (D) any
prohibited transaction (within the meaning of Section 406 of ERISA or
Section 4975 of the Code) or breach of fiduciary responsibility shall
occur which may subject any Credit Party or any ERISA Affiliate to any
liability under Sections 406, 409, 502(i), or 502(l) of ERISA or
Section 4975 of the Code, or under any agreement or other instrument
pursuant to which any Credit Party or any ERISA Affiliate has agreed or
is required to indemnify any person against any such liability.
(j) OWNERSHIP. There shall occur a Change of Control.
(k) SYNTHETIC LEASE. There shall occur an Event of Default (as
defined in the Participation Agreement) under the Participation
Agreement.
(l) SUBORDINATED DEBT. Any holder of the Subordinated Debt
alleges in writing (or any Governmental Authority with applicable
jurisdiction determines) (i) that the Lenders are not holders of Senior
Indebtedness (as defined in the Indenture) or (ii) the subordinated
provisions in the Indenture shall, in whole or part, terminate, cease
to be effective or cease to be legally valid, binding and enforceable
against any holder of the Subordinated Debt.
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(m) DEFAULT ON SUBORDINATED DEBT. There shall occur (i) (other
than the Indenture Default) an Event of Default (as defined in the
Indenture) under the Indenture or (ii) a Change of Control (as defined
in the Indenture) under the Indenture.
(n) ▇▇▇▇ PROMISSORY NOTE. There shall occur a default or event
of default under the ▇▇▇▇ Promissory Note.
(o) INDENTURE DEFAULT. The failure of the Credit Parties to
receive a written waiver of the Indenture Default in form and substance
satisfactory to the Administrative Agent on or before February 1, 2000.
(p) ACTION BY SUBORDINATED DEBT HOLDERS. The holders of the
Subordinated Debt or any Person acting on behalf of the holders of the
Subordinated Debt shall take any remedial action (whether affirmative
or by omission) with respect to the Indenture Default (other than the
waiver thereof), including but not limited to, acceleration of the
Subordinated Debt, written demand with respect to the Subordinated Debt
or the pursuit of any assets of the Credit Parties in connection
therewith.
9.2 ACCELERATION; REMEDIES.
Upon the occurrence, and during the continuance, of an Event of
Default, and at any time thereafter unless and until such Event of Default has
been waived in writing by the Required Lenders (or the Lenders as may be
required hereunder), the Administrative Agent shall, upon the request and
direction of the Required Lenders, by written notice to the Borrower, take the
following actions without prejudice to the rights of the Administrative Agent or
any Lender to enforce its claims against the Credit Parties, except as otherwise
specifically provided for herein:
(a) TERMINATION OF COMMITMENTS. Declare the Commitments
terminated whereupon the Commitments shall be immediately terminated.
(b) ACCELERATION OF LOANS. Declare the unpaid principal of and
any accrued interest in respect of all Loans, any reimbursement
obligations arising from drawings under Letters of Credit and any and
all other indebtedness or obligations of any and every kind owing by a
Credit Party to any of the Lenders hereunder to be due whereupon the
same shall be immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by
the Credit Parties.
(c) CASH COLLATERAL. Direct the Borrower to pay (and the
Borrower agrees that upon receipt of such notice, or upon the
occurrence of an Event of Default under Section 9.1(f), it will
immediately pay) to the Administrative Agent additional cash, to be
held by the Administrative Agent, for the benefit of the Lenders, in a
cash collateral account as additional security for the LOC Obligations
in respect of subsequent drawings under all then outstanding Letters of
Credit in an amount equal to the maximum aggregate amount which may be
drawn under all Letters of Credits then outstanding.
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(d) ENFORCEMENT OF RIGHTS. Enforce any and all rights and
interests created and existing under the Credit Documents, including,
without limitation, all rights and remedies existing under the
Collateral Documents, all rights and remedies against a Guarantor and
all rights of set-off.
Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(f) shall occur, then the Commitments shall automatically terminate and all
Loans, all reimbursement obligations under Letters of Credit, all accrued
interest in respect thereof, all accrued and unpaid fees and other indebtedness
or obligations owing to the Lenders hereunder shall immediately become due and
payable without the giving of any notice or other action by the Administrative
Agent or the Lenders, which notice or other action is expressly waived by the
Credit Parties.
Notwithstanding the fact that enforcement powers reside primarily with the
Administrative Agent, each Lender has, to the extent permitted by law, a
separate right of payment and shall be considered a separate "creditor" holding
a separate "claim" within the meaning of Section 101(5) of the Bankruptcy Code
or any other insolvency statute.
9.3 ALLOCATION OF PAYMENTS AFTER EVENT OF DEFAULT.
Notwithstanding any other provisions of this Credit Agreement, after
the occurrence and during the continuance of an Event of Default, all amounts
collected or received by the Administrative Agent or any Lender on account of
amounts outstanding under any of the Credit Documents or in respect of the
Collateral shall be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs
and expenses (including without limitation reasonable attorneys' fees)
of the Administrative Agent or any of the Lenders in connection with
enforcing the rights of the Lenders under the Credit Documents and any
protective advances made by the Administrative Agent or any of the
Lenders with respect to the Collateral under or pursuant to the terms
of the Collateral Documents;
SECOND, to payment of any fees owed to the Administrative
Agent, the Issuing Lender or any Lender;
THIRD, to the payment of all accrued interest payable to the
Lenders hereunder and all other obligations which shall have become due
and payable under the Credit Documents and not repaid pursuant to
clauses "FIRST" and "SECOND" above;
FOURTH, to the payment of the outstanding principal amount of
the Loans and unreimbursed drawings under Letters of Credit, and to the
payment or cash collateralization of the outstanding LOC Obligations,
pro rata as set forth below;
FIFTH, to any principal amounts outstanding under Hedging
Agreements between a Credit Party and a Lender, pro rata, as set forth
below; and
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SIXTH, to the payment of the surplus, if any, to whoever may
be lawfully entitled to receive such surplus.
In carrying out the foregoing, (a) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (b) each of the Lenders shall receive an amount equal to
its pro rata share (based on the proportion that the then outstanding Loans, LOC
Obligations and obligations under Hedging Agreements held by such Lender bears
to the aggregate then outstanding Loans, LOC Obligations and obligations under
Hedging Agreements) of amounts available to be applied; and (c) to the extent
that any amounts available for distribution pursuant to clause "FOURTH" above
are attributable to the issued but undrawn amount of outstanding Letters of
Credit, such amounts shall be held by the Administrative Agent in a cash
collateral account and applied (x) first, to reimburse the Issuing Lender from
time to time for any drawings under such Letters of Credit and (y) then,
following the expiration of all Letters of Credit, to all other obligations of
the types described in clauses "FOURTH," and "FIFTH" above in the manner
provided in this Section 9.3.
SECTION 10
AGENCY PROVISIONS
10.1 APPOINTMENT.
Each Lender hereby designates and appoints NationsBank, N.A. as
Administrative Agent of such Lender to act as specified herein and the other
Credit Documents, and each such Lender hereby authorizes the Administrative
Agent, as the agent for such Lender, to take such action on its behalf under the
provisions of this Credit Agreement and the other Credit Documents and to
exercise such powers and perform such duties as are expressly delegated by the
terms hereof and of the other Credit Documents, together with such other powers
as are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere herein and in the other Credit Documents, the Administrative
Agent shall not have any duties or responsibilities, except those expressly set
forth herein and therein, or any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Credit Agreement or any of the other Credit
Documents, or shall otherwise exist against the Administrative Agent. The
provisions of this Section are solely for the benefit of the Administrative
Agent and the Lenders and none of the Credit Parties shall have any rights as a
third party beneficiary of the provisions hereof. In performing its functions
and duties under this Credit Agreement and the other Credit Documents, the
Administrative Agent shall act solely as the agent of the Lenders and does not
assume and shall not be deemed to have assumed any obligation or relationship of
agency or trust with or for any Credit Party.
10.2 DELEGATION OF DUTIES.
The Administrative Agent may execute any of its duties hereunder or
under the other Credit Documents by or through agents or attorneys-in-fact and
shall be entitled to advice of counsel
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concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
10.3 EXCULPATORY PROVISIONS.
Neither the Administrative Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates shall be liable for any
action lawfully taken or omitted to be taken by it or such Person under or in
connection herewith or in connection with any of the other Credit Documents
(except for its or such Person's own gross negligence or willful misconduct) or
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by any of the Credit Parties contained herein
or in any of the other Credit Documents or in any certificate, report, document,
financial statement or other written or oral statement referred to or provided
for in, or received by the Administrative Agent under or in connection herewith
or in connection with the other Credit Documents, or enforceability or
sufficiency therefor of any of the other Credit Documents, or for any failure of
the Borrower to perform its obligations hereunder or thereunder. The
Administrative Agent shall not be responsible to any Lender for the
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of this Credit Agreement, or any of the other Credit Documents or
for any representations, warranties, recitals or statements made herein or
therein or made by a Borrower or any Credit Party in any written or oral
statement or in any financial or other statements, instruments, reports,
certificates or any other documents in connection herewith or therewith
furnished or made by the Administrative Agent to the Lenders or by or on behalf
of the Credit Parties to the Administrative Agent or any Lender or be required
to ascertain or inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained herein or therein or
as to the use of the proceeds of the Loans or the use of the Letters of Credit
or of the existence or possible existence of any Default or Event of Default or
to inspect the properties, books or records of the Credit Parties. The
Administrative Agent is not a trustee for the Lenders and owes no fiduciary duty
to the Lenders.
10.4 RELIANCE ON COMMUNICATIONS.
The Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document or conversation reasonably believed
by it to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to any of the Credit Parties,
independent accountants and other experts selected by the Administrative Agent
with reasonable care). The Administrative Agent may deem and treat the Lenders
as the owner of its interests hereunder for all purposes unless a written notice
of assignment, negotiation or transfer thereof shall have been filed with the
Administrative Agent in accordance with Section 11.3(b). The Administrative
Agent shall be fully justified in failing or refusing to take any action under
this Credit Agreement or under any of the other Credit Documents unless it shall
first receive such advice or concurrence of the Required Lenders as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders
against any and all
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liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Administrative Agent shall in all cases
be fully protected in acting, or in refraining from acting, hereunder or under
any of the other Credit Documents in accordance with a request of the Required
Lenders (or to the extent specifically provided in Section 11.6, all the
Lenders) and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders (including their successors and
assigns).
10.5 NOTICE OF DEFAULT.
The Administrative Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder unless the
Administrative Agent has received notice from a Lender or a Credit Party
referring to the Credit Document, describing such Default or Event of Default
and stating that such notice is a "notice of default." In the event that the
Administrative Agent receives such a notice, the Administrative Agent shall give
prompt notice thereof to the Lenders. The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders and as is permitted by the Credit Documents.
10.6 NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS.
Each Lender expressly acknowledges that neither the Administrative
Agent, ▇▇▇▇ nor any of their officers, directors, employees, agent,
attorneys-in-fact or affiliates has made any representations or warranties to it
and that no act by the Administrative Agent or any affiliate thereof hereinafter
taken, including any review of the affairs of any Credit Party, shall be deemed
to constitute any representation or warranty by the Administrative Agent to any
Lender. Each Lender represents to the Administrative Agent and ▇▇▇▇ that it has,
independently and without reliance upon the Administrative Agent or ▇▇▇▇ or any
other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
assets, operations, property, financial and other conditions, prospects and
creditworthiness of the Credit Parties and made its own decision to make its
Loans hereunder and enter into this Credit Agreement. Each Lender also
represents that it will, independently and without reliance upon the
Administrative Agent or ▇▇▇▇ 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 analysis, appraisals and decisions in taking or not taking action
under this Credit Agreement, and to make such investigation as it deems
necessary to inform itself as to the business, assets, operations, property,
financial and other conditions, prospects and creditworthiness of the Credit
Parties. Except for notices, reports and other documents expressly required to
be furnished to the Lenders by the Administrative Agent hereunder, the
Administrative Agent and ▇▇▇▇ shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
operations, assets, property, financial or other conditions, prospects or
creditworthiness of the Credit Parties which may come into the possession of the
Administrative Agent, ▇▇▇▇ or any of their officers, directors, employees,
agents, attorneys-in-fact or affiliates.
10.7 INDEMNIFICATION.
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The Lenders agree to indemnify the Administrative Agent in its capacity
as such (to the extent not reimbursed by the Borrower and without limiting the
obligation of the Borrower to do so), ratably according to their respective
Commitments (or if the Commitments have expired or been terminated, in
accordance with the respective principal amounts of outstanding Loans and
Participation Interest of the Lenders), 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
(including without limitation at any time following payment in full of the
Credit Party Obligations) be imposed on, incurred by or asserted against the
Administrative Agent in its capacity as such in any way relating to or arising
out of this Credit Agreement or the other Credit Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent under or in connection with any of the foregoing; PROVIDED
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the gross negligence or willful
misconduct of the Administrative Agent. If any indemnity furnished to the
Administrative Agent for any purpose shall, in the opinion of the Administrative
Agent, be insufficient or become impaired, the Administrative Agent may call for
additional indemnity and cease, or not commence, to do the acts indemnified
against until such additional indemnity is furnished. The agreements in this
Section shall survive the payment of the Credit Party Obligations and all other
amounts payable hereunder and under the other Credit Documents.
10.8 ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY.
The Administrative Agent and its affiliates may make loans to, accept
deposits from and generally engage in any kind of business with a Borrower or
any other Credit Party as though the Administrative Agent were not the
Administrative Agent hereunder. With respect to the Loans made and Letters of
Credit issued and all obligations owing to it, the Administrative Agent shall
have the same rights and powers under this Credit Agreement as any Lender and
may exercise the same as though they were not the Administrative Agent, and the
terms "Lender" and "Lenders" shall include the Administrative Agent in its
individual capacity.
10.9 SUCCESSOR ADMINISTRATIVE AGENT.
The Administrative Agent may, at any time, resign upon 20 days written
notice to the Lenders. Upon any such resignation, the Required Lenders shall
have the right to appoint a successor Administrative Agent. If no successor
Administrative Agent shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within 60 days after the notice of
resignation, then the retiring Administrative Agent shall select a successor
Administrative Agent, provided such successor is an Eligible Assignee. Upon the
acceptance of any appointment as the Administrative Agent hereunder by a
successor, such successor Administrative Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations as the Administrative Agent, as appropriate,
under this Credit Agreement and the other Credit Documents and the provisions of
this Section
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10.9 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was the Administrative Agent under this Credit Agreement.
SECTION 11
MISCELLANEOUS
11.1 NOTICES.
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (a) when
delivered, (b) when transmitted via telecopy (or other facsimile device) to the
number set out below, (c) the Business Day following the day on which the same
has been delivered prepaid to a reputable national overnight air courier
service, or (d) the third Business Day following the day on which the same is
sent by certified or registered mail, postage prepaid, in each case to the
respective parties at the address or telecopy numbers set forth on SCHEDULE
11.1, or at such other address as such party may specify by written notice to
the other parties hereto.
11.2 RIGHT OF SET-OFF.
In addition to any rights now or hereafter granted under applicable law
or otherwise, and not by way of limitation of any such rights, upon the
occurrence of an Event of Default and the commencement of remedies described in
Section 9.2, each Lender is authorized at any time and from time to time,
without presentment, demand, protest or other notice of any kind (all of which
rights being hereby expressly waived), to set-off and to appropriate and apply
any and all deposits (general or special) and any other indebtedness at any time
held or owing by such Lender (including, without limitation, branches, agencies
or Affiliates of such Lender wherever located) to or for the credit or the
account of any Credit Party against obligations and liabilities of such Credit
Party to the Lenders hereunder, under the Notes, the other Credit Documents or
otherwise, irrespective of whether the Administrative Agent or the Lenders shall
have made any demand hereunder and although such obligations, liabilities or
claims, or any of them, may be contingent or unmatured, and any such set-off
shall be deemed to have been made immediately upon the occurrence of an Event of
Default even though such charge is made or entered on the books of such Lender
subsequent thereto. The Credit Parties hereby agree that any Person purchasing a
participation in the Loans and Commitments hereunder pursuant to Section 11.3(c)
or 3.8 may exercise all rights of set-off with respect to its participation
interest as fully as if such Person were a Lender hereunder.
11.3 BENEFIT OF AGREEMENT.
(a) GENERALLY. This Credit Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto; PROVIDED that none of the Credit
Parties may assign and transfer any of its interests (except as
permitted by Section 8.4 or 8.5) without the prior written consent of
the Lenders; and
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PROVIDED FURTHER that the rights of each Lender to transfer, assign or
grant participations in its rights and/or obligations hereunder shall
be limited as set forth below in this Section 11.3.
(b) ASSIGNMENTS. Each Lender may assign to one or more
Eligible Assignees all or a portion of its rights and obligations under
this Credit Agreement (including, without limitation, all or a portion
of its Loans, its Notes, and its Commitments); PROVIDED, HOWEVER, that:
(i) each such assignment shall be to an Eligible
Assignee;
(ii) except in the case of an assignment to another
Lender or an assignment of all of a Lender's rights and
obligations under this Credit Agreement, any such partial
assignment shall be in an amount at least equal to $5,000,000
(or, if less, the remaining amount of the Commitment being
assigned by such Lender) or an integral multiple of $1,000,000
in excess thereof;
(iii) each such assignment by a Lender shall be of a
constant, and not varying, percentage of all of its rights and
obligations under this Credit Agreement and the Notes;
(iv) unless otherwise agreed to by the Borrower and
the Administrative Agent, such Lender proposing to assign a
portion of its Commitment shall be required to assign to such
Eligible Assignee (A) an identical percentage of its
Commitment (as defined in Appendix A to the Participation
Agreement) and (B) an identical percentage of its Holder
Commitment (as defined in Appendix A to the Participation
Agreement); provided that to the extent an Affiliate of any
Lender holds any portion of such Commitment or Holder
Commitment, such Lender shall cause such Affiliate to assign
to such Eligible Assignee (C) an identical percentage of its
Commitment (as defined in the Appendix A to the Participation
Agreement) and (D) an identical percentage of its Holder
Commitment (as defined in Appendix A to the Participation
Agreement);
(v) the parties to such assignment shall execute and
deliver to the Administrative Agent for its acceptance an
Assignment Agreement in substantially the form of EXHIBIT
11.3(b), together with a processing fee from the assignor of
$3,500.
Upon execution, delivery, and acceptance of such Assignment Agreement,
the assignee thereunder shall be a party hereto and, to the extent of
such assignment, have the obligations, rights, and benefits of a Lender
hereunder and the assigning Lender shall, to the extent of such
assignment, relinquish its rights and be released from its obligations
under this Credit Agreement. Upon the consummation of any assignment
pursuant to this Section 11.3(b), the assignor, the Administrative
Agent and the Borrower shall make appropriate arrangements so that, if
required, new Notes are issued to the assignor and the
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assignee. If the assignee is not incorporated under the laws of the
United States of America or a state thereof, it shall deliver to the
Borrower and the Administrative Agent certification as to exemption
from deduction or withholding of taxes in accordance with Section 3.13.
By executing and delivering an assignment agreement in accordance with
this Section 11.3(b), the assigning Lender thereunder and the assignee
thereunder shall be deemed to confirm to and agree with each other and
the other parties hereto as follows: (A) such assigning Lender warrants
that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim and the assignee
warrants that it is an Eligible Assignee; (B) except as set forth in
clause (A) above, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Credit
Agreement, any of the other Credit Documents or any other instrument or
document furnished pursuant hereto or thereto, or the execution,
legality, validity, enforceability, genuineness, sufficiency or value
of this Credit Agreement, any of the other Credit Documents or any
other instrument or document furnished pursuant hereto or thereto or
the financial condition of any Credit Party or the performance or
observance by any Credit Party of any of its obligations under this
Credit Agreement, any of the other Credit Documents or any other
instrument or document furnished pursuant hereto or thereto; (C) such
assignee represents and warrants that it is legally authorized to enter
into such assignment agreement; (D) such assignee confirms that it has
received a copy of this Credit Agreement, the other Credit Documents
and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such
assignment agreement; (E) such assignee will independently and without
reliance upon the Administrative 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 Credit Agreement and the
other Credit Documents; (F) such assignee appoints and authorizes the
Administrative Agent to take such action on its behalf and to exercise
such powers under this Credit Agreement or any other Credit Document as
are delegated to the Administrative Agent by the terms hereof or
thereof, together with such powers as are reasonably incidental
thereto; and (G) such assignee agrees that it will perform in
accordance with their terms all the obligations which by the terms of
this Credit Agreement and the other Credit Documents are required to be
performed by it as a Lender.
(c) REGISTER. The Administrative Agent shall maintain a copy
of each Assignment Agreement delivered to and accepted by it and a
register for the recordation of the names and addresses of the Lenders
and the Commitment of, and principal amount of the Loans owing to, each
Lender from time to time (the "REGISTER"). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower, the Administrative Agent and the Lenders may
treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Credit 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.
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(d) ACCEPTANCE. Upon its receipt of an Assignment Agreement
executed by the parties thereto, together with any Note subject to such
assignment and payment of the processing fee, the Administrative Agent
shall, if such Assignment Agreement has been completed and is in
substantially the form of EXHIBIT 11.3(b) hereto, (i) accept such
Assignment Agreement, (ii) record the information contained therein in
the Register and (iii) give prompt notice thereof to the parties
thereto.
(e) PARTICIPATIONS. Each Lender may sell participations to one
or more Persons in all or a portion of its rights, obligations or
rights and obligations under this Credit Agreement (including all or a
portion of its Commitments and its Loans); PROVIDED, HOWEVER, that (i)
such Lender's obligations under this Credit Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) the
participant shall be entitled to the benefit of the yield protection
provisions contained in Sections 3.9 through 3.14, inclusive, and the
right of set-off contained in Section 11.2, and (iv) the Borrower shall
continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under this Credit Agreement,
and such Lender shall retain the sole right to enforce the obligations
of the Borrower relating to its Loans and its Notes and to approve any
amendment, modification, or waiver of any provision of this Credit
Agreement (other than amendments, modifications, or waivers decreasing
the amount of principal of or the rate at which interest is payable on
such Loans or Notes, extending any scheduled principal payment date or
date fixed for the payment of interest on such Loans or Notes,
extending its Commitments or releasing all or substantially all of the
Collateral securing the Credit Party Obligations).
-
(f) NONRESTRICTED ASSIGNMENTS. Notwithstanding any other
provision set forth in this Credit Agreement, any Lender may at any
time assign and pledge all or any portion of its Loans and its Notes to
any Federal Reserve Bank as collateral security pursuant to Regulation
A and any Operating Circular issued by such Federal Reserve Bank. No
such assignment shall release the assigning Lender from its obligations
hereunder.
(g) INFORMATION. Any Lender may furnish any information
concerning the Borrower or any of its Subsidiaries in the possession of
such Lender from time to time to assignees and participants (including
prospective assignees and participants), subject, however, to the
provisions of Section 11.16 hereof.
11.4 NO WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of Administrative Agent or any Lender
in exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Borrower or any Credit Party and
the Administrative Agent or any Lender shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
or under any other Credit Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder or
thereunder. The rights and remedies provided herein are cumulative and not
exclusive of any rights or remedies which the
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Administrative Agent or any Lender would otherwise have. No notice to or demand
on any Credit Party in any case shall entitle any Credit Party to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Administrative Agent or the Lenders to any other or
further action in any circumstances without notice or demand.
11.5 PAYMENT OF EXPENSES; INDEMNIFICATION.
The Credit Parties agree to: (a) pay all reasonable out-of-pocket costs
and expenses of (i) the Administrative Agent and ▇▇▇▇ in connection with (A) the
negotiation, preparation, execution and delivery and administration of this
Credit Agreement and the other Credit Documents and the documents and
instruments referred to therein (including, without limitation, the reasonable
fees and expenses of ▇▇▇▇▇ & ▇▇▇ ▇▇▇▇▇, PLLC, special counsel to the
Administrative Agent), (B) any amendment, waiver or consent relating hereto and
thereto including, but not limited to, any such amendments, waivers or consents
resulting from or related to any work-out, renegotiation or restructure relating
to the performance by the Credit Parties under this Credit Agreement, and (C)
searches of the UCC and the preparation and filing of UCC financing statements
in connection with such searches subsequent to the Closing Date (including,
without limitation, the reasonable fees and expenses of ▇▇▇▇▇ & ▇▇▇ ▇▇▇▇▇, PLLC)
and (ii) the Administrative Agent and the Lenders in connection with (A)
enforcement of the Credit Documents and the documents and instruments referred
to therein, including, without limitation, in connection with any such
enforcement, the reasonable fees and disbursements of counsel for the
Administrative Agent and each of the Lenders, and (B) any bankruptcy or
insolvency proceeding of a Credit Party of any of its Subsidiaries and (b)
indemnify the Administrative Agent, ▇▇▇▇ and each Lender, its officers,
directors, employees, representatives and agents from and hold each of them
harmless against any and all losses, liabilities, claims, damages or expenses
incurred by any of them as a result of, or arising out of, or in any way related
to, or by reason of, any investigation, litigation or other proceeding (whether
or not the Administrative Agent, ▇▇▇▇ or Lender is a party thereto) related to
(i) the entering into and/or performance of any Credit Document or the use of
proceeds of any Loans (including other extensions of credit) hereunder or the
consummation of any other transactions contemplated in any Credit Document,
including, without limitation, the reasonable fees and disbursements of counsel
incurred in connection with any such investigation, litigation or other
proceeding, (ii) any Environmental Claim, (iii) any claims for Non-Excluded
Taxes (but excluding in the case of (i), (ii) and (iii) above, any such losses,
liabilities, claims, damages or expenses to the extent incurred by reason of
gross negligence or willful misconduct on the part of the Person to be
indemnified).
11.6 AMENDMENTS, WAIVERS AND CONSENTS.
Neither this Credit Agreement nor any other Credit Document nor any of
the terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is in
writing and signed by the Required Lenders and the then Credit Parties; PROVIDED
that no such amendment, change, waiver, discharge or termination shall without
the consent of each Lender affected thereby:
(a) extend the final maturity of any Loan or of any
reimbursement obligation; or any portion thereof, arising from drawings
under Letters of Credit;
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(b) reduce the rate or extend the time of payment of interest
(other than as a result of waiving the applicability of any
post-default increase in interest rates) thereon or fees hereunder;
(c) reduce or waive the principal amount of any Loan or of any
reimbursement obligation, or any portion thereof, arising from drawings
under Letters of Credit;
(d) increase or extend the Revolving Committed Amount, the LOC
Committed Amount or the Commitment of any Lender (it being understood
and agreed that a waiver of any Default or Event of Default or a waiver
of any mandatory reduction in the Revolving Committed Amount or the LOC
Committed Amount shall not constitute a change in the terms of the
Revolving Committed Amount, the LOC Committed Amount or the Commitment
of any Lender);
(e) release all or substantially all of the Collateral
securing the Credit Party Obligations hereunder (provided that the
Administrative Agent may, without consent from any other Lender,
release any Collateral that is sold or transferred by a Credit Party in
conformance with Section 8.5);
(f) release the Borrower from its obligations or release all
or substantially all of the other Credit Parties from their respective
obligations under the Credit Documents;
(g) amend, modify or waive any provision of this Section or
Section 3.4(a), 3.4(b), 3.4(c), 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13,
3.14, 5.2, 9.1(a), 11.2, 11.3 or 11.5;
(h) reduce any percentage specified in, or otherwise modify,
the definition of Required Lenders; or
(i) consent to the assignment or transfer by the Borrower of
any of its rights and obligations under (or in respect of) the Credit
Documents.
Notwithstanding the above, no provisions of Section 10 may be amended or
modified without the consent of the Administrative Agent, and no provisions of
Section 2.2, Section 2.3 or Section 2.4 may be amended or modified without the
consent of the Issuing Lender.
Notwithstanding the fact that the consent of all the Lenders is required in
certain circumstances as set forth above, (x) each Lender is entitled to vote as
such Lender sees fit on any reorganization plan that affects the Loans or the
Letters of Credit, and each Lender acknowledges that the provisions of Section
1126(c) of the Bankruptcy Code supersedes the unanimous consent provisions set
forth herein and (y) the Required Lenders may consent to allow a Credit Party to
use cash collateral in the context of a bankruptcy or insolvency proceeding.
11.7 COUNTERPARTS/TELECOPY.
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This Credit Agreement may be executed in any number of counterparts,
each of which where so executed and delivered shall be an original, but all of
which shall constitute one and the same instrument. Delivery of executed
counterparts by telecopy shall be as effective as an original and shall
constitute a representation that an original will be delivered.
11.8 HEADINGS.
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
11.9 DEFAULTING LENDER.
Each Lender understands and agrees that if such Lender is a Defaulting
Lender then notwithstanding the provisions of Section 11.6 it shall not be
entitled to vote on any matter requiring the consent of the Required Lenders or
to object to any matter requiring the consent of all the Lenders; provided,
however, that all other benefits and obligations under the Credit Documents
shall apply to such Defaulting Lender.
11.10 SURVIVAL OF INDEMNIFICATION AND REPRESENTATIONS AND WARRANTIES.
All indemnities set forth herein and all representations and warranties
made herein shall survive the execution and delivery of this Credit Agreement,
the making of the Loans, the issuance of the Letters of Credit and the repayment
of the Loans, LOC Obligations and other obligations and the termination of the
Commitments hereunder.
11.11 GOVERNING LAW; JURISDICTION.
(a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF GEORGIA. Any legal action or proceeding with respect to
this Credit Agreement or any other Credit Document may be brought in
the courts of the State of North Carolina or of the United States for
the Western District of North Carolina, and, by execution and delivery
of this Credit Agreement, each Credit Party hereby irrevocably accepts
for itself and in respect of its property, generally and
unconditionally, the jurisdiction of such courts. Each Credit Party
further irrevocably consents to the service of process out of any of
the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage
prepaid, to it at the address for notices pursuant to Section 11.1,
such service to become effective 10 days after such mailing. Nothing
herein shall affect the right of a Lender to serve process in any other
manner permitted by law or to commence legal proceedings or to
otherwise proceed against a Credit Party in any other jurisdiction.
Each Credit Party agrees that a final judgment in any action or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner
98
provided by law; provided that nothing in this Section 11.11(a) is
intended to impair a Credit Party's right under applicable law to
appeal or seek a stay of any judgment.
(b) Each Credit Party hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with
this Agreement or any other Credit Document brought in the courts
referred to in subsection (a) hereof and hereby further irrevocably
waives and agrees not to plead or claim in any such court that any such
action or proceeding brought in any such court has been brought in an
inconvenient forum.
11.12 WAIVER OF JURY TRIAL.
TO THE EXTENT PERMITTED BY LAW, EACH OF THE PARTIES TO THIS AGREEMENT
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS CREDIT AGREEMENT, ANY OF THE
OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY.
11.13 TIME.
All references to time herein shall be references to Eastern Standard
Time or Eastern Daylight time, as the case may be, unless specified otherwise.
11.14 SEVERABILITY.
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
11.15 FURTHER ASSURANCES.
The Credit Parties agree, upon the request of the Administrative Agent,
to promptly take such actions, as reasonably requested, as is necessary to carry
out the intent of this Credit Agreement and the other Credit Documents,
including, but not limited to, such actions as are necessary to ensure that the
Lenders have a perfected security interest in the Collateral subject to no Liens
other than Permitted Liens.
11.16 CONFIDENTIALITY.
Each Lender agrees that it will use its reasonable best efforts to keep
confidential and to cause any representative designated under Section 7.12 to
keep confidential any non-public information from time to time supplied to it
under any Credit Document; PROVIDED, HOWEVER, that nothing herein shall prevent
the disclosure of any such information to (a) the extent a Lender in good faith
believes such disclosure is required by Requirement of Law, (b) counsel for a
Lender or
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to its accountants, (c) bank examiners or auditors or comparable Persons, (d)
any affiliate of a Lender, (e) any other Lender, or any assignee, transferee or
participant, or any potential assignee, transferee or participant, of all or any
portion of any Lender's rights under this Agreement who is notified of the
confidential nature of the information or (f) any other Person in connection
with any litigation to which any one or more of the Lenders is a party; and
PROVIDED FURTHER that no Lender shall have any obligation under this Section
11.16 to the extent any such information becomes available on a non-confidential
basis from a source other than a Credit Party or that any information becomes
publicly available other than by a breach of this Section 11.16 by any Lender or
representative thereof.
11.17 ENTIRETY.
This Credit Agreement together with the other Credit Documents and the
Fee Letter represent the entire agreement of the parties hereto and thereto, and
supersede all prior agreements and understandings, oral or written, if any,
including any commitment letters or correspondence relating to the Credit
Documents or the transactions contemplated herein and therein.
11.18 BINDING EFFECT; CONTINUING AGREEMENT.
(a) This Credit Agreement shall become effective at such time
when all of the conditions set forth in Section 5.1 have been satisfied
or waived by the Lenders and it shall have been executed by the
Borrower, the Guarantors and the Administrative Agent, and the
Administrative Agent shall have received copies hereof (telefaxed or
otherwise) which, when taken together, bear the signatures of each
Lender, and thereafter this Credit Agreement shall be binding upon and
inure to the benefit of the Borrower, the Guarantors, the
Administrative Agent and each Lender and their respective successors
and assigns. Upon this Credit Agreement becoming effective, the Prior
Credit Agreement shall be deemed terminated and the lenders party to
the Prior Credit Agreement shall no longer have any obligations
thereunder.
(b) This Credit Agreement shall be a continuing agreement and
shall remain in full force and effect until all Loans, LOC Obligations,
interest, fees and other Credit Party Obligations have been paid in
full and all Commitments and Letters of Credit have been terminated.
Upon termination, the Credit Parties shall have no further obligations
(other than the indemnification provisions that survive) under the
Credit Documents and the Administrative Agent shall, at the request and
expense of the Borrower, deliver all Collateral in its possession to
the Borrower and release all Liens on Collateral; provided that should
any payment, in whole or in part, of the Credit Party Obligations be
rescinded or otherwise required to be restored or returned by the
Administrative Agent or any Lender, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise, then the
Credit Documents shall automatically be reinstated and all Liens of the
Lenders shall reattach to the Collateral and all amounts required to be
restored or returned and all costs and expenses incurred by the
Administrative Agent or Lender in connection therewith shall be deemed
included as part of the Credit Party Obligations.
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AMENDED AND RESTATED
CREDIT AGREEMENT
Each of the parties hereto has caused a counterpart of this Credit
Agreement to be duly executed and delivered as of the date first above written.
BORROWER: THE MAXIM GROUP, INC., a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Title: Executive Vice President
-------------------------------
GUARANTORS:
CARPETMAX, L.P., a Georgia limited partnership
By: The Maxim Group, Inc. as its sole general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Title: Executive Vice President
-------------------------------
[SIGNATURES CONTINUE]
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ CARPETMAX OF
TENNESSEE, INC., a Tennessee corporation
C & S TEXTILES, INC., an Idaho corporation
CARPETMAX OF UTAH, INC., a Utah corporation
CARPETMAX RETAIL STORES, INC., a
Delaware corporation
CARPETSPLUS OF AMERICA, INC., a Georgia
corporation
GCO, INC., a Nevada corporation
GCO CARPET OUTLET, INC., an Alabama
corporation
INVESTOR MANAGEMENT, INC., an Alabama
corporation
MAXIM EQUIPMENT LEASING COMPANY,
INC., a Georgia corporation
MAXIM RETAIL GROUP, INC., a Georgia
corporation
MAXIM RETAIL STORES, INC., a Georgia
corporation
TRI-R OF ORLANDO, INC., a Georgia corporation
COLORADO CARPET & RUGS, INC., a Colorado
corporation
MANASOTA CARPET, INC., a Florida
corporation
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ DECORATING
CENTER, INC., a Florida corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Title: Vice President of each of the
foregoing Guarantors
[SIGNATURES CONTINUE]
LENDERS:
--------
NATIONSBANK, N.A., individually in its capacity as a
Lender, in its capacity as the Administrative Agent,
and in its capacity as the Issuing Lender
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Title: Vice President
-------------------------------