EXHIBIT 10.1
SENIOR SUBORDINATED CREDIT AGREEMENT
dated as of
October 9, 1997
among
T/SF COMMUNICATIONS CORPORATION,
as Borrower,
THE GUARANTORS named herein,
THE LENDERS named herein
and
FIRST UNION CORPORATION, as Agent
TABLE OF CONTENTS
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SECTION 1 DEFINITIONS.....................................................1
1.1 Certain Defined Terms.......................................1
1.2 Accounting Terms...........................................34
1.3 Other Definitional Provisions..............................34
SECTION 2 AMOUNT AND TERMS OF LOAN COMMITMENT AND
LOANS; NOTES..........................................34
2.1 Bridge Loan and Bridge Note................................34
2.2 Term Loan and Term Note....................................36
2.3 Interest on the Loans......................................37
2.4 Fees.......................................................39
2.5 Prepayments and Payments...................................39
2.6 Use of Proceeds............................................43
SECTION 3 CONDITIONS.....................................................43
3.1 Conditions to Bridge Loan..................................43
3.2 Conditions to Term Loan....................................50
SECTION 4 REPRESENTATIONS AND WARRANTIES.................................51
4.1 Organization and Good Standing; Capitalization.............51
4.2 Authorization and Power....................................52
4.3 No Conflicts or Consents...................................52
4.4 Enforceable Obligations....................................54
4.5 Properties; Liens..........................................54
4.6 Financial Condition........................................55
4.7 Full Disclosure............................................57
4.8 No Default.................................................57
4.9 Compliance with Contracts, Etc.............................57
4.10 No Litigation.............................................58
4.11 Use of Proceeds; Margin Stock, Etc........................58
4.12 Taxes.....................................................59
4.13 ERISA.....................................................59
4.14 Compliance with Law.......................................60
4.15 Government Regulation.....................................60
4.16 Capital Structure and Subsidiaries........................60
4.17 Intellectual Property.....................................60
4.18 Environmental Matters.....................................61
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4.19 Survival of Representations and Warranties................63
4.20 Permits...................................................63
4.21 Insurance.................................................64
4.22 Labor Matters.............................................64
4.23 Guarantees................................................64
4.24 Senior Subordinated Indenture; Etc........................65
4.25 Broker's or Finder's Fees.................................66
4.26 Terms of Holdings LLC Preferred Equity Interest...........66
SECTION 5 AFFIRMATIVE COVENANTS..........................................66
5.1 Financial Statements and Other Reports.....................66
5.2 Corporate Existence, Etc...................................73
5.3 Payment of Taxes and Claims; Tax Consolidation.............73
5.4 Maintenance of Properties; Insurance.......................73
5.5 Inspection.................................................74
5.6 Equal Security for Loans and Notes.........................74
5.7 Compliance with Laws, Etc..................................75
5.8 Maintenance of Accurate Records, Etc.......................75
5.9 Recapitalization Documents.................................75
5.10 Exchange of Term Notes....................................75
5.11 ERISA Compliance..........................................76
5.12 Payments in U.S. Dollars..................................77
5.13 Register..................................................77
5.14 Lenders Meeting...........................................78
5.15 Additional Guarantors.....................................78
5.16 Marketing Take-Out Securities.............................78
5.17 Warrants..................................................78
SECTION 6 NEGATIVE COVENANTS.............................................79
6.1 Indebtedness...............................................79
6.2 Liens......................................................81
6.3 Restricted Payments........................................83
6.4 Investments................................................84
6.5 Contingent Obligations.....................................85
6.6 Senior Subordinated Indebtedness...........................86
6.7 Restriction on Fundamental Changes.........................87
6.8 Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries................................88
6.9 Transactions with Shareholders and Affiliates..............89
6.10 Subsidiary Stock..........................................89
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6.11 Business Activities.......................................90
6.12 Amendments or Waivers of Certain Documents................90
6.13 Amendments to Charter Documents...........................90
6.14 Asset Sales...............................................90
6.15 Transfer of Assets to Subsidiaries........................91
6.16 Modification of the LLC Preferred Equity Interests........91
SECTION 7 EVENTS OF DEFAULT..............................................91
7.1 Failure To Make Payments When Due..........................92
7.2 Default in Other Agreements................................92
7.3 Breach of Certain Covenants................................92
7.4 Breach of Warranty.........................................92
7.5 Other Defaults Under Agreement or Loan Documents...........93
7.6 Involuntary Bankruptcy; Appointment of Custodian, Etc......93
7.7 Voluntary Bankruptcy; Appointment of Custodian, Etc........93
7.8 Judgments and Attachments..................................94
7.9 Dissolution................................................94
7.10 Guarantee.................................................94
7.11 Foreclosure...............................................94
SECTION 8 SUBORDINATION..................................................96
8.1 Obligations Subordinated to Senior Indebtedness of
the Company...........................................96
8.2 Priority and Payment Over of Proceeds in Certain Events....96
8.3 Payments May Be Paid Prior to Dissolution..................99
8.4 Rights of Holders of Senior Indebtedness of the Company
Not To Be Impaired....................................99
8.5 Subrogation...............................................100
8.6 Obligations of the Company Unconditional..................101
8.7 Lenders Authorize Agent to Effectuate Subordination.......101
SECTION 9 THE AGENT.....................................................102
9.1 Appointment...............................................102
9.2 Delegation of Duties......................................103
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9.3 Exculpatory Provisions....................................103
9.4 Reliance by Agent.........................................104
9.5 Notice of Default.........................................104
9.6 Non-Reliance on Agent and Other Lenders...................105
9.7 Indemnification...........................................105
9.8 Agent in Its Individual Capacity..........................106
9.9 Resignation of the Agent; Successor Agent.................106
SECTION 10 GUARANTEE....................................................107
10.1 Unconditional Guarantee...................................107
10.2 Subordination of Guarantee................................108
10.3 Severability..............................................108
10.4 Limitation of Guarantor's Liability.......................108
10.5 Guarantors May Consolidate, etc., on Certain Terms........109
10.6 Contribution..............................................109
10.7 Waiver of Subrogation.....................................110
10.8 Evidence of Guarantee.....................................111
10.9 Waiver of Stay, Extension or Usury Laws...................111
SECTION 11 SUBORDINATION OF GUARANTEE OBLIGATIONS........................111
11.1 Guarantee Obligations Subordinated to Guarantor Senior
Indebtedness..........................................111
11.2 Priority and Payment Over of Proceeds in Certain Events...112
11.3 Payments May Be Paid Prior to Dissolution.................115
11.4 Rights of Holders of Subsidiary Guarantor Senior
Indebtedness Not To Be Impaired.......................115
11.5 Subrogation...............................................116
11.6 Obligations of the Guarantors Unconditional...............117
11.7 Lenders Authorize Agent to Effectuate Subordination.......117
SECTION 12 MISCELLANEOUS 118
12.1 Representation of the Lenders.............................118
12.2 Participations in and Assignments of Loans and Notes......118
12.3 Expenses..................................................121
12.4 Indemnity.................................................121
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12.5 Setoff....................................................122
12.6 Amendments and Waivers....................................123
12.7 Independence of Covenants.................................124
12.8 Entirety..................................................124
12.9 Notices...................................................124
12.10 Survival of Warranties and Certain Agreements............125
12.11 Failure or Indulgence Not Waiver; Remedies Cumulative....125
12.12 Severability.............................................125
12.13 Headings.................................................125
12.14 Applicable Law...........................................126
12.15 Successors and Assigns; Subsequent Holders of Notes......126
12.16 Counterparts; Effectiveness..............................126
12.17 Consent to Jurisdiction; Venue; Waiver of Jury Trial.....127
12.18 Payments Pro Rata........................................128
12.19 Taxes....................................................128
12.20 Waiver of Stay, Extension or Usury Laws..................130
12.21 Requirements of Law......................................130
12.22 Confidentiality..........................................131
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SCHEDULES
A EXISTING LIENS
B-1 SUBSIDIARIES
B-2 INACTIVE SUBSIDIARIES
C ERISA
D EXISTING INVESTMENTS
E INTELLECTUAL PROPERTY
F ENVIRONMENTAL MATTERS
G PERMITS
H EXISTING INDEBTEDNESS
I TERMS OF THE HOLDINGS LLC PREFERRED STOCK
J TRANSACTIONS WITH AFFILIATES
K ASSET SALES
L LITIGATION
EXHIBITS
I FORM OF BRIDGE NOTE
II FORM OF TERM NOTE
III FORM OF COMPLIANCE CERTIFICATE
IV-A FORM OF NOTICE OF BORROWING
IV-B FORM OF NOTICE OF CONVERSION
V TERM SHEET FOR REGISTRATION RIGHTS AGREEMENT
VI FORM OF OPINION OF PROSKAUER ROSE LLP - COUNSEL FOR THE
COMPANY AND THE GUARANTORS
VII FORM OF OPINION OF ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ - COUNSEL FOR THE
LENDERS
IX FORM OF NOTATION OF GUARANTEE
X FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
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This Senior Subordinated Credit Agreement is dated as of
October 9, 1997, and entered into by and among T/SF Communications Corporation,
a Delaware corporation (the "Company"), the Guarantors named on the signature
pages hereto, the Lenders named on the signature pages hereto (the "Lenders")
and First Union Corporation ("First Union"), as agent for the Lenders (in such
capacity, the "Agent").
RECITALS
WHEREAS, the Company desires that the Lenders extend a senior
subordinated credit facility to the Company in connection with the
Recapitalization (as defined herein);
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties hereby agree
as follows:
SECTION 1 DEFINITIONS
1.1 Certain Defined Terms
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The following terms used in this Agreement shall have the
following meanings:
"Acquired Indebtedness" means Indebtedness of a Person or any
of its Subsidiaries existing at the time such Person becomes a Subsidiary of the
Company or at the time it merges or consolidates with the Company or any of its
Subsidiaries or assumed in connection with the acquisition of assets from such
Person and in each case not incurred by such Person in connection with, or in
anticipation or contemplation of, such Person becoming a Subsidiary of the
Company or such acquisition, merger or consolidation.
"Adjusted Net Assets" shall have the meaning provided in
Section 10.6.
"Affiliate," as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means (i) the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Per-
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son, whether through the ownership of voting securities or by contract or
otherwise, or (ii) the ownership of more than 10% of the voting securities of
that Person; provided that none of First Union or any of its Affiliates shall be
treated as an Affiliate of the Company or of any Subsidiary of the Company.
"Agent" has the meaning ascribed to such term in the introduc-
tion to this Agreement.
"Agreement" means this Senior Subordinated Credit Agreement
dated as of October 9, 1997, as it may be amended, supplemented or otherwise
modified from time to time in accordance with the terms hereof.
"Amount of Unfunded Benefit Liability" means, with respect to
any Pension Plan, (i) if set forth on the most recent actuarial valuation report
with respect to such Pension Plan, the amount of unfunded benefit liabilities
(as defined in Section 4001(a)(18) of ERISA) and (ii) otherwise, the excess of
(a) the greater of the current liability (as defined in Section 412(l)(7) of the
Internal Revenue Code) or the actuarial present value of the accrued benefits
with respect to such Pension Plan over (b) the market value of the assets of
such Pension Plan.
"Applicable Interest Rate" means (i) for each Quarterly Period
prior to the Conversion Date, the Applicable LIBOR Rate then in effect and (ii)
for each Quarterly Period on and after the Conversion Date, the greatest of, as
of the Interest Rate Determination Date, (a) the Applicable Prime Rate then in
effect, (b) the Applicable LIBOR Rate then in effect and (c) the Application
Treasury Rate then in effect in each case as determined on the applicable
Interest Rate Determination Date; provided, however, that in no event shall the
Applicable Interest Rate exceed 18% per annum.
"Applicable LIBOR Rate" means (i) an interest rate per annum
equal to the rate of interest appearing on Telerate Page 3750 (or any successor
page) or if no such rate is available, the rate of interest determined by the
Agent to be the rate or the arithmetic mean of rates (rounded upward, if
necessary, to the nearest 1/16 of one percentage point) at which Dollar deposits
in immediately available funds are offered by First Union to first-tier banks in
the London interbank Eurodollar market, at approximately 11:00 a.m., London
time, on the Interest Rate Determination Date for a 3-month period at the amount
of the Loans outstanding plus (ii) the Applicable LIBOR Rate Spread.
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"Applicable LIBOR Rate Spread" means (i) 4.50% per annum for
the period from and including the Closing Date to but excluding the 90th day
following the Closing Date and for the two subsequent 90-day periods to but
excluding the 270th day following the Closing Date the Applicable LIBOR Rate
Spread in effect for the immediately preceding 90-day period plus .25% per annum
and for the subsequent 90-day period the Applicable LIBOR Rate Spread in effect
for the immediately preceding 90-day period plus .50% per annum and (ii) 6.50%
per annum for the period from and including the Conversion Date to but excluding
the 90th day following the Conversion Date and for each subsequent 90-day period
the Applicable Treasury Rate for the immediately preceding 90-day period plus
.50% per annum.
"Applicable Prime Rate" means (i) the rate which First Union
announces from time to time as its prime lending rate, the Applicable Prime Rate
to change when and as such prime lending rate changes, plus (ii) the Applicable
Prime Rate Spread. The Applicable Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any customer.
First Union or its affiliates may make commercial loans or other loans at rates
of interest at, above or below the Applicable Prime Rate.
"Applicable Prime Rate Spread" means 4.25% per annum for the
period from and including the Conversion Date to but excluding the 90th day
following the Conversion Date and for each subsequent 90-day period the
Applicable Prime Rate Spread in effect for the immediately preceding 90-day
period plus .50% per annum.
"Applicable Treasury Rate" means (i) the rate equal to the
yield (expressed as a rate per annum) in the secondary market on United States
Treasury securities of substantially the same principal amount as the Loans and
having a term to maturity of (a) one year, (b) three years, (c) five years and
(d) ten years, whichever of (a), (b), (c) and (d) has the greatest yield as of
the Interest Rate Determination Date (the determination of yield to be based
upon quotes obtained by the Agent from at least two established dealers in such
market), plus (ii) the Applicable Treasury Rate Spread.
"Applicable Treasury Rate Spread" means 6.50% per annum for
the period from and including the Conversion Date to but excluding the 90th day
following the Conversion Date and for each subsequent 90-day period the
Applicable Treasury Rate Spread for the immediately preceding 90-day period plus
.50% per annum.
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"Asset Acquisition" means (a) an Investment by the Company or
any Subsidiary of the Company in any other Person pursuant to which such Person
shall be merged with or into the Company or any Subsidiary of the Company, or
(b) the acquisition by the Company or any Subsidiary of the Company of the
assets of any Person (other than a Subsidiary of the Company) which constitute
all or substantially all of the assets of such Person or comprises any division
or line of business of such Person or any other properties or assets of such
Person other than in the ordinary course of business.
"Asset Sale" means, except as set forth on Schedule K, any
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direct or indirect sale, issuance, conveyance, lease, assignment, transfer or
other disposition for value (including, without limitation, pursuant to any
amalgamation, merger or consolidation or pursuant to any sale-and-leaseback
transaction) by the Company or by any of its Subsidiaries to any Person other
than the Company or any of its Wholly-Owned Subsidiaries (any such transaction,
a "disposition") of (i) any of the stock of any of the Company's Subsidiaries,
(ii) substantially all of the assets of any division or line of business of the
Company or of any of its Subsidiaries, or (iii) any other assets (whether
tangible or intangible) of the Company or of any of its Subsidiaries; excluding
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(a) any disposition of Cash Equivalents or inventory in the ordinary course of
business or obsolete equipment in the ordinary course of business consistent
with past practices of the Company or the lease or sublease of any real or
personal property in the ordinary course of business, (b) any disposition of
stock or assets in any single transaction or related series of transactions the
aggregate value of which is equal to $250,000 or less and (c) the contribution
of substantially all of the assets and liabilities of ▇▇▇▇▇▇, Galaxy and GEM to
Holdings LLC in connection with the Recapitalization.
"▇▇▇▇▇▇" means ▇▇▇▇▇▇ Convention Publishing, Inc., a Missouri
corporation.
"Bankruptcy Law" means Title 11 of the United States Code
entitled "Bankruptcy", as now and hereafter in effect, or any successor statute
or any other United States federal, state or local law or the law of any other
jurisdiction relating to bankruptcy, insolvency, winding up, liquidation,
reorganization or relief of debtors, whether in effect on the date hereof or
hereafter.
"Bankruptcy Order" means any court order made in a proceeding
pursuant to or within the meaning of any Bankruptcy
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Law, containing an adjudication of bankruptcy or insolvency, or providing for
liquidation, winding up, dissolution or reorganization, or appointing a
custodian of a debtor or of all or any substantial part of a debtor's property,
or providing for the staying, arrangement, adjustment or composition of
indebtedness or other relief of a debtor.
"Board of Directors" means, with respect to any Person, the
Board of Directors of such Person or any duly authorized committee of that
Board.
"Bridge Loan" means, collectively, the loans made by the
Lenders pursuant to Section 2.1A.
"Bridge Loan Commitment" means the commitment of the Lenders
to make the Bridge Loan as set forth in Section 2.1A.
"Bridge Notes" has the meaning ascribed to such term in Sect-
ion 2.1D.
"Business Day" means any day excluding Saturday, Sunday and
any day which is a legal holiday under the laws of New York, New York or is a
day on which banking institutions therein located are authorized or required by
law or other governmental action to close.
"Capital Lease," as applied to any Person, means any lease of
any property (whether real, personal or mixed) by that Person as lessee which,
in conformity with GAAP, is required to be accounted for as a capital lease on
the balance sheet of that Person.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including,
without limitation, each class of Common Stock and Preferred Stock of such
Person and (ii) with respect to any Person that is not a corporation, any and
all partnership or other equity interests of such Person.
"Capitalized Lease Obligation" means obligations under a lease
that is required to be capitalized for financial reporting purposes in
accordance with GAAP, and the amount of Indebtedness represented by such
obligations shall be the capitalized amount of such obligations determined in
accordance with GAAP.
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"Cash Equivalents" means (i) marketable direct obligations
issued or unconditionally guaranteed by the United States Government or issued
by any agency thereof and backed by the full faith and credit of the United
States, in each case maturing within one year from the date of acquisition
thereof; (ii) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having the highest rating obtainable
from either Standard & Poor's Rating Group ("S&P") or ▇▇▇▇▇'▇ Investors Service,
Inc. ("Moody's"); (iii) commercial paper maturing no more than one year from the
date of creation thereof and, at the time of acquisition, having the highest
rating obtainable from either S&P's or Moody's; and (iv) certificates of deposit
or bankers' acceptances maturing within one year from the date of acquisition
thereof issued by any commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia that (a) is
at least "adequately capitalized" (as defined in the regulations of its primary
Federal banking regulator) and (b) has Tier 1 capital (as defined in such
regulations) of not less than $100,000,000; (v) shares of any money market
mutual fund that (a) has its assets invested continuously in the types of
investments referred to in clauses (i) and (ii) above, (b) has net assets of not
less than $500,000,000, and (c) has the highest rating obtainable from either
S&P's or Moody's; and (vi) repurchase agreements with respect to, and which are
fully secured by a perfected security interest in, obligations of a type
described in clause (i) or clause (ii) above and are with any commercial bank
described in clause (iv) above.
"Cash Proceeds" means, with respect to any Asset Sale, cash
payments (including any cash received by way of deferred payment pursuant to, or
monetization of, a note receivable or otherwise but only as and when so
received) received from such Asset Sale.
"Change of Control" means the occurrence of one or more of the
following events: (i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Company to any Person or group of related Persons for purposes
of Section 13(d) of the Exchange Act (a "Group"), together with any Affiliates
thereof; (ii) the approval by the holders of Capital Stock of the Company of any
plan or proposal for the liquidation or dissolution of the Company; (iii) any
Person or Group (other than the Permitted Holders) shall become the
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owner, directly or indirectly, beneficially or of record, of shares representing
more than 20% of the Voting Stock of the Company; provided, however, such
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referenced percentage in this clause (iii) may be increased to 49% with the
consent of the Agent, which consent shall not be unreasonably withheld or
delayed; or (iv) the replacement of a majority of the Board of Directors of the
Company over a two-year period from the directors who constituted the Board of
Directors of the Company at the beginning of such period, and such replacement
shall not have been approved by a vote of at least a majority of the Board of
Directors of the Company then still in office who either were members of such
Board of Directors at the beginning of such period or whose election as a member
of such Board of Directors was previously so approved.
"Change of Control Date" has the meaning ascribed to such
term in Section 2.5A(iv).
"Change of Control Offer" has the meaning ascribed to such
term in Section 2.5A(iv).
"Closing Date" means the date on or before October 9, 1997 on
which the initial Bridge Loan is made and the conditions set forth in Section
3.1 are satisfied or waived in accordance with Section 12.6.
"Commission" means the Securities and Exchange Commission.
"Commitment Letter" means the letter agreement dated August
13, 1997, between the Company and First Union pursuant to which First Union
committed to provide the Bridge Loan to the Company, subject to the terms and
conditions thereof, and the Company committed to pay First Union certain fees
and to satisfy certain other obligations to First Union in respect of such
commitments.
"Common Stock" of any Person means any and all shares,
interests or other participations in, and other equivalents (however designated
and whether voting or non-voting) of, such Person's common stock, whether
outstanding on the Closing Date or issued after the Closing Date, and includes,
without limitation, all series and classes of such common stock.
"Company" has the meaning ascribed to such term in the intro-
duction to this Agreement.
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"Compliance Certificate" means a certificate substantially in
the form of Exhibit III delivered to the Agent by the Company pursuant to
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Section 5.1(iv)(b).
"Consolidated EBITDA" means, with respect to any Person, for
any period, the sum (without duplication) of (i) Consolidated Net Income and
(ii) to the extent Consolidated Net Income has been reduced thereby, (A) all
income taxes of such Person and its Restricted Subsidiaries (including the LLCs)
paid or accrued in accordance with GAAP for such period (other than income taxes
attributable to extraordinary, unusual or nonrecurring gains or losses or taxes
attributable to sales or dispositions outside the ordinary course of business),
(B) Consolidated Interest Expense and (C) Consolidated Non-cash Charges less any
non-cash items increasing Consolidated Net Income for such period, all as
determined on a consolidated basis for such Person and its Restricted
Subsidiaries in accordance with GAAP. For purposes of this definition, the LLCs
shall be treated as a Wholly-Owned Subsidiary.
"Consolidated Fixed Charge Coverage Ratio" means, with respect
to the Company, the ratio of Consolidated EBITDA of the Company during the four
full fiscal quarters (the "Four Quarter Period") ending on or prior to the date
of the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of
the Company for the Four Quarter Period. In addition to and without limitation
of the foregoing, for purposes of this definition, "Consolidated EBITDA" and
"Consolidated Fixed Charges" shall be calculated after giving effect on a pro
forma basis, in accordance with Article 11 of Regulation S-X under the
Securities Act of 1933, as amended, for the period of such calculation to (a)
the incurrence or repayment of any Indebtedness of the Company or any of its
Subsidiaries (and the application of the proceeds thereof) giving rise to the
need to make such calculation and any incurrence or repayment of other
Indebtedness (and the application of the proceeds thereof), other than the
incurrence or repayment of Indebtedness in the ordinary course of business for
working capital purposes pursuant to working capital facilities, occurring
during the Four Quarter Period or at any time subsequent to the last day of the
Four Quarter Period and on or prior to the Transaction Date, as if such
incurrence or repayment, as the case may be (and the application of the proceeds
thereof), occurred on the first day of the Four Quarter Period and (b) any Asset
Sales or Asset Acquisitions (including, without limitation, any Asset
Acquisition giving rise to the need to make such calculation as a result of the
Company or one of its
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Subsidiaries incurring, assuming or otherwise being liable for Acquired
Indebtedness and also including any Consolidated EBITDA attributable to the
assets which are the subject of the Asset Acquisition or Asset Sale during the
Four Quarter Period) occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or prior to the
Transaction Date, as if such Asset Sale or Asset Acquisition occurred on the
first day of the Four Quarter Period. If the Company or any of its Subsidiaries
directly or indirectly guarantees Indebtedness of a third Person, the preceding
sentence shall give effect to the incurrence of such guaranteed Indebtedness as
if the Company or such Subsidiary, as the case may be, had directly incurred or
otherwise assumed such guaranteed Indebtedness. Furthermore, in calculating
"Consolidated Fixed Charges" for purposes of determining the denominator (but
not the numerator) of this "Consolidated Fixed Charge Coverage Ratio," (i)
interest on outstanding Indebtedness determined on a fluctuating basis as of the
Transaction Date and which will continue to be so determined thereafter shall be
deemed to have accrued at a fixed rate per annum equal to the rate of interest
on such Indebtedness in effect on the Transaction Date; (ii) if interest on any
Indebtedness actually incurred on the Transaction Date may optionally be
determined at an interest rate based upon a factor of a prime or similar rate, a
eurocurrency interbank offered rate, or other rates, then the interest rate in
effect on the Transaction Date will be deemed to have been in effect during the
Four Quarter Period; and (iii) notwithstanding clause (i) above, interest on
Indebtedness determined on a fluctuating basis, to the extent such interest is
covered by agreements relating to Interest Swap Obligations, shall be deemed to
accrue at the rate per annum resulting after giving effect to the operation of
such agreements.
"Consolidated Fixed Charges" means, with respect to the
Company for any period, the sum, without duplication, of (a) Consolidated
Interest Expense (including any premium or penalty paid in connection with
redeeming or retiring Indebtedness of the Company and its Subsidiaries prior to
the stated maturity thereof pursuant to the agreements governing such
Indebtedness), plus (b) the product of (i) the amount of all dividend payments
on any series (other than Holdings LLC Preferred Equity Interests) of Preferred
Stock of the Company (other than dividends paid in Qualified Capital Stock)
paid, accrued or scheduled to be paid or accrued during such period times (ii) a
fraction, the numerator of which is one and the denominator of which is one
minus the then-current effective
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consolidated federal, state and local income tax rate of the Company, expressed
as a decimal.
"Consolidated Interest Expense" means, with respect to any
Person for any period, the sum of, without duplication: (i) the aggregate of all
cash and non-cash interest expense (minus amortization or write-off of deferred
financing costs included in cash or non-cash interest expense) of such Person
and its Subsidiaries for such period determined on a consolidated basis in
accordance with GAAP, including, without limitation, (a) any amortization of
debt discount, (b) the net costs under Interest Swap Obligations, (c) all
capitalized interest and (d) the interest portion of any deferred payment
obligation; and (ii) the interest component of Capitalized Lease Obligations
paid, accrued and/or scheduled to be paid or accrued by such Person and its
Subsidiaries during such period as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person,
for any period, the aggregate net income (or loss) of such Person and its
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP; provided that there shall be excluded therefrom (a) after-tax gains
and losses from Asset Sales or abandonments or reserves relating thereto, (b)
items classified as extraordinary, nonrecurring or unusual gains, losses or
charges, and the related tax effects, each determined in accordance with GAAP,
(c) the net income of any Person acquired in a "pooling of interests"
transaction accrued prior to the date it becomes a Subsidiary of the referent
Person or is merged or consolidated with the referent Person or any Subsidiary
of the referent Person, (d) the net income (but not loss) of any Subsidiary
(other than Holdings LLC) of the referent Person to the extent that the
declaration of dividends or similar distributions by that Subsidiary of that
income is restricted by a contract, operation of law or otherwise, (e) the net
income of any Person, other than a Subsidiary of the referent Person, except to
the extent of cash dividends or distributions paid to the referent Person or to
a Wholly Owned Subsidiary of the referent Person by such Person, (f) any
restoration to income of any contingency reserve, except to the extent that
provision for such reserve was made out of Consolidated Net Income accrued at
any time following the Issue Date, (g) income or loss attributable to
discontinued operations (including, without limitation, operations disposed of
during such period whether or not such operations were classified as
discontinued), and (h) in the case of a successor to the referent Person by
consolidation or merger or as a transferee of the referent Person's assets, any
earnings of the successor corpo-
-11-
ration prior to such consolidation, merger or transfer of assets.
"Consolidated Non-Cash Charges" means, with respect to the
Company, for any period, the aggregate depreciation, amortization and other
non-cash expenses of the Company and its Subsidiaries reducing Consolidated Net
Income of the Company for such period, determined on a consolidated basis in
accordance with GAAP (excluding any such charges constituting an extraordinary
item or loss or any such charge which requires an accrual of or a reserve for
cash charges for any future period).
"Contested Claim" means any Tax, Indebtedness or other claim
or liability (i) the validity or amount of which is being diligently contested
in good faith, (ii) for which adequate reserve, or other appropriate provision,
if any, as required in conformity with GAAP shall have been made, and (iii) with
respect to which any right to execute upon or sell any assets of the Company or
of any of its Subsidiaries has not matured or has been and continues to be
effectively enjoined, superseded or stayed.
"Contingent Obligation," as applied to any Person, means any
direct or indirect liability, contingent or otherwise, of that Person (i) with
respect to any Indebtedness, lease, dividend or other obligation of another if
the primary purpose or intent thereof by the Person incurring the Contingent
Obligation is to provide assurance to the obligee of such obligation of another
that such obligation of another will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
obligation will be protected (in whole or in part) against loss in respect
thereof, (ii) with respect to any letter of credit issued for the account of
that Person or as to which that Person is otherwise liable for reimbursement of
drawings, or (iii) under Interest Rate Agreements and Currency Agreements.
Contingent Obligations shall include, without limitation, (a) the direct or
indirect guaranty, endorsement (otherwise than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse or sale with
recourse by such Person of the obligation of another, (b) the obligation to make
take-or-pay or similar payments if required regardless of non-performance by any
other party or parties to an agreement, and (c) any liability of such Person for
the obligation of another through any agreement (contingent or otherwise) (X) to
purchase, repurchase or otherwise acquire such obligation or any security
therefor, or to provide funds for the payment or dis-
-12-
charge of such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise) or (Y) to maintain the solvency
or any balance sheet item, level of income or financial condition of another if,
in the case of any agreement described under subclauses (X) or (Y) of this
sentence, the primary purpose or intent thereof is as described in the preceding
sentence. The amount of any Contingent Obligation shall be equal to the amount
of the obligation so guaranteed or otherwise supported or, if less, the amount
to which such Contingent Obligation is specifically limited.
"Contractual Obligation", as applied to any Person, means any
provision of any Security issued by that Person or of any indenture, mortgage,
deed of trust, contract, undertaking, agreement or other instrument to which
that Person is a party or by which it or any of its properties is bound or to
which it or any of its properties is subject.
"Controlled Group" means (i) a controlled group of
corporations as defined in Section 1563(a) of the Internal Revenue Code or (ii)
a group of trades or businesses under common control, as defined in Section
414(c) of the Internal Revenue Code, of which the Company or any of its
Subsidiaries is a part or becomes a part.
"Conversion Date" means the one year anniversary of the
Closing Date or such later date to which the Conversion Date may be deferred
pursuant to Section 3.2D.
"Covered Taxes" has the meaning ascribed to it in Section
12.19.
"Currency Agreement" means any foreign exchange contract,
currency swap agreement, futures contract, option contract, synthetic cap or
other similar agreement or arrangement designed to protect the Company or any of
its Subsidiaries against fluctuations in currency values.
"Custodian" means any receiver, interim receiver, receiver and
manager, trustee, assignee, liquidator, sequestrator or similar official charged
with maintaining possession or control over property for one or more creditors,
whether under any Bankruptcy Law or otherwise.
"Disqualified Capital Stock" means any Capital Stock which, by
its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event (other than an
event which would consti-
-13-
tute a Change of Control), matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at the sole option of the
holder thereof (except upon the occurrence of a Change of Control), in whole or
in part, on or prior to the final maturity date of the Term Notes.
"Dollars" or the sign "$" means the lawful money of the United
States of America.
"Eligible Assignee" means (A) (i) a commercial bank organized
under the laws of the United States of America or any state thereof; (ii) a
savings and loan association or savings bank organized under the laws of the
United States or any state thereof; (iii) a commercial bank organized under the
laws of any other country or a political subdivision thereof; provided that (x)
such bank is acting through a branch or agency located in the United States or
(y) such bank is organized under the laws of a country that is a member of the
Organization for Economic Cooperation and Development or a political subdivision
of such country; and (iv) any other entity which is an "accredited investor" (as
defined in Regulation D under the Securities Act of 1933) which extends credit
or buys loans as one of its businesses including, but not limited to, insurance
companies, mutual funds and lease financing companies, in each case (under
clauses (i) through (iv) above) that is reasonably acceptable to the Agent; and
(B) any Lender and any Affiliate of any Lender.
"Employee Benefit Plan" means any "employee benefit plan" as
defined in Section 3(3) of ERISA (i) which is, or, at any time within the five
calendar years immediately preceding the date hereof, was at any time,
maintained or contributed to by the Company or its Subsidiaries or any of their
respective ERISA Affiliates or (ii) with respect to which the Company or its
Subsidiaries retains any liability, including any potential joint and several
liability as a result of an affiliation with an ERISA Affiliate or a party that
would be an ERISA Affiliate except for the fact the affiliation ceased more than
five calendar years prior to the date hereof.
"Environmental Claim" means any accusation, allegation, notice
of violation, claim, demand, abatement order or other order or direction
(conditional or otherwise) by any governmental authority or any Person for any
response or corrective action, any damage, including, without limitation,
personal injury (including sickness, disease or death), tangible or intangible
property damage, contribution, indemnity, indirect or consequential damages,
damage to the environment, nui-
-14-
sance, pollution, contamination or other adverse effects on the environment, or
for fines, penalties or restrictions, in each case arising under any
Environmental Law, including without limitation, relating to, resulting from or
in connection with Hazardous Materials and relating to the Company, any of its
Subsidiaries or any of their respective properties or predecessors in interest.
"Environmental Laws" means the common law and all statutes,
ordinances, orders, rules, regulations, plans, policies or decrees and the like
relating to (i) environmental matters, including, without limitation, those
relating to fines, injunctions, penalties, damages, contribution, cost recovery
compensation, losses or injuries resulting from the Release or threatened
Release of Hazardous Materials, (ii) the generation, use, storage,
transportation or disposal of Hazardous Materials, or (iii) occupational safety
and health, industrial hygiene, land use or the protection of human, plant or
animal health or welfare, including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. ss. 9601 et
--
seq.), the Hazardous Materials Transportation Act (49 U.S.C. ss. 1801 et seq.),
--- -- ---
the Resource Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), the
------
Federal Water Pollution Control Act (33 U.S.C. ss. 1251 et seq.), the Clean Air
-- ---
Act (42 U.S.C. ss. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C.
-- ---
ss. 2601 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7
-- ---
U.S.C. ss. 136 et seq.), the Occupational Safety and Health Act (29 U.S.C. ss.
-- ---
651 et seq.) and the Emergency Planning and Community Right-to-Know Act (42
-- ---
U.S.C. ss. 11001 et seq.), each as amended or supplemented, and any analogous
-- ---
future or present statutes and regulations promulgated pursuant thereto, each as
in effect as of the date of determination.
"Environmental Lien" means a Lien in favor of a Tribunal or
other Person (i) for any liability under an Environmental Law or (ii) for
damages arising from or costs incurred by such Tribunal or other Person in
response to a release or threatened release of hazardous or toxic waste,
substance or constituent into the environment.
"Equity Financing" shall mean the contribution to the capital
of the Company effected pursuant to the sale of the Company's stock pursuant to
the Stock Purchase Agreement and the contribution to Holdings LLC in connection
with the Recapitalization.
-15-
"Equity Financing Documents" shall mean each of the documents
related to the consummation of the Equity Financing.
"Equity Interest" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) corporate stock or other
equity participations, including partnership interests, whether general or
limited, of such Person, including any Preferred Equity Interests.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute.
"ERISA Affiliate," as applied to any Person, means (i) any
corporation which is, or was at any time within the five calendar years
immediately preceding the date hereof, a member of a controlled group of
corporations within the meaning of Section 414(b) of the Internal Revenue Code
of which that Person is, or was at any time within the five calendar years
immediately preceding the date hereof, a member; (ii) any trade or business
(whether or not incorporated) which is, or was at any time within the five
calendar years immediately preceding the date hereof, a member of a group of
trades or businesses under common control within the meaning of Section 414(c)
of the Internal Revenue Code of which that Person is, or was at any time within
the five calendar years immediately preceding the date hereof, a member; and
(iii) any member of an affiliated service group within the meaning of Section
414(m) or (o) of the Internal Revenue Code of which that Person, any corporation
described in clause (i) above or any trade or business described in clause (ii)
above is, or was at any time within the five calendar years immediately
preceding the date hereof, a member.
"ERISA Event" means (i) a "reportable event" within the
meaning of Section 4043 of ERISA and the regulations issued thereunder with
respect to any Pension Plan (excluding those for which the provision for 30-day
notice to the PBGC has been waived by regulation); (ii) the failure to meet the
minimum funding standard of Section 412 of the Internal Revenue Code with
respect to any Pension Plan (whether or not waived in accordance with Section
412(d) of the Internal Revenue Code) or the failure to make by its due date a
required installment under Section 412(m) of the Internal Revenue Code with
respect to any Pension Plan or the failure to make any required contribution to
a Multiemployer Plan; (iii) the provision by the administrator of any Pension
Plan pursuant to Section 4041(a)(2) of
-16-
ERISA of a notice of intent to terminate such plan in a distress termination
described in Section 4041(c) of ERISA; (iv) the withdrawal by the Company or any
of its Subsidiaries or any of their respective ERISA Affiliates from any Pension
Plan with two or more contributing sponsors or the termination of any such
Pension Plan resulting in liability pursuant to Sections 4063 or 4064 of ERISA;
(v) the institution by the PBGC of proceedings to terminate any Pension Plan, or
the occurrence of any event or condition which might reasonably be expected to
constitute grounds under ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan; (vi) the imposition of liability on the
Company or any of its Subsidiaries or any of their respective ERISA Affiliates
pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of
Section 4212(c) of ERISA; (vii) the withdrawal by the Company or any of its
Subsidiaries or any of their respective ERISA Affiliates in a complete or
partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from
any Multiemployer Plan if there is any potential liability therefor, or the
receipt by the Company or any of its Subsidiaries or any of their respective
ERISA Affiliates of notice from any Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that
it intends to terminate or has terminated under Section 4041A or 4042 of ERISA;
(viii) the occurrence of an act or omission which could reasonably be expected
to give rise to the imposition on the Company or any of its Subsidiaries or any
of their respective ERISA Affiliates of fines, penalties, taxes or related
charges under Chapter 43 of the Internal Revenue Code or under Section 409 or
502(c), (i) or (l) or 4071 of ERISA in respect of any Employee Benefit Plan;
(ix) the assertion of a material claim (other than routine claims for benefits)
against any Employee Benefit Plan other than a Multiemployer Plan or the assets
thereof, or against the Company or any of its Subsidiaries or any of their
respective ERISA Affiliates in connection with any such Employee Benefit Plan;
(x) receipt from the Internal Revenue Service of notice of the failure of any
Pension Plan (or any other Employee Benefit Plan intended to be qualified under
Section 401(a) of the Internal Revenue Code) to qualify under Section 401(a) of
the Internal Revenue Code, or the failure of any trust forming part of any
Pension Plan to qualify for exemption from taxation under Section 501(a) of the
Internal Revenue Code; or (xi) the imposition of a Lien pursuant to Section
401(a)(29) or 412(n) of the Internal Revenue Code or pursuant to ERISA with
respect to any Pension Plan.
"Event of Default" means each of the events set forth in
Section 7.
-17-
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.
"Exchange Notes" has the meaning ascribed to it in Section
5.10(ii).
"Exchange Request" has the meaning ascribed to it in Section
5.10.
"Facilities" means any and all real property (including,
without limitation, all buildings, fixtures or other improvements located
thereon) now, hereafter or heretofore owned, leased, operated or used by the
Company, its Subsidiaries or any of their respective predecessors in interest.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal Funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by the Agent.
"Fir Tree" means Fir Tree Value Fund L.P., Fir Tree Institut-
ional Value Fund L.P. and Fir Tree Value Partners L.D.C. and their Affiliates.
"FUCMC" means First Union Capital Markets Corp.
"Funding Subsidiary Guarantor" has the meaning ascribed to it
in Section 10.6.
"GAAP" means those generally accepted accounting principles
and practices which are recognized as such by The Financial Accounting Standards
Board and which are consistently applied for all periods after the date hereof
so as to properly reflect the financial condition, and the results of operations
and changes in financial position, of the Company and its Subsidiaries, except
that any accounting principle or practice required to be changed in order to
continue as a generally accepted accounting principle or practice may be so
changed.
"Galaxy" means Galaxy Registration, Inc., a Maryland corpora-
tion.
-18-
"GEM" means G.E.M. Communications, Inc., an Oklahoma
corporation.
"Guarantee Obligations" has the meaning ascribed to it in
Section 11.1.
"Guarantees" means, collectively, the guarantees delivered to
the Lenders by the Guarantors pursuant to Section 10 which are evidenced by
notations of guarantee substantially in the form of Exhibit VIII.
------------
"Guarantor Payment Blockage Period" has the meaning ascribed
to it in Section 11.2.
"Guarantor Senior Indebtedness" means, with respect to any
Guarantor, the principal of, premium, if any, and interest on, and all amounts
payable in respect of, all obligations of every nature of such Guarantor from
time to time owed to the lenders under the Senior Credit Facility, including,
without limitation, all obligations with respect to letters of credit and
principal of and interest on, and all fees, indemnities and expenses payable
under, the Senior Credit Facility and all obligations under Interest Rate
Agreements entered into with lenders under the Senior Credit Facility and their
respective Affiliates and any guarantees thereof including any agreement
refinancing all or any portion of the Indebtedness under such Senior Credit
Facility but only to the extent such Indebtedness is fully and adequately
secured. Without limiting the generality of the foregoing, "Guarantor Senior
Indebtedness" shall include interest accruing thereon subsequent to the
occurrence of any Event of Default specified in Sections 7.6 and 7.7 relating to
the Guarantors, whether or not the claim for such interest is allowed under any
applicable Bankruptcy Law. Notwithstanding the foregoing, "Guarantor Senior
Indebtedness" shall not include that portion of any Indebtedness which is
incurred by such Guarantor in violation of this Agreement.
"Guarantors" means (i) each of the present and future
Wholly-Owned Subsidiaries of the Company, including ▇▇▇▇▇▇, Galaxy, GEM,
CORESEARCH, Inc., a Delaware corporation, Crimesearch, Inc., an Oklahoma
corporation, Expo Magazine, Inc., a Kansas corporation, Galaxy Design &
Printing, Inc., a Maryland corporation, Transportation Communications Services,
Inc., an Oklahoma corporation, T/SF Europe, Inc., an Oklahoma corporation, T/SF
Investment Co., a Delaware corporation, T/SF of Nevada, Inc., a Nevada
corporation and Transportation Information Services, Inc., an Oklahoma
corporation, other than inactive
-19-
Subsidiaries with no assets, and (ii) upon their formation, Holdings LLC and
each of the Operating LLCs.
"Hazardous Materials" means (i) any chemical, material or
substance at any time defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely hazardous
waste," "restricted hazardous waste," "infectious waste," "toxic substances" or
any other formulations intended to define, list or classify substances by reason
of deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity" or "EP
toxicity" or words of similar import under any applicable Environmental Laws or
publications promulgated pursuant thereto; (ii) any oil, petroleum, petroleum
fraction or petroleum derived substance; (iii) any drilling fluids, produced
waters and other wastes associated with the exploration, development or
production of crude oil, natural gas or geothermal resources; (iv) any flammable
substances or explosives; (v) any radioactive materials; (vi) asbestos in any
form; (vii) urea formaldehyde foam insulation; (viii) electrical equipment which
contains any oil or dielectric fluid containing levels of polychlorinated
biphenyls in excess of fifty parts per million; (ix) pesticides; and (x) any
other chemical, material or substance, exposure to which is prohibited, limited
or regulated by any governmental authority or which may or could pose a hazard
to human health or safety or the environment.
"Holdings LLC" means T/SF Holdings, LLC, a Delaware limited
liability company, whose Common Equity Interests shall be owned by VS&A - T/SF
and Fir Tree in the same proportion as their ownership interest in the Common
Stock of the Company pursuant to the Recapitalization and whose Preferred Equity
Interests shall be owned by the Company. For purposes of this Agreement,
Holdings LLC shall be treated as a Wholly-Owned Subsidiary.
"Holdings LLC Preferred Equity Interests" as applied to the
Equity Interests of Holdings LLC, means Equity Interests of any class or classes
(however designated) which is preferred as to the payment of dividends or
distributions, or as to the distribution of assets upon any voluntary or
involuntary liquidation or dissolution of Holdings LLC, over Equity Interests of
any other class of such Person.
"Inactive Subsidiary" means, with respect to any Person, any
Subsidiary of such Person listed on Schedule B-2, for
-20-
so long as such Subsidiary is not conducting any business and does not hold any
assets.
"Incur" means, with respect to any Indebtedness or other
obligation of any Person, to create, issue, incur (by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or other obligation on the balance sheet
of such Person (and "Incurrence," "Incurred," "Incurable" and "Incurring" shall
have meanings correlative to the foregoing); provided that any amendment,
--------
modification or waiver of any document pursuant to which Indebtedness was
previously Incurred shall only be deemed to be an Incurrence of Indebtedness if
and to the extent such amendment, modification or waiver (i) increases the
principal thereof or interest rate or premium payable thereon or (ii) changes to
an earlier date the stated maturity thereof or the date of any scheduled or
required principal payment thereon or the time or circumstances under which such
Indebtedness shall be redeemed; provided, further, that any Indebtedness of a
--------
Person existing at the time such Person becomes a Subsidiary of the Company
(whether by merger, consolidation, acquisition or otherwise) shall be deemed to
be Incurred by such Subsidiary at the time it becomes a Subsidiary of the
Company.
"Indebtedness" means, with respect to any Person, (i) all
indebtedness, obligations and liabilities of such Person for borrowed money,
(ii) that portion of obligations with respect to Capital Leases that is properly
classified as a liability on a balance sheet of such Person in conformity with
GAAP, (iii) notes payable and drafts accepted representing extensions of credit,
whether or not representing obligations for borrowed money, of such Person, (iv)
any indebtedness, obligation or liability of such Person owed for all or any
part of the deferred purchase price of property or services (excluding any such
obligations incurred under ERISA), which purchase price is (a) due more than six
months (or a longer period of up to one year, if such terms are available from
suppliers in the ordinary course of business) from the date of incurrence of the
obligation in respect thereof or (b) evidenced by a note or similar written
instrument, (v) all indebtedness, obligations and liabilities secured by any
Lien on any property or asset owned or held by that Person regardless of whether
the indebtedness secured thereby shall have been assumed by that Person or is
nonrecourse to the credit of that Person except that "Indebtedness" shall not
include trade payables and accrued liabilities Incurred in the ordinary course
of business for the
-21-
purchase of goods or services which are not secured by a Lien other than a
Permitted Encumbrance and obligations under Interest Rate Agreements and
Currency Agreements (which constitute Contingent Obligations, not Indebtedness),
(vi) guarantees of such Person in respect of Indebtedness of other Persons and
(vii) all Disqualified Capital Stock issued by such Person with the amount of
Indebtedness represented by such Disqualified Capital Stock being equal to the
greater of its voluntary or involuntary liquidation preference and its maximum
fixed repurchase price, but excluding accrued dividends, if any. For purposes
hereof, the "maximum fixed repurchase price" of any Disqualified Capital Stock
which does not have a fixed repurchase price shall be calculated in accordance
with the terms of such Disqualified Capital Stock as if such Disqualified
Capital Stock were purchased on any date on which Indebtedness shall be required
to be determined pursuant to this Agreement, and if such price is based upon, or
measured by, the fair market value of such Disqualified Capital Stock, such fair
market value to be determined reasonably and in good faith by the board of
directors of the issuer of such Disqualified Capital Stock.
"Indemnified Liabilities" has the meaning ascribed to such
term in Section 12.4.
"Indemnitees" has the meaning ascribed to such term in Section
12.4.
"Independent Financial Advisor" means a firm (i) which does
not, and whose directors, officers and employees or Affiliates do not, have a
direct or indirect financial interest in the Company and (ii) which, in the
judgment of the Board of Directors of the Company, is otherwise independent and
qualified to perform the task for which it is to be engaged.
"Intellectual Property" means all patents, trademarks,
tradenames, copyrights, technology, know-how and processes used in or necessary
for the conduct of the business of the Company as currently conducted that are
material to the condition (financial or otherwise), business, operations or
prospects of the Company and its Subsidiaries, taken as a whole.
"Intercompany Indebtedness" means any Indebtedness of the
Company or any Subsidiary of the Company which, in the case of the Company, is
owing to any Wholly-Owned Subsidiary and which, in the case of any such
Subsidiary, is owing to the Company or any Wholly-Owned Subsidiary of the
Company; provided that if as of any date any Person other than the Company or a
--------
-22-
Wholly-Owned Subsidiary of the Company or any lender under the Senior Credit
Facility owns or holds such Indebtedness, or holds any Lien in respect thereof,
such Indebtedness shall no longer be Intercompany Indebtedness permitted to be
Incurred pursuant to Section 6.1(vi).
"Interest Rate Agreement" means any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement or arrangement designed to protect the Company or any of its
Subsidiaries against fluctuations in interest rates.
"Interest Rate Determination Date" means, with respect to any
Quarterly Period, the second Business Day on which banks in New York and London
are open prior to the first Business Day of such Quarterly Period.
"Interest Swap Obligations" means the obligations of any
Person, pursuant to any arrangement with any other Person, whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such other
Person calculated by applying a fixed or a floating rate of interest on the same
notional amount.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended from time to time, and any successor code or statute.
"Investment" means (i) any direct or indirect purchase or
other acquisition of, or of a beneficial interest in, any Securities of any
other Person or (ii) any direct or indirect loan, advance (other than advances
to employees for moving, entertainment and travel expenses, drawing accounts and
similar expenditures in the ordinary course of business), extension of credit or
capital contribution to any other Person, including all indebtedness and
accounts receivable from that other Person that are not current assets or did
not arise from sales to that other Person in the ordinary course of business.
The amount of any Investment shall be the original cost of such Investment plus
the cost of all additions thereto, without any adjustments for increases or
decreases in value, or write-ups, write-downs or write-offs with respect to such
Investment.
"Joint Venture" means a joint venture, partnership or other
similar arrangement, whether in corporate, partnership or other legal form;
provided that, as to any such arrangement in
--------
-23-
corporate form, such corporation shall not, as to any Person of which such
corporation is a Subsidiary, be considered to be a Joint Venture to which
such Person is a party.
"Laws" means all applicable statutes, laws, ordinances,
regulations, rules, orders, judgments, writs, injunctions or decrees of any
state, commonwealth, nation, territory, possession, province, county, parish,
town, township, village, municipality or Tribunal, and "Law" means each of the
foregoing.
"Lenders" has the meaning ascribed to that term in the
introduction to this Agreement and shall include any assignee of any Loan, Note
or Loan Commitment to the extent of such assignment.
"LIBOR Rate" means the rate determined on the basis of the
offered rates for deposits in U.S. Dollars for a period of three months which
appear on the Reuters Screen LIBO Page as of 11:00 a.m., London time, on the
Interest Rate Determination Date for such Quarterly Period. If at least two
rates appear on the Reuters Screen LIBO Page, the rate for such Quarterly Period
will be the arithmetic mean of such rates rounded upwards, if necessary, to the
nearest 1/16 of 1%. If fewer than two rates appear on the Reuters Screen LIBO
Page, then such rate shall equal the arithmetic mean (rounded upward to the
nearest 1/16 of 1%) of the interest rates per annum at which deposits in U.S.
Dollars for a period of three months are offered by First Union or its designee
at approximately 11:00 a.m., London time, on such Interest Rate Determination
Date to first class banks in the London interbank market.
"Lien" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.
"Litigation" means any action, suit, proceeding, claim,
lawsuit and/or investigation conducted or threatened by or before any Tribunal.
"LLCs" means Holdings LLC and the Operating LLCs. For purposes
of this Agreement, the LLCs shall be treated as Wholly-Owned Subsidiaries.
-24-
"Loan Commitment" means the Bridge Loan Commitment and the
Term Loan Commitment.
"Loan Documents" means this Agreement, the Bridge Notes, the
Term Notes, the Guarantees, the Senior Subordinated Indenture, the Exchange
Notes and the Registration Rights Agreement.
"Loans" means the Bridge Loan and the Term Loan as each may be
outstanding.
"Margin Stock" has the meaning assigned to that term in
Regulation U and Regulation G of the Board of Governors of the Federal Reserve
System as in effect from time to time.
"Material Adverse Change" means a material adverse change in
the business, operations, properties, assets, condition (financial or otherwise)
or prospects of the Company and its Subsidiaries, taken as a whole.
"Material Adverse Effect" means (i) a material adverse effect
upon the business, operations, properties, assets, condition (financial or
otherwise) or prospects of the Company and its Subsidiaries, taken as a whole,
or (ii) the impairment of the ability of the Company and its Subsidiaries, taken
as a whole, to perform, or the impairment of the ability of the Agent or Lenders
to enforce, the Obligations.
"Material Subsidiary" means, with respect to any accounting
period, (a) any Subsidiary of the Company (i) whose revenues constitute greater
than 10% of the aggregate dollar value of the revenues of Company and its
Subsidiaries, taken as a whole, for such accounting period or (ii) the fair
market value of whose assets at any time during such accounting period is
greater than 10% of the fair market value of all of the assets of Company and
its Subsidiaries at such time and (b) the LLCs.
"Maximum Cash Interest Rate" means an interest rate of 14% per
annum; provided that in computing such interest rate, fees paid to the Lenders
-------
shall not be deemed an interest payment.
"Multiemployer Plan" means a Pension Plan which is a
"multiemployer plan" as defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" means, with respect to any Asset Sale,
Cash Proceeds of such Asset Sale net of bona fide direct
-25-
costs of sale including, but not limited to, (i) income taxes reasonably
estimated to be actually payable as a result of such Asset Sale within two years
of the date of such Asset Sale, (ii) payment of the outstanding principal amount
of, premium or penalty, if any, and interest on, any Indebtedness that is
secured by a Lien on the stock or assets in question and that is required to be
repaid under the terms thereof as a result of such Asset Sale, (iii) out-of-
pocket expenses and fees relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees and sales commissions)
and (iv) any portion of cash proceeds which the Company determines in good faith
should be reserved for post-closing adjustments or liabilities relating to the
Asset Sale retained by the Company, it being understood and agreed that on the
day that all such post-closing adjustments have been determined, the amount (if
any) by which the reserved amount in respect of such Asset Sale exceeds the
actual post-closing adjustments, payable by the Company or any of its
Subsidiaries, shall constitute Net Cash Proceeds on such date.
"Non-payment Default" means any event (other than a Payment
Default) the occurrence of which entitles one or more Persons to act to
accelerate the maturity of any Designated Senior Indebtedness.
"Notes" means, collectively, the Bridge Notes and the Term
Notes.
"Notice of Borrowing" means a notice substantially in the form
of Exhibit IV-A with respect to a proposed borrowing.
------------
"Notice of Conversion" means a notice substantially in the
form of Exhibit IV-B with respect to a proposed conversion.
------------
"Obligations" means all obligations of every nature of the
Company from time to time owed to the Lenders and the Agent under the Loan
Documents, whether for principal, reimbursements, interest, fees, expenses,
indemnities or otherwise, and whether primary, secondary, direct, indirect,
contingent, fixed or otherwise (including obligations of performance).
"Offer Payment Date" has the meaning ascribed to such term in
Section 2.5A(iv).
"Officer" means the Chairman of the Board, the President, any
Vice President, the Chief Financial Officer, the Con-
-26-
troller, the Treasurer, the Secretary or Assistant Secretary of each of the
Company and the Guarantors.
"Officers' Certificate" means, as applied to any corporation,
a certificate executed on behalf of such corporation by two Officers; provided
--------
that every Officers' Certificate with respect to the compliance with a condition
precedent to the making of the Loans hereunder shall include (i) a statement
that the officer or officers making or giving such Officers' Certificate have
read such condition and any definitions or other provisions contained in this
Agreement relating thereto, (ii) a statement that, in the opinion of the
signers, they have made or have caused to be made such examination or
investigation as is necessary to enable them to express an informed opinion as
to whether or not such condition has been complied with, and (iii) a statement
as to whether, in the opinion of the signers, such condition has been complied
with.
"Operating LLCs" means, upon their formation, each of (i)
Galaxy Registration LLC, a Delaware limited liability company, (ii) ▇▇▇▇▇▇, LLC,
a Delaware limited liability company and (iii) GEM Gaming, LLC, a Delaware
limited liability company, each of whose Common Stock is owned by Holdings LLC.
For purposes of this Agreement, the Operating LLCs shall be treated as
Wholly-Owned Subsidiaries.
"Other Taxes" has the meaning ascribed to such term in Section
12.19.
"Pari Passu Indebtedness" means, with respect to the Company
or any Subsidiary Guarantor, Indebtedness of such Person which ranks pari passu
---- -----
in right of payment to the Loans or the Guarantee of such Subsidiary Guarantor,
as the case may be.
"Payment Blockage Period" has the meaning ascribed to such
term in Section 8.2(b).
"Payment Default" means any default in the payment of
principal, premium, if any, or interest on any Designated Senior Indebtedness
beyond any applicable grace period with respect thereto.
"Payment Office" shall mean the office of the Agent located at
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ or such other office as the Agent
may designate to the Company and the Lenders from time to time.
-27-
"Payment Restriction" has the meaning ascribed to such term in
Section 6.8.
"PBGC" means the Pension Benefit Guaranty Corporation, and any
successor to all or any of the Pension Benefit Guaranty Corporation's functions
under ERISA.
"Pension Plan" means an employee pension benefit plan as
defined in Section 3(2) of ERISA which is subject to the provisions of Title IV
of ERISA and which is maintained for employees of the Company, any Subsidiary of
the Company or any member of the Controlled Group.
"Permits" has the meaning ascribed to such term in Section
4.20.
"Permitted Holders" means Fir Tree and VS&A and their
Affiliates.
"Permitted Refinancing Indebtedness" means (A) any Refinancing
by the Company of Indebtedness of the Company or of its Subsidiaries (other than
Indebtedness Incurred or outstanding pursuant to clause (ii), (iv), (v), (vi),
(vii), (viii), (ix) or (xi) of Section 6.1) and (B) any Indebtedness incurred
pursuant to a Refinancing by any Subsidiary of the Company of Indebtedness
Incurred by such Subsidiary (other than Indebtedness Incurred or outstanding
pursuant to clause (ii), (vi), (viii), (ix) or (xii) of Section 6.1), in the
case of each of (A) and (B), that does not (1) result in an increase in the
total of the aggregate principal amount of the Indebtedness of such Person being
Refinanced as of the date of such proposed Refinancing (if such Indebtedness
that is Refinancing the existing Indebtedness is issued at a price less than
100% of the principal amount thereof, an increase shall not be deemed to have
occurred unless the gross proceeds of such Indebtedness that is Refinancing the
existing Indebtedness is in excess of the total of the aggregate principal
amount of the Indebtedness being Refinanced as of the date of such proposed
Refinancing) or (2) create Indebtedness with a Weighted Average Life to Maturity
that is less than the Weighted Average Life to Maturity of the Indebtedness
being Refinanced; provided that (x) if such Indebtedness being Refinanced is
--------
Indebtedness of the Company, then such Refinancing Indebtedness shall be
Indebtedness solely of the Company, (y) if such Indebtedness being Refinanced is
subordinate or junior in right of payment to the Loans or the Guarantees, as the
case may be, or if recourse in respect of the Indebtedness being Refinanced is
limited in any respect, then such Indebtedness proposed to be Incurred to
Refinance the
-28-
existing Indebtedness shall be subordinate in right of payment to the Loans or
the Guarantees, as the case may be, and recourse with respect thereto, as the
case may be, shall be limited at least to the same extent and in the same manner
as the Indebtedness being Refinanced and (z) if such Indebtedness being
Refinanced is Pari Passu Indebtedness, then such Indebtedness proposed to be
incurred to Refinance the existing Indebtedness shall be Pari Passu
Indebtedness; provided, further, that Indebtedness incurred currently with an
-------- -------
irrevocable offer to purchase, on a date not more than 60 days from the date of
the incurrence of such Indebtedness, an amount of Notes equal to such
Indebtedness shall be deemed Refinancing Indebtedness.
"Permitted Tax Distributions" means, subject to Section 6.3,
distributions by Holdings LLC to Fir Tree and VS&A-T/SF to the extent necessary
to permit the direct or indirect beneficial owners of the common Equity
Interests of Holdings LLC to pay federal and state income tax liabilities
arising from income of Holdings LLC irrespective of any other income or loss
such holders may have and attributable to them solely as a result of Holdings
LLC (and any intermediate entity through which such holder owns such Equity
Interests) being a partnership or similar pass-through entity for federal income
tax purposes.
"Person" means and includes natural persons, corporations,
limited liability companies, limited partnerships, general partnerships, joint
stock companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions thereof.
"PIK Interest Amount" has the meaning ascribed to such term in
Section 2.B.
"Plan" means an employee benefit plan as defined in Section
3(3) of ERISA maintained by the Company or any of its Subsidiaries for employees
of the Company or any of its Subsidiaries.
"Potential Event of Default" means a condition or event which,
after notice or lapse of time or both, would constitute an Event of Default if
that condition or event were not cured or removed within any applicable grace or
cure period.
"Preferred Stock" of any Person means any Capital Stock of
such Person that has preferential rights (as compared
-29-
to any other Capital Stock of such Person) with respect to dividends or
redemptions or upon liquidation.
"pro forma" means, with respect to any calculation made or
required to be made pursuant to the terms of this Agreement, a calculation in
accordance with Article 11 of Regulation S-X under the Securities Act as
interpreted by the Company's chief financial officer or Board of Directors in
consultation with its independent certified public accountants.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Quarterly Period" shall mean the period commencing on the
first calendar day of each three-month period, if such day is a Business Day, or
the first Business Day succeeding the first calendar day of each three-month
period and ending on the day next preceding the first Business Day of the
following Quarterly Period; provided that the first Quarterly Period shall
--------
commence on the Closing Date and shall end on and exclude January 1, 1998.
"Real Property Assets" means interests in land, buildings,
improvements, and fixtures attached thereto or used in the operation thereof, in
each case owned or leased (as lessee) by the Company or its Subsidiaries.
"Recapitalization" means the recapitalization of the Company
as contemplated by the Stock Purchase Agreement.
"Refinance" means, in respect of any security or Indebtedness,
to refinance, extend, renew, refund or defease, or to issue a security or
Indebtedness in exchange or replacement for, such security or Indebtedness in
whole or in part. "Refinanced" and "Refinancing" shall have correlative
meanings.
"Register" has the meaning ascribed to such term in Section
5.13.
"Registration Rights Agreement" means a registration rights
agreement substantially in the form contemplated by Exhibit V (with such changes
---------
therein as the Agent and the Company shall approve).
"Related Business" means any capital expenditure or Investment
in properties and assets that replace the properties and assets that were the
subject of an Asset Sale or in properties and assets that will be used in the
business of the Com-
-30-
pany and its Subsidiaries as existing on the Closing Date or in businesses
reasonably related thereto.
"Release" means any release, spill, emission, leaking,
pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal,
dumping, leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including, without limitation, the abandonment or disposal of any
barrels, containers or other closed receptacles containing any Hazardous
Materials), or into or out of any Facility, including the movement of any
Hazardous Material through the air, soil, surface water, groundwater or
property.
"Reportable Event" has the meaning set forth in Section 4043
of ERISA, but excluding any event for which the 30-day notice requirement has
been waived by applicable regulations of the PBGC.
"Required Lenders" means the Lender or Lenders holding at
least 51% of the aggregate outstanding principal amount of Notes.
"Restricted Payment" has the meaning ascribed to such term in
Section 6.3.
"Securities" means any stock, shares, partnership interests,
voting trust certificates, certificates of interest or participation in any
profit sharing agreement or arrangement, bonds, debentures, options, warrants,
notes, or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or participations in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.
"Senior Credit Facility" means the Loan Agreement dated as of
October 9, 1997 among the Company, the lenders listed therein and First Union,
as agent, together with the documents related thereto (including, without
limitation, any guarantee agreements and security documents), in each case as
such agreements may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including any
agreement extending the maturity of, refinancing, replacing or otherwise
restructuring (including adding Subsidiaries of the Company as additional
borrowers or guarantors thereunder) all or any portion of the Indebtedness under
such agreement or any successor or replace-
-31-
ment agreement and whether by the same or any other agent, lender or group of
lenders pursuant to which the Company may borrow up to $25,000,000 in the
aggregate at any one time.
"Senior Indebtedness" means for any Person the principal of,
premium, if any, and interest on, and all amounts payable in respect of, all
obligations of every nature of the Company from time to time owed to the lenders
under the Senior Credit Facility, including, without limitation, all obligations
in respect of letters of credit and principal of and interest on and all fees,
indemnities, and expenses payable under the Senior Credit Facility and all
obligations under Interest Rate Agreements entered into with lenders under the
Senior Credit Facility and their respective Affiliates and any guarantees
thereof including any agreement refinancing all or any portion of the
Indebtedness under such Senior Credit Facility but only to the extent such
Indebtedness is fully and adequately secured. Without limiting the generality of
the foregoing, "Senior Indebtedness" shall include interest accruing thereon
subsequent to the occurrence of any Event of Default specified in Sections 7.6
and 7.7 relating to the Company, whether or not the claim for such interest is
allowed under any applicable Bankruptcy Law. Notwithstanding the foregoing,
"Senior Indebtedness" of any Person shall not include that portion of any
Indebtedness which is incurred by such Person in violation of this Agreement.
"Senior Subordinated Indenture" means an indenture between the
Company and a trustee substantially in the form contemplated by and in
accordance with Section 5.10 (with such changes therein as the Agent and the
Company shall approve, and, at such time as notes issued thereunder are sold in
a public offering, with other appropriate changes to reflect such public
offering), as the same may at any time be amended, modified and supplemented and
in effect.
"Stock Purchase" means the acquisition by VS&A-T/SF of shares
of stock of the Company pursuant to the Stock Purchase Agreement.
"Stock Purchase Agreement" means the stock purchase agreement
dated as of August 15, 1997, as amended, by and among VS&A-T/SF, VS&A and the
Company, relating to the Recapitalization.
"Stockholders Agreement" means the Stockholders Agreement
dated October 9, 1997 among VS&A-T/SF, Fir Tree and the Company.
-32-
"Subordinated Indebtedness" means Indebtedness of the Company
or any Guarantor which is expressly subordinated in right of payment to the
Notes or the Guarantee of such Guarantor, as the case may be.
"Subsequent Bridge Note" has the meaning ascribed to such term
in Section 2.1D.
"Subsequent Term Note" has the meaning ascribed to such term
in Section 2.2E.
"Subsidiary" means, with respect to any Person, any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of stock or other equity interest entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereto is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof; provided that with respect to the
--------
Company, "Subsidiary" shall not include Inactive Subsidiaries so long as such
entities remain Inactive Subsidiaries. For purposes of this Agreement, each of
the LLCs shall be deemed to be Subsidiaries.
"Take-Out Securities" means any debt securities of the Company
and/or the Guarantors the proceeds of which are used to repay the Notes in full.
"Taxes" means all taxes, assessments, fees, levies, imposts,
duties, penalties, deductions, liabilities, withholdings or other charges of any
nature whatsoever, including interest penalties, from time to time or at any
time imposed by any Law or any Tribunal.
"Term Loan Commitment" has the meaning ascribed to such term
in Section 2.2A.
"Term Notes" has the meaning ascribed to such term in Section
2.2E.
"Transaction Costs" means the fees, costs and expenses payable
by the Company pursuant hereto and other fees, costs and expenses payable by the
Company or a Subsidiary of the Company in connection with the Transactions.
"Transactions" shall mean, collectively, (i) the Equity
Financing, (ii) the incurrence of the revolving loans drawn down on the Closing
Date under the Senior Credit Facil-
-33-
ity, (iii) the incurrence of the Bridge Loans hereunder on the Closing Date,
(iv) the Recapitalization, (v) any other transaction on the Closing Date
contemplated in relation to the foregoing, including, but not limited to, the
formation of the LLCs, and (vi) the payment of fees and expenses in connection
with the foregoing.
"Transferee" has the meaning ascribed to such term in Section
12.19.
"Tribunal" means any government, any arbitration panel, any
court or any governmental department, commission, board, bureau, agency,
authority or instrumentality of the United States or any state, province,
commonwealth, nation, territory, possession, county, parish, town, township,
village or municipality, whether now or hereafter constituted and/or existing.
"U.S. Legal Tender" means such coin or currency of the United
States of America as at the time of payment shall be legal tender for the
payment of public and private debts.
"Voting Stock" means, with respect to any Person, securities
of any class or classes of Capital Stock in such Person entitling the holders
thereof (whether at all times or only so long as no senior class of stock has
voting power by reason of any contingency) to vote in the election of members of
the board of directors or other governing body of such Person.
"VS&A" means VS&A Communications Partners II, L.P., a Delaware
limited partnership.
"VS&A-T/SF" means VS&A-T/SF Inc., a Delaware corporation, and
after the merger of VS&A-T/SF into the Company, VS&A-T/SF L.L.C.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the total
of the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment.
-34-
"Wholly-Owned Subsidiary" means, with respect to any Person,
any corporation, association or other business entity of which 100% of the total
voting power of shares of stock or other equity interest entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Wholly-Owned
Subsidiaries of that Person or a combination thereof and including Holdings LLC
and the Operating LLCs.
1.2 Accounting Terms
----------------
For the purposes of this Agreement, all accounting terms not
otherwise defined herein shall have the meanings assigned to them in conformity
with GAAP. The LLCs shall be treated as Wholly-Owned Subsidiaries for computing
financial covenants.
1.3 Other Definitional Provisions
-----------------------------
(a) Any of the terms defined in Section 1.1 may, unless the
context otherwise requires, be used in the singular or the plural depending on
the reference.
(b) If Holdings LLC and the Operating LLCs are not formed, all
references to Holdings LLC, Operating LLC and LLCs shall be disregarded.
SECTION 2 AMOUNT AND TERMS OF LOAN COMMITMENT AND LOANS; NOTES
2.1 Bridge Loan and Bridge Note
---------------------------
A. Bridge Loan Commitment. Subject to the terms and
----------------------
conditions of this Agreement and in reliance upon the representations and
warranties of the Company herein set forth, the Lenders hereby agree to lend to
the Company on the Closing Date $80,000,000 in the aggregate (the "Bridge
Loan"), each such Lender committing to lend the amount set forth next to such
Lender's name on the signature pages hereto. The Lenders' commitments to make
the Bridge Loan to the Company pursuant to this Section 2.1A are herein called
individually, the "Bridge Loan Commitment" and collectively, the "Bridge Loan
Commitments."
B. Notice of Borrowing. When the Company desires to
-------------------
borrow under this Section 2.1, it shall deliver to the Agent
-35-
a Notice of Borrowing no later than 11:00 A.M. (New York time), at least two
Business Days in advance of the Closing Date or such later date as shall be
agreed to by the Agent. The Notice of Borrowing shall specify the applicable
date of borrowing (which shall be a Business Day). Upon receipt of such Notice
of Borrowing, the Agent shall promptly notify each Lender of its share of the
Bridge Loan and the other matters covered by the Notice of Borrowing.
C. Disbursement of Funds. (a) No later than 12:00 Noon
---------------------
(New York time) on the Closing Date, each Lender will make available its pro
rata share of the Bridge Loan requested to be made on such date in the manner
provided below. All amounts shall be made available to the Agent in U.S. Legal
Tender and immediately available funds at the Payment Office and the Agent
promptly will make available to the Company by depositing to its account at the
Payment Office the aggregate of the amounts so made available in the type of
funds received. Unless the Agent shall have been notified by any Lender prior to
the Closing Date that such Lender does not intend to make available to the Agent
its portion of the Bridge Loan to be made on such date, the Agent may assume
that such Lender has made such amount available to the Agent on such date, and
the Agent, in reliance upon such assumption, may (in its sole discretion and
without any obligation to do so) make available to the Company a corresponding
amount. If such corresponding amount is not in fact made available to the Agent
by such Lender and the Agent has made available same to the Company, the Agent
shall be entitled to recover such corresponding amount from such Lender. If such
Lender does not pay such corresponding amount forthwith upon the Agent's demand
therefor, the Agent shall promptly notify the Company, and the Company shall
immediately pay such corresponding amount to the Agent. The Agent shall also be
entitled to recover from such Lender or the Company, 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 Agent to the Company to the date
such corresponding amount is recovered by the Agent, at a rate per annum equal
to (x) if paid by such Lender, the overnight Federal Funds Rate or (y) if paid
by the Company, the then applicable rate of interest on the Loans.
(b) Nothing herein shall be deemed to relieve any Lender from
its obligation to fulfill its Bridge Loan Commitment hereunder or to prejudice
any rights which the Company may have against any Lender as a result of any
default by such Lender hereunder.
-36-
D. Bridge Notes. The Company shall execute and deliver
------------
to each Lender on the Closing Date a Bridge Note dated the Closing Date
substantially in the form of Exhibit I to evidence such Lender's portion of the
---------
Bridge Loan Commitment and with appropriate insertions (the "Original Bridge
Notes"). On each interest payment date prior to the Conversion Date on which the
Company elects to pay a PIK Interest Amount pursuant to Section 2.3B, the
Company shall execute and deliver to each Lender on such interest payment date a
Bridge Note dated such interest payment date substantially in the form of
Exhibit I annexed hereto in a principal amount equal to such Lender's pro rata
---------
portion of such PIK Interest Amount and with other appropriate insertions (each
a "Subsequent Bridge Note" and, together with the Original Bridge Notes, the
"Bridge Notes"). A Subsequent Bridge Note shall bear interest from the date of
its issuance at the same rate borne by all Bridge Notes.
E. Scheduled Payment of Bridge Loan. Subject to Section
--------------------------------
2.2, the Company shall pay in full the outstanding amount of the Bridge Loan and
all other Obligations owing hereunder no later than the Conversion Date.
F. Termination of Bridge Loan Commitment. The Bridge
-------------------------------------
Loan Commitment hereunder shall terminate on the earlier of (i) the date on
which the Acquisition Agreement is terminated in accordance with its terms or
(ii) December 31, 1997 if the Bridge Loan is not made on or before such date.
G. Pro Rata Borrowings. The Bridge Loan made under this
-------------------
Agreement shall be made by the Lenders pro rata on the basis of their respective
--- ----
Bridge Loan Commitments. It is understood that no Lender shall be responsible
for any default by any other Lender of its obligation to make its portion of the
Bridge Loan hereunder and that each Lender shall be obligated to make its
portion of the Bridge Loan hereunder, regardless of the failure of any other
Lender to fulfill its commitments hereunder.
2.2 Term Loan and Term Note
-----------------------
A. Term Loan Commitment. Subject to the terms and
--------------------
conditions of this Agreement and in reliance upon the representations and
warranties of the Company herein set forth, the Lenders hereby agree, on the
Conversion Date, upon the request of the Company, to convert the then
outstanding principal amount of the Bridge Notes into a term loan (the "Term
Loan"), such Term Loan to be in the aggregate principal amount of the then
outstanding principal amount of the Bridge Notes. The
-37-
Lenders' commitments under this Section 2.2A are herein called collectively, the
"Term Loan Commitment."
B. Notice of Conversion/Borrowing. If the Company has
------------------------------
not repaid the Bridge Loan in full on or prior to the Conversion Date, then the
Company shall convert the then outstanding principal amount of the Bridge Notes
into a Term Loan under this Section 2.2. The Company shall deliver to the
Lenders a Notice of Conversion no later than 11:00 A.M. (New York time), at
least two Business Days in advance of the Conversion Date. The Notice of
Conversion shall specify the principal amount of the Bridge Notes outstanding on
the Conversion Date to be converted into a Term Loan.
C. Making of Term Loan. Upon satisfaction or waiver of
-------------------
the conditions precedent specified in Section 3.2, each Lender shall extend to
the Company the Term Loan to be issued on the Conversion Date by such Lender by
cancelling on its records a corresponding principal amount of the Bridge Notes
held by such Lender.
D. Maturity of Term Loan. The Term Loan shall mature and
---------------------
the Company shall pay in full the outstanding principal amount thereof and
accrued interest thereon on the tenth anniversary of the Closing Date (the
"Maturity Date").
E. Term Notes. The Company, as borrower, shall execute
----------
and deliver to each Lender on the Conversion Date a Term Note dated the
Conversion Date substantially in the form of Exhibit II to evidence the Term
----------
Loan made on such date, in the principal amount of the Bridge Notes held by such
Lender on such date and with other appropriate insertions (collectively the
"Original Term Notes"). On or after the Conversion Date, on each interest
payment date on which the Company elects to pay a PIK Interest Amount pursuant
to Section 2.3B, the Company shall execute and deliver to each Lender on such
interest payment date a Term Note dated such interest payment date substantially
in the form of Exhibit II annexed hereto in a principal amount equal to such
----------
Lender's pro rata portion of such PIK Interest Amount and with other appropriate
insertions (each a "Subsequent Term Note" and, together with the Original Term
Notes, the "Term Notes"). A Subsequent Term Note shall bear interest at the same
rate borne by all Term Notes.
2.3 Interest on the Loans
---------------------
A. Rate of Interest. The Loans shall bear interest on
----------------
the unpaid principal amount thereof from the date made
-38-
through maturity (whether by prepayment, acceleration or otherwise) each
Quarterly Period at a rate per annum equal to the Applicable Interest Rate for
such period.
Notwithstanding this Section 2.3A or any other provision
herein, in no event will the combined sum of interest (cash or otherwise) on the
Loans exceed 18.00% per annum.
--- -----
B. Interest Payments. Interest shall be payable (i)
-----------------
with respect to the Bridge Loan, in arrears on January 1, 1998, April 1, 1998,
July 1, 1998, October 1, 1998, and upon any prepayment of the Bridge Loan (to
the extent accrued on the amount being prepaid) and at maturity of the Bridge
Loan in respect of any amounts paid on such date and not converted to Term Loans
and (ii) with respect to the Term Loan, in arrears on each January 1, April 1,
July 1 and October 1 of each year, commencing on the first of such dates to
follow the Conversion Date, upon any prepayment of the Term Loan (to the extent
accrued on the amount being prepaid) and at maturity of the Term Loan; provided,
--------
however, that if, on any interest payment date, the interest rate borne by the
-------
Bridge Loan or the Term Loan, as the case may be, exceeds the Maximum Cash
Interest Rate, the Company may pay all or a portion of the interest payable in
excess of the amount of interest that would be payable on such date at the
Maximum Cash Interest Rate by issuance of Subsequent Bridge Notes or Subsequent
Term Notes, as the case may be, in an aggregate principal amount equal to the
amount of such interest being so paid (the "PIK Interest Amount").
C. Post-Maturity Interest. Any principal payments on the
----------------------
Loans not paid when due and, to the extent permitted by applicable law, any
interest payment on the Loans not paid when due, in each case whether at stated
maturity, by notice of prepayment, by acceleration or otherwise, shall
thereafter bear interest payable upon demand at a rate which is 2.00% per annum
in excess of the rate of interest otherwise payable under this Agreement for the
Loans.
D. Computation of Interest. Interest on the Loans shall
-----------------------
be computed on the basis of a 360-day year and the actual number of days elapsed
in the period during which it accrues. In computing interest on the Loans, the
date of the making of the Loans shall be included and the date of payment shall
be excluded; provided that if a Loan is repaid on the same day on which it is
made, one day's interest shall be paid on that Loan.
-39-
2.4 Fees
----
The Company agrees to pay to First Union all fees and other
obligations in accordance with, and at the times specified by, the Commitment
Letter.
2.5 Prepayments and Payments
------------------------
A. Prepayments
-----------
(i) Voluntary Prepayments. The Company may, upon not
---------------------
less than three Business Days' prior written or telephonic notice
confirmed in writing to the Agent at any time and from time to time,
prepay the Loans made to the Company in whole or in part in an
aggregate minimum amount of $500,000 and integral multiples of $100,000
in excess of that amount at a redemption price equal to the principal
amount thereof plus accrued and unpaid interest thereon to the date of
redemption; provided the redemption price shall be 103.0% of par plus
--------
accrued interest if the source of repayment is from a transaction for
which FUCMC or any of its affiliates was not the exclusive agent or
sole manager for the Company.
Notice of prepayment having been given as aforesaid, the
principal amount of the Loans to be prepaid shall become due and
payable on the prepayment date. Amounts of the Loans so prepaid may not
be reborrowed.
(ii) Mandatory Prepayments
(a) Prepayments from Asset Sales. Upon receipt by the Company
----------------------------
or any Subsidiary of the Company of Cash Proceeds of any Asset Sale
occurring after the Closing Date, (i) the Company or any Subsidiary of
the Company shall, or shall cause its Subsidiaries to, apply the Net
Cash Proceeds of such Asset Sale to prepay revolving loans outstanding
under the Senior Credit Facility; provided that the commitment
--------
thereunder is permanently reduced to the extent of the prepayment; and
(ii) after the Conversion Date, the Company or any Subsidiary of the
Company may apply any Net Cash Proceeds remaining after application
pursuant to clause (i) above to a Related Business. Concurrently with
the consummation of an Asset Sale, the Company shall deliver to the
Agent an Officer's Certificate demonstrating the derivation of Net Cash
Proceeds from the gross sales price of such Asset Sale.
-40-
To the extent not used as above, the Company shall, or shall
cause its Subsidiaries to, prepay the Loans with the Net Cash Proceeds
received from any Asset Sale on a date not later than the Business Day
next succeeding (i) the third Business day after the receipt thereof if
such date of receipt is on or prior to the Conversion Date and (ii) the
180th day after the consummation of such Asset Sale if and to the
extent that such Net Cash Proceeds are not applied by the Company or
any Subsidiary of the Company within 180 days to a Related Business if
such date of receipt is after the Conversion Date.
(b) Prepayments from Issuances of Take-Out Securities.
-------------------------------------------------
Concurrently with the receipt by the Company of proceeds from the
issuance of Take-Out Securities, the Company shall prepay the Loans in
whole (at a price per Note equal to either the principal amount of such
Note plus accrued and unpaid interest, if any, to the date of payment
or a redemption price of 103.0% if FUCMC was not the exclusive agent or
sole manager with respect to the Take-Out Securities transaction).
(c) Notice. The Company shall notify the Agent of any
------
prepayment to be made pursuant to this Section 2.5A(ii) at least two
Business Days prior to such prepayment date (unless shorter notice is
satisfactory to the Required Lenders).
(iii) Company's Mandatory Prepayment Obligation; Application
------------------------------------------------------
of Prepayments. All prepayments shall include payment of accrued
--------------
interest on the principal amount so prepaid and shall be applied to
payment of interest before application to principal.
(iv) Mandatory Offer to Purchase Notes
---------------------------------
(a) Upon the occurrence of a Change of Control (the date of
such occurrence, the "Change of Control Date"), the Company shall, if
the Lenders so request, offer to purchase (the "Change of Control
Offer") all of the Notes at a purchase price equal to 101.5% of the
aggregate principal amount thereof plus accrued interest thereon to the
date of repurchase. Prior to the mailing of the notice to the Agent
provided for in paragraphs (b) and (c) below but in any event within 30
days following any Change of Control, the Company hereby covenants to
(i) repay in full all Indebtedness under the Senior Credit Facility or
to offer to repay in full all such Indebtedness and to repay
-41-
the Indebtedness of each lender under the Senior Credit Facility who
has accepted such offer or (ii) obtain the requisite consents under the
Senior Credit Facility to permit the payment of the Notes as provided
for in paragraph (d) below. The Company shall first comply with the
covenant in the preceding sentence before it shall be required to pay
the Notes pursuant to this Section 2.5A(iv).
(b) The notice to the Agent shall contain all instructions and
materials necessary to enable the Lenders to tender Notes.
(c) Within 30 days following any Change of Control the Company
shall mail a notice to the Agent stating:
(1) that the Change of Control Offer is being made
pursuant to this Section 2.5(A)(iv) and that all Notes validly
tendered will be accepted for payment;
(2) the purchase price and the purchase date, which
shall be no earlier than 30 days nor later than 40 days from
the date such notice is mailed (the "Offer Payment Date");
(3) that any Note not tendered will continue to
accrue interest;
(4) that any Note accepted for payment pursuant to
the Change of Control Offer shall cease to accrue interest
after the Offer Payment Date unless the Company shall default
in the payment of the repurchase price of the Notes;
(5) that if a Lender elects to have a Note
purchased pursuant to the Change of Control Offer it will be
required to surrender the Note, with the form entitled "Option
of Holder to Elect Purchase" on the reverse of the Note
completed, to the Company prior to 5:00 p.m. New York time on
the Offer Payment Date;
(6) that a Lender will be entitled to withdraw its
election if the Company receives, not later than 5:00 p.m. New
York time on the Business Day preceding the Offer Payment
Date, a telegram, telex, facsimile transmission or letter
setting forth the principal amount of Notes such Lender
delivered for purchase, and a statement that such Lender is
withdrawing its election to have such Note purchased; and
-42-
(7) that if Notes are purchased only in part a new
Note of the same type will be issued in principal amount equal
to the unpurchased portion of the Notes surrendered.
(d) On or before the Offer Payment Date, the Company shall (i)
accept for payment Notes or portions thereof which are to be purchased
in accordance with the above, and (ii) deposit at the Payment Office
U.S. Legal Tender sufficient to pay the purchase price of all Notes to
be purchased. The Agent shall promptly mail to the Lenders whose Notes
are so accepted payment in an amount equal to the purchase price unless
such payment is prohibited pursuant to Section 8 or otherwise.
(e) The Company shall comply with the requirements of Rule
14e-1 under the Exchange Act and any other securities laws and
regulations thereunder to the extent such laws and regulations are
applicable in connection with the purchase of Notes pursuant to an
offer hereunder. To the extent the provisions of any securities laws or
regulations conflict with the provisions under this Section, the
Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations
under this Section by virtue thereof.
B. Manner and Time of Payment. All payments of principal
--------------------------
and interest hereunder and under the Notes by the Company shall be made without
defense, set-off or counterclaim and in same-day funds and delivered to the
Agent, unless otherwise specified, not later than 12:00 Noon (New York time) on
the date due at the Payment Office for the account of the Lenders; funds
received by the Agent after that time shall be deemed to have been paid by the
Company on the next succeeding Business Day. The Company hereby authorizes the
Agent to charge its account with the Agent in order to cause timely payment to
be made of all principal, interest and fees due hereunder (subject to sufficient
funds being available in its account for that purpose).
C. Notation of Payment. Each Lender agrees that before
-------------------
disposing of any Note held by it, or any part thereof (other than by granting
participations therein), such Lender will make a notation thereon of all
principal payments previously made thereon and of the date to which interest
thereon has been paid and will notify the Company of the name and address of the
transferee of that Note; provided that the failure to make (or any error in the
--------
making of) such a notation or to
-43-
notify the Company of the name and address of such transferee shall not limit or
otherwise affect the obligation of the Company hereunder or under such Notes
with respect to the Loans and payments of principal or interest on any such
Note.
2.6 Use of Proceeds
---------------
A. Bridge Loan. The proceeds of the Bridge Loan shall be
-----------
applied by the Company, together with borrowings under the Senior Credit
Facility and funds raised in the Equity Financing, to the payment of the
Transaction Costs and to pay the consideration for the Recapitalization.
B. Term Loan. Upon the extension of a Term Loan by a
---------
Lender, the Company shall cancel a corresponding principal amount of Bridge
Notes held by such Lender.
SECTION 3 CONDITIONS
3.1 Conditions to Bridge Loan
-------------------------
The obligation of the Lenders to make the Bridge Loan is
subject to prior or concurrent satisfaction of each of the following conditions:
A. On or before the Closing Date, all corporate and
other proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incidental thereto not previously found
acceptable by the Agent shall be reasonably satisfactory in form and substance
to the Agent, and the Agent shall have received on behalf of the Lenders the
following items, each of which shall be in form and substance satisfactory to
the Agent and, unless otherwise noted, dated the Closing Date:
1. a certified copy of the Company's, each Guarantor's and any
other of the Company's Subsidiaries' (other than the inactive
subsidiaries) charter, together with a certificate of status,
compliance, good standing or like certificate with respect to the
Company and each Guarantor issued by the appropriate government
officials of the jurisdiction of its incorporation and of each
jurisdiction in which it owns any material assets or carries on any
material business, each to be dated a recent date prior to the Closing
Date;
-44-
2. a copy of the Company's and each Guarantor's and any other
of the Company's Subsidiaries' bylaws, certified as of the Closing Date
by one of its Officers;
3. resolutions of the Company's and each Guarantor's Board of
Directors approving and authorizing the execution, delivery and
performance of this Agreement, each of the other Loan Documents and any
other documents, instruments and certificates required to be executed
by the Company or such Guarantor in connection herewith and therewith
and approving and authorizing the execution, delivery and payment of
the Notes and the consummation of the Transactions, each certified as
of the Closing Date by one of its Officers as being in full force and
effect without modification or amendment;
4. signature and incumbency certificates of the Company's and
each Guarantor's Officers executing this Agreement and the Bridge
Notes;
5. executed copies of this Agreement and the Bridge Notes
substantially in the form of Exhibit I executed in accordance with
---------
Section 2.1D drawn to the order of the Lenders and with appropriate
insertions;
6. an originally executed Notice of Borrowing substantially in
the form of Exhibit IV-A, signed by the President or a Vice President
------------
of the Company on behalf of the Company in writing delivered to the
Agent;
7. originally executed copies of one or more favorable written
opinions of (I) Proskauer Rose, LLP, special counsel for the Company
and the Subsidiary Guarantors, substantially in the form of Exhibit VI
----------
and addressed to the Lenders, (II) ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for
the Lenders, substantially in the form of Exhibit VII and addressed to
-----------
the Lenders and (III) such other opinions of counsel and such
certificates or opinions of accountants, appraisers or other
professionals as the Agent shall have reasonably requested including,
without limitation, receipt of an environmental report and technical
reports from independent consultants in respect of the Company and the
Subsidiaries of the Company and their respective properties, reasonably
satisfactory to the Agent;
8. a certificate, delivered by the Company and signed by the
President or a Vice President and the Chief Financial or Accounting
Officer of the Company and ad-
-45-
dressed to the Lenders in form and substance reasonably satisfactory to
the Agent, with appropriate attachments, stating that, after giving
effect to the consummation of the Transactions, the fair saleable value
of the assets of the Company and its Subsidiaries will not be less than
the probable liability on their debts, that each of the Company and its
Subsidiaries will be able to pay its debts as they mature and that each
will not have unreasonably small capital to conduct its business, and
the Agent shall have received such opinions of value, other appropriate
factual information and expert advice supporting the conclusions
reached in such letter as the Agent may reasonably request, all in form
and substance reasonably satisfactory to the Agent.
9. true and correct copies of the Stock Purchase Agreement,
which shall not have been amended without the Agent's consent (which
consent shall not be unreasonably withheld or delayed) and which shall
be in full force and effect and each of the conditions to purchase
contained therein shall have been satisfied and not materially waived
or amended without the Agent's prior written consent (which consent
shall not be unreasonably withheld or delayed);
10. (i) executed or conformed copies of the Senior Credit
Facility and any amendments thereto made on or prior to the Closing
Date and a copy of each legal opinion delivered in connection with the
Senior Credit Facility, and the terms and provisions of the Senior
Credit Facility and all documents and instruments relating thereto
shall be reasonably satisfactory to the Agent, (ii) an Officers'
Certificate from the Company certifying that the Senior Credit Facility
is in full force and effect on the Closing Date and no material term or
condition thereof has been amended, modified or waived from the form
most recently provided to the Agent a reasonable time prior to the
Closing Date except with the prior written consent of the Agent (which
consent shall not be unreasonably withheld or delayed) and (iii) an
Officers' Certificate from the Company to the effect that such party
has performed or complied with all agreements and conditions contained
in the Senior Credit Facility and any agreements or documents referred
to therein, and the Company is not in default in the performance or
compliance with any of the terms or provisions thereof;
-46-
11. a notation of Guarantee, executed and delivered by each
Guarantor, dated the date of this Agreement, substantially in the form
of Exhibit VIII, as applicable; and
------------
12. a copy of the Stock Purchase Agreement and Stockholders
Agreement relating to the Recapitalization and all such counterpart
originals or certified copies of such documents, instruments,
certificates and opinions as the Agent may reasonably request.
B. The Agent shall have received reports and other
information in form, scope and substance satisfactory to the Agent concerning
environmental liabilities of the Company and the Guarantors.
C. On or before the Closing Date, all authorizations,
consents and approvals necessary in connection with the Transactions shall have
been obtained and remain in full force and effect and all applicable waiting
periods under Law applicable to the Recapitalization shall have expired without
any action being taken by any competent authority (including without limitation,
any Tribunal) which restrains, prevents or imposes materially adverse conditions
upon the completion of the Recapitalization or the financing thereof and
evidence of the receipt of such authorizations, consents and approvals
satisfactory to the Agent shall have been delivered to the Agent.
D. No default or event of default shall have occurred
under the Senior Credit Facility, all conditions to borrowing thereunder shall
have been satisfied without waiver (except for any written waivers delivered in
respect of a condition that in the opinion of the Agent is immaterial) and the
Company shall have available to it a revolving credit facility of which not more
than $20,000,000 shall have been funded as of such date.
E. On or before the Closing Date, the Company shall have
paid to First Union the fees payable on the Closing Date pursuant to Section
2.4.
F. On or before the Closing Date, the Company shall have
performed in all material respects all agreements which this Agreement provides
shall be performed on or before the Closing Date except as otherwise disclosed
to and agreed to in writing by the Agent.
G. At the Closing Date, the Company shall have
consummated the Equity Financing (other than $4,500,000 to be con-
-47-
tributed to Holdings LLC) and received gross cash proceeds of approximately
$35,500,000 from VS&A-T/SF and management and the roll-over by Fir Tree of
common equity capital in the Company with a value of approximately $19,600,000.
The Equity Financing shall have been definitively documented on terms and
conditions satisfactory to the Agent, all such documentation shall be in full
force and effect and the parties thereto shall be in compliance with all
material agreements thereunder.
H. Simultaneously with the making of the Bridge Loan by
the Lenders, the Company shall have delivered to the Agent an Officers'
Certificate from the Company in form and substance satisfactory to the Agent to
the effect that (i) the representations and warranties in Section 4 and the
representations and warranties of the Company in the Senior Credit Facility are
true, correct and complete in all material respects on and as of the Closing
Date to the same extent as though made on and as of that date, (ii) on or prior
to the Closing Date, the Company has performed and complied with in all material
respects all covenants and conditions to be performed and observed by the
Company on or prior to the Closing Date and (iii) all conditions to the
consummation of the Recapitalization in the Stock Purchase Agreement have been
satisfied substantially on the terms set forth therein and have not been waived
or amended without the Agent's prior written consent.
I. Immediately following the making of the Bridge Loan
by the Lenders, the Recapitalization shall be consummated without the waiver of
any conditions precedent thereto.
J. None of the Company or any of the Guarantors of the
Company shall have sustained any loss or interference with respect to its
businesses or properties from fire, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or from any labor dispute or any
legal or governmental proceeding, which loss or interference, in the sole
judgment of the Agent, has had or could reasonably be expected to have a
Material Adverse Effect or a material adverse effect on the ability of the
Company and its subsidiaries to consummate the Transactions and to execute,
deliver and perform its respective obligations under the Loan Documents, the
Senior Credit Facility and each other document or instrument to be delivered in
connection with the Transactions executed or to be executed by it; there shall
not have been, in the reasonable judgment of the Agent, any Material Adverse
Change, or any development involving a prospective Material Adverse Change.
-48-
K. No event shall have occurred and be continuing or
would result from the consummation of the borrowing contemplated by the Notice
of Borrowing which would constitute an Event of Default or Potential Event of
Default.
L. No order, judgment or decree of any court, arbitrator
or governmental authority shall purport to enjoin or restrain the Lenders from
making the Bridge Loan.
M. There shall not be pending or, to the knowledge of
the Company, threatened any action, suit, proceeding, governmental investigation
or arbitration against or affecting the Company or any property or asset of the
Company or any of its Affiliates which has not been disclosed by the Company in
writing to the Agent (and the Agent shall have received on the Closing Date an
Officer's Certificate dated the Closing Date attesting to the same) and there
shall have occurred no development not so disclosed in any such action, suit,
proceeding, governmental investigation or arbitration so disclosed, which, in
each case, singly or in the aggregate, in the opinion of the Agent, could
reasonably be expected to have a Material Adverse Effect or a material adverse
effect on the Company, the Transactions or the making of the Bridge Loans. No
injunction or other restraining order shall have been issued and no hearing to
cause an injunction or other restraining order to be issued shall be pending or
noticed with respect to any action, suit or proceeding seeking to restrain,
enjoin, delay, prohibit or otherwise prevent the consummation of, or to recover
any damages or obtain relief as a result of, the Transactions. There shall not
be threatened, instituted or pending any action, proceeding or application
before or by any Tribunal, or any other Person, domestic or foreign (i)
challenging the Transactions or seeking to restrain, delay or prohibit the
consummation thereof; (ii) seeking to prohibit or impose material limitations on
the Company's ownership or operation of all or any portion of the Company's
business or assets (including the business or assets of any Subsidiary thereof)
or to compel the Company to dispose of or hold separate all or any portion of
the Company's business or assets (including the business or assets of any
Subsidiary thereof) as a result of the Recapitalization; (iii) which, in any
event, might adversely affect the Bridge Loan; or (iv) seeking to impose any
materially adverse conditions upon the Transactions.
N. The making of the Bridge Loan in the manner
contemplated in this Agreement shall not violate the applicable provisions of
Regulation G, T, U or X of the Board of Governors
-49-
of the Federal Reserve Board or any other regulation of the Board.
O. The pro forma consolidated capital structure of the
Company and its Subsidiaries and the LLCs, after giving effect to the
Transactions, shall be consistent with the capital structure contemplated in the
preliminary offering memorandum dated October 8, 1997.
P. There shall not have occurred (i) any general suspension
of, or limitation on times or prices for, trading in securities on the New York
Stock Exchange or American Stock Exchange or in the over-the-counter market in
the United States or minimum or maximum prices established on any such
exchanges; (ii) a declaration of a banking moratorium or any suspension of
payments in respect of the banks in the United States or New York; or (iii)
either (A) an outbreak or escalation of hostilities between the United States
and any foreign power, or (B) an outbreak or escalation of any other
insurrection or armed conflict involving the United States or any other national
or international calamity or emergency, or (C) any material change in the
financial markets of the United States, which, in the sole judgment of the
Agent, makes it impracticable or inadvisable to proceed with the consummation of
the Transactions or the Bridge Loan or any of the other transactions
contemplated hereby including, without limitation, the issuance and sale of the
Take-Out Notes or that would materially affect the ability to sell or syndicate
the Bridge Loan.
Q. The Agent shall be satisfied that audited, unaudited
and pro forma financial statements meeting the requirements of Regulation S-X
under the Securities Act of 1933, as amended, of the Company and its
Subsidiaries (including the LLCs) are available as of the Closing Date and the
Company shall have prepared an offering memorandum relating to the issuance of
Take-Out Securities (which offering memorandum shall contain audited, unaudited
and pro forma financial statements meeting the requirements of Regulation S-X
under the Securities Act of 1933, as amended, of the Company for the periods
required of a registrant on Form S-1).
R. The Agent and its counsel shall be satisfied that the
consummation of the Recapitalization and the related financing, including the
funding of the Bridge Loan, shall be in compliance with all applicable Laws.
There shall not have been any statute, rule, regulation, injunction or order
applicable to the Acquisition, or the financing thereof, promulgated, enacted,
entered or enforced by any state or federal
-50-
government or governmental or regulatory authority or agency or by any federal
or state court, or by any Tribunal, nor shall there be pending any action or
proceeding by or before any such authority, court or tribunal, involving a
substantial likelihood of an order, that would prohibit, restrict, delay or
otherwise materially affect the Recapitalization or the financing thereof.
3.2 Conditions to Term Loan
-----------------------
The obligation of the Lenders to make the Term Loan on the
Conversion Date is subject to the prior or concurrent satisfaction or waiver of
the following conditions precedent:
A. The Agent shall have received in accordance with the
provisions of Section 2.2B an originally executed Notice of Conversion.
B. The Company or any of its Material Subsidiaries shall
not be subject to a Bankruptcy Order or a bankruptcy or other insolvency
proceeding and an Event of Default or Potential Event of Default shall not have
occurred under Section 7.6, 7.7 or 7.9.
C. No Event of Default or Potential Event of Default
(whether matured or not) shall have occurred under Section 7.1.
D. No Event of Default or Potential Event of Default shall
have occurred under Section 7.2; provided that if an event described in this
--------
Section 3.2D is continuing at the Conversion Date but 30 days has not passed
since the date of written notice of the commencement of such 30-day period from
the holder or holders of not less than 50% in aggregate principal amount of the
Loans then outstanding (the "Grace Period"), the Conversion Date shall be
deferred until the earlier to occur of (x) the cure of such event or (y) the
expiration of such Grace Period.
E. On the Conversion Date, the Agent shall have received
an Officers' Certificate from the Company, dated the Conversion Date and
satisfactory in form and substance to the Agent, to the effect that the
conditions in this Section 3.2 are satisfied on and as of the Conversion Date.
F. The Company shall have executed and delivered to the
Agent on the Conversion Date for delivery to the Lenders Term Notes dated the
Conversion Date substantially in the form
-51-
of Exhibit II to evidence the Term Loan, in the principal amount of (which
----------
principal amount shall be the aggregate principal amount of the Bridge Loan
outstanding on the Conversion Date) the Term Loan and with other appropriate
insertions.
G. The Company shall have paid any fees owing pursuant to
Section 2.4 in cash to First Union.
H. The making of the Term Loan shall not violate Regulation
G, T, U or X of the Board of Governors of the Federal Reserve Board or any other
regulation of the Board.
I. If requested by FUCMC, the Company shall have supplemented
the information previously provided to FUCMC and shall have assisted in sales
presentations to market the Take-Out Securities.
J. The warrants ("Warrants") held in escrow, pursuant to
the commitment letter and term sheet between FUCMC AND VS&A, shall be released
to the Agent, representing the following percentages (as of the Closing Date) of
fully-diluted common stock of the Company and unless the Term Notes have been
redeemed in full prior thereto at the following times: (i) upon such Conversion
Date, 1.875%; (ii) on each of the 90th day, 180th day and 270th day after the
Conversion Date, 1.406%; and (iii) on the 360th day after such Conversion Date,
1.407%.
SECTION 4 REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Agreement
and to make the Loans, the Company represents and warrants to the Lenders that,
at the time of execution hereof and after consummation of the Transactions, the
following statements are true, correct and complete:
4.1 Organization and Good Standing;
Capitalization
-------------------------------
(a) Each of the Company and the Guarantors is a corporation duly
organized and existing and in good standing under the laws of its jurisdiction
of incorporation. Each of the Company and the Guarantors has the corporate power
and authority to own and operate its properties and to carry on its business as
now conducted and as proposed to be conducted and is duly qualified as a foreign
corporation and in good standing in all jurisdictions in which it is doing
business, except where failure to be so qualified or in good standing, singly or
in
-52-
the aggregate, has not had and will not have a Material Adverse Effect or a
material adverse effect on the ability of the Company or its subsidiaries to
consummate the Transactions and to execute, deliver and perform its respective
obligations under the Loan Documents, the Senior Credit Facility and each other
document or instrument to be delivered in connection with the Transactions
executed or to be executed by it.
(b) All of the Subsidiaries of the Company and all of the LLCs as of
the Closing Date are identified and their respective ownership structure and
jurisdiction of incorporation disclosed in Schedule B. The Capital Stock of each
----------
of the Subsidiaries of the Company and each LLC identified in Schedule B is duly
----------
authorized, validly issued, fully paid and nonassessable and none of such
capital stock constitutes Margin Stock.
(c) As of the Closing Date and after giving effect to the
Transactions, there are issued and outstanding shares of Common Stock of the
Company. Such shares of Common Stock of the Company have been duly and validly
issued, fully paid and nonassessable. Except as provided in the Stockholders
Agreement, no stockholder of the Company has or will have any preemptive rights
to subscribe for any additional equity securities of the Company. Any issuance
and sale of Common Stock of the Company, upon such issuance and sale, will
either (a) have been registered or qualified under applicable federal and state
securities laws or (b) be exempt therefrom.
4.2 Authorization and Power
-----------------------
Each of the Company and its Subsidiaries has the corporate
power and requisite authority, and, to the extent a party thereto, has taken all
corporate action necessary, to consummate the Transactions and to execute,
deliver and perform its obligations under the Loan Documents, the Senior Credit
Facility and each other document and instrument to be delivered in connection
with the Transactions executed or to be executed by it and to issue the Notes
and the Exchange Notes.
4.3 No Conflicts or Consents
------------------------
(a) The execution and delivery of the Loan Documents, the Stock
Purchase Agreement and each other document to be executed and delivered in
connection with the Transactions, the consummation of each of the transactions
herein or therein contemplated, the compliance with each of the terms and
provisions hereof or thereof, and the issuance, delivery and performance of
the Notes, the Senior Credit Facility and the Ex-
-53-
change Notes, do not and will not (i) violate any provision of any law or any
governmental rule or regulation applicable to any of the Company and its
Subsidiaries, the Certificate or Articles of Incorporation or bylaws of any of
them or any order, judgment or decree of any court or other agency of
government binding on any of them, (ii) conflict with, result in a breach of
or constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation of any of the Company and its Subsidiaries which could
reasonably be expected to result in a Material Adverse Effect or have a
material adverse effect on the ability of the Company or its Subsidiaries to
consummate the Transactions and to execute, deliver and perform its
obligations under the Loan Documents, the Senior Credit Facility and each
other document and instrument to be delivered in connection with the
Transactions executed or to be executed by it, (iii) result in or require the
creation or imposition of any Lien upon any of the properties or assets of any
of the Company and its Subsidiaries (other than any Liens created under the
Senior Credit Facility) or (iv) require any approval of stockholders or any
approval or consent of any Person under any Contractual Obligation of any of
the Company and its Guarantors except for such approvals or consents which
will be obtained on or before the Closing Date and disclosed in writing to
Lenders or such approvals or consents the failure to obtain which could not
reasonably be expected to singly or in the aggregate result in a Material
Adverse Effect or have a material adverse effect on the ability of the Company
or its Subsidiaries to consummate the Transactions and to execute, deliver and
perform its obligations under the Loan Documents, the Senior Credit Facility
and each other document and instrument to be delivered in connection with the
Transactions executed or to be executed by it.
(b) No consent, approval, authorization or order of any Tribunal or
other Person is required in connection with the execution and delivery by the
Company or any of its Subsidiaries of the Loan Documents, the Senior Credit
Facility or any other document or instrument to be delivered in connection with
the Transactions or the consummation of the transactions contemplated hereby or
thereby, other than any such consent, approval, authorization or order which has
been obtained and remains in full force and effect or which has been waived in
writing by the Agent on behalf of the Lenders or the failure of which to obtain
would not, singly or in the aggregate, have a Material Adverse Effect or a
material adverse effect on the ability of the Company or its Subsidiaries to
consummate the Transactions and to execute, deliver and perform its respective
obligations under the Loan Documents, the Senior Credit Facil-
-54-
ity and each other document or instrument to be delivered in connection with the
Transactions executed or to be executed by it.
4.4 Enforceable Obligations
-----------------------
Each of the Loan Documents, the Stock Purchase Agreement, the
Senior Credit Facility and each other document or instrument to be delivered in
connection therewith has been duly authorized; each of the Loan Documents, the
Stock Purchase Agreement, the Senior Credit Facility and each other document or
instrument to be delivered in connection therewith to be executed and delivered
on or prior to the Closing Date has been duly executed and delivered by the
Company and each of its Guarantors that are a party thereto; and each of the
Loan Documents, the Stock Purchase Agreement, the Senior Credit Facility and
each other document or instrument to be delivered in connection therewith to be
executed and delivered on or prior to the Closing Date is, and each of the Loan
Documents to be executed and delivered after the Closing Date will be, upon such
execution and delivery, the legal, valid and binding obligations of the Company
and each such Subsidiary (to the extent a party thereto), enforceable in
accordance with their respective terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization or similar laws affecting the enforcement of creditors' rights
generally or by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
4.5 Properties; Liens
-----------------
Each of the Company and each Guarantor has, and after
consummation of the Recapitalization will have, good, sufficient and legal title
to all their respective properties and assets, and all properties held under
lease by any of them, are, and immediately after the consummation of the
Recapitalization will be, held under valid, subsisting and enforceable leases,
and none of the Company or its Subsidiaries and, to the knowledge of the
Company, any other party thereto, is in default under any lease, except in each
case for such defects or defaults that, singly or in the aggregate, would not
have a Material Adverse Effect. Except as permitted by this Agreement, all such
properties and assets owned or leased are so owned or leased free and clear of
Liens.
-55-
4.6 Financial Condition
-------------------
(a) The audited consolidated balance sheets of the Company and
its Subsidiaries at December 31, 1996 and 1995 and the related consolidated
statements of income, shareholders equity and cash flows of the Company and its
Subsidiaries for the three-year period ended December 31, 1996, certified by the
independent certified public accountants of the Company, copies of which have
been delivered to the Agent, were prepared in accordance with GAAP, have been
prepared from, and are consistent with, the books and records of the Company and
its Subsidiaries, respectively, and fairly present in all material respects the
consolidated financial position of the Company and its Subsidiaries,
respectively, as at the respective dates thereof and the consolidated results of
operations and cash flows of the Company and its Subsidiaries, respectively, for
the periods then ended. None of the Company or any of its Subsidiaries had at
December 31, 1996 any material contingent liabilities, liabilities for Taxes or
long-term leases, unusual forward or long-term commitments or unrealized or
unanticipated losses from any unfavorable commitments which are not reflected or
reserved against in the foregoing statements or in the notes thereto.
(b) The unaudited consolidated balance sheets of the Company
and its Subsidiaries at June 30, 1997 and the related consolidated statements of
income, retained earnings (deficit) and cash flows of the Company and its
Subsidiaries for the period then ended, a copy of which has been delivered to
the Agent, were prepared in accordance with GAAP consistently applied (except to
the extent noted therein), have been prepared from, and are consistent with, the
books and records of the Company and its Subsidiaries and fairly present in all
material respects the consolidated financial position of the Company and its
Subsidiaries as of such date and the consolidated results of operations and cash
flows of the Company and its Subsidiaries for the period covered thereby, in
each case subject to normal year-end audit adjustments (including footnotes),
consistent with past practices. None of the Company or any of its Subsidiaries
had on such date any material contingent liabilities, liabilities for Taxes or
long-term leases, unusual forward or long-term commitment or unrealized or
unanticipated losses from any unfavorable commitment which are not reflected or
reserved against in the foregoing statements or in the notes thereto. No events
which have had or could reasonably be expected to have a Material Adverse Effect
have occurred since June 30, 1997 except as reflected therein.
-56-
(c) The pro forma balance sheet of the Company as of June 30,
1997, a copy of which has heretofore been furnished to the Agent, fairly
presents the estimated consolidated opening balance sheet of the Company
assuming the Transactions had occurred as of June 30, 1997, and the financial
condition of the Company on the Closing Date does not differ in any material
respect from the information therein set forth.
(d) Upon giving effect to the Transactions:
(i) The fair saleable value of the assets of the Company and
each of the Guarantors, on a stand-alone basis, exceeds the amount that
will be required to be paid on or in respect of the existing debts and
other liabilities (including contingent liabilities) of such Person as
they mature.
(ii) The assets of each of the Company and the Guarantors, on
a stand-alone basis, do not constitute unreasonably small capital for
any such Person to carry out its business as now conducted and as
proposed to be conducted including the capital needs of any such
Person, taking into account the particular capital requirements of the
business conducted by such Person, and projected capital requirements
and capital availability thereof.
(iii) The Company does not intend to, and will not permit any
of the Guarantors to, incur debts beyond its ability to pay such debts
as they mature (taking into account the timing and amounts of cash to
be payable on or in respect of debt of each of such Person). The cash
flow of the Company and each of its Subsidiaries, after taking into
account all anticipated uses of the cash of each such Person, will at
all times be sufficient to pay all amounts on or in respect of debt of
each such company when such amounts are required to be paid.
(iv) The Company does not intend, and does not believe, that
final judgments against any of the Company or the Guarantors in actions
for money damages will be rendered at a time when, or in an amount such
that, any such Person will be unable to satisfy any such judgments
promptly in accordance with their terms (taking into account the
maximum reasonable amount of such judgments in any such actions and the
earliest reasonable time at which such judgments might be rendered).
The cash flow of the Company and each of the Guarantors, on a
stand-alone basis, after taking into account all other anticipated uses
-57-
of the cash of each such Person (including the payments on or in
respect of debt referred to in paragraph (iii) of this Section 4.6(d)),
will at all times be sufficient to pay all such judgments promptly in
accordance with their terms.
4.7 Full Disclosure
---------------
The financial projections (including, without limitation, the
pro forma financial statements included therewith) heretofore furnished to the
--- -----
Agent by the Company are complete, were prepared by or under the direction of an
officer of the Company and were prepared in good faith on the basis of
information and assumptions that the Company believed to be fair, complete and
reasonable as of the date of such information, and which assumptions are
believed to be fair, complete and reasonable as of the date hereof. All other
factual information heretofore or contemporaneously furnished in writing by or
on behalf of the Company or any of its Subsidiaries to the Agent or Lenders for
purposes of or in connection with this Agreement (including, but not limited to,
the Stock Purchase Agreement, the Senior Credit Facility and all exhibits and
appendices thereto) does not contain any untrue statement by such party or, to
its knowledge, any other party of a material fact or omit to state any material
fact necessary to keep the statements made by such party or, to its knowledge,
any other party contained herein or therein from being misleading in a material
respect. No fact is known, no condition exists nor has any event occurred which
has not been disclosed herein or in any other document, certificate or statement
furnished to the Agent or the Lenders for use in the transactions contemplated
hereby which, singly or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
4.8 No Default
----------
No event has occurred and is continuing which constitutes a
Potential Event of Default or an Event of Default.
4.9 Compliance with Contracts, Etc.
------------------------------
None of the Company or any of the Guarantors is in violation
of (A) its certificate of incorporation, by-laws or other organizational
documents or (B) any applicable law, ordinance, administrative or governmental
rule or regulation, except, with respect to this clause (B), for such violations
that would not, singly or in the aggregate, have a Material Adverse Effect, or
(C) any order, decree or judgment of any Tribunal
-58-
having jurisdiction over any of them; no event of default or event that but for
the giving of notice or the lapse of time, or both, would constitute an event of
default on the part of the Company or any of the Guarantors exists under any
material Contractual Obligation which would have a Material Adverse Effect.
4.10 No Litigation
-------------
Except as disclosed in Schedule L, there is no Litigation
pending or, to the best knowledge of the Company after due investigation,
threatened, by, against, or which may relate to or affect (a) any benefit plan
or any fiduciary or administrator thereof, (b) the Transactions, or (c) the
Company or any of the Guarantors, which singly or in the aggregate, could
reasonably be expected to have a Material Adverse Effect or that could
reasonably be expected to materially and adversely affect the ability of the
Company to consummate the Recapitalization in a timely manner. There are no
outstanding injunctions or restraining orders prohibiting consummation of any of
the transactions contemplated by the Loan Documents or the Senior Credit
Facility. Neither the Company nor any of the Guarantors is in default with
respect to any judgment, order, writ, injunction or decree of any court or
governmental agency, and there are no unsatisfied judgments against any such
Person or its business or activities. None of the Company or any of the
Guarantors has been advised that there is a reasonable likelihood of an adverse
determination of any Litigation which adverse determination, should it occur,
would have a Material Adverse Effect or a material adverse effect on the ability
of the Company or its subsidiaries to consummate the Transactions and to
execute, deliver and perform its respective obligations under the Loan
Documents, the Senior Credit Facility and each other document or instrument to
be delivered in connection with the Transactions executed or to be executed by
it.
4.11 Use of Proceeds; Margin Stock, Etc.
----------------------------------
The proceeds of the Bridge Loan will be used solely for the
purposes specified herein. None of such proceeds will be used in violation of
Regulation G, T, U or X. Neither the Company nor any of its Subsidiaries has
taken or will take any action which might cause any of the Loan Documents to
violate the applicable provisions of Regulation G, T, U or X, or any other
regulation of the Board of Governors of the Federal Reserve System.
-59-
4.12 Taxes
-----
All material tax returns, foreign and domestic, required to be
filed by the Company and each of its Subsidiaries in any jurisdiction have been
filed, and all material Taxes for which they are directly or indirectly liable
or to which any of their respective properties or assets are subject have been
paid prior to the time that such Taxes could give rise to a Lien thereon. There
is no material proposed tax assessment against the Company or any of its
Subsidiaries, and, to the best knowledge of the Company, there is no basis for
such assessment, except for Contested Claims.
4.13 ERISA
-----
A. The Company, its Subsidiaries and each of their respective
ERISA Affiliates are in material compliance with all applicable provisions and
requirements of the Internal Revenue Code and ERISA and the regulations and
published interpretations thereunder with respect to each Employee Benefit Plan,
and have performed all their material obligations under each Employee Benefit
Plan.
B. No ERISA Events have occurred or are reasonably expected to
occur which individually or in the aggregate resulted in or might reasonably be
expected to result in a liability of the Company or any Subsidiary of the
Company or any of their respective ERISA Affiliates in excess of $500,000 during
the term of this Agreement.
C. Except as disclosed on Schedule C and except to the extent
----------
required under Section 4980B of the Internal Revenue Code, no Employee Benefit
Plan provides health or welfare benefits (through the purchase of insurance or
otherwise) for any retired or former employees of the Company or any Subsidiary
of the Company or any of their respective ERISA Affiliates.
D. In accordance with the most recent actuarial valuations,
the Amount of Unfunded Benefit Liabilities individually or in the aggregate for
all Pension Plans (excluding for purposes of such computation any Pension Plans
which have a negative Amount of Unfunded Benefit Liabilities), does not exceed
$100,000.
E. None of the Company or any of its Subsidiaries is a party
to any Foreign Plans. For purposes hereof, the term "Foreign Plans" shall mean
any plan, program, policy, arrangement or agreement maintained or contributed to
by, or entered
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into with, the Company or any of its Subsidiaries with respect to employees
employed outside the United States.
4.14 Compliance with Law
-------------------
The Company and each of its Subsidiaries is in compliance with
all Laws, except where the failure to comply, singly or in the aggregate, would
not have a Material Adverse Effect.
4.15 Government Regulation
---------------------
Neither the Company nor any of its Subsidiaries is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Investment Company Act of 1940 (as any of the preceding acts have
been amended) or other Law which regulates the Incurrence by the Company or any
of its Subsidiaries of Indebtedness, including, but not limited to, Laws
relating to common contract carriers or the sale of electricity, gas, steam,
water or other public utility services.
4.16 Capital Structure and Subsidiaries
----------------------------------
After giving effect to the Transactions, the Company will have
no interest in any Person other than the Subsidiaries of the Company (and
control of all of the LLCs through ownership of the preferred interest of
Holdings LLC) set forth on Schedule B and other Investments of the Company as
----------
set forth on Schedule D and the Company will own, free and clear of all Liens,
----------
claims or restrictions on voting or transfer (other than as permitted by this
Agreement), 100% of all classes of outstanding Capital Stock of each of the
entities set forth on such Schedule B, except as specified on Schedule B. All of
---------- ----------
the issued and outstanding shares of Capital Stock of the Company and of each of
its Subsidiaries is, and at and as of the date of consummation of the
Transactions will be, duly authorized, validly issued, fully paid and
nonassessable.
4.17 Intellectual Property
---------------------
A. Schedule E sets forth a complete and correct list, as of
----------
the Closing Date, of: (i) all patented or registered Intellectual Property and
pending patent applications or applications for registration of Intellectual
Property owned or filed by or on behalf of the Company or any of the Guarantors;
(ii) all trade names and unregistered trademarks or service marks owned by or
used by the Company or any of its Subsidiar-
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ies; and (iii) all licenses of Intellectual Property to which the Company or any
of the Guarantors is a party, either as licensee or licensor. Except as set
forth on Schedule E, the Company and the Guarantors own or are licensed to use
----------
all Intellectual Property necessary to permit the operation of their businesses
as currently conducted.
B. Except as disclosed on Schedule E, no material claim has
----------
been asserted by any Person with respect to the use of any such Intellectual
Property, or challenging or questioning the validity or effectiveness of any
such Intellectual Property. Except as disclosed on Schedule E, the use of such
----------
Intellectual Property by the Company or any of its Subsidiaries does not
infringe on the rights of any Person, subject to such claims and infringements
as do not, in the aggregate, give rise to any liabilities on the part of the
Company or any of the Guarantors that are material to the Company and the
Guarantors, taken as a whole. The consummation of the Transactions will not in
any material manner or to any material extent impair the ownership of (or the
license to use, as the case may be) any of such Intellectual Property by the
Company or any of the Guarantors.
4.18 Environmental Matters
---------------------
Except as set forth on Schedule F:
----------
(i) the operations of each of the Company and the Guarantors
(including, without limitation, all operations and conditions at or in
the Facilities) comply in all material respects with all Environmental
Laws except for any such noncompliance which would not reasonably be
expected to have a Material Adverse Effect;
(ii) each of the Company and the Guarantors has obtained all
Permits under Environmental Laws necessary to their respective
operations, and all such Permits are being maintained in good standing,
and each of the Company and the Guarantors is in compliance with all
material terms and conditions of such Permits except for any such
failure to obtain, maintain or comply which would not reasonably be
expected to have a Material Adverse Effect;
(iii) none of the Company or the Guarantors has received (a)
any notice or claim to the effect that it is or may be liable to any
Person under any Environmental Law, including without limitation, any
relating to any Hazardous Materials except as would not reasonably be
expected
-62-
to have a Material Adverse Effect or (b) any letter or request for
information under Section 104 of the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. ss. 9604) or
comparable foreign or state laws regarding any matter which could
reasonably be expected to result in a Material Adverse Effect, and, to
the best of the Company's knowledge, none of the Company or its
Subsidiaries is involved in any investigation, response or corrective
action relating to or in connection with any Hazardous Materials at any
Facility or at any other location except for such of the foregoing
which would not reasonably be expected to have a Material Adverse
Effect;
(iv) none of the Company or the Guarantors is subject to any
judicial or administrative proceeding alleging the violation of or
liability under any Environmental Laws which if adversely determined
could reasonably be expected to have a Material Adverse Effect;
(v) none of the Company or the Guarantors or any of their
respective Facilities or operations are subject to any outstanding
written order or agreement with any governmental authority or private
party relating to (a) any actual or potential violation of or liability
under Environmental Laws or (b) any Environmental Claims except for
such of the foregoing which would reasonably be expected to have a
Material Adverse Effect;
(vi) none of the Company or the Guarantors has any contingent
liability in connection with any Release or threatened Release of any
Hazardous Materials by any of the Company or the Guarantors except for
such of the foregoing which would not reasonably be expected to have a
Material Adverse Effect;
(vii) none of the Company or the Guarantors or, to the best of
the Company's knowledge, any predecessor of any of the Company or the
Guarantors has filed any notice under any Environmental Law indicating
past or present treatment, storage or disposal of hazardous waste, as
defined under 40 C.F.R. Parts 260-270 or any state equivalent;
(viii) no Hazardous Materials exist on, under or about any
Facility in a manner that would reasonably be expected to give rise to
an Environmental Claim having a Material Adverse Effect, and none of
the Company or its Subsidiaries has filed any notice or report of a
Release of any Hazardous Materials that would reasonably be expected to
-63-
give rise to an Environmental Claim having a Material Adverse Effect;
(ix) none of the Company or the Guarantors or, to the best of
the Company's knowledge, any of their respective predecessors has
disposed of any Hazardous Materials in a manner that would reasonably
be expected to give rise to an Environmental Claim having a Material
Adverse Effect;
(x) no underground storage tanks or surface impoundments are
on or at any Facility; and
(xi) no Lien in favor of any Person relating to or in
connection with any Environmental Claim has been filed or has been
attached to any Facility or other assets of the Company or any of its
Subsidiaries except for any such Lien which would not reasonably be
expected to have a Material Adverse Effect.
Notwithstanding anything in this Section 4.18 to the contrary, no event or
condition has occurred which may interfere with present compliance by the
Company or the Guarantors with any Environmental Law, or which may give rise to
any liability under any Environmental Law, including, without limitation, any
matter disclosed on Schedule F which, individually or in the aggregate, has had
----------
a Material Adverse Effect.
4.19 Survival of Representations and Warranties
------------------------------------------
Subject to Section 12.10B, all representations and warranties
in the Loan Documents shall survive delivery of the Bridge Notes and the making
of the Bridge Loan and shall continue until one year after repayment of the
Notes and the Obligations, and any investigation at any time made by or on
behalf of the Lenders shall not diminish the Lenders' right to rely thereon.
4.20 Permits
-------
Except as disclosed on Schedule G, the Company and the
----------
Guarantors have, and immediately after the consummation of the Transactions will
have, such certificates, permits, licenses, franchises, consents, approvals,
authorizations and clearances that are material to the condition (financial or
otherwise), business or operations of the Company and its Subsidiaries, taken as
a whole ("Permits"), and are (and will be immediately after the consummation of
the Transactions) in compliance in all material respects with all applicable
Laws of
-64-
all Tribunals as are necessary to own, lease or operate their respective
properties and to conduct their businesses in the manner as presently conducted
and to be conducted immediately after the consummation of the Transactions, and
all such Permits are valid and in full force and effect and will be valid and in
full force and effect immediately upon consummation of the Transactions. The
Company and the Guarantors are, and immediately after the consummation of the
Transactions will be, in compliance in all material respects with their
respective obligations under such Permits and no event has occurred that allows,
or after notice or lapse of time would allow, revocation or termination of such
Permits, except for any such revocation or termination as would not, singly or
in the aggregate, have a Material Adverse Effect.
4.21 Insurance
---------
The Company and the Guarantors carry or are entitled to the
benefits of insurance (including self-insurance) in such amounts and covering
such risks as is generally maintained by companies of established repute engaged
in the same or similar businesses, and all such insurance is (and will be
immediately after the consummation of the Transactions) in full force and
effect.
4.22 Labor Matters
-------------
No labor disturbance by the employees of the Company and the
Guarantors exists or, to the best knowledge of the Company, is threatened, and
the Company is not aware of any existing or imminent labor disturbance by the
employees of the Company's or the Guarantors' principal suppliers, manufacturers
or customers that could, singly or in the aggregate, have a Material Adverse
Effect.
4.23 Guarantees
----------
Each Guarantor shall, on the date it executes and delivers a
Guarantee hereunder, have the full corporate power, authority and capacity to
execute and deliver such Guarantee and to perform all of its obligations to be
performed thereunder; all corporate and other acts, conditions and things
required to be done and performed or to have occurred prior to such execution
and delivery to constitute such Guarantee as a valid and legally binding
obligation of such Guarantor enforceable in accordance with its terms shall have
been done and performed and shall have occurred in due compliance with all
applicable Laws; on the date of such execution and delivery, the
-65-
execution, delivery and performance of such Guarantee by such Guarantor will not
(i) violate any provision of Law or any provision of the charter or bylaws of
such Guarantor, or (ii) result in a breach of, a default under (including,
without limitation, any event which with notice or lapse of time, or both, would
constitute a breach of or a default under), or the creation of any Lien on the
properties or assets of such Guarantor, the Company or any other Subsidiary of
the Company under any Contract to which such Guarantor or the Company or any
other Subsidiary of the Company is a party or by which the properties or assets
of such Guarantor, the Company or any other Subsidiary of the Company may be
bound or affected; on the date of such execution and delivery, each Guarantee
executed and delivered by a Guarantor shall constitute legal, valid, binding and
unconditional obligations of the Guarantor executing and delivering it to the
Lenders hereunder, enforceable in accordance with its terms, except to the
extent that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization or similar laws affecting the
enforcement of creditors' rights generally or by general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law); and the foregoing representations and warranties of the Company
shall be deemed for all purposes to have been made on each date when a Guarantee
is delivered hereunder with respect solely to that Guarantee and the Guarantor
so issuing such Guarantee.
4.24 Senior Subordinated Indenture; Etc.
----------------------------------
Each of the Company and the Guarantors shall (to the extent
such documents are executed), on the date it executes and delivers the Senior
Subordinated Indenture and the Exchange Notes (or the guarantees related
thereto, as the case may be), have the full corporate power, authority and
capacity to do so and to perform all of its obligations to be performed
thereunder; all corporate and other acts, conditions and things required to be
done and performed or to have occurred prior to such execution and delivery to
constitute them as valid and legally binding obligations of the Company
enforceable against the Company and the Guarantors in accordance with their
respective terms except to the extent that the enforceability thereof may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization or similar laws affecting the enforcement of creditors' rights
generally or by general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at law), shall have been
done and performed and shall have occurred in due compliance with all applicable
Laws; on the date, if any, of such execu-
-66-
tion and delivery by the Company and the Guarantors, the Senior Subordinated
Indenture and the Exchange Notes (and the guarantees) shall constitute legal,
valid, binding and unconditional obligations of the Company and the Guarantors,
as the case may be, enforceable against the Company and the Guarantors, as the
case may be, in accordance with their respective terms, except to the extent
that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization or similar laws affecting the
enforcement of creditors' rights generally or by general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law).
4.25 Broker's or Finder's Fees
-------------------------
No broker's or finder's fees or commissions will be payable by
the Company or any of the Guarantors with respect to any transaction
contemplated hereby or by the Senior Credit Facility and no similar fees or
commissions will be payable by the Company or any of the Guarantors for any
other services rendered to the Company or any of the Guarantors in connection
with the transactions contemplated hereby and thereby. The Company represents,
warrants, covenants and agrees that the Company will indemnify the Lenders and
the Agent against, and hold each of them completely harmless from and against,
any and all claims, demands or liabilities for broker's or finder's fees or
similar fees or commissions asserted to have been incurred in connection with
any of the transactions contemplated hereby or by the Senior Credit Facility.
4.26 Terms of Holdings LLC Preferred Equity Interest
-----------------------------------------------
All of the material terms of Holdings LLC Preferred Equity
Interests are disclosed on Schedule I.
----------
SECTION 5 AFFIRMATIVE COVENANTS
The Company covenants and agrees that, until the Loans and the
Notes and all other amounts due under this Agreement have been indefeasibly paid
in full it shall perform all covenants in this Section 5 required to be
performed by it:
5.1 Financial Statements and Other Reports
--------------------------------------
The Company will maintain, and cause each of its Subsidiaries
to maintain, a system of accounting established and administered in accordance
with sound business practices to
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permit preparation of consolidated financial statements in conformity with GAAP.
The Company will deliver to each Lender and the Agent:
(i) as soon as available and in any event within 45 days
after the end of each month ending after the Closing Date, (1) the
consolidated balance sheets of the Company and its Subsidiaries and the
consolidating balance sheets of the Company and its major divisions, in
each case as at the end of such month, (2) the related summary
statements of income, stockholders' equity and cash flows, in each case
for such month and for the period from the beginning of the then
current fiscal year to the end of such month, setting forth in each
case in comparative form the corresponding consolidated figures for the
corresponding periods of the previous fiscal year and the corresponding
figures from the consolidated plan and financial forecast for the
current fiscal year delivered pursuant to Section 5.1(x), all certified
by the chief financial officer or the controller of the Company that
they fairly present in all material respects the financial condition of
such entities as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, subject to
changes resulting from audit and normal year-end adjustments, and (3) a
conference call with senior management to discuss the operations of the
Company and its Subsidiaries for such monthly period and for the period
from the beginning of the then current fiscal year to the end of such
monthly period;
(ii) as soon as available and in any event within 45 days
after the end of each of the first three fiscal quarters of each fiscal
year, (1) the consolidated balance sheets of the Company and its
Subsidiaries and the consolidating balance sheets of the Company and
its major divisions as at the end of such fiscal quarter, (2) the
related consolidated and consolidating statements of income,
stockholders' equity and cash flows for such fiscal quarter and for the
period from the beginning of the then current fiscal year to the end of
such fiscal quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding periods of the previous
fiscal year and the corresponding figures from the consolidated plan
and financial forecast for the current fiscal year delivered pursuant
to Section 5.1(x), all in reasonable detail and certified by the chief
financial officer or the controller of the Company that they fairly
present in all material respects the financial condition
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of the Company and its Subsidiaries at the dates indicated and the
results of their operations and their cash flows for the periods
indicated, subject to changes resulting from audit and normal year-end
adjustments, and (3) the company's quarterly report on Form 10-Q for
such quarterly period, and (4) only if the Company does not file
quarterly reports on Form 10-Q with the Commission, a narrative report
describing the operations of the Company and its Subsidiaries (in the
form of management's discussion and analysis of such operations which
would comply with the disclosure requirements of the Exchange Act and
rules and regulations promulgated thereunder with respect to
management's discussion and analysis set forth in quarterly reports on
Form 10-Q) prepared for such fiscal quarter and for the period from the
beginning of the then current fiscal year to the end of such fiscal
quarter;
(iii) as soon as available and in any event within 100 days
after the end of each fiscal year, (1) the consolidated balance sheets
of the Company and its Subsidiaries and the consolidating balance
sheets of the Company and its major divisions as at the end of such
fiscal year, (2) the related consolidated and consolidating statements
of income, stockholders' equity and cash flows for such fiscal year,
setting forth in each case in comparative form the corresponding
figures for the previous fiscal year and the corresponding figures from
the consolidated plan and financial forecast for the current fiscal
year delivered pursuant to Section 5.1(x) for the fiscal year covered
by such financial statements, all in reasonable detail and certified by
the chief financial officer or the controller of the Company that they
fairly present in all material respects the financial condition of the
Company and its Subsidiaries, at the dates and the results of their
operations and their cash flows for the periods indicated, (3) the
Company's annual report on Form 10-K for such year, (4) only if the
Company does not file annual reports on Form 10-K with the Commission,
a narrative report describing the operations of the Company and its
Subsidiaries (in the form of management's discussion and analysis of
such operations which would comply with the disclosure requirements of
the Exchange Act and rules and regulations promulgated thereunder with
respect to management's discussion and analysis set forth in annual
reports on Form 10-K) prepared for such fiscal year, and (5) in the
case of such consolidated financial statements, a report thereon of
independent certified public accountants of recognized national
standing, which report shall be un-
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qualified as to scope of audit, shall express no doubts about the
ability of the Company and its Subsidiaries to continue as a going
concern, and shall state that such consolidated financial statements
fairly present in all material respects the consolidated financial
position of the Company and its Subsidiaries as at the dates indicated
and the results of their operations and their cash flows for the
periods indicated in conformity with GAAP applied on a basis consistent
with prior years (except as otherwise disclosed in such financial
statements) and that the examination by such accountants in connection
with such consolidated financial statements has been made in accordance
with generally accepted auditing standards;
(iv) together with each delivery of financial statements
pursuant to Sections 5.1(ii) and (iii) above, (a) an Officers'
Certificate of the Company stating that the signers have reviewed the
terms of this Agreement and the Notes and have made, or caused to be
made under their supervision, a review in reasonable detail of the
transactions and condition of the Company and its Subsidiaries during
the accounting period covered by such financial statements and that
such review has not disclosed the existence during or at the end of
such accounting period, and that the signers do not have knowledge of
the existence as of the date of the Officers' Certificate, of any
condition or event which constitutes an Event of Default or Potential
Event of Default, or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action
the Company has taken, is taking and proposes to take with respect
thereto; and (b) a Compliance Certificate demonstrating in reasonable
detail compliance (as determined in accordance with GAAP) during and at
the end of such accounting periods with the restrictions contained in
Sections 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 6.9 and 6.14;
(v) together with each delivery of consolidated financial
statements pursuant to Section (iii) above, a written statement by the
independent certified public accountants giving the report thereon (a)
stating whether, in connection with their audit examination, any
condition or event that constitutes an Event of Default or Potential
Event of Default that relates to accounting matters has come to their
attention and, if any such condition or event has come to their
attention, specifying the nature and period of existence thereof;
provided that such accountants shall not be liable by reason of any
--------
failure to
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obtain knowledge of any such Event of Default or Potential Event of
Default that would not be disclosed in the course of their audit
examination, and (b) stating that based on their audit examination
nothing has come to their attention that causes them to believe that
the information contained in the certificates delivered therewith is
not correct;
(vi) promptly upon receipt thereof (unless restricted by
applicable professional standards), copies of all reports in final form
(other than reports of a routine or ministerial nature which are not
material) submitted to the Company by independent certified public
accountants in connection with each annual, interim or special audit of
the financial statements of the Company and its Subsidiaries made by
such accountants, including, without limitation, any comment letter
submitted by such accountants to management in connection with their
annual audit;
(vii) promptly upon the sending or filing thereof, copies of
(a) all financial statements, reports, notices and proxy statements
sent or made available generally by the Company to their public
security holders or by any Subsidiary of the Company to its public
security holders other than the Company or another Subsidiary of the
Company, (b) all regular and periodic reports and all registration
statements (other than on Form S-8 or a similar form) and prospectuses,
if any, filed by the Company or any of its Subsidiaries with any
securities exchange or with the Securities and Exchange Commission or
any governmental authority (other than reports of a routine or
ministerial nature which are not material), and (c) all press releases
and other statements made available generally by the Company or any of
its Subsidiaries to the public concerning material developments in the
business of the Company or any of its Subsidiaries;
(viii) promptly upon any executive officer of the Company
obtaining knowledge (a) of any condition or event which constitutes an
Event of Default or Potential Event of Default, or becoming aware that
any Lender or Agent has given any notice or taken any other action with
respect to a claimed Event of Default or Potential Event of Default
under this Agreement, (b) that any Person has given any notice to the
Company or any Subsidiary of the Company or taken any other action with
respect to a claimed default or event or condition which might result
in an Event of Default referred to in Section 7.2, (c) of any condition
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or event which would be required to be disclosed in a current report
filed with the Commission on Form 8-K whether or not the Company is
required to file such reports under the Exchange Act, or (d) of the
occurrence of any event or change that has caused or evidences, either
in any case or in the aggregate, a Material Adverse Effect, an
Officers' Certificate specifying the nature and period of existence of
any such condition or event, or specifying the notice given or action
taken by such holder or Person and the nature of such claimed default,
Event of Default, Potential Event of Default, event or condition, and
what action the Company has taken, is taking and proposes to take with
respect thereto;
(ix) promptly upon any executive officer of the Company
obtaining knowledge of (X) the institution of, or non-frivolous threat
of, any action, suit, proceeding (whether administrative, judicial or
otherwise), governmental investigation or arbitration against or
affecting the Company or any of its Subsidiaries or any property of the
Company or any of its Subsidiaries (collectively, "Proceedings") not
previously disclosed in writing by the Company to Lenders or (Y) any
material development in any Proceeding that, in any case:
(1) if adversely determined, has a reasonable
possibility of giving rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief as
a result of, the Transactions;
written notice thereof together with such other information as may be
reasonably available to the Company or any of its Subsidiaries to
enable Lenders and their counsel to evaluate such matters;
(x) as soon as practicable but in any event no later than 40
days following the first day of each fiscal year a forecast for each of
the next succeeding twelve months of the consolidated balance sheet and
the consolidated statements of income, cash flow and cash position of
the Company and its Subsidiaries and the consolidating balance sheet
and the consolidating statements of income, cash flow and cash position
of the Company and its major divisions, together with an outline of the
major assumptions upon which the forecast is based; provided, however,
-------- -------
that
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for fiscal 1998 such forecast may be for the four fiscal quarters.
Together with each delivery of financial statements pursuant to
Sections 5.1(ii) and (iii) above, the Company shall deliver a
comparison of the current year to date financial results against the
budget required to be submitted pursuant to this Section;
(xi) not later than the last day of each fiscal year of the
Company, a report in form and substance satisfactory to the Agent
outlining all material insurance coverage maintained as of the date of
such report by the Company and its Subsidiaries and all material
insurance coverage planned to be maintained by such Persons in the
subsequent fiscal year;
(xii) in writing, promptly upon an executive officer of the
Company obtaining knowledge that the Company or any of its Subsidiaries
has received notice or otherwise learned of any claim, demand, action,
event, condition, report or investigation indicating any potential or
actual liability arising in connection with (x) the non-compliance with
or violation of the requirements of any Environmental Law which could
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, (y) the release or threatened release of any
Hazardous Material, substance or constituent into the environment which
could reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect or which release the Company or any of its
Subsidiaries would have a duty to report to a Tribunal under an
Environmental Law, or (z) the existence of any Environmental Lien on
any properties or assets of the Company or any of its Subsidiaries;
(xiii) promptly after the availability thereof, copies of all
material amendments to the certificate of incorporation or by-laws of
the Company or any of its Subsidiaries; and
(xiv) promptly upon any Person becoming a Subsidiary of the
Company, a written notice setting forth with respect to such Person (a)
the date on which such Person became a Subsidiary of the Company and
(b) all of the data required to be set forth in Schedule B with respect
----------
to all Subsidiaries of the Company;
(xv) with reasonable promptness, such other information and
data with respect to the Company or any of its
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Subsidiaries or any of their respective property, business or assets as
from time to time may be reasonably requested by any Lender; provided
--------
that no information or data shall be required to be delivered hereunder
or under any other provision of this Agreement if it would violate any
applicable attorney-client or accountant-client privilege.
5.2 Corporate Existence, Etc.
------------------------
The Company will at all times preserve and keep in full force
and effect its corporate existence and rights and franchises to its business and
those of each of its Subsidiaries, except as permitted by Section 6.7 or where
the failure to so preserve or keep will not, singly or in the aggregate, have a
Material Adverse Effect.
5.3 Payment of Taxes and Claims; Tax
Consolidation
--------------------------------
A. The Company will, and will cause each of the Guarantors to,
pay all material Taxes, assessments and other governmental charges imposed upon
it or any of its material properties or assets or in respect of any of its
franchises, business, income or property before any material penalty accrues
thereon, and all claims (including, without limitation, claims for labor,
services, materials and supplies) for sums which have become due and payable and
which by law have or may become a Lien upon any of its properties or assets
prior to the time when any material penalty or fine shall be incurred with
respect thereto; provided that no such charge or claim need be paid if the
--------
validity or amount of such charge or claim is being diligently contested in good
faith and if such reserve or other appropriate provision, if any, as shall be
required in conformity with GAAP shall have been made therefor.
B. The Company will not, nor will it permit any of its
Subsidiaries to, file or consent to the filing of any consolidated income tax
return with any Person (other than the Company or any of its Subsidiaries so
long as the filing of such consolidated income tax return is permitted by
applicable law).
5.4 Maintenance of Properties; Insurance
------------------------------------
The Company will maintain or cause to be maintained in good
repair, working order and condition, ordinary wear and tear excepted, all
material properties used or useful in the business of the Company and its
Subsidiaries and from time to
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time promptly will make or cause to be made all necessary repairs, renewals and
replacements thereof; provided that nothing in this Section 5.4 shall prevent
--------
the Company or any of its Subsidiaries from discontinuing the use, operation or
maintenance of any such properties, or disposing of any of them, if such action
is in the ordinary course of business or, in the reasonable good faith judgment
of the Company, necessary or desirable in the conduct of its business or
otherwise permitted by this Agreement. The Company will maintain or cause to be
maintained, with financially sound and reputable insurers or with self insurance
programs, in each case to the extent consistent with prudent business practices
and customary in its industry, insurance with respect to its properties and
business and the properties and businesses of its Subsidiaries against loss or
damage of the kinds (including, in any event, business interruption insurance)
and in the amounts customarily carried or maintained under similar circumstances
by corporations of established reputation engaged in similar businesses and
owning similar properties in the same general respective areas in which the
Company and its Subsidiaries operate.
5.5 Inspection
----------
The Company shall permit any authorized representatives
designated by the Lenders to visit and inspect any of the properties of the
Company or its Subsidiaries, including, without limitation, its and their
financial and accounting records, and to receive copies and extracts therefrom,
and to discuss its and their affairs, finances and accounts with its and their
officers and independent public accountants (provided that representatives of
the Company or any of its Subsidiaries may, if it so chooses, be present at or
participate in any such discussion), all upon reasonable notice and at such
reasonable times during normal business hours and as often as may be reasonably
requested.
5.6 Equal Security for Loans and Notes
----------------------------------
If the Company or any of its Subsidiaries shall create, assume
or suffer to exist any Lien upon any of their respective property or assets,
whether now owned or hereafter acquired, other than Liens permitted by the
provisions of Section 6.2, the Company shall, at the request of the Agent, make
or cause to be made effective provision whereby the Obligations under this
Agreement will be secured by such Lien equally and ratably with any and all
other Indebtedness thereby secured as long as any such Indebtedness shall be
secured; provided that this covenant shall not be construed as or deemed to be a
--------
con-
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sent by the Lenders to any violation of the provisions of Section 6.2; and
provided, further, that the Company shall under no circumstances be required to
-------- -------
make or cause to be made effective provision whereby the Obligations under this
Agreement will be secured, directly or indirectly, by Margin Stock.
5.7 Compliance with Laws, Etc.
-------------------------
The Company shall and shall cause each of its Subsidiaries to
comply with the requirements of all applicable Laws of any Tribunal, to the
extent noncompliance, singly or in the aggregate, could reasonably be expected
to have a Material Adverse Effect.
5.8 Maintenance of Accurate Records, Etc.
------------------------------------
The Company shall keep, and will cause each of its
Subsidiaries to keep, true books and records and accounts in which full and
correct entries will be made of all its respective business transactions, and
will reflect, and cause each of its Subsidiaries to reflect, in its respective
financial statements adequate accruals and appropriations to reserves all in
accordance with GAAP and consistent with prior business practices.
5.9 Recapitalization Documents
--------------------------
Promptly, but in no case more than 30 days after the Closing
Date, the Company shall provide all closing documents (in form and substance
satisfactory to the Agent) relating to the Recapitalization and all such
counterpart originals or certified copies of such documents, instruments,
certificates and opinions as the Agent may reasonably request, including, but
not limited to, the operating agreements of the LLCs.
5.10 Exchange of Term Notes
----------------------
The Company will, on the 5th Business Day following the
written request (the "Exchange Request") of the holder of any Term Note (or
beneficial owner of a portion thereof):
(i) Execute and deliver, cause each Subsidiary Guarantor to
execute and deliver, and cause a bank or trust company acting as
trustee thereunder to execute and deliver, the Senior Subordinated
Indenture containing covenants, subordination provisions and other
terms consistent with the Term Notes, if such Senior Subordinated
Indenture has not previously been executed and delivered;
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(ii) Execute and deliver to such holder or beneficial owner
in accordance with the Senior Subordinated Indenture a note in the form
attached to the Senior Subordinated Indenture (the "Exchange Notes") in
exchange for such Term Note dated the date of the issuance of such
Exchange Note, payable to the order of such holder or owner, as the
case may be, in the same principal amount as such Term Note (or portion
thereof) being exchanged, and cause each Subsidiary Guarantor to
endorse its guarantee thereon; and
(iii) Execute and deliver, and cause each Subsidiary Guarantor
to execute and deliver, to such holder or owner, as the case may be, a
Registration Rights Agreement containing terms as are generally set
forth in Exhibit V hereto, if such Registration Rights Agreement has
---------
not previously been executed and delivered or, if such Registration
Rights Agreement has previously been executed and delivered and such
holder or owner is not already a party thereto, permit such holder or
owner to become a party thereto.
The Exchange Request shall specify the principal amount of the
Term Notes to be exchanged pursuant to this Section 5.10 which shall be at least
$5,000,000 and integral multiples of $10,000 in excess thereof. Term Notes
delivered to the Company under this Section 5.10 in exchange for Exchange Notes
shall be cancelled by the Company and the corresponding amount of the Term Loan
deemed repaid and the Exchange Notes shall be governed by and construed in
accordance with the terms of the Senior Subordinated Indenture.
The bank or trust company acting as trustee under the Senior
Subordinated Indenture shall at all times be a corporation organized and doing
business under the laws of the United States of America or the State of New
York, in good standing and having its principal offices in the Borough of
Manhattan, in The City of New York, which is authorized under such laws to
exercise corporate trust powers and is subject to supervision or examination by
Federal or State authority and which has a combined capital and surplus of not
less than $50,000,000.
5.11 ERISA Compliance
----------------
Each of the Company and its Subsidiaries will (i) make prompt
payment of all contributions which it is obligated to make under all Pension
Plans and which are required to meet the minimum funding standard set forth in
ERISA with respect to each of the Pension Plans, (ii) within 30 days after
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the filing thereof, furnish to the Lenders each Schedule B to the annual
return/report (Form 5500 Series), required to be filed with the Department of
Labor and/or the Internal Revenue Service pursuant to ERISA, with respect to
each of the Pension Plans that is not a Multiemployer Plan for each Plan year,
and (iii) notify the Lenders promptly upon becoming aware of any fact, including
but not limited to, any Reportable Event arising in connection with any of the
Pension Plans that is not a Multiemployer Plan, which could be reasonably
expected to constitute grounds for termination thereof by the PBGC or for the
appointment by the appropriate United States District Court of a trustee to
administer such Pension Plan, together with a statement as to the action, if
any, proposed to be taken with respect thereto.
5.12 Payments in U.S. Dollars
------------------------
All payments of any Obligations to be made hereunder or under
the Notes by the Company or any other obligor with respect thereto shall be made
solely in U.S. Dollars or such other currency as is then legal tender for public
and private debts in the United States of America.
5.13 Register
--------
The Company hereby designates the Agent to serve as the
Company's agent, solely for purposes of this Section 5.13, to maintain a
register (the "Register") on which it will record the Loans made by each of the
Lenders and each repayment in respect of the principal amount of the Loans of
each Lender. Failure to make any such recordation, or any error in such
recordation shall not affect the Company's obligations in respect of such Loans.
With respect to any Lender, the transfer of the Loan Commitments of such Lender
and the rights to the principal of, and interest on, any Loan made pursuant to
such Loan Commitments shall not be effective until such transfer is recorded on
the Register maintained by the Agent with respect to ownership of such Loan
Commitments and Loans and prior to such recordation all amounts owing to the
transferor with respect to such Loan Commitments and Loans shall remain owing to
the transferor. The registration of assignment or transfer of all or part of any
Loan Commitments and Loans shall be recorded by the Agent on the Register only
upon the receipt by the Agent of a properly executed and delivered assignment
and assumption agreement pursuant to Section 12.2A. Coincident with the delivery
of such an assignment and assumption agreement to the Agent for acceptance and
registration of assignment or transfer of all or part of a Loan, or as soon
thereafter as practicable,
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the assigning or transferor Lender shall surrender the Note evidencing such
Loan, and thereupon one or more new Notes of the same type and in the same
aggregate principal amount shall be issued to the assigning or transferor Lender
and/or the new Lender.
5.14 Lenders Meeting
---------------
The Company will participate in a meeting with the Lenders
once during each fiscal year during which any Obligations are outstanding
hereunder to be held at a location and a time selected by the Company and
reasonably satisfactory to the Lenders.
5.15 Additional Guarantors
---------------------
The Company will cause any Person which becomes a Subsidiary
of the Company (whether by creation, acquisition or otherwise) or upon the
formation of an LLC to execute and deliver a guarantee, in form and substance
satisfactory to the Agent (and with such documentation relating thereto as the
Agent shall require, including, without limitation, a supplement or amendment to
this Agreement and opinions of counsel as to the enforceability of such
guarantee) pursuant to which such Subsidiary or LLC shall become a Guarantor
under the Bridge Notes and this Agreement in accordance with Section 10 with the
same effect and to the same extent as if such Person had been named herein as a
Subsidiary Guarantor.
5.16 Marketing Take-Out Securities
-----------------------------
If requested by FUCMC, the Company will make appropriate
officers of the Company available to FUCMC for meetings with prospective
purchasers of the Take Out Securities and preparing and presenting to potential
investors road show material in a manner consistent with other new issuances of
high yield debt securities.
5.17 Warrants
--------
Within 45 days after the Closing Date, warrants (in a form to
be agreed upon), representing 7.50% of the fully-diluted common stock of the
Company, shall have been placed in escrow with a mutually agreeable escrow
agent, and will be released to the holders of the Term Notes on the Conversion
Date upon the issuance of such Term Notes and at such other dates as described
in Section 3.2.
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SECTION 6 NEGATIVE COVENANTS
The Company covenants and agrees that until the satisfaction
in full of the Loans and the Notes and all other Obligations due under this
Agreement it will fully and timely perform all covenants in this Section 6.
6.1 Indebtedness
------------
The Company shall not, and shall not cause or permit any of
the Guarantors, directly or indirectly, to Incur, or remain or become directly
or indirectly liable with respect to, any Indebtedness, except for the following
("Permitted Indebtedness"):
(i) Indebtedness under the Bridge Notes, the Term Notes, the
Exchange Notes and the Guarantees;
(ii) Indebtedness incurred pursuant to the Senior Credit
Facility provided the principal amount at any time outstanding does not
exceed $25,000,000 in the aggregate, reduced by any required permanent
repayments (which are accompanied by a corresponding permanent
commitment reduction) thereunder;
(iii) other Indebtedness of the Company and its Subsidiaries
outstanding on the Closing Date described in Schedule H reduced by the
----------
amount of any scheduled amortization payments or mandatory prepayments
when actually paid or permanent reductions thereon;
(iv) Interest Swap Obligations of the Company covering
Indebtedness of the Company or any of its Subsidiaries and Interest
Swap Obligations of any Subsidiary of the Company covering Indebtedness
of such Subsidiary; provided, however, that such Interest Swap
-------- -------
Obligations are entered into to protect the Company and its
Subsidiaries from fluctuations in interest rates on Indebtedness
incurred in accordance with this Agreement and the Senior Credit
Facility to the extent the notional principal amount of such Interest
Swap Obligation does not exceed the principal amount of the
Indebtedness to which such Interest Swap Obligation relates;
(v) Indebtedness of the Company under Currency Agreements;
provided that in the case of Currency Agreements which relate to
--------
Indebtedness, such Currency Agreements do not increase the Indebtedness
of the Company and
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its Subsidiaries outstanding other than as a result of fluctuations in
foreign currency exchange rates or by reason of fees, indemnities and
compensation payable thereunder;
(vi) Indebtedness of a Guarantor of the Company to the
Company or to a Guarantor of the Company for so long as such
Indebtedness is held by the Company or a Guarantor of the Company, in
each case subject to no Lien held by a Person other than the Company or
a Guarantor of the Company; provided that if as of any date any Person
--------
other than the Company or a Guarantor of the Company owns or holds any
such Indebtedness or holds a Lien in respect of such Indebtedness, such
date shall be deemed the incurrence of Indebtedness not constituting
Permitted Indebtedness by the issuer of such Indebtedness;
(vii) Indebtedness of the Company to a Wholly-Owned Subsidiary
of the Company for so long as such Indebtedness is held by a
Wholly-Owned Subsidiary of the Company, in each case subject to no
Lien; provided that (a) any Indebtedness of the Company to any
--------
Wholly-Owned Subsidiary of the Company is unsecured and subordinated,
pursuant to a written agreement, to the Company's obligations under
this Agreement and the Notes and (b) if as of any date any Person other
than a Wholly-Owned Subsidiary of the Company owns or holds any such
Indebtedness or any Person holds a Lien in respect of such
Indebtedness, such date shall be deemed the incurrence of Indebtedness
not constituting Permitted Indebtedness by the Company;
(viii) Indebtedness arising from the honoring by a bank or
other financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn against
insufficient funds in the ordinary course of business; provided,
--------
however, that such Indebtedness is extinguished within two business
-------
days of incurrence;
(ix) Indebtedness of the Company or any of its Subsidiaries
represented by letters of credit for the account of the Company or such
Subsidiary, as the case may be, in order to provide security for
workers' compensation claims, payment obligations in connection with
self-insurance or similar requirements in the ordinary course of
business;
(x) Permitted Refinancing Indebtedness; and
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(xi) additional Indebtedness of the Company and its
Subsidiaries in an aggregate principal amount not to exceed $5,000,000
at any one time outstanding.
In addition to the foregoing, at any time after the Conversion
Date, if no Potential Event of Default with respect to payment of principal of,
or interest on, the Notes or Event of Default shall have occurred and be
continuing at the time of or as a consequence of the incurrence of any such
Indebtedness, the Company or any Subsidiary Guarantor may incur Indebtedness if
immediately before and immediately after giving effect to the incurrence of such
Indebtedness the Consolidated Fixed Charge Coverage Ratio of the Company would
be greater than (a) 2.00 to 1.0, if the date of such incurrence is on or prior
to November 1, 1999, or (b) 2.25 to 1.0, if the date of such incurrence is after
November 1, 1999.
6.2 Liens
-----
The Company shall not, and shall not cause or permit any of
the Guarantors to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset (including any
document or instrument in respect of goods or accounts receivable) of the
Company or of any of its Subsidiaries, whether now owned or hereafter acquired,
or assign or otherwise convey any right to receive any income or profits
therefrom, or file or permit the filing of, or permit to remain in effect, any
financing statement or other similar notice of any Lien with respect to any such
property, asset, income or profits under the Uniform Commercial Code of any
State or under any similar recording or notice statute, other than the following
(collectively, the "Permitted Liens"):
(i) Liens for taxes, assessments or governmental charges or
claims either (a) not delinquent or (b) contested in good faith by
appropriate proceedings and as to which the Company or the Guarantors
shall have set aside on its books such reserves as may be required
pursuant to GAAP;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other
Liens imposed by law incurred in the ordinary course of business for
sums not yet delinquent or being contested in good faith, if such
reserve or other appropriate provision, if any, as shall be required by
GAAP shall have been made in respect thereof;
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(iii) Liens incurred or deposits made in the ordinary course
of business in connection with workers' compensation, unemployment
insurance and other types of social security, including any Lien
securing letters of credit issued in the ordinary course of business
consistent with past practice in connection therewith, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds,
bids, leases, government contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money);
(iv) judgment Liens not giving rise to an Event of Default so
long as such Lien is adequately bonded and any appropriate legal
proceedings which may have been duly initiated for the review of such
judgment shall not have been finally terminated or the period within
which such proceedings may be initiated shall not have expired;
(v) easements, rights-of-way, zoning restrictions and other
similar charges or encumbrances in respect of real property not
interfering in any material respect with the ordinary conduct of the
business of the Company or any of the Guarantors;
(vi) any interest or title of a lessor under any Capitalized
Lease Obligation; provided that such Liens do not extend to any
-------
property or assets which is not leased property subject to such
Capitalized Lease Obligation;
(vii) purchase money Liens to finance property or assets of
the Company or a Guarantor acquired in the ordinary course of business;
provided, however, that (A) the related purchase money Indebtedness
-------- -------
shall not exceed the cost of such property or assets and shall not be
secured by any property or assets of the Company or any Guarantor other
than the property and assets so acquired and (B) the Lien securing such
Indebtedness shall be created within 90 days of such acquisition;
(viii) Liens upon specific items of inventory or other goods
and proceeds of any Person securing such Person's obligations in
respect of bankers' acceptances issued or created for the account of
such Person to facilitate the purchase, shipment or storage of such
inventory or other goods;
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(ix) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other
property relating to such letters of credit and products and proceeds
thereof;
(x) Liens encumbering deposits made to secure obligations
arising from statutory, regulatory, contractual, or warranty
requirements of the Company or a Guarantor, including rights of offset
and set-off;
(xi) Liens securing Interest Swap Obligations which Interest
Swap Obligations relate to Indebtedness that is incurred under this
Agreement or the Senior Credit Facility;
(xii) Liens securing Indebtedness under Currency Agreements;
(xiii) Liens granted to secure the Senior Credit Facility;
(xiv) Liens securing Indebtedness permitted under Section 6.1;
and
(xv) Liens existing on the Closing Date as set forth on
Schedule A.
-----------
6.3 Restricted Payments
-------------------
(a) Except as contemplated by the Stock Purchase Agreement,
the Company shall not, and shall not cause or permit any of the Guarantors to,
directly or indirectly (i) declare or pay any dividend, or make any
distribution, on any Capital Stock of the Company or Holdings LLC (other than,
in the case of the Company, dividends or distributions payable solely in
Qualified Capital Stock of the Company or dividends or distributions payable to
the Company or any Wholly-Owned Subsidiary of the Company), (ii) purchase,
redeem or otherwise acquire or retire for value any of the Company's Capital
Stock, or any warrants, rights or options to acquire shares of any class of such
Capital Stock or (iii) make any principal payment on, purchase, defease, redeem,
prepay, or otherwise acquire or retire for value, other than any scheduled final
maturity, scheduled repayment or scheduled sinking fund payment, any
Subordinated Indebtedness or Pari Passu Indebtedness of the Company or of a
Guarantor (any such dividend, distribution, purchase, redemption, acquisition,
retirement, defeasance or prepayment set forth in clauses (i), (ii) and (iii)
above a "Restricted Pay-
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ment"); provided, however, a Restricted Payment may be made after the Conversion
-------- -------
Date if (A) a Default or an Event of Default shall not have occurred and be
continuing and (B) the aggregate amount of Restricted Payments including such
proposed Restricted Payment (other than Permitted Tax Distributions and payments
contemplated by the Stock Purchase Agreement) shall not exceed 50% of the excess
of (x) the cumulative Consolidated Net Income (or if cumulative Consolidated Net
Income shall be a loss, minus 100% of such loss) of the Company earned
subsequent to the Closing Date and on or prior to the date the Restricted
Payment occurs (the "Reference Date") minus (y) the aggregate amount of
Permitted Tax Distributions subsequent to the Closing Date.
(b) Notwithstanding the foregoing, the provisions set forth in
the immediately preceding paragraph will not prevent (a) if no Potential Event
of Default or Event of Default shall have occurred and be continuing or shall be
caused as a consequence of clause (1), (2) or (3), (1) the acquisition of any
shares of Capital Stock of the Company or the repurchase, redemption or other
repayment of any Subordinated Indebtedness or Pari Passu Indebtedness of the
Company or of a Subsidiary Guarantor in exchange for or solely out of the
proceeds of the substantially concurrent sale (other than to the Company or a
Subsidiary of the Company) of shares of Qualified Capital Stock of the Company,
(2) the repurchase, redemption or other repayment of any Subordinated
Indebtedness of the Company in exchange for or solely out of the proceeds of the
substantially concurrent sale (other than to the Company or a Subsidiary of the
Company) of Subordinated Indebtedness of the Company with a Weighted Average
Life to Maturity equal to or greater than the then remaining Weighted Average
Life to Maturity of the Subordinated Indebtedness repurchased, redeemed or
repaid, (3) the repurchase, redemption or other repayment of any Pari Passu
Indebtedness of the Company in exchange for or solely out of the proceeds of the
substantially concurrent sale (other than to the Company or a Subsidiary of the
Company) of Pari Passu Indebtedness or Subordinated Indebtedness of the Company
with a Weighted Average Life to Maturity equal to or greater than the then
remaining Weighted Average Life to Maturity of the Pari Passu Indebtedness
repurchased, redeemed or repaid or (b) if no Event of Default pursuant to
Section 7.1 shall have occurred, Permitted Tax Distributions.
6.4 Investments
-----------
The Company shall not, and shall not cause or permit any of
the Guarantors to, directly or indirectly, make or own
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any Investment in any Person, other than the following (collectively, "Permitted
Investments"):
(i) Investments by the Company or any Guarantor of the
Company in any Person that is or will become immediately after such
Investment a Guarantor of the Company or that will merge or consolidate
into the Company or a Guarantor of the Company;
(ii) Investments in the Company by any Guarantor of the
Company; provided that any Indebtedness evidencing such Investment is
--------
unsecured and subordinated, pursuant to a written agreement, to the
Company's obligations under the Bridge Notes, Term Notes and Exchange
Notes;
(iii) Investments in cash and Cash Equivalents;
(iv) loans and advances to employees and officers of the
Company and its Guarantors in the ordinary course of business for bona
fide business purposes not in excess of $500,000 at any one time
outstanding;
(v) Currency Agreements and Interest Swap Obligations
entered into in the ordinary course of the Company's or its Guarantors'
businesses and otherwise in compliance with the Indenture;
(vi) Investments in Wholly-Owned Subsidiaries (including the
LLCs);
(vii) Investments in securities of trade creditors or
customers received pursuant to any plan of reorganization or similar
arrangement upon the bankruptcy or insolvency of such trade creditors
or customers;
(viii) Investments made by the Company or its Guarantors as a
result of consideration received in connection with an Asset Sale made
in compliance with Section 6.14; and
(ix) Investments not to exceed $2,000,000 at any one time
outstanding; provided such Investments are made after the Closing Date.
--------
6.5 Contingent Obligations
----------------------
The Company shall not, and shall not cause or permit any of
the Guarantors to, directly or indirectly, create or be-
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come or remain liable with respect to any Contingent Obligation, except:
(i) the Company and the Guarantors may become and remain
liable with respect to Contingent Obligations outstanding on the
Closing Date described in Schedule H and in respect of any Interest
Rate Agreements entered into with any lender under the Senior Credit
Facility or any of their respective Affiliates and any guarantees
thereof;
(ii) the Guarantors may become and remain liable with respect
to Contingent Obligations under the Guarantees;
(iii) the Company and the Guarantors may become and remain
liable with respect to Contingent Obligations in respect of customary
indemnification and purchase price adjustment obligations incurred in
connection with the Acquisition, additional acquisitions of assets or
stock, Asset Sales or other sales of assets; provided that the maximum
assumable liability in respect of all such obligations shall at no time
exceed the gross proceeds actually received by the Company and its
Subsidiaries in connection with such Asset Sales and other sales;
(iv) the Company and the Guarantors may become and remain
liable with respect to Contingent Obligations under guarantees made
under the Senior Credit Facility;
(v) the Company and its Subsidiaries may become and remain
liable with respect to guarantees of Indebtedness or Contingent
Obligations of a Wholly-Owned Subsidiary of the Company and a
Subsidiary of the Company may become and remain liable with respect to
guarantees of Indebtedness or Contingent Obligations of the Company or
a Wholly-Owned Subsidiary of the Company; and
(vi) after the Conversion Date, the Company and its
Subsidiaries may become and remain liable with respect to other
Contingent Obligations; provided that the maximum aggregate liability,
contingent or otherwise, of the Company and its Subsidiaries in respect
of all such Contingent Obligations shall at no time exceed $1,000,000.
6.6 Senior Subordinated Indebtedness
--------------------------------
Neither the Company nor any of the Guarantors shall, directly
or indirectly, Incur any Indebtedness that is by its terms (or by the terms of
any agreement governing such Indebt-
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edness) subordinated in right of payment to any other Indebtedness of the
Company or of such Guarantor unless such Indebtedness is also by its terms (or
by the terms of any agreement governing such Indebtedness) made expressly
subordinate to the Loans and the Notes and the Guarantees to the same extent and
in the same manner as such Loans and Notes and Guarantees are subordinated to
the Senior Credit Facility.
6.7 Restriction on Fundamental Changes
----------------------------------
Subject to Section 5.2 and other than the sale of 100% of a
Subsidiary of the Company in accordance with Section 2.5A(ii)(a) and Section
6.15, the Company shall not, and shall not cause or permit any of the Guarantors
to, directly or indirectly, enter into any transaction, or series of related
transactions, of merger, amalgamation, consolidation or combination, or
consolidate, or liquidate, windup or dissolve itself (or suffer any liquidation
or dissolution), or convey, sell, lease, sublease, transfer or otherwise dispose
of, in one transaction or in a series of transactions, all or substantially all
of its business, property or assets, whether now owned or hereafter acquired,
except:
(i) in connection with the Recapitalization including the
merger or stock split and the contribution to Holdings LLC; and
(ii) any Subsidiary of the Company may be merged,
amalgamated, consolidated or combined with or into the Company or any
Wholly-Owned Subsidiary of the Company or be liquidated, wound up or
dissolved, or all or substantially all of its business, property or
assets may be conveyed, sold, leased, transferred or otherwise disposed
of, in one transaction or in a series of transactions, to the Company
or to any Wholly-Owned Subsidiary of the Company; provided that (A) no
--------
Potential Event of Default or Event of Default shall have occurred and
be continuing or would result therefrom, (B) in the case of such a
merger, amalgamation, consolidation or combination of the Company and a
Subsidiary of the Company, the Company shall be the continuing or
surviving corporation, and (C) the surviving entity (I) continues to be
bound as such under this Agreement or the Guarantee of such Guarantor,
as the case may be, and (II) executes and delivers to the Agent
immediately upon consummation of such transaction a written
confirmation or acknowledgment to such effect, in form and substance
satisfactory to the Agent, together with evidence of appropriate
corporate power, authority and action
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and a written legal opinion in form and substance satisfactory to the
Agent to the effect that this Agreement and such Guarantee continue to
be a legal, valid and binding obligation of such entity, enforceable
against such entity in accordance with its terms (subject to customary
exceptions in respect of bankruptcy, insolvency and other equitable
remedies) and with respect to such other matters as the Agent may
reasonably request.
6.8 Limitation on Dividend and Other Payment
Restrictions Affecting Subsidiaries
----------------------------------------
The Company shall not, and shall not cause or permit any of
the Guarantors to, directly or indirectly, create or otherwise cause or permit
or suffer to exist or become effective any encumbrance or restriction on the
ability of any Subsidiary of the Company to (a) pay dividends or make any other
distributions on its Capital Stock (other than with respect to the Capital Stock
of Holdings LLC) or any other interest or participation in, or measured by, such
Subsidiary's profits; (b) make loans or advances or pay any Indebtedness or
other obligation owed to the Company or to any Subsidiary of the Company; or (c)
transfer any of its property or assets to the Company or to any Subsidiary of
the Company (any such restriction or encumbrance a "Payment Restriction"),
except for such encumbrances or restrictions existing under or by reason of: (1)
any restrictions contained in (i) the Loan Documents, the Senior Subordinated
Indenture and any instrument governing the Take-Out Securities or Exchange Notes
to the extent Incurred in accordance with this Agreement; (ii) the Senior Credit
Facility as in effect on the Closing Date; (iii) the Indebtedness pertaining to
a Subsidiary of the Company that is not a Subsidiary of the Company on the
Closing Date in existence at the time such Subsidiary becomes a Subsidiary of
the Company; provided that any such Indebtedness was not incurred as a result
--------
of, in connection with or in anticipation of the transaction pursuant to which
such entity becomes a Subsidiary of the Company and it does not apply to any
Person, or the properties of assets of any Person, other than the Subsidiary
acquired and such Indebtedness is otherwise permitted to be incurred pursuant to
Section 6.1; or (iv) secured Indebtedness otherwise permitted to be incurred
pursuant to Sections 6.1 and 6.2 that limits the right of the debtor to dispose
of the assets securing such Indebtedness; (2) customary non-assignment
provisions of any lease governing a leasehold interest of any Subsidiary of the
Company; (3) customary net worth provisions contained in leases and other
agreements entered into by a Subsidiary in the ordinary course of business; (4)
customary restrictions with re-
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spect to a Subsidiary pursuant to an agreement that has been entered into for
the sale or disposition of all or substantially all of the Capital Stock or
assets of such Subsidiary; (5) applicable law; and (6) any instrument that
Refinances any Indebtedness effecting any such encumbrance or restriction
pursuant to clause (1) above; provided that the provisions relating to any such
--------
encumbrance or restriction in any such instrument are not materially less
favorable to the Company or its Subsidiaries or the Lenders than those contained
in the agreements referred to in clause (1).
6.9 Transactions with Shareholders and
Affiliates
----------------------------------
The Company will not, and will not permit or cause any of the
Guarantors to, enter into any transaction (including, without limitation, any
purchase, sale, lease or exchange of property or the rendering of any service)
with any officer, director, stockholder or other Affiliate of the Company or any
Guarantor, except in the ordinary course of its business and upon fair and
reasonable terms that are no less favorable to it than would obtain in a
comparable arm's length transaction with a Person other than an Affiliate of the
Company or such Guarantor; provided, however, that nothing contained in this
-------- -------
Section shall prohibit:
(i) transactions described on Schedule J or otherwise
----------
expressly permitted under this Agreement;
(ii) the consummation on the Closing Date of the
Transactions; and
(iii) payments to VS&A and Fir Tree not to exceed $90,000 plus
expenses in any year for monitoring services pursuant to the
Stockholders Agreement as in effect on the Closing Date.
6.10 Subsidiary Stock
----------------
Except for any sale of 100% of the Capital Stock or other
equity securities of any of the Company's Subsidiaries in compliance with the
provisions of Section 6.7, the Company will not and will not permit any of the
Guarantors to directly or indirectly sell, assign, pledge or otherwise encumber
or dispose of any shares of Capital Stock or other equity securities of any of
the Guarantors, except (i) to qualify directors if required by applicable law,
(ii) to the Company or to a Wholly-Owned Subsidiary of the Company, (iii) Asset
Sales made
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in compliance with this Agreement, (iv) Liens in favor of the lenders under the
Senior Credit Facility and (v) the formation of and contribution to the LLCs.
6.11 Business Activities
-------------------
The Company shall not, and shall not cause or permit any of
the Guarantors to, directly or indirectly, materially alter the nature of the
consolidated business of the Company and its Subsidiaries from that in existence
immediately after giving effect to the Transactions or similar or related
businesses.
6.12 Amendments or Waivers of Certain Documents
------------------------------------------
The Company shall not, and shall not cause or permit any of
the Guarantors to, directly or indirectly, enter into any amendment,
modification, supplement or waiver with respect to the Senior Credit Facility as
in effect on the Closing Date that would modify any of the provisions thereof or
any of the definitions relating thereof in a manner adverse to the Lenders.
6.13 Amendments to Charter Documents
-------------------------------
The Company shall not, and shall not cause or permit any of
its Subsidiaries to, amend its certificate of incorporation or bylaws or, in the
case of the LLCs, amend its certificate of formation or operating agreements in
any respect which could be materially adverse to the interests of the Lenders.
6.14 Asset Sales
-----------
The Company shall not, and shall not cause or permit any of
its Subsidiaries to, directly or indirectly, consummate any Asset Sale unless
(1) such Asset Sale occurs after the Conversion Date, (2) the Company or such
Subsidiary, as the case may be, receives consideration therefor at the time
thereof at least equal to the fair market value at the time of such Asset Sale
of the property, assets or stock that is the subject of such Asset Sale, (3) at
least 75% of the consideration received therefor by the Company or such
Subsidiary is in the form of cash or Cash Equivalents and (4) all of the Net
Cash Proceeds in respect thereof are applied by the Company or a Subsidiary of
the Company in accordance with Section 2.5A(ii)(a).
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Nothing in this covenant shall be deemed to prevent the
exercise of remedies by secured creditors of the Company or any Subsidiary of
the Company.
6.15 Transfer of Assets to Subsidiaries
----------------------------------
The Company shall not, and shall not cause or permit any of
its Subsidiaries to, directly or indirectly, transfer (other than in the
ordinary course of business and other than pursuant to a Permitted Investment)
any assets or property to any Subsidiary of the Company unless such Subsidiary
pays fair market value therefor to the Company or to a Wholly-Owned Subsidiary
of the Company and except as provided in Sections 6.3, 6.4, 6.5, 6.7 and 6.9.
For purposes of this Section 6.15, the fair market value paid by such Subsidiary
shall not consist in whole or in part of any securities or debt instruments of
such Subsidiary or of any Affiliate of such Subsidiary.
6.16 Modification of the LLC Preferred Equity Interests
--------------------------------------------------
The Company shall not, and shall not and will not permit any
of the Guarantors to, amend or modify in any material respect or in any manner
adverse to the Company or the Lenders, including but not limited, to a change in
voting control with respect to Holdings LLC or the termination of Holdings LLC
Preferred Equity Interests for so long as this Agreement is in effect and until
the Notes, together with interest, fees and all other obligations incurred
hereunder, are paid in full, or permit such an amendment or modification of any
provision of, Holdings LLC Preferred Equity Interest.
Notwithstanding the foregoing Sections 5 and 6, nothing in
----------------------------------------------------------
this Agreement shall prohibit the Company from contributing certain assets and
------------------------------------------------------------------------------
liabilities to the LLCs in exchange for a $45.0 million preferred equity
------------------------------------------------------------------------
interest in the LLCs as described in the preliminary offering memorandum dated
------------------------------------------------------------------------------
October 8, 1997.
----------------
SECTION 7 EVENTS OF DEFAULT
If any of the following conditions or events ("Events of
Default") shall occur and be continuing:
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7.1 Failure To Make Payments When Due
---------------------------------
Failure to pay any installment of principal of the Loans when
due, whether at stated maturity, by acceleration, by notice of prepayment or
otherwise (whether or not such payment is prohibited by Section 8); or failure
to pay any interest on the Loans or any other amount due under this Agreement
within ten days or more after the date due (whether or not such payment is
prohibited by Section 8); or
7.2 Default in Other Agreements
---------------------------
(A) Failure of the Company or any of its Subsidiaries to pay
at final maturity principal on one or more issues of Indebtedness or Contingent
Obligations of the Company or of any of its Subsidiaries (other than
Indebtedness referred to in Section 7.1) or (B) breach or default by the Company
or any of its Subsidiaries with respect to any other term of any one or more
issues of Indebtedness or Contingent Obligations of the Company or of any of its
Subsidiaries or any agreement or instrument evidencing or securing such
Indebtedness or Contingent Obligations and such breach or default results in the
acceleration of that Indebtedness or Contingent Obligation prior to its stated
maturity and, in any case of (A) or (B), the principal amount of such
Indebtedness or Contingent Obligation and all other such Indebtedness or
Contingent Obligations of the Company and its Subsidiaries in respect of which
there is such a failure to pay principal or which has been so accelerated equals
$5,000,000 or more; or
7.3 Breach of Certain Covenants
---------------------------
Failure of the Company to perform or comply with any covenant,
term or condition contained in Section 2.5A(ii), 2.5A(iv) or 5.2; or
7.4 Breach of Warranty
------------------
Any representation, warranty or certification made by the
Company in any Loan Document or in any statement or certificate at any time
given by the Company in writing pursuant hereto or thereto or in connection
herewith or therewith shall be false or incorrect in any material respect on the
date as of which made or deemed made; or
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7.5 Other Defaults Under Agreement or Loan Documents
------------------------------------------------
The Company shall default in the performance of or compliance
with any covenant, term or condition contained in this Agreement or the other
Loan Documents (other than those covered by Section 7.1, 7.3, 7.4, 7.10 or 7.11)
and such default shall not have been remedied or waived in accordance with this
Agreement within 30 days after the date of written notice from the holder or
holders of not less than 25% in aggregate principal amount of the Loans then
outstanding of such default; or
7.6 Involuntary Bankruptcy; Appointment
of Custodian, Etc.
-----------------------------------
A court of competent jurisdiction enters a Bankruptcy Order
under any Bankruptcy Law that:
(A) is for relief against the Company or any Material
Subsidiary in an involuntary case or proceeding, or
(B) appoints a Custodian of the Company or any Material
Subsidiary for all or substantially all of its properties, or
(C) orders the liquidation of the Company or any Material
Subsidiary,
and in each case the order or decree remains unstayed and in effect for 60 days.
7.7 Voluntary Bankruptcy; Appointment
of Custodian, Etc.
---------------------------------
The Company or any Material Subsidiary pursuant to or within
the meaning of any Bankruptcy Law:
(A) commences a voluntary case or proceeding, or
(B) consents to the entry of a Bankruptcy Order for relief
against it in an involuntary case or proceeding, or
(C) consents to the appointment of a Custodian of it or for
all or substantially all of its property, or
(D) makes a general assignment for the benefit of its
creditors or files a proposal or scheme of arrangement
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involving the rescheduling or composition of its indebtedness, or
(E) consents to the filing of a petition in bankruptcy against
it, or
(F) shall generally not pay its debts when such debts become
due or shall admit in writing its inability to pay its debts generally.
7.8 Judgments and Attachments
-------------------------
Any money judgment, writ or warrant of attachment, or similar
process involving in any individual case or in the aggregate at any time an
amount in excess of $750,000 (to the extent not covered by third-party insurance
as to which the insurance company has acknowledged coverage) shall be entered or
filed against the Company or any of the Guarantors or any of their respective
properties or assets and shall remain undischarged, unvacated, unbonded or
unstayed for a period of 60 days or in any event later than five days prior to
the date of any proposed sale thereunder; or
7.9 Dissolution
-----------
Any order, judgment or decree shall be entered against the
Company or any Material Subsidiary decreeing the dissolution or split-up of the
Company or that Material Subsidiary and such order shall remain undischarged or
unstayed for a period in excess of 30 days; or
7.10 Guarantee
---------
(i) Any Guarantee or any provision thereof shall cease to be
in full force or effect (other than in accordance with its express terms), or
(ii) any Subsidiary Guarantor or any Person acting by or on behalf of such
Subsidiary Guarantor shall deny or disaffirm such Subsidiary Guarantor's
obligations under its Guarantee, or (iii) any Subsidiary Guarantor shall default
in the due performance or observance of any term, covenant or agreement on its
part to be performed or observed, after giving effect to any applicable grace
periods, pursuant to its Guarantee; or
7.11 Foreclosure
-----------
The agent under the Senior Credit Facility or any other party
entitled to act thereunder commences judicial pro-
-95-
ceedings to foreclose on the collateral securing the Senior Credit Facility or
exercises any right under applicable law or any instrument evidencing a security
interest or other encumbrance in respect of such collateral to take ownership or
effect the transfer of such collateral in lieu of foreclosure.
THEN (i) upon the occurrence of any Event of Default described
in the foregoing Sections 7.6 or 7.7, all of the unpaid principal amount of and
accrued interest on the Loans and all other outstanding Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by the Company, and the commitments of the Lenders hereunder shall
thereupon terminate, and (ii) upon the occurrence of any other Event of Default,
the Agent shall, upon written notice of the holder or holders of a majority in
aggregate principal amount of the Loans then outstanding, by written notice to
the Company and the agent under the Senior Credit Facility, declare all of the
unpaid principal amount of and accrued interest on the Loans and all other
outstanding Obligations to be, and the same shall forthwith become, due and
payable, and the obligations of the Lenders hereunder shall thereupon terminate;
provided that if any declaration of acceleration under this Agreement occurs
--------
solely because an Event of Default set forth in Section 7.2 has occurred and is
continuing, such declaration of acceleration shall be automatically annulled if
the holders of the Indebtedness which is the subject of such Event of Default
have rescinded their declaration of acceleration in respect of such Indebtedness
within thirty days of such acceleration of such Indebtedness and the Agent has
received written notice thereof within such time and if no other Event of
Default has occurred during such thirty-day period which has not been cured or
waived in accordance with this Agreement. Nevertheless, if at any time after
acceleration of the maturity of the Loans, the Company shall pay all arrears of
interest and all payments on account of the principal thereof which shall have
become due otherwise than by acceleration (with interest on principal and, to
the extent permitted by law, on overdue interest, at the rates specified in this
Agreement or the Notes) and all Events of Default and Potential Events of
Default (other than non-payment of principal of and accrued interest on the
Loans and the Notes due and payable solely by virtue of acceleration) shall be
remedied or waived pursuant to Section 12.6, then the Agent shall, upon written
notice of the holders of a majority in aggregate principal amount of the Loans
then outstanding, by written notice to the Company rescind and annul the
acceleration and its consequences; but such action shall not affect any
subsequent Event
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of Default or Potential Event of Default or impair any right consequent thereon.
SECTION 8 SUBORDINATION
8.1 Obligations Subordinated to Senior
Indebtedness of the Company
----------------------------------
The Lenders covenant and agree that payments in respect of the
Obligations by the Company shall be subordinated in accordance with the
provisions of this Section 8 to the prior payment in full, in cash or Cash
Equivalents, of all amounts payable in respect of Senior Indebtedness of the
Company, whether now outstanding or hereafter created (including any interest
accruing subsequent to an event specified in Section 7.6 or 7.7 whether or not
such interest is an allowed claim against the Company), that the subordination
is for the benefit of the holders of Senior Indebtedness of the Company, and
that each holder of Senior Indebtedness of the Company whether now outstanding
or hereafter created, incurred, assumed or guaranteed shall be deemed to have
acquired Senior Indebtedness of the Company in reliance upon the covenants and
provisions contained in this Agreement.
8.2 Priority and Payment Over of Proceeds
in Certain Events
-------------------------------------
(a) Subordination on Dissolution, Liquidation or
--------------------------------------------
Reorganization of the Company. Upon any payment or distribution of assets or
-----------------------------
securities of the Company of any kind or character, whether in cash, property or
securities, upon any dissolution or winding up or total or partial liquidation
or reorganization of the Company, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership or other proceedings, all Senior
Indebtedness of the Company (including any interest accruing subsequent to an
event specified in Section 7.6 or 7.7 whether or not such interest is an allowed
claim enforceable against the Company) shall first be paid in full in cash or
Cash Equivalents, before the Lenders shall be entitled to receive any payment by
the Company in respect of any Obligations and upon any such dissolution or
winding up or liquidation or reorganization, any payment or distribution of
assets or securities of the Company of any kind or character, whether in cash,
property or securities, to which the Lenders would be entitled except for the
provisions of this Section 8 shall be made by the Company or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other Person making such
payment
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or distribution, directly to the holders of the Senior Indebtedness of the
Company or their representatives to the extent necessary to pay all of the
Senior Indebtedness of the Company to the holders of such Senior Indebtedness of
the Company.
(b) Subordination on Default on Senior Indebtedness. Upon the
-----------------------------------------------
maturity of any Senior Indebtedness of the Company by lapse of time,
acceleration or otherwise, all Senior Indebtedness of the Company then due and
payable shall first be paid in full in cash or Cash Equivalents, before any
payment is made by the Company or any Person acting on behalf of the Company
with respect to the Obligations. No direct or indirect payment by the Company or
any Person acting on behalf of the Company of any Obligations whether pursuant
to the terms of the Loans or upon acceleration or otherwise shall be made, if at
the time of such payment, there exists a Default (as defined in the document
governing any Senior Indebtedness of the Company) in the payment of all or any
portion of any principal, interest, fees, letter of credit reimbursement
obligations or other amounts payable in respect of any Senior Indebtedness of
the Company and such default shall not have been cured or waived or the benefits
of this sentence waived by or on behalf of the holders of such Senior
Indebtedness. In addition, during the continuation of any other event of default
with respect to the Senior Indebtedness of the Company pursuant to which the
maturity thereof may be accelerated, upon the (i) receipt by the Agent of
written notice from the agent or representative of the holders of such Senior
Indebtedness of such Default or (ii) if such Non-Payment Default results from
the acceleration of the Loans, the date of the acceleration of the Loans, no
such payment may be made by the Company upon or in respect of the Obligations,
for a period ("Payment Blockage Period") commencing on the date of receipt of
such notice or the date of such acceleration and ending on the earlier to occur
of 179 days after receipt of such notice (unless such Payment Blockage Period
shall be terminated by written notice to the Agent from such agent or
representative) or the date of such acceleration. Notwithstanding anything
herein to the contrary, (x) in no event will a Payment Blockage Period or
successive Payment Blockage Periods with respect to the same payment on the
Obligations extend beyond 179 days from the date the payment on the Obligations
was due and (y) there must be 180 consecutive days in any 365-day period during
which no Payment Blockage Period is in effect. For all purposes of this Section
8.2(b), no event of default which existed or was continuing on the date of the
commencement of any Payment Blockage Period with respect to the Senior
Indebtedness of the Company initiating such Payment Blockage Period shall be, or
be made, the basis for the commencement of a second Pay-
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ment Blockage Period by the holders or by the agent or other representative of
such Senior Indebtedness whether or not within a period of 365 consecutive days,
unless such event of default shall have been cured or waived for a period of not
less than 90 consecutive days.
(c) Rights and Obligations of the Lenders. In the event that,
-------------------------------------
notwithstanding the foregoing provisions prohibiting such payment or
distribution, the Agent or any Lender shall have received any payment in respect
of any Obligation (other than as permitted by Sections (a) and (b) of this
Section 8.2) at a time when such payment is prohibited by this Section 8.2, then
and in such event such payment or distribution shall be received and held in
trust for the holders of the Senior Indebtedness of the Company and shall be
paid over or delivered to the holders of the Senior Indebtedness of the Company
remaining unpaid to the extent necessary to pay in full in cash or Cash
Equivalents all Senior Indebtedness of the Company in accordance with their
terms after giving effect to any concurrent payment or distribution to the
holders of such Senior Indebtedness of the Company.
If payment in respect of the Obligations is accelerated
because of an Event of Default, the Company shall promptly notify the agent or
other representatives for Senior Indebtedness of the Company of such
acceleration.
Upon any payment or distribution of assets or securities
referred to in this Section 8, the Lenders (notwithstanding any other provision
of this Agreement) shall be entitled to rely upon any order or decree of a court
of competent jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, and upon a certificate of the receiver,
trustee in bankruptcy, liquidating trustee, agent or other Person making any
such payment or distribution, delivered to the Lenders for the purpose of
ascertaining the Persons entitled to participate in such distribution, the
holders of Senior Indebtedness of the Company, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Section 8.
The Company shall promptly give written notice to each of the
Lenders of any default or event of default under any Senior Indebtedness of the
Company or under any agreement pursuant to which Senior Indebtedness of the
Company may have been issued, and, in the event of any such event of default,
shall provide to the Agent the names and address of the trus-
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tees or other representatives of holders of such Senior Indebtedness of the
Company.
With respect to the holders and owners of Senior Indebtedness
of the Company, each Lender undertakes to perform only such obligations on the
part of such Lender as are specifically set forth in this Section 8, and no
implied covenants or obligations with respect to the holders or owners of Senior
Indebtedness of the Company shall be read into this Agreement against the
Lenders. The Lenders shall not be deemed to owe any fiduciary duty to the
holders or owners of Senior Indebtedness of the Company or to any agent under
the Senior Credit Facility or any other representative of the holders of the
Senior Indebtedness of the Company.
8.3 Payments May Be Paid Prior to Dissolution
-----------------------------------------
Nothing contained in this Section 8 or elsewhere in this
Agreement shall prevent or delay (i) the Company, except under the conditions
described in Section 8.2, from making payments at any time for the purpose of
making payments in respect of its Obligations, or from depositing with the Agent
any moneys for such payments, or (ii) subject to Section 8.2, the application by
the Agent of any moneys deposited with it for the purpose of making payments in
respect of Obligations.
8.4 Rights of Holders of Senior Indebtedness
of the Company Not To Be Impaired
----------------------------------------
No right of any present or future holder of any Senior
Indebtedness of the Company to enforce subordination as provided in this Section
8 shall at any time in any way be prejudiced or impaired by any act or failure
to act by any such holder, or by any noncompliance by the Company with the terms
and provisions and covenants herein, regardless of any knowledge thereof any
such holder may have or otherwise be charged with. Without in any way limiting
the generality of the foregoing Section, such holders of Senior Indebtedness of
the Company may, at any time and from time to time without impairing or
releasing the subordination provided in this Section 8 or the obligations of the
Lenders hereunder to the holders of Senior Indebtedness of the Company, do any
one or more of the following: (i) change the manner, place, terms or time of
payment of, or renew or alter, Senior Indebtedness of the Company or otherwise
amend or supplement in any manner Senior Indebtedness of the Company or any
instrument evidencing the same or any agreement under which any Senior
Indebtedness of the Company is outstanding; (ii) sell, exchange, release, or
otherwise deal
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with any property pledged, mortgaged, or otherwise securing Senior Indebtedness
of the Company or fail to perfect or delay in the perfection of the security
interest in such property; (iii) release any Person liable in any manner for the
collection of Senior Indebtedness of the Company; and (iv) exercise or refrain
from exercising any rights against the Company and any other Person. Each Lender
by purchasing or accepting a Note waives any and all notice of the creation,
modification, renewal, extension or accrual of any Senior Indebtedness of the
Company and notice of or proof of reliance by any holder or owner of Senior
Indebtedness of the Company upon this Section 8 and the Senior Indebtedness of
the Company shall conclusively be deemed to have been created, contracted or
incurred in reliance upon this Section 8, and all dealings between the Company
and the holders and owners of the Senior Indebtedness of the Company shall be
deemed to have been consummated in reliance upon this Section 8.
The provisions of this Section 8 are intended to be for the
benefit of, and shall be enforceable directly by, the holders of the Senior
Indebtedness of the Company.
8.5 Subrogation
-----------
Upon the payment in full in accordance with the terms of
Section 8.2 of all amounts payable under or in respect of the Senior
Indebtedness of the Company, the Lenders shall be subrogated to the rights of
the holders of such Senior Indebtedness of the Company to receive payments or
distributions of assets of Company made on such Senior Indebtedness of the
Company until the Obligations shall be paid in full in cash or Cash Equivalents;
and for purposes of such subrogation no payments or distributions to holders of
such Senior Indebtedness of the Company of any cash, property or securities to
which the Lenders would be entitled except for the provisions of this Section 8,
and no payment over pursuant to the provisions of this Section 8 to holders of
such Senior Indebtedness of the Company by the Lenders, shall, as between the
Company, its creditors other than holders of such Senior Indebtedness of the
Company and the Lenders, be deemed to be a payment by the Company to or on
account of such Senior Indebtedness of the Company, it being understood that the
provisions of this Section 8 are solely for the purpose of defining the relative
rights of the holders of such Senior Indebtedness of the Company, on the one
hand, and the Lenders, on the other hand. A release of any claim by any holder
of Senior Indebtedness of the Company shall not limit the Lenders' rights of
subrogation under this Section 8.5.
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If any payment or distribution to which the Lenders would
otherwise have been entitled but for the provisions of this Section 8 shall have
been applied, pursuant to the provisions of this Section 8, to the payment of
all amounts payable under the Senior Indebtedness of the Company, then and in
such case, the Lenders shall be entitled to receive from the holders of such
Senior Indebtedness of the Company at the time outstanding the full amount of
any such payments or distributions received by such holders of Senior
Indebtedness of the Company in excess of the amount sufficient to pay all Senior
Indebtedness of the Company payable under or in respect of the Senior
Indebtedness of the Company in full in cash or Cash Equivalents in accordance
with the terms of Section 8.2.
8.6 Obligations of the Company Unconditional
----------------------------------------
Nothing contained in this Section 8 or elsewhere in this
Agreement is intended to or shall impair as between the Company and the Lenders
the obligations of the Company, which are absolute and unconditional, to pay to
the Lenders the Obligations as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the Lenders and creditors of the Company other than the holders of the
Senior Indebtedness of the Company, nor shall anything herein or therein prevent
the Lenders from exercising all remedies otherwise permitted by applicable law
upon default under this Agreement, subject to the rights, if any, under this
Section 8 of the holders of such Senior Indebtedness of the Company in respect
of cash, property or securities of the Company received upon the exercise of any
such remedy.
The failure to make a payment in respect of Obligations by
reason of any provision of this Section 8 shall not prevent the occurrence of an
Event of Default under Section 7.
8.7 Lenders Authorize Agent to
Effectuate Subordination
--------------------------
Each Lender hereby authorizes and expressly directs the Agent
on its behalf to take such action as may be necessary or appropriate to
effectuate the subordination provided in this Section 8 and appoints the Agent
its attorney in fact for such purpose, including, without limitation, in the
event of any dissolution, winding up, liquidation or reorganization of the
Company (whether in bankruptcy, insolvency, receivership, reorganization or
similar proceedings or upon an assignment for the benefit of creditors or any
other similar remedy or otherwise)
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tending towards liquidation of the business and assets of the Company, the
immediate filing of a claim for the unpaid balance of the Obligations in the
form required in said proceedings and causing said claim to be approved. If the
Agent does not file a proper claim or proof of debt in the form required in such
proceeding prior to 30 days before the expiration of the time to file such claim
or claims, then the holders of the Senior Indebtedness of the Company are hereby
authorized to have the right to file and are hereby authorized to file an
appropriate claim for and on behalf of the Lenders. In the event of any such
proceeding, until the Senior Indebtedness of the Company is paid in full in cash
or Cash Equivalents, without the consent of the holders of a majority in
principal amount outstanding of Senior Indebtedness of the Company, no Lender
shall waive, settle or compromise any such claim or claims relating to the
Obligations that such Lender now or hereafter may have against the Company.
SECTION 9 THE AGENT
9.1 Appointment
-----------
Each Lender hereby irrevocably designates and appoints First
Union as Agent of such Lender to act as specified herein and in the other Loan
Documents, and each Lender hereby irrevocably authorizes First Union as the
Agent to take such action on its behalf under the provisions of this Agreement
and the other Loan Documents and to exercise such powers and perform such duties
as are expressly delegated to the Agent by the terms of this Agreement and the
other Loan Documents, together with such other powers as are reasonably
incidental thereto. The Agent agrees to act as such upon the express conditions
contained in this Section 9. Notwithstanding any provision to the contrary
elsewhere in this Agreement or in any other Loan Document, the Agent shall not
have any duties or responsibilities, except those expressly set forth herein or
in the other Loan Documents, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or otherwise exist against the
Agent. The provisions of this Section 9 are solely for the benefit of the Agent
and the Lenders, and neither the Company nor any of its Subsidiaries shall have
any rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement, the Agent shall act
solely as agent of the Lenders and the Agent does not assume and shall not be
deemed
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to have assumed any obligation or relationship of agent or trust with or for the
Company or any of its Subsidiaries.
9.2 Delegation of Duties
--------------------
The Agent may execute any of its duties under this Agreement
or any other Loan Document by or through agents or attorneys-in-fact and shall
be entitled to advice of counsel concerning all matters pertaining to such
duties. The Agent shall not be responsible for the negligence or misconduct of
any agents or attorneys-in-fact selected by it with reasonable care except to
the extent otherwise required by Section 9.3.
9.3 Exculpatory Provisions
----------------------
Neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any
action lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement or the other Loan Documents (except for its or
such Person's own gross negligence or willful misconduct) or (ii) responsible in
any manner to any of the Lenders for any recitals, statements, representations
or warranties made by the Company, any of its Subsidiaries or any of their
respective officers contained in this Agreement, any other Loan Documents, or in
any certificate, report, statement or other document referred to or provided for
in, or received by the Agent under or in connection with, this Agreement or any
other Loan Document or for any failure of the Company, any of its Subsidiaries
or any of their respective officers to perform its obligations hereunder or
thereunder. The Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or the other Loan
Documents, or to inspect the properties, books or records of the Company or any
of its Subsidiaries. The Agent shall not be responsible to any Lender for the
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of this Agreement or any other Loan Document or for any
representations, warranties, recitals or statements made herein or therein or
made in any written or oral 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 Agent to the Lenders or by or on behalf of
the Company or any of its Subsidiaries to the 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
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the Loans or of the existence or possible existence of any Potential Event of
Default or Event of Default.
9.4 Reliance by Agent
-----------------
The 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, facsimile, telex or
teletype message, statement, order or other document or conversation 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 the Company or any of its Subsidiaries),
independent accountants and other experts selected by the Agent. The Agent shall
be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document 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 liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. As between the Agent and the Lenders, the Agent shall in
all cases be fully protected in acting, or in refraining from acting, under this
Agreement and the other Loan Documents in accordance with a request of the
Required Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders.
9.5 Notice of Default
-----------------
The Agent shall not be deemed to have knowledge or notice of
the occurrence of any Potential Event of Default or Event of Default hereunder
unless the Agent has actually received notice from a Lender or the Company
referring to this Agreement, describing such Potential Event of Default or Event
of Default and stating that such notice is a "notice of default." In the event
that the Agent receives such a notice, the Agent shall give prompt notice
thereof to the Lenders. The Agent shall take such action with respect to such
Potential Event of Default or Event of Default as shall be reasonably directed
by the Required Lenders; provided that, as between the Agent and the Lenders
--------
unless and until the Agent shall have received such directions, the Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Potential Event of Default or Event of Default as
it shall deem advisable in the best interests of the Lenders.
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9.6 Non-Reliance on Agent and Other Lenders
---------------------------------------
Each Lender expressly acknowledges that neither the Agent nor
any of its respective officers, directors, employees, agents, attorneys-in-fact
or affiliates have made any representations or warranties to it and that no act
by the Agent hereinafter taken, including any review of the affairs of the
Company or any of its Subsidiaries, shall be deemed to constitute any
representation or warranty by the Agent to any Lender. Each Lender represents to
the Agent that it has, independently and without reliance upon the Agent 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 condition, prospects and
creditworthiness of the Company and its Subsidiaries and made its own decision
to make its Loans hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon the Agent 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 Agreement, and to make
such investigation as it deems necessary to inform itself as to the business,
assets, operations, property, financial and other condition, prospects and
creditworthiness of the Company and its Subsidiaries. The Agent shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, assets, property, financial and
other condition, prospects or creditworthiness of the Company or any of its
Subsidiaries which may come into the possession of the Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates.
9.7 Indemnification
---------------
The Lenders agree to indemnify the Agent in its capacity as
such ratably according to their respective "percentages" as used in determining
the Required Lenders at such time, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
reasonable expenses or disbursements of any kind whatsoever which may at any
time (including, without limitation, at any time following the payment in full
of the Obligations) be imposed on, incurred by or asserted against the Agent in
its capacity as such in any way relating to or arising out of this Agreement or
any other Loan Document, or any documents contemplated by or referred to herein
or the transactions contemplated hereby or any action taken or omitted to be
taken by the
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Agent under or in connection with any of the foregoing, but only to the extent
that any of the foregoing is not paid by the Company or any of its Subsidiaries;
provided that no Lender shall be liable to the Agent for the payment of any
--------
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from the
gross negligence or willful misconduct of the Agent. If any indemnity furnished
to the Agent for any purpose shall, in the opinion of the Agent be insufficient
or become impaired, the 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 9.7 shall survive the payment in
full of all Obligations.
9.8 Agent in Its Individual Capacity
--------------------------------
The Agent and its affiliates may make loans to, accept
deposits from and generally engage in any kind of business with the Company and
its Subsidiaries as though the Agent were not the Agent hereunder. With respect
to the Loans made by it and all Obligations owing to it, the Agent shall have
the same rights and powers under this Agreement as any Lender and may exercise
the same as though it were not the Agent and the terms "Lender" and "Lenders"
shall include the Agent in its individual capacity.
9.9 Resignation of the Agent; Successor Agent
-----------------------------------------
The Agent may resign as the Agent upon 20 days' notice to the
Lenders and the Company. Upon the resignation of the Agent, the Required Lenders
shall appoint from among the Lenders a successor Agent which is a bank or a
trust company for the Lenders subject to prior approval by the Company (such
approval not to be unreasonably withheld or delayed), whereupon such successor
agent shall succeed to the rights, powers and duties of the Agent, and the term
"Agent" shall include such successor agent effective upon its appointment, and
the resigning Agent's rights, powers and duties as the Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent or any of the parties to this Agreement. After the resignation of the
Agent hereunder, the provisions of this Section 9 shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was Agent under this
Agreement.
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SECTION 10 GUARANTEE
10.1 Unconditional Guarantee
-----------------------
Each Guarantor hereby unconditionally, jointly and severally,
guarantees (such guarantee to be referred to herein as the "Guarantee"), subject
to Section 11, to each of the Lenders and to the Agent and their respective
successors and assigns that (i) the principal of and interest on the Loans will
be promptly paid in full when due, subject to any applicable grace period,
whether at maturity, by acceleration or otherwise and interest on the overdue
principal, if any, and interest on any interest, to the extent lawful, of the
Loans and all other obligations of the Company to the Lenders or the Agent
hereunder or thereunder will be promptly paid in full or performed, all in
accordance with the terms hereof and thereof; and (ii) in case of any extension
of time of payment or renewal of any of the Loans or of any such other
obligations, the same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, subject to any applicable
grace period, whether at stated maturity, by acceleration or otherwise, subject,
however, in the case of clauses (i) and (ii) above, to the limitations set forth
in Section 10.5. Each Guarantor hereby agrees that its obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Loans or this Agreement, the absence of any action to
enforce the same, any waiver or consent by any of the Lenders with respect to
any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a Subsidiary
Guarantor. Each Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against the Company,
protest, notice and all demands whatsoever and covenants that this Guarantee
will not be discharged except by complete performance of the obligations
contained in the Loans, this Agreement and in this Guarantee. If any Lender or
the Agent is required by any court or otherwise to return to the Company, any
Guarantor, or any custodian, trustee, liquidator or other similar official
acting in relation to the Company or any Guarantor, any amount paid by the
Company or any Guarantor to the Agent or such Lender, this Guarantee, to the
extent theretofore discharged, shall be reinstated in full force and effect.
Each Guarantor further agrees that, as between each Guarantor, on the one hand,
and the Lenders and the Agent, on the other hand, (x) the maturity of the
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obligations guaranteed hereby may be accelerated as provided in Section 7 for
the purposes of this Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any acceleration of such obligations
as provided in Section 7, such obligations (whether or not due and payable)
shall forthwith become due and payable by each Guarantor for the purpose of this
Guarantee.
10.2 Subordination of Guarantee
--------------------------
The obligations of each Guarantor to the Lenders and to the
Agent pursuant to the Guarantee of such Subsidiary Guarantor and this Agreement
are expressly subordinate and subject in right of payment to the prior payment
in full of all Guarantor Senior Indebtedness of such Subsidiary Guarantor, to
the extent and in the manner provided in Section 11.
10.3 Severability
------------
In case any provision of this Guarantee shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
10.4 Limitation of Guarantor's Liability
-----------------------------------
Each Guarantor and by its acceptance hereof each of the
Lenders hereby confirms that it is the intention of all such parties that the
guarantee by such Subsidiary Guarantor pursuant to its Guarantee not constitute
a fraudulent transfer or conveyance for purposes of any Bankruptcy Law, the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any
similar Federal or state law. To effectuate the foregoing intention, the Lenders
and such Guarantor hereby irrevocably agree that the obligations of such
Guarantor under the Guarantee shall be limited to the maximum amount as will,
after giving effect to all other contingent and fixed liabilities of such
Guarantor (including, but not limited to, the Guarantor Senior Indebtedness of
such Guarantor) and after giving effect to any collections from or payments made
by or on behalf of any other Guarantor in respect of the obligations of such
other Guarantor under its Guarantee or pursuant to Section 10.6, result in the
obligations of such Guarantor under the Guarantee not constituting such
fraudulent transfer or conveyance.
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10.5 Guarantors May Consolidate, etc.,
on Certain Terms
---------------------------------
(a) Nothing contained in this Agreement or in the Loans
shall prevent any consolidation or merger of a Guarantor with or into the
Company or another Guarantor or shall prevent any sale or conveyance of the
property of a Guarantor as an entirety or substantially as an entirety, to the
Company or another Guarantor. Upon any such consolidation, merger, sale or
conveyance, the Guarantee given by such Guarantor shall no longer have any force
or effect.
(b) Except as set forth in Section 6.7, nothing contained in
this Agreement or in the Loans shall prevent any consolidation or merger of a
Guarantor with or into a corporation or corporations other than the Company or
another Guarantor (whether or not affiliated with the Guarantor); provided that,
--------
subject to Section 10.5(a), (i) immediately after such transaction, and giving
effect thereto, no Potential Event of Default or Event of Default shall have
occurred as a result of such transaction and be continuing, and (ii) upon any
such consolidation, merger, sale or conveyance, the Guarantee of such Guarantor
set forth in this Section 10, and the due and punctual performance and
observance of all of the covenants and conditions of this Agreement to be
performed by such Guarantor, shall be expressly assumed (in the event that the
Guarantor is not the surviving corporation in the merger), by supplemental
indenture satisfactory in form to the Agent, executed and delivered to the
Agent, by the corporation formed by such consolidation, or into which the
Guarantor shall have merged, or by the corporation that shall have acquired such
property. In the case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor corporation, by supplemental indenture
executed and delivered to the Agent and satisfactory in form and substance to
the Agent of the due and punctual performance of all of the covenants and
conditions of this Agreement to be performed by the Guarantor, such successor
corporation shall succeed to and be substituted for the Guarantor with the same
effect as if it had been named herein as a Guarantor.
10.6 Contribution
------------
In order to provide for just and equitable contribution among
the Guarantors, the Guarantors agree, inter se, that in the event any payment or
-----
distribution is made by any Guarantor (a "Funding Guarantor") under its
Guarantee, such Funding Guarantor shall be entitled to a contribution from all
other
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Guarantors in a pro rata amount based on the Adjusted Net Assets of each
--- ----
Guarantor (including the Funding Guarantor) for all payments, damages and
expenses incurred by that Funding Guarantor in discharging the Company's
obligations with respect to the Obligations. "Adjusted Net Assets" of such
Guarantor at any date shall mean the lesser of (x) the amount by which the fair
value of the property of such Guarantor exceeds the total amount of liabilities,
including, without limitation, contingent liabilities (after giving effect to
all other fixed and contingent liabilities incurred or assumed on such date
(other than liabilities of such Guarantor under Subordinated Indebtedness)), but
excluding liabilities under the Guarantee, of such Guarantor at such date and
(y) the amount by which the present fair salable value of the assets of such
Guarantor at such date exceeds the amount that will be required to pay the
probable liabilities of such Guarantor on its debts including, without
limitation, Guarantor Senior Indebtedness (after giving effect to all other
fixed and contingent liabilities incurred or assumed on such date and after
giving effect to any collection from any Subsidiary of such Guarantor in respect
of the obligations of such Subsidiary under the Guarantee), excluding debt in
respect of the Guarantee of such Guarantor, as they become absolute and matured.
10.7 Waiver of Subrogation
---------------------
Each Guarantor hereby irrevocably waives any claim or other
rights which it may now or hereafter acquire against the Company that arise from
the existence, payment, performance or enforcement of such Guarantor's
obligations under its Guarantee and this Agreement, including, without
limitation, any right of subrogation, reimbursement, exoneration,
indemnification, and any right to participate in any claim or remedy of any
Lender against the Company, whether or not such claim, remedy or right arises in
equity, or under contract, statute or common law, including, without limitation,
the right to take or receive from the Company, directly or indirectly, in cash
or other property or by set-off or in any other manner, payment or security on
account of such claim or other rights. If any amount shall be paid to any
Guarantor in violation of the preceding sentence and the Loans shall not have
been paid in full, such amount shall be deemed to have been paid to such
Guarantor for the benefit of, and held in trust for the benefit of, the Lenders,
and shall, subject to the provisions of Section 8, Section 10.2 and Section 11,
forthwith be paid to the Agent for the benefit of such Lenders to be credited
and applied upon the Loans, whether matured or unmatured, in accordance with the
terms of this Agreement. Each Guarantor acknowledges that it will re-
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ceive direct and indirect benefits from the financing arrangements contemplated
by this Agreement and that the waiver set forth in this Section 10.7 is
knowingly made in contemplation of such benefits.
10.8 Evidence of Guarantee
---------------------
To evidence their guarantees to the Lenders set forth in this
Section 10, each of the Guarantors hereby agrees to execute the notation of
Guarantee in substantially the form included in Exhibit VIII. Each such notation
------------
of Guarantee shall be signed on behalf of each Guarantor by two Officers, or an
Officer and an assistant Secretary or one Officer shall sign and one Officer or
an assistant Secretary (each of whom shall, in each case, have been duly
authorized by all requisite corporate actions) shall attest to such notation of
Guarantee.
10.9 Waiver of Stay, Extension or Usury Laws
---------------------------------------
Each Guarantor covenants that it will not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay or extension law or any usury law or other law that would prohibit
or forgive such Guarantor from performing its Guarantee as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Agreement; and each Guarantor hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Agent, but will suffer and permit the execution of every such power as
though no such law had been enacted.
SECTION 11 SUBORDINATION OF GUARANTEE OBLIGATIONS
11.1 Guarantee Obligations Subordinated to
Guarantor Senior Indebtedness
-------------------------------------
The Lenders covenant and agree that payments in respect of the
obligations by a Guarantor in respect of its Guarantee (collectively, as to any
Guarantor, its "Guarantee Obligations") shall be subordinated in accordance with
the provisions of this Section 11 to the prior payment in full, in cash or Cash
Equivalents, of all amounts payable in respect of Guarantor Senior Indebtedness
of such Guarantor whether now outstanding or hereafter created (including any
interest accruing subsequent to an event specified in Section 7.6 or 7.7 whether
or not such interest is an allowed claim against such Guaran-
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tor), that the subordination is for the benefit of the holders of Guarantor
Senior Indebtedness, and that each holder of Guarantor Senior Indebtedness
whether now outstanding or hereafter created, incurred, assumed or guaranteed
shall be deemed to have acquired Guarantor Senior Indebtedness in reliance upon
the covenants and provisions contained in this Agreement.
11.2 Priority and Payment Over of
Proceeds in Certain Events
----------------------------
(a) Subordination of Guarantee Obligations on Dissolution,
-----------------------------------------------------
Liquidation or Reorganization of Such Guarantor. Upon any payment or
-----------------------------------------------
distribution of assets or securities of any Guarantor of any kind or character,
whether in cash, property or securities, upon any dissolution or winding up or
total or partial liquidation or reorganization of such Guarantor, whether
voluntary or involuntary or in bankruptcy, insolvency, receivership or other
proceedings (other than a liquidation or dissolution of such Guarantor into the
Company or another Guarantor), all Guarantor Senior Indebtedness of such
Guarantor (including any interest accruing subsequent to an event specified in
Section 7.6 or 7.7 whether or not such interest is an allowed claim enforceable
against such Guarantor) shall first be paid in full in cash or Cash Equivalents,
before the Lenders shall be entitled to receive any payment with respect to any
Guarantee Obligations of such Guarantor and upon any such dissolution or winding
up or liquidation or reorganization, any payment or distribution of assets or
securities of such Guarantor of any kind or character, whether in cash, property
or securities, to which the Lenders would be entitled except for the provisions
of this Section 11 shall be made by such Guarantor or by any receiver, trustee
in bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, directly to the holders of the Guarantor Senior Indebtedness of
such Guarantor or their representatives to the extent necessary to pay all of
the Guarantor Senior Indebtedness of such Guarantor to the holders of such
Guarantor Senior Indebtedness.
(b) Subordination of Guarantee Obligations on Default on
----------------------------------------------------
Senior Indebtedness. Upon the maturity of any Senior Indebtedness of a Guarantor
-------------------
by lapse of time, acceleration or otherwise, all Senior Indebtedness of such
Guarantor then due and payable shall first be paid in full in cash or Cash
Equivalents, before any payment is made by such Guarantor or any Person acting
on behalf of such Guarantor with respect to the Guarantee Obligations of such
Guarantor. No direct or indirect payment by any Guarantor or any Person acting
on behalf of such Guarantor of any Guarantee Obligations of such Guarantor
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whether pursuant to the terms of the Loans or upon acceleration or otherwise
shall be made, if at the time of such payment, there exists a default (as
defined in the document governing any Senior Indebtedness of such Guarantor) in
the payment of all or any portion of any principal, interest, fees, letter of
credit reimbursement obligations or other amounts payable in respect of any
Senior Indebtedness of such Guarantor and such default shall not have been cured
or waived or the benefits of this sentence waived by or on behalf of the holders
of such Senior Indebtedness. In addition, during the continuation of any other
event of default with respect to any Senior Indebtedness of such Guarantor
pursuant to which the maturity thereof may be accelerated, upon the earlier of
(i) receipt by the Agent of written notice from the agent or representative of
the holders of such Senior Indebtedness or (ii) if such non-payment default
results from the acceleration of the Loans, the date of acceleration of the
Loans, no such payment may be made by such Guarantor under its Guarantee for a
period ("Guarantor Payment Blockage Period") commencing on the date of receipt
of such notice or the date of the acceleration referred to in clause (ii) above,
as the case may be, and ending on the earlier to occur of 179 days after receipt
of such written notice by the Agent (unless such Guarantor Payment Blockage
Period shall be terminated by written notice to the Agent from such agent) or
the date of the acceleration of the Loans, as the case may be (provided such
Guarantor Senior Indebtedness shall theretofore not have been accelerated).
Notwithstanding anything herein to the contrary, (x) in no event will a
Guarantor Payment Blockage Period or successive Guarantor Payment Blockage
Periods with respect to the same payment on such Guarantee extend beyond 179
days from the date the payment on such Guarantee was due and (y) there must be
180 consecutive days in any 365-day period during which no Guarantor Payment
Blockage Period is in effect. For all purposes of this Section 11.2(b), no event
of default which existed or was continuing on the date of the commencement of
any Guarantor Payment Blockage Period with respect to the Senior Indebtedness
initiating such Guarantor Payment Blockage Period shall be, or be made, the
basis for the commencement of a second Guarantor Payment Blockage Period by the
holders or by the agent or other representative of such Senior Indebtedness
whether or not within a period of 365 consecutive days, unless such event of
default shall have been cured or waived for a period of not less than 90
consecutive days.
(c) Rights and Obligations of the Lenders. In the event that,
-------------------------------------
notwithstanding the foregoing provisions prohibiting such payment or
distribution, the Agent or any Lender shall have received any payment in respect
of any Guarantee Obliga-
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tion with respect to the Loans (other than as permitted by Sections (a) and (b)
of this Section 11.2) at a time when such payment is prohibited by this Section
11.2, then and in such event such payment or distribution shall be received and
held in trust for the holders of the Guarantor Senior Indebtedness and shall be
paid over or delivered to the holders of the Guarantor Senior Indebtedness
remaining unpaid to the extent necessary to pay in full in cash or Cash
Equivalents all Guarantor Senior Indebtedness in accordance with their terms
after giving effect to any concurrent payment or distribution to the holders of
such Guarantor Senior Indebtedness.
Nothing contained in this Section 11 will limit the right of
the Lenders to take any action to accelerate the maturity of the Loans pursuant
to Section 7 or to pursue any rights or remedies hereunder or otherwise.
Upon any payment or distribution of assets or securities
referred to in this Section 11, the Lenders (notwithstanding any other provision
of this Agreement) shall be entitled to rely upon any order or decree of a court
of competent jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, and upon a certificate of the receiver,
trustee in bankruptcy, liquidating trustee, agent or other Person making any
such payment or distribution, delivered to the Lender for the purpose of
ascertaining the Persons entitled to participate in such distribution, the
holders of Guarantor Senior Indebtedness, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Section 11.
The Guarantors shall promptly give written notice to each of
the Lenders of any default or event of default under any Guarantor Senior
Indebtedness or under any agreement pursuant to which Guarantor Senior
Indebtedness may have been issued, and, in the event of any such event of
default, shall provide to the Agent the names and address of the trustees or
other representatives of holders of such Guarantor Senior Indebtedness.
With respect to the holders and owners of Guarantor Senior
Indebtedness, each Lender undertakes to perform only such obligations on the
part of such Lender as are specifically set forth in this Section 11, and no
implied covenants or obligations with respect to the holders or owners of
Guarantor Senior Indebtedness shall be read into this Agreement against the
Lenders. The Lenders shall not be deemed to owe any fiduciary
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duty to the holders or owners of Guarantor Senior Indebtedness or to the agent
under the Senior Credit Facility or any other representative of the holders of
the Guarantor Senior Indebtedness.
11.3 Payments May Be Paid Prior to Dissolution
-----------------------------------------
Nothing contained in this Section 11 or elsewhere in this
Agreement shall prevent or delay (i) Subsidiary Guarantors, except under the
conditions described in Section 11.2, from making payments at any time for the
purpose of making payments in respect of their respective Guarantee Obligations,
or from depositing with the Agent any moneys for such payments, or (ii) subject
to Section 11.2, the application by the Agent of any moneys deposited with it
for the purpose of making payments in respect of Guarantee Obligations.
11.4 Rights of Holders of Subsidiary Guarantor
Senior Indebtedness Not To Be Impaired
-----------------------------------------
No right of any present or future holder of any Guarantor
Senior Indebtedness to enforce subordination as provided in this Section 11
shall at any time in any way be prejudiced or impaired by any act or failure to
act by any such holder, or by any noncompliance by the Guarantors with the terms
and provisions and covenants herein, regardless of any knowledge thereof any
such holder may have or otherwise be charged with. Without in any way limiting
the generality of the foregoing Section, such holders of Guarantor Senior
Indebtedness may, at any time and from time to time without impairing or
releasing the subordination provided in this Section 11 or the obligations of
the Lenders hereunder to the holders of Guarantor Senior Indebtedness, do any
one or more of the following: (i) change the manner, place, terms or time of
payment of, or renew or alter, Guarantor Senior Indebtedness or otherwise amend
or supplement in any manner Guarantor Senior Indebtedness or any instrument
evidencing the same or any agreement under which any Guarantor Senior
Indebtedness is outstanding; (ii) sell, exchange, release, or otherwise deal
with any property pledged, mortgaged, or otherwise securing Guarantor Senior
Indebtedness or fail to perfect or delay in the perfection of the security
interest in such property; (iii) release any Person liable in any manner for the
collection of Guarantor Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Guarantors and any other Person. Each Lender
by purchasing or accepting a Note waives any and all notice of the creation,
modification, renewal, extension or accrual of any Guarantor Senior Indebtedness
and notice of or
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proof of reliance by any holder or owner of Guarantor Senior Indebtedness upon
this Section 11 and the Guarantor Senior Indebtedness shall conclusively be
deemed to have been created, contracted or incurred in reliance upon this
Section 11, and all dealings between the Guarantors and the holders and owners
of the Guarantor Senior Indebtedness shall be deemed to have been consummated in
reliance upon this Section 11.
The provisions of this Section 11 are intended to be for the
benefit of, and shall be enforceable directly by, the holders of the Guarantor
Senior Indebtedness.
11.5 Subrogation
-----------
Upon the payment in full in accordance with the terms of
Section 11.2 of all amounts payable under or in respect of the Guarantor Senior
Indebtedness, the Lenders shall be subrogated to the rights of the holders of
such Guarantor Senior Indebtedness to receive payments or distributions of
assets of the Guarantors made on such Guarantor Senior Indebtedness until the
Guarantee Obligations shall be paid in full in cash or Cash Equivalents in a
manner satisfactory to the holders of such Guarantor Senior Indebtedness in
accordance with the terms of Section 11.2; and for purposes of such subrogation
no payments or distributions to holders of such Guarantor Senior Indebtedness of
any cash, property or securities to which the Lenders would be entitled except
for the provisions of this Section 11, and no payment over pursuant to the
provisions of this Section 11 to holders of such Guarantor Senior Indebtedness
by the Lenders, shall, as between such Guarantor, its creditors other than
holders of such Guarantor Senior Indebtedness and the Lenders, be deemed to be a
payment by such Guarantor to or on account of such Guarantor Senior
Indebtedness, it being understood that the provisions of this Section 11 are
solely for the purpose of defining the relative rights of the holders of such
Guarantor Senior Indebtedness, on the one hand, and the Lenders, on the other
hand. A release of any claim by any holder of Guarantor Senior Indebtedness
shall not limit the Lenders' rights of subrogation under this Section 11.5.
If any payment or distribution to which the Lenders would
otherwise have been entitled but for the provisions of this Section 11 shall
have been applied, pursuant to the provisions of this Section 11, to the payment
of all amounts payable under the Guarantor Senior Indebtedness, then and in such
case, the Lenders shall be entitled to receive from the holders of such
Guarantor Senior Indebtedness at the time outstanding the full amount of any
payments or distributions received by such
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holders of Guarantor Senior Indebtedness in excess of the amount sufficient to
pay all Guarantor Senior Indebtedness payable under or in respect of the
Guarantor Senior Indebtedness in full in cash or Cash Equivalents in accordance
with the terms of Section 11.2.
11.6 Obligations of the Guarantors
Unconditional
-----------------------------
Nothing contained in this Section 11 or elsewhere in this
Agreement or in the Guarantees is intended to or shall impair as between the
Guarantors and the Lenders the obligations of the Guarantors, which are absolute
and unconditional, to pay to the Lenders the Guarantee Obligations as and when
the same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the Lenders and creditors of
the Guarantors other than the holders of the Guarantor Senior Indebtedness, nor
shall anything herein or therein prevent the Lenders from exercising all
remedies otherwise permitted by applicable law upon default under this
Agreement, subject to the rights, if any, under this Section 11 of the holders
of such Guarantor Senior Indebtedness in respect of cash, property or securities
of the Guarantors received upon the exercise of any such remedy.
The failure to make a payment in respect of Guarantee
Obligations by reason of any provision of this Section 11 shall not prevent the
occurrence of an Event of Default under Section 7.
11.7 Lenders Authorize Agent to
Effectuate Subordination
--------------------------
Each Lender hereby authorizes and expressly directs the Agent
on its behalf to take such action as may be necessary or appropriate to
effectuate the subordination provided in this Section 11 and appoints the Agent
its attorney in fact for such purpose, including, without limitation, in the
event of any dissolution, winding up, liquidation or reorganization of any
Guarantor (whether in bankruptcy, insolvency, receivership, reorganization or
similar proceedings or upon an assignment for the benefit of creditors or any
other similar remedy or otherwise) tending towards liquidation of the business
and assets of any Guarantor, the immediate filing of a claim for the unpaid
balance of the Guarantee Obligations in the form required in said proceedings
and causing said claim to be approved. If the Agent does not file a proper claim
or proof of debt in the form required in such proceeding prior to 30 days before
the expira-
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tion of the time to file such claim or claims, then the holders of the Guarantor
Senior Indebtedness are hereby authorized to have the right to file and are
hereby authorized to file an appropriate claim for and on behalf of the Lenders.
In the event of any such proceeding, until the Guarantor Senior Indebtedness is
paid in full in cash or Cash Equivalents, without the consent of the holders of
a majority in principal amount outstanding of Guarantor Senior Indebtedness, no
Lender shall waive, settle or compromise any such claim or claims relating to
the Obligations that such Lender now or hereafter may have against the
Guarantors.
SECTION 12 MISCELLANEOUS
12.1 Representation of the Lenders
-----------------------------
Each Lender hereby represents that it is a commercial lender
which makes loans in the ordinary course of its business and that it will make
the Loans hereunder for its own account or the account of its affiliates in the
ordinary course of such business.
12.2 Participations in and Assignments
of Loans and Notes
---------------------------------
A. Each Lender shall have the right at any time to sell,
assign, transfer or negotiate all or any portion of its Notes or its Loan
Commitment in an aggregate amount of not less than $1,000,000 to any Eligible
Assignee, other than to an Eligible Assignee which has, or has an Affiliate
which has, a principal line of business similar to any principal line of
business of the Company or any of its Subsidiaries. In the case of any sale,
transfer or negotiation of all or part of the Notes or any Loan Commitment
authorized under this Section 12.2A, the assignee, transferee or recipient shall
become a party to this Agreement as a Lender by execution of an assignment and
assumption agreement; provided that (i) at such time Section 2.1A or 2.2A, as
--------
the case may be, shall be deemed modified to reflect the Loan Commitment of such
new Lender and of the existing Lenders, (ii) upon surrender of the Notes, new
Notes will be issued, at the Company's expense, to such new Lender and to the
assigning Lender, such new Notes to be in conformity with the requirements of
Section 2.1D or 2.2E as the case may be (with appropriate modifications) to the
extent needed to reflect the revised Loan Commitment, and (iii) the Agent shall
receive at the time of each such assignment, from the assigning or assignee
Lender, the payment of a non-
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refundable assignment fee of $3,500; and provided, further, that such transfer
-------- -------
or assignment will not be effective until recorded by the Agent on the Register
pursuant to Section 5.13. To the extent of any assignment pursuant to this
Section 12.2A, the assigning Lender shall be relieved of its obligations
hereunder with respect to its assigned Loan Commitment, and the assignee,
transferee or recipient shall have, to the extent of such sale, assignment,
transfer or negotiation, the same rights, benefits and obligations as it would
if it were a Lender with respect to such Notes or Loan Commitment, including,
without limitation, the right to approve or disapprove actions which, in
accordance with the terms hereof, require the approval of a Lender. At the time
of each assignment pursuant to this Section 12.2A to an Eligible Assignee which
is not already a Lender hereunder and which is not a United States Person (as
such term is defined in Section 7701(a)(30) of the Internal Revenue Code) for
Federal income tax purposes, the respective Eligible Assignee shall provide to
the Company and the Agent the appropriate Internal Revenue Service Forms (and,
if applicable, a Section 12.2E(ii) Certificate) described in Section 12.2E.
B. Each Lender may grant participations in all or any part of
its Notes or its Loan Commitment in an aggregate amount of not less than
$1,000,000 to any Eligible Assignee, other than to an Eligible Assignee which
has, or has an Affiliate which has, a principal line of business similar to any
principal line of business of the Company or any of its Subsidiaries.
C. The Company shall, at its own cost and expense, provide
such certificates, acknowledgments and further assurances in respect of this
Agreement and the Loans as any Lender may reasonably require in connection with
any participation, transfer or assignment pursuant to this Section 12.2.
D. Nothing in this Agreement shall prevent or prohibit any
Lender from pledging its Loan and Notes hereunder to a Federal Reserve Bank in
support of borrowings made by such Lender from such Federal Reserve Bank.
E. Each Lender that is an assignee or transferee of an
interest under this Agreement pursuant to Section 12.2A (unless the respective
Lender was already a Lender hereunder immediately prior to such assignment or
transfer) and that is not a United States Person (as such term is defined in
Section 7701(a)(30) of the Internal Revenue Code) agrees to deliver to the
Company and the Agent, on the date of such assignment or
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transfer to such Lender, (i) two accurate and complete original signed copies of
Internal Revenue Service Form 4224 or 1001 (or successor forms) certifying to
such Lender's entitlement to a complete exemption from United States withholding
tax with respect to payments to be made under this Agreement and under any Note,
or (ii) if the Lender is not a "bank" within the meaning of Section 881(c)(3)(A)
of the Internal Revenue Code and cannot deliver either Internal Revenue Service
Form 1001 or 4224 pursuant to clause (i) above, two accurate and complete
original signed copies of Internal Revenue Service Form W-8 (or successor form)
certifying to such Lender's entitlement to a complete exemption from United
States withholding tax with respect to payments of interest to be made under
this Agreement and under any Note. In addition, each Lender agrees that, when a
lapse in time or change in circumstances renders the previous certification
obsolete or inaccurate in any material respect, it will deliver to the Company
and the Agent two new accurate and complete original signed copies of Internal
Revenue Service Form 4224 or 1001, or Form W-8, as the case may be, and such
other forms as may be required in order to confirm or establish the entitlement
of such Lender to a continued exemption from or reduction in United States
withholding tax with respect to payments under this Agreement and any Note, or
it shall immediately notify the Company and the Agent of its inability to
deliver any such Form or Certificate. Subject to Section 12.2A and the
immediately succeeding sentence, the Company shall be entitled, to the extent it
is required to do so by law, to deduct or withhold income or similar taxes
imposed by the United States (or any political subdivision or taxing authority
thereof or therein) from interest, fees or other amounts payable hereunder or
made on any other Loan Document for the account of any Lender which is not a
United States Person (as such term is defined in Section 7701(a)(30) of the
Internal Revenue Code) for U.S. Federal income tax purposes to the extent that
such Lender has not provided to the Company U.S. Internal Revenue Service Forms
that establish a complete exemption from such deduction or withholding.
Notwithstanding anything to the contrary contained in the preceding sentence or
elsewhere in this Section 12.2E and except as set forth in Section 12.2A, the
Company agrees to pay additional amounts and to indemnify and hold harmless each
Lender (without regard to the identity of the jurisdiction requiring the
deduction or withholding), and reimburse such Lender upon its written request,
in respect of any amounts deducted or withheld by it as described in the
immediately preceding sentence as a result of any changes after the date of any
assignment or transfer in any applicable law, treaty, governmental rule,
regulation, guide-
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line or order, or in the interpretation thereof, relating to the deducting or
withholding of income or similar Taxes.
12.3 Expenses
--------
Whether or not the transactions contemplated hereby shall be
consummated, the Company agrees to promptly pay (i) all the actual and
reasonable costs and expenses of preparation of the Loan Documents and all the
costs of furnishing all opinions by counsel for the Company (including without
limitation any opinions requested by the Lenders as to any legal matters arising
hereunder), and of the Company's performance of and compliance with all
agreements and conditions contained herein on its part to be performed or
complied with; (ii) the actual and reasonable fees, expenses and disbursements
of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ in connection with the negotiation, preparation,
execution and administration of the Loan Documents and the Loans hereunder, and
any amendments, modifications and waivers hereto or thereto and consents to
departures from the terms hereof and thereof; and (iii) after the occurrence of
an Event of Default, actual and reasonable all costs and expenses (including
actual and reasonable attorneys fees, including allocated costs of internal
counsel, and costs of settlement) incurred by the Lenders or the Agent in
enforcing any Obligations of or in collecting any payments due from the Company
hereunder or under the Notes by reason of such Event of Default or in connection
with any refinancing or restructuring of the credit arrangements provided under
this Agreement in the nature of a "work-out" or of any insolvency or bankruptcy
proceedings.
12.4 Indemnity
---------
In addition to the payment of expenses pursuant to Section
12.3, whether or not the transactions contemplated hereby shall be consummated,
the Company agrees to indemnify, pay and hold each of the Lenders, the Agent and
any holder of any of the Notes, and each of their respective officers,
directors, employees, agents, representatives and affiliates (collectively
called the "Indemnitees"), harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature whatsoever
(including, without limitation, the actual and reasonable fees and disbursements
of counsel for such Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
such Indemnitee shall be designated as a party thereto), which may be suffered
by, imposed on, incurred by, or asserted against that Indemnitee,
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in any manner resulting from, connected with, in respect of, relating to or
arising out of this Agreement, the other Loan Documents, the Commitment Letter,
the Lenders' agreements to make the Loans or the use or intended use of any of
the proceeds of the Loans hereunder, the issuance of the Exchange Notes or the
Take-Out Securities or the Recapitalization (the "Indemnified Liabilities");
provided that the Company shall have no obligation to an Indemnitee hereunder
--------
with respect to Indemnified Liabilities (i) to the extent such liabilities are
finally judicially determined to have resulted solely from (A) the gross
negligence or willful misconduct of that Indemnitee or (B) the failure of such
Indemnitee to perform its obligations under any Loan Document or (C) such
Indemnitee's violation of law or (ii) in connection with the obligations of any
Indemnitee under any Loan Document or for any transfer fees. To the extent that
the undertaking to indemnify, pay and hold harmless set forth in the preceding
sentence may be unenforceable because it is violative of any law or public
policy, the Company shall contribute the maximum portion which it is permitted
to pay and satisfy under applicable law to the payment and satisfaction of all
Indemnified Liabilities incurred by the Indemnitees or any of them.
12.5 Setoff
------
Subject to Section 8, in addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence and during the continuance of any Event of Default,
each Lender, the Agent and each subsequent holder of any Note is hereby
authorized by the Company at any time or from time to time, without notice to
the Company, or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and to apply any and all deposits (general
or special, including, but not limited to, Indebtedness evidenced by
certificates of deposit, whether matured or unmatured but not including trust
accounts or any other accounts held for the benefit of another Person) and any
other Indebtedness at any time held or owing by such Person or any such
subsequent holder to or for the credit or the account of the Company against and
on account of the obligations and liabilities of the Company to such Person or
such subsequent holder under this Agreement and the Notes, including, but not
limited to, all claims of any nature or description arising out of or connected
with this Agreement or the Notes, irrespective of whether or not (a) such Person
or such subsequent holder shall have made any demand hereunder or (b) such
Person or such subsequent holder shall have declared the principal of or the
interest on its portion of the Loans
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and its Notes and other amounts due hereunder to be due and payable as permitted
by Section 7 and although said obligations and liabilities, or any of them, may
be contingent or unmatured.
12.6 Amendments and Waivers
----------------------
No amendment, modification, termination or waiver of any term
or provision of this Agreement, of the Notes, any Guarantee or, prior to the
execution and delivery thereof, of the form of the Registration Rights Agreement
or the form of the Senior Subordinated Indenture or consent to any departure by
the Company or any Guarantor therefrom, shall in any event be effective without
the prior written concurrence of the Company or such Guarantor, as the case may
be, and the Agent and the Required Lenders, and, upon the request of any Lender,
the receipt of a written opinion of counsel of the Company addressed to the
Lenders to the effect that such amendment, modification, termination, waiver or
consent does not violate or conflict with any of the terms and provisions of the
Senior Credit Facility or any other Contractual Obligation of the Company;
provided that, notwithstanding the third sentence of Section 12.15, without the
--------
prior written consent of each Lender affected, an amendment, modification,
termination or waiver of this Agreement, any Notes, any Guarantee, and, prior to
the execution and delivery thereof, of the form of Registration Rights Agreement
and the form of Senior Subordinated Indenture or consent to departure from a
term or provision hereof or thereof may not: (i) reduce the principal amount of
Notes whose holders must consent to any such amendment, modification,
termination, waiver or consent; (ii) reduce the rate of or extend the time for
payment of principal or interest on any Note; (iii) reduce the principal amount
of any Note; (iv) make any Note payable in money other than that stated in the
Note; (v) make any change in Section 2.5A(iv) or in the definition of Change of
Control, in the last paragraph of Section 7 or in Section 8.5, 11.5 or 12.6;
(vi) reduce the rate or extend the time of payment of fees or other compensation
payable to the Lenders hereunder; (vii) modify the provisions of Section 8 or
any of the defined terms related thereto in any manner adverse to the Lenders;
or (viii) waive performance by the Company of its obligations under, or consent
to any departure from any of the terms and provisions of, Section 2.5A(iv); and
provided, further, that without the consent of the Agent, no such amendment,
-------- -------
modification, termination or waiver may amend, modify, terminate or waive any
provision of Section 9 as the same applies to the Agent or any other provision
of this Agreement as it relates to the rights or obligations of the Agent. No
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amendment, modification or waiver of any provision of this Agreement, the Notes,
any Guarantee or the form of the Senior Subordinated Indenture shall adversely
affect the rights of the holders of Senior Indebtedness or the holders of
Guarantor Senior Indebtedness without their consent. Any waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which it was given. No notice to or demand on the Company in any case shall
entitle the Company to any further notice or demand in similar or other
circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this Section 12.6 shall be binding upon each holder
of the Notes at the time outstanding, each further holder of the Notes, and, if
signed by the Company or a Guarantor, on the Company and such Guarantor.
12.7 Independence of Covenants
-------------------------
All covenants hereunder shall be given independent effect so
that if a particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception to, or be
otherwise within the limitation of, another covenant shall not avoid the
occurrence of an Event of Default or Potential Event of Default if such action
is taken or condition exists.
12.8 Entirety
--------
The Loan Documents, the Commitment Letter and the Assignment
Agreement embody the entire agreement of the parties and supersede all prior
agreements and understandings, if any, relating to the subject matter hereof and
thereof.
12.9 Notices
-------
Unless otherwise provided herein, any notice or other
communications herein required or permitted to be given shall be in writing and
may be personally served, telecopied, telexed or sent by mail and shall be
deemed to have been given when delivered in person, upon receipt of telecopy or
telex against receipt of answer back or four Business Days after depositing it
in the mail, registered or certified, with postage prepaid and properly
addressed; provided that notices shall not be effective until received. For the
--------
purposes hereof, the addresses of the parties hereto (until notice of a change
thereof is delivered as provided in this Section 12.9) shall be set forth under
each party's name on the signature pages hereto.
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12.10 Survival of Warranties and Certain Agreements
---------------------------------------------
A. All agreements, representations and warranties made herein
shall survive the execution and delivery of this Agreement and the Commitment
Letter, the making of the Loans hereunder and the execution and delivery of the
Notes and, notwithstanding the making of the Loans, the execution and delivery
of the Notes or any investigation made by or on behalf of any party, shall
continue in full force and effect. The closing of the transactions herein
contemplated shall not prejudice any right of one party against any other party
in respect of anything done or omitted hereunder or in respect of any right to
damages or other remedies.
B. Notwithstanding anything in this Agreement or implied by
law to the contrary, the agreements of the Company set forth in Sections 12.3,
12.4, 12.14, 12.15, 12.17, 12.19 and 12.22 shall survive the payment of the
Loans and the Notes and the termination of this Agreement.
12.11 Failure or Indulgence Not Waiver;
Remedies Cumulative
---------------------------------
No failure or delay on the part of the Agent or any Lender or
any holder of any Note in the exercise of any power, right or privilege
hereunder, under a Guarantee or under the Notes shall impair such power, right
or privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privilege. All rights and remedies existing under this Agreement, under
a Guarantee or the Notes are cumulative to and not exclusive of any rights or
remedies otherwise available.
12.12 Severability
------------
In case any provision in or obligation under this Agreement,
under a Guarantee or the Notes shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
12.13 Headings
--------
Section and Section headings in this Agreement are included
herein for convenience of reference only and shall not
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constitute a part of this Agreement for any other purpose or be given any
substantive effect.
12.14 Applicable Law
--------------
THIS AGREEMENT, EACH GUARANTEE AND THE NOTES SHALL BE GOVERNED
BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW.
12.15 Successors and Assigns; Subsequent
Holders of Notes
----------------------------------
This Agreement shall be binding upon the parties hereto and
their respective successors and assigns and shall inure to the benefit of the
parties hereto and the successors and assigns of the Lenders. The terms and
provisions of this Agreement and each Guarantee shall inure to the benefit of
any assignee or transferee of the Notes pursuant to Section 12.2A, and in the
event of such transfer or assignment, the rights and privileges herein conferred
upon the Lenders shall automatically extend to and be vested in such transferee
or assignee, all subject to the terms and conditions hereof. Except as provided
in Section 12.6, in determining whether the holders of a sufficient aggregate
principal amount of the Loans shall have consented to any action under this
Agreement, any amount of the Loans owned or held by the Company, any Subsidiary
Guarantor or any of their respective Affiliates shall be disregarded. The
Company's rights or any interest therein hereunder may not be assigned without
the prior express written consent of each of the Lenders.
12.16 Counterparts; Effectiveness
---------------------------
This Agreement and any amendments, waivers, consents or
supplements may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument. This Agreement shall become
effective upon the execution of a counterpart hereof by each of the parties
hereto, and delivery thereof to the Agent or, in the case of the Lenders,
written telex or facsimile notice or telephonic notification (confirmed in
writing) of such execution and delivery. The Agent will give the Company and
each Lender prompt notice of the effectiveness of this Agreement.
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12.17 Consent to Jurisdiction; Venue;
Waiver of Jury Trial
-------------------------------
A. Any legal action or proceeding with respect to this
Agreement, any Note or any Guarantee may be brought in the courts of the State
of New York or of the United States for the Southern District of New York, and,
by execution and delivery of this Agreement, each of the parties to this
Agreement hereby irrevocably accepts for itself and in respect of its respective
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Each of the parties to this Agreement hereby further irrevocably waives
any claim that any such courts lack jurisdiction over such party, and agrees not
to plead or claim, in any legal action or proceeding with respect to this
Agreement, the Notes or the Guarantees brought in any of the aforesaid courts,
that any such court lacks jurisdiction over such party. Each of the parties to
this Agreement irrevocably consents to the service of process in any such action
or proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to such party, at its respective address for notices pursuant
to Section 12.9, such service to become effective 30 days after such mailing. To
the extent permitted by law, each of the parties to this Agreement hereby
irrevocably waives any objection to such service of process and further
irrevocably waives and agrees not to plead or claim in any action or proceeding
commenced hereunder or under any Note or any Guarantee that service of process
was in any way invalid or ineffective. Nothing herein shall affect the right of
any party to this Agreement to serve process in any other manner permitted by
law or to commence legal proceedings or otherwise proceed against any party in
any other jurisdiction.
B. Each of the parties to this Agreement 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, the Notes or the Guarantees brought in the courts referred
to in clause A above 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.
C. Each of the parties to this Agreement hereby irrevocably
waives all right to a trial by jury in any action, proceeding or counterclaim
arising out of or relating to this Agreement, the Notes or the Guarantees or the
transactions contemplated hereby or thereby.
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12.18 Payments Pro Rata
-----------------
A. The Agent agrees that promptly after its receipt of each
payment of any interest or premium on or principal of the Notes from or on
behalf of the Company or any Subsidiary Guarantor, it shall, except as otherwise
provided in this Agreement, distribute such payment to the Lenders (other than
any Lender that has consented in writing to waive its pro rata share of such
--- ----
payment) pro rata based upon their respective pro rata shares, if any, of such
--- ----
payment.
B. Each of the Lenders agrees that, if it should receive any
amount hereunder (whether by voluntary payment, by realization upon security, by
the exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Loan Documents, or otherwise)
which is applicable to the payment of the principal of, or interest on, the
Loans of a sum which with respect to the related sum or sums received by other
Lenders is in a greater proportion than the total of such Obligation then owed
and due to such Lender bears to the total of such Obligation then owed and due
to all of the Lenders immediately prior to such receipt, then such Lender
receiving such excess payment shall purchase for cash without recourse or
warranty from the other Lenders an interest in the Obligations of the Company to
such Lenders in such amount as shall result in a proportional participation by
all of the Lenders in such amount; provided that, if all or any portion of such
--------
excess amount is thereafter recovered from such Lender, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
12.19 Taxes
-----
A. Any and all payments by the Company hereunder or under any
of the other Loan Documents shall be made free and clear of and without
deduction or withholding for any and all present or future Taxes, unless such
Taxes are required by law or the administration thereof to be deducted or
withheld and excluding (i) in the case of each Lender and the Agent, Taxes
imposed on its net income and franchise taxes imposed on it by the jurisdiction
under the laws of which such Person is organized or any political subdivision
thereof, (ii) in the case of each such Lender and the Agent, any Taxes that are
in effect and that would apply to a payment
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to such Person, as applicable, as of the Closing Date, and (iii) if any Person
acquires any interest in this Agreement (a "Transferee"), any Taxes to the
extent that they are in effect and would apply to a payment to such Transferee
as of the date of the acquisition of such interest, as the case may be (all such
nonexcluded Taxes being hereinafter referred to as "Covered Taxes"). If the
Company shall be required by Law or the administration thereof to deduct or
withhold any Covered Taxes from or in respect of any sum payable hereunder or
under any other Loan Document, (a) unless such requirement results from the
failure of the payee to perform its obligations under Section 12.2E, the sum
payable shall be increased as may be necessary so that after making all required
deductions or withholdings (including deductions or withholdings applicable to
additional amounts paid under this paragraph), the Lender receives an amount
equal to the sum it would have received if no such deduction or withholding had
been made; (b) the Company shall make such deductions or withholdings; and (c)
the Company forthwith shall pay the full amount deducted or withheld to the
relevant taxation or other authority in accordance with applicable Law.
B. The Company agrees to pay forthwith any present or future
stamp documentary taxes or any other excise or property taxes, charges or
similar levies (all such taxes, charges and levies being herein referred to as
"Other Taxes") imposed by any jurisdiction (or any political subdivision or
taxing authority thereof or therein) which arise from any payment made by the
Company hereunder or under any of the other Loan Documents or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any of the other Loan Documents.
C. The Company agrees to indemnify the Agent and each of the
Lenders for the full amount of Covered Taxes or Other Taxes not deducted or
withheld and paid by the Company in accordance with Sections 12.19A and 12.19B
to the relevant taxation or other authority and any Taxes other than Covered
Taxes or Other Taxes imposed by any jurisdiction on amounts payable by the
Company under this Section 12.19 paid by the Lender or the Agent and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not any such Taxes or Other Taxes were correctly or
legally asserted. Payment under this indemnification shall be made within 30
days from the date the Agent or such Lender makes written demand therefor. A
certificate as to the amount of such Taxes or Other Taxes and evidence of
payment thereof submitted to the Company shall be prima facie evidence, absent
manifest error, of the amount due from the Company to the Agent or such Lender.
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D. The Company shall furnish to the Agent and each of the
Lenders the original or a certified copy of a receipt evidencing any payment of
Taxes or Other Taxes made by the Company as soon as such receipt becomes
available.
E. The provisions of this Section 12.19 shall survive the
termination of the Agreement and repayment of all Obligations.
12.20 Waiver of Stay, Extension or Usury Laws
---------------------------------------
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law or any
usury law or other law that would prohibit or forgive the Company from paying
all or any portion of the principal of or interest on the Loans as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Agreement; and (to the extent
that it may lawfully do so) the Company hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Agent, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
12.21 Requirements of Law
-------------------
(a) In the event that any change in law occurring after the date that any lender
becomes a Lender party to this Agreement with respect to such Lender shall, in
the opinion of such Lender, require that any Bridge Loan Commitment of such
Lender be treated as an asset or otherwise be included for purposes of
calculating the appropriate amount of capital to be maintained by such Lender or
any corporation controlling such Lender, and such change in law shall have the
effect of reducing the rate of return on such Lender's or such corporation's
capital, as the case may be, as a consequence of such Lender's obligations
hereunder to a level below that which such Lender or such corporation, as the
case may be, could have achieved but for such change in law (taking into account
such Lender's or such corporation's policies, as the case may be, with respect
to capital adequacy) by an amount deemed by such Lender to be material, then
from time to time following notice by such Lender to the Company of such change
in law as provided in paragraph (b) of this Section 12.21, within 15 days after
demand by such Lender, the Company shall pay to such Lender such
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additional amount or amounts as will compensate such Lender or such corporation,
as the case may be, for such reduction.
(b) The Company shall not be required to make any payments to
any Lender for any additional amounts pursuant to this Section 12.21 unless such
Lender has given written notice to the Company, through the Agent, of its intent
to request such payments prior to or within 60 days after the date on which such
Lender became entitled to claim such amounts. If any Lender requests
compensation from the Company under this Section 12.21, the Company may, by
notice to such Lender (with a copy to the Agent), suspend the obligation of such
Lender thereafter to make or continue Loans, until the requirement of law giving
rise to such request ceases to be in effect; provided that such suspension shall
not affect the right of such Lender to receive the compensation so requested.
12.22 Confidentiality
---------------
Each Lender shall hold all non-public information obtained
pursuant to the requirements of or in connection with this Agreement which has
been identified as confidential by the Company in accordance with such Lender's
customary procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices, it being understood and agreed
by the Company that (i) in any event a Lender may make disclosures reasonably
required by any bona fide assignee, transferee or participant in connection with
the contemplated assignment or transfer by such Lender of any Loans or any
participation therein or as required or requested by any governmental agency or
representative thereof or pursuant to legal process; provided that unless
--------
specifically prohibited by applicable law or court order, each Lender shall
notify the Company of any request by any governmental agency or representative
thereof (other than any such request in connection with any examination of the
financial condition of such Lender by such governmental agency) for disclosure
of any such non-public information prior to disclosure of such information and
(ii) a Lender may share with any of its affiliates, and such affiliates may
share with any Lender, any information related to the Company or the Company's
affiliates (including information relating to creditworthiness), the
Recapitalization or the financing therefor; and provided, further, that in no
-------- -------
event shall any Lender be obligated or required to return any materials
furnished by the Company or any Subsidiaries of the Company. In connection with
any sales, assignments or transfers referred to in Section 12.2A, a Lender shall
obtain agreements from the purchasers, assignees or transferees, as the case may
be, rea-
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sonably satisfactory to the Company, that such parties will comply with this
Section 12.22.
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WITNESS the due execution hereof by the respective duly
authorized officers of the undersigned as of the date first written above.
COMPANY:
T/SF COMMUNICATIONS CORPORATION
By:______________________________
Name:
Title:
Notice Address:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Telephone:
Telecopy:
GUARANTORS:
▇▇▇▇▇▇ Convention Publishing
CORESEARCH
Crimesearch, Inc.
Expo Magazine, Inc.
Galaxy Design & Printing, Inc.
Galaxy Registration, Inc.
G.E.M. Communications, Inc.
Transportation Communications
Services, Inc.
T/SF Europe, Inc.
T/SF Investment Co.
T/SF of Nevada Co.
Transportation Information
Services, Inc.
By:______________________________
Name:
Title:
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Notice Address:
Telephone:
Telecopy:
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AGENT:
FIRST UNION CORPORATION
as agent
By:______________________________
Name:
Title:
Notice Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
Telephone: (704)
Telecopy: (704)
LENDERS:
Commitment: $80,000,000 FIRST UNION CORPORATION
By:______________________________
Name:
Title:
Notice Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
Telephone: (704)
Telecopy: (704)