AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF DECEMBER 18, 2001
by and among
AKI, INC.,
as Borrower
and
▇▇▇▇▇▇ FINANCIAL, INC.
as Agent, Issuing Lender and a Lender
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
as Lenders
TABLE OF CONTENTS
Page
INDEX OF DEFINED TERMS.....................................................iv
SECTION 1. AMOUNTS AND TERMS OF LOANS....................................1
1.1. Loans.........................................................1
1.2. Interest and Related Fees.....................................6
1.3. Other Fees and Expenses......................................11
1.4. Payments.....................................................12
1.5. Prepayments; Repayments......................................13
1.6. Maturity.....................................................16
1.7. Loan Accounts................................................16
1.8. Yield Protection.............................................16
1.9. Taxes........................................................17
1.10. Optional Prepayment/Replacement of Lenders...................19
SECTION 2. AFFIRMATIVE COVENANTS........................................20
2.1. Compliance With Laws and Contractual Obligations.............20
2.2. Maintenance of Properties; Insurance.........................21
2.3. Inspection; Lender Meeting...................................22
2.4. Organizational Existence.....................................22
2.5. Additional Environmental Covenants...........................22
2.6. Further Assurances...........................................22
SECTION 3. NEGATIVE COVENANTS...........................................24
3.1. Indebtedness.................................................24
3.2. Liens and Related Matters....................................25
3.3. Investments..................................................27
3.4. Contingent Obligations.......................................28
3.5. Restricted Junior Payments...................................29
3.6. Restriction on Fundamental Changes...........................33
3.7. Disposal of Assets or Subsidiary Stock.......................33
3.8. Transactions with Affiliates.................................33
3.9. Conduct of Business..........................................34
3.10. Changes Relating to Indebtedness.............................34
3.11. Fiscal Year..................................................34
3.12. Press Release; Public Disclosure.............................34
3.13. Subsidiaries.................................................34
3.14. Scent Seal...................................................35
SECTION 4. FINANCIAL COVENANTS/REPORTING................................35
4.1. Capital Expenditure Limits...................................35
4.2. Reserved.....................................................35
4.3. EBITDA.......................................................35
4.4. Fixed Charge Coverage........................................36
4.5. Total Interest Coverage......................................36
4.6. Total Indebtedness to EBITDA Ratio...........................36
4.7. Senior Indebtedness to EBITDA Ratio..........................37
4.8. Financial Statements and Other Reports.......................37
4.9. Accounting Terms; Utilization of GAAP for Purposes of
Calculations Under Agreement.................................40
SECTION 5. REPRESENTATIONS AND WARRANTIES...............................41
5.1. Disclosure...................................................41
5.2. No Material Adverse Effect...................................41
5.3. No Conflict..................................................41
5.4. Organization, Powers, Capitalization and Good Standing.......41
5.5. Financial Statements and Projections.........................42
5.6. Intellectual Property........................................43
5.7. Investigations, Audits, Etc..................................43
5.8. Employee Matters.............................................43
5.9. Solvency.....................................................43
5.10. Litigation; Adverse Facts....................................43
5.11. Use of Proceeds; Margin Regulations..........................44
5.12. Color Prelude Purchase Agreement.............................44
5.13. Scent Seal...................................................44
SECTION 6. DEFAULT, RIGHTS AND REMEDIES.................................44
6.1. Event of Default.............................................44
6.2. Suspension or Termination of Commitments.....................48
6.3. Acceleration and other Remedies..............................48
6.4. Performance by Agent.........................................49
6.5. Application of Proceeds......................................49
SECTION 7. CONDITIONS TO LOANS..........................................49
7.1. Conditions to Initial Loans..................................49
7.2. Conditions to All Loans......................................50
SECTION 8. ASSIGNMENT AND PARTICIPATION.................................50
8.1. Assignments and Participations...............................50
8.2. Agent........................................................52
8.3. Amendments, Consents and Waivers.............................57
8.4. Set Off and Sharing of Payments..............................58
8.5. Disbursement of Funds........................................58
8.6. Disbursements of Advances; Payment...........................58
SECTION 9. MISCELLANEOUS................................................61
9.1. Indemnities..................................................61
9.2. Amendments and Waivers.......................................62
9.3. Notices......................................................62
9.4. Failure or Indulgence Not Waiver; Remedies Cumulative........65
9.5. Marshaling; Payments Set Aside...............................65
9.6. Severability.................................................65
9.7. Lenders' Obligations Several; Independent Nature of
Lenders' Rights..............................................65
9.8. Headings.....................................................65
9.9. Applicable Law...............................................65
9.10. Successors and Assigns.......................................65
9.11. No Fiduciary Relationship; Limited Liability.................66
9.12. Construction.................................................66
9.13. Confidentiality..............................................66
9.14. CONSENT TO JURISDICTION......................................67
9.15. WAIVER OF JURY TRIAL.........................................67
9.16. Survival of Warranties and Certain Agreements................68
9.17. Entire Agreement.............................................68
9.18. Counterparts; Effectiveness..................................68
9.19. Press Releases...............................................68
9.20. No Novation; Amendments to Loan Documents....................68
SECTION 10. DEFINITIONS..................................................69
10.1. Certain Defined Terms........................................69
10.2. Other Definitional Provisions................................78
INDEX OF DEFINED TERMS
Defined Term Defined in Section
Accounting Changes ss.4.9
Additional Seller Notes 10.1
Adjustment Date ss.1.2(A)
Affected Lender ss.1.10
Affiliate ss.10.1
Agent ss.10.1
Agreement ss.10.1
AHC ss.10.1
AHC Subordinated Note ss.10.1
AHC Subordinated Loan Documents ss.10.1
AKI Senior Notes ss.10.1
AKI Senior Notes Indenture ss.10.1
Asset Disposition ss.10.1
Assignment and Acceptance Agreement ss.10.1
Bank Line Issuer ss.1.1(C)(2)
Bankruptcy Code ss.10.1
Base Rate ss.1.2(A)
Base Rate Loans ss.1.2(A)
Borrower Preamble &ss.10.1
Borrowing Base ss.1.1(B)(1)
Borrowing Base Certificate ss.1.1(B)(1)
Business Day ss.10.1
Capex Limit ss.4.1
Capital Expenditures ss.4.1
Capitalization/Acquisition Documents ss.10.1
Cash Equivalent ss.3.3
Certificate of Exemption ss.1.9(C)
Collateral ss.10.1
Color Prelude Acquisition ss.10.1
Color Prelude Acquisition Instruments ss.10.1
Color Prelude Purchase Agreement ss.10.1
Commitment Termination Date ss.1.1(B)(1)
Contingent Obligation ss.3.4
Contractual Obligations ss.2.1
Default ss.10.1
Defaulting Lender ss.8.6(C)(1)
DLJ ss.10.1
DLJ Affiliates ss.10.1
EBITDA ss.4.3
ERISA ss.10.1
ERISA Event ss.10.1
Event of Default ss.6.1
Existing Credit Agreement 1st Recital
Financial Model ss.10.1
Fixed Charge Coverage ss.4.4
Foreign Lender ss.1.9(C)
Funding Date ss.7.2
Funded Revolver ss.1.2(B)
GAAP ss.10.1
▇▇▇▇▇▇ Preamble
Holdings ss.10.1
Holdings 13 1/2% Notes ss.10.1
Holdings 13 1/2% Notes Indenture ss.10.1
Indebtedness ss.10.1
Indemnitee ss.9.1
Intellectual Property ss.5.6
Interest Period ss.1.2(A)
Investment ss.3.3
IRC ss.10.1
Issuing Lender ss.10.1
IST ss.10.1
Lender(s) ss.10.1
Letter of Credit Liability ss.10.1
Letters of Credit ss.1.1(C)
Letter of Non-Exemption ss.1.9(C)
LIBOR ss.1.2(A)
LIBOR Breakage Fee ss.1.3(C)
LIBOR Loans ss.1.2(A)
Lien ss.10.1
Loan(s) ss.10.1
Loan Documents ss.10.1
Loan Party ss.10.1
Material Adverse Effect ss.10.1
Maximum Revolving Loan Balance ss.1.1(B)(1)
Multiemployer Plan ss.10.1
Net Proceeds ss.10.1
Note(s) ss.10.1
Obligations ss.10.1
Operating Cash Flow ss.4.7
Original Closing Date ss.10.1
PBGC ss.10.1
Pension Plan ss.10.1
Permitted Encumbrances ss.3.2(A)
Person ss.10.1
Plan ss.10.1
Pro Forma ss.10.1
Pro Rata Share ss.10.1
Register ss.8.1(B)
Related Transactions ss.10.1
Related Transactions Documents ss.10.1
Replacement Lender ss.1.10
Reportable Event ss.10.1
Requisite Lenders ss.10.1
Responsible Officer ss.10.1
Restatement Effective Date ss.10.1
Restricted Junior Payment ss.3.5
Revolving Credit Exposure ss.10.1
Revolving Loan Commitment ss.1.1(B)(1)
Revolving Loans ss.1.1(B)(1)
Security Documents ss.10.1
Subordinated Indebtedness ss.10.1
Subordinated Loan Documents ss.10.1
Subsidiary ss.10.1
Term Loan ss.1.1(A)
Term Loan Exposure ss.10.1
Total Indebtedness ss.4.7
Total Interest Coverage ss.4.5
AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT is dated as of December 18,
2001, and entered into by and among AKI, INC., a Delaware corporation, f/k/a
Arcade Marketing, Inc., f/k/a Arcade, Inc. ("Borrower"), with its principal
place of business at ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, the
financial institutions who are or hereafter become parties to this Agreement as
"Lenders" (as defined in subsection 10.1 hereof), and ▇▇▇▇▇▇ FINANCIAL, INC., a
Delaware corporation (in its individual capacity "▇▇▇▇▇▇"), with its principal
place of business at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as the
initial "Issuing Lender" and as "Agent" (as such terms are defined in subsection
10.1 hereof).
R E C I T A L S:
WHEREAS, Borrower and ▇▇▇▇▇▇ are parties to that certain Credit Agreement
dated as of April 30, 1996 (as amended, supplemented or otherwise modified from
time to time, the "Existing Credit Agreement"); and
WHEREAS, Borrower, Agent and Lenders desire to amend and restate in its
entirety the Existing Credit Agreement, without constituting a novation, on the
terms and subject to the conditions contained herein.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Borrower, Lenders and Agent hereby
agree to amend and restate in its entirety the Existing Credit Agreement as
follows:
SECTION 1. AMOUNTS AND TERMS OF LOANS.
1.1. LOANS. Subject to the terms and conditions of this Agreement and in
reliance upon the representations and warranties of Borrower contained herein:
(A) TERM LOAN. Each Lender agrees, severally and not jointly, to lend
to Borrower in one draw on the Restatement Effective Date, its Pro Rata
Share of the aggregate amount of $10,000,000 (the "Term Loan"). Borrower
shall repay the Term Loan through periodic payments on the dates and in the
amounts indicated below (the "Scheduled Installments"):
Date Scheduled Installment
---- ---------------------
March 31, 2002 $250,000
June 30, 2002 $250,000
September 30, 2002 $250,000
December 31, 2002 $250,000
March 31, 2003 $437,500
June 30, 2003 $437,500
September 30, 2003 $437,500
December 31, 2003 $437,500
March 31, 2004 $500,000
June 30, 2004 $500,000
September 30, 2004 $500,000
December 31, 2004 $500,000
March 31, 2005 $562,500
June 30, 2005 $562,500
September 30, 2005 $562,500
December 31, 2005 $562,500
March 31, 2006 $750,000
June 30, 2006 $750,000
September 30, 2006 $750,000
December 31, 2006 $750,000
Amounts borrowed under this subsection 1.1(A) and repaid may not be reborrowed.
Notwithstanding the foregoing, the outstanding principal balance of the Term
Loan shall be due and payable in full upon termination of the Revolving Loan
Commitment.
The proceeds of the Term Loan, together with other available resources, shall be
applied to discharge the obligations of Borrower in respect of the Color Prelude
Acquisition.
(B) REVOLVING LOANS.
(1) REVOLVING LOANS. Each Lender agrees, severally and not
jointly, to lend to Borrower from the Restatement Effective Date to
December 31, 2006 (the "Commitment Termination Date") its Pro Rata
Share of the loans requested by Borrower to be made by Lenders under
this subsection 1.1(B)(1), up to an aggregate maximum for all Lenders
of $20,000,000 (as the same may be reduced from time to time
hereunder, the "Revolving Loan Commitment"). Advances or amounts
outstanding under the Revolving Loan Commitment will be called
"Revolving Loans". Revolving Loans may be repaid and reborrowed. All
Revolving Loans shall be repaid in full on the Commitment Termination
Date. If at any time the outstanding Revolving Loans exceed the
Maximum Revolving Loan Balance, Lenders shall not be obligated to make
Revolving Loans, no additional Letters of Credit shall be issued and
Revolving Loans must be repaid immediately in an amount sufficient to
eliminate any excess. The "Maximum Revolving Loan Balance" will be the
lesser of (a) the "Borrowing Base" (as calculated on Exhibit 4.8(E),
the "Borrowing Base Certificate") less outstanding Letter of Credit
Liability or (b) the Revolving Loan Commitment less outstanding Letter
of Credit Liability.
(2) RESERVED.
(3) REQUESTS FOR REVOLVING LOANS. Revolving Loans may be
requested in any amount with one (1) Business Day prior written or
telephonic notice required for amounts equal to or greater than
$5,000,000. For amounts less than $5,000,000, written or telephonic
notice must be provided by noon Chicago time on the day on which the
Loan is to be made. All LIBOR Loans require three (3) Business Days
prior written notice. All Loans requested telephonically must be
confirmed in writing within twenty-four (24) hours. Written notices
for funding requests shall be in the form attached as Exhibit 1.1(B).
Neither Agent nor any Lender shall incur any liability to Borrower for
acting upon any telephonic notice that Agent believes in good faith to
have been given by a duly authorized officer or other person
authorized to borrow on behalf of Borrower.
(C) LETTERS OF CREDIT. The Revolving Loan Commitment may, in addition
to advances under the Revolving Loans, be utilized, upon the request of
Borrower, for (i) the issuance of standby letters of credit for the account
of Borrower by ▇▇▇▇▇▇ or any other Issuing Lender approved by Agent, (ii)
the issuance of commercial letters of credit for the account of Borrower by
any Issuing Lender other than ▇▇▇▇▇▇ approved by Agent or (iii) the
issuance of standby letters of credit or commercial letters of credit for
the account of Borrower under risk participation agreements entered into by
▇▇▇▇▇▇, as Issuing Lender, with other banks or financial institutions (the
letters of credit described in clauses (i), (ii) and (iii) will be referred
to hereinafter collectively as "Letters of Credit"). Immediately upon the
issuance by an Issuing Lender of a Letter of Credit, and without further
action on the part of Agent or any of the Lenders, each Lender with a
Revolving Loan Commitment shall be deemed to have purchased from such
Issuing Lender a participation in such Letter of Credit (or in its
obligation under a risk participation agreement with respect thereto) equal
to such Lender's Pro Rata Share of the aggregate amount available to be
drawn under such Letter of Credit.
(1) MAXIMUM AMOUNT. The aggregate amount of Letter of Credit
Liability with respect to all Letters of Credit outstanding at any
time shall not exceed $2,000,000.
(2) REIMBURSEMENT. Borrower shall be irrevocably and
unconditionally obligated forthwith without presentment, demand,
protest or other formalities of any kind, to reimburse any Issuing
Lender on demand in immediately available funds for any amounts paid
by such Issuing Lender with respect to a Letter of Credit, including
all reimbursement payments, fees, charges, costs and expenses paid by
▇▇▇▇▇▇, as Issuing Lender, to any bank that issues Letters of Credit
under a risk participation agreement (a "Bank Line Issuer"). Borrower
hereby authorizes and directs Agent, at Agent's option, to debit
Borrower's account (by increasing the outstanding principal balance of
the Revolving Loan) in the amount of any payment made by an Issuing
Lender with respect to any Letter of Credit. All amounts paid by an
Issuing Lender with respect to any Letter of Credit that are not
immediately repaid by Borrower with the proceeds of a Revolving Loan
or otherwise shall bear interest at the interest rate applicable to
Revolving Loans which are Base Rate Loans plus, at the election of
Agent or Requisite Lenders, an additional two percent (2.00%) per
annum. Each Lender agrees to fund its Pro Rata Share of any Revolving
Loan made pursuant to this subsection 1.1(C)(2). In the event Agent
elects not to
debit Borrower's account and Borrower fails to reimburse an Issuing
Lender in full on the date of any payment in respect of a Letter of
Credit, Agent shall promptly notify each Lender with a Revolving Loan
Commitment of the amount of such unreimbursed payment and the accrued
interest thereon and each Lender, on the next Business Day, shall
deliver to Agent an amount equal to its Pro Rata Share thereof in same
day funds. Each Lender with a Revolving Loan Commitment hereby
absolutely and unconditionally agrees to pay to each Issuing Lender
upon demand by such Issuing Lender such Lender's Pro Rata Share of
each payment made by such Issuing Lender in respect of a Letter of
Credit and not immediately reimbursed by Borrower or satisfied through
a debit of Borrower's account. Each Lender with a Revolving Loan
Commitment acknowledges and agrees that its obligations to acquire
participations pursuant to this subsection in respect of Letters of
Credit and to make the payments to each Issuing Lender required by the
preceding sentence are absolute and unconditional and shall not be
affected by any circumstance whatsoever, including the occurrence and
continuance of a Default or an Event of Default or any failure by
Borrower to satisfy any of the conditions set forth in subsection 7.2.
If any Lender fails to make available to an Issuing Lender the amount
of such Lender's Pro Rata Share of any payments made by such Issuing
Lender in respect of a Letter of Credit as provided in this subsection
1.1(C)(2), such Issuing Lender shall be entitled to recover such
amount on demand from such Lender together with interest at the Base
Rate.
(3) REQUEST FOR Letters of Credit. Borrower shall give Agent at
least three (3) Business Days prior written notice specifying the date
a Letter of Credit is requested to be issued, the amount and the name
and address of the beneficiary and a description of the transactions
proposed to be supported thereby. If Agent informs Borrower that an
Issuing Lender cannot issue the requested Letter of Credit directly,
Borrower may request that ▇▇▇▇▇▇ arrange for the issuance of the
requested Letter of Credit under a risk participation agreement with
another financial institution reasonably acceptable to ▇▇▇▇▇▇,
Borrower and the beneficiary of the requested Letter of Credit. The
issuance of any Letter of Credit under this Agreement shall be subject
to the conditions that the Letter of Credit (i) supports a transaction
entered into in the ordinary course of business of Borrower or one of
its Subsidiaries and (ii) is in a form, is for an amount and contains
such terms and conditions as are reasonably satisfactory to the
Issuing Lender or the Bank Line Issuer asked to issue such Letter of
Credit and, in the case of standby letters of credit, Agent. In the
event that Borrower seeks the issuance of a Letter of Credit through a
Bank Line Issuer or an Issuing Lender other than ▇▇▇▇▇▇, the issuance
of such Letter of Credit shall be further conditioned on Borrower
either maintaining an operating account with such Bank Line Issuer or
other Issuing Lender or otherwise arranging to be charged directly by
such Bank Line Issuer or other Issuing Lender for drawings under any
such Letters of Credit and any related fees and expenses. Any notice
requesting the issuance of a Letter of Credit shall be accompanied by
the form of the Letter of Credit and the application or reimbursement
agreement, if any, then required by the Issuing Lender or Bank Line
Issuer asked to issue such Letter of Credit completed in a manner
satisfactory to such Issuing Lender or Bank Line Issuer. If any
provision of any application or reimbursement agreement is
inconsistent with the terms of this Agreement, then the provisions of
this Agreement, to the extent of such inconsistency, shall control.
(4) EXPIRATION DATES OF LETTERS OF CREDIT. The expiration date of
each Letter of Credit shall be on a date which is not later than the
earlier of (a) one year from its date of issuance or (b) the thirtieth
(30th) day prior to the Commitment Termination Date. Notwithstanding
the foregoing, a Letter of Credit may provide for automatic extensions
of its expiration date for one or more successive one year periods
provided that the Issuing Lender or Bank Line Issuer that issued such
Letter of Credit has the right to terminate such Letter of Credit on
each such annual expiration date and no renewal term may extend the
term of the Letter of Credit to a date that is later than the
thirtieth (30th) day prior to the Commitment Termination Date. An
Issuing Lender may elect not to renew any such Letter of Credit and,
upon direction by Agent or Requisite Lenders, shall not renew any such
Letter of Credit at any time during the continuance of an Event of
Default, provided that, in the case of a direction by Agent or
Requisite Lenders, such Issuing Lender receives such directions prior
to the date notice of non-renewal is required to be given by such
Issuing Lender and such Issuing Lender has had a reasonable period of
time to act on such notice.
(5) OBLIGATIONS ABSOLUTE. The obligation of Borrower to reimburse
an Issuing Lender for payments made in respect of Letters of Credit
issued by such Issuing Lender shall be unconditional and irrevocable
and shall be paid under all circumstances strictly in accordance with
the terms of this Agreement including, without limitation, the
following circumstances: (a) any lack of validity or enforceability of
any Letter of Credit; (b) any amendment or waiver of or any consent or
departure from all or any of the provisions of any Letter of Credit or
any Loan Document in any case to the extent requested or approved by
Borrower; (c) the existence of any claim, set-off, defense or other
right which Borrower, any of its Subsidiaries or Affiliates or any
other Person may at any time have against any beneficiary of any
Letter of Credit, Agent, any Issuing Lender, any Bank Line Issuer, any
Lender or any other Person, whether in connection with this Agreement,
any other Loan Document or any other related or unrelated agreements
or transactions; (d) any draft or other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; (e) payment under any Letter of Credit
against presentation of a draft or other document that does not
substantially comply with the terms of such Letter of Credit; or (f)
any other act or omission to act or delay of any kind of any Issuing
Lender, any Bank Line Issuer, Agent, any Lender or any other Person or
any other event or circumstance whatsoever that might, but for the
provisions of this subsection, constitute a legal or equitable
discharge of Borrower's obligations hereunder.
(6) OBLIGATIONS OF ISSUING LENDERS. Each Issuing Lender (other
than ▇▇▇▇▇▇) hereby agrees that it will not issue a Letter of Credit
hereunder until it has provided Agent with written notice specifying
the amount and intended issuance date of such Letter of Credit and
Agent has returned a written acknowledgment of such notice to Issuing
Lender. Each Issuing Lender (other than ▇▇▇▇▇▇) further agrees to
provide to Agent: (a) a copy of each Letter of Credit issued by such
Issuing Lender promptly after its issuance; (b) a weekly report
summarizing available amounts under Letters of Credit issued by such
Issuing Lender, the dates and amounts of any draws under such Letters
of Credit, the effective date of any increase or decrease in the face
amount of any Letters of Credit during such week and the amount of any
unreimbursed
draws under such Letters of Credit; and (c) such additional
information reasonably requested by Agent from time to time with
respect to the Letters of Credit issued by such Issuing Lender.
Without limiting the generality of the foregoing, it is expressly
understood and agreed by Borrower that the absolute and unconditional
obligation of Borrower hereunder to reimburse payments made under a
Letter of Credit will not be excused by the gross negligence or
willful misconduct of the Issuing Lender or a Bank Line Issuer that
issued such Letter of Credit. However, the foregoing shall not be
construed to excuse an Issuing Lender from liability to Borrower to
the extent of any direct damages (as opposed to consequential damages,
claims in respect of which are hereby waived by Borrower to the extent
permitted by applicable law) suffered by Borrower that are caused by
such Issuing Lender's or Bank Line Issuer's gross negligence or
willful misconduct (as determined by a court of competent
jurisdiction) in determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof.
Agent and Lenders shall have no liability or responsibility for any
action or omission by any Bank Line Issuer. It is understood and
agreed by Borrower that any Issuing Lender or Bank Line Issuer may
accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary. As between Borrower and the issuer of any
Letter of Credit, Borrower assumes all risks of the acts and omissions
of, or misuse of the Letter of Credit by, the beneficiary thereof.
(D) NOTES. Borrower shall execute and deliver to each Lender (i) a
Note to evidence the Revolving Loans, such Note to be in the principal
amount of such Lender's Pro Rata Share of the Revolving Loan Commitment and
(ii) a Note to evidence the Term Loan, such Note to be in the principal
amount of such Lender's Pro Rate Share of the Term Loan. In the event of an
assignment under subsection 8.1, Borrower shall, upon surrender of the
assigning Lender's Notes, and at the request of the assignee or assignor
issue new Notes to reflect the interests of the assigning Lender and the
Person to which interests are to be assigned.
(E) FUNDING AUTHORIZATION. The proceeds of all Loans made pursuant to
this Agreement subsequent to the Restatement Effective Date are to be
funded by Agent by wire transfer to the account designated by Borrower
below:
Bank: Sun Trust Bank
ABA No.: ▇▇▇-▇▇▇-▇▇▇
Bank Address: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Account No.: 0152207
Reference: Arcade Marketing, Inc.
Borrower shall provide Agent with written notice of any change in the
foregoing instructions at least three (3) Business Days before the desired
effective date of such change.
1.2. INTEREST AND RELATED FEES.
(A) INTEREST. From the date the Loans are made and the date the other
Obligations become due, depending upon Borrower's election from time to
time, as permitted herein, to have portions of the Loans accrue interest
determined by reference to the Base Rate ("Base Rate Loans") or the LIBOR
("LIBOR Loans"), the Loans and the other Obligations shall bear interest at
the applicable rates set forth below:
(1) The Revolving Loans and all other Obligations shall bear
interest as follows:
(a) If a Base Rate Loan, then at the sum of the Base Rate
plus the Base Rate Margin.
(b) If a LIBOR Loan, then at the sum of LIBOR plus the LIBOR
Margin.
(2) Reserved.
"Base Rate" means a variable rate of interest per annum equal to the
greater of (a) the rate of interest from time to time published by the
Board of Governors of the Federal Reserve System in Federal Reserve
statistical release H.15 (519) entitled "Selected Interest Rates" as the
Bank prime loan rate or (b) the Federal Funds Effective Rate plus fifty
(50) basis points. Base Rate also includes rates published in any successor
publications of the Federal Reserve System reporting the Bank prime loan
rate or its equivalent. The statistical release generally sets forth a Bank
prime loan rate for each business day. The applicable Bank prime loan rate
for any date not set forth shall be the rate set forth for the last
preceding date. In the event the Board of Governors of the Federal Reserve
System ceases to publish a Bank prime loan rate or its equivalent, the term
"Base Rate" shall mean a variable rate of interest per annum equal to the
greater of (a) the highest of the "prime rate," "reference rate," "base
rate" or other similar rate as determined by Agent announced from time to
time by any of the three largest banks (based on combined capital and
surplus) headquartered in New York, New York (with the understanding that
any such rate may merely be a reference rate and may not necessarily
represent the lowest or best rate actually charged to any customer by such
bank) or (b) the Federal Funds Effective Rate plus fifty (50) basis points.
"Base Rate Margin" shall mean (i) as of the Restatement Effective
Date, 2.25% per annum, and (ii) thereafter, as of February 1, May 1, August
1 and November 1 of each year (each, an "Adjustment Date"), commencing on
February 1, 2002, the Base Rate Margin shall be adjusted, if necessary, to
the applicable percent per annum set forth in the pricing table set forth
on Schedule 1.2 hereto corresponding to the Total Indebtedness to EBITDA
Ratio for the trailing twelve month period ending on the last day of the
most recently completed calendar quarter prior to the applicable Adjustment
Date (each such period, a "Calculation Period") calculated in the manner
described in Exhibit 4.8(C) hereto; provided, however, that prior to the
Adjustment Date commencing on August 1, 2002, the Base Rate Margin shall be
adjusted only if such Total
Indebtedness to EBITDA Ratio for the applicable Calculation Period is
greater than or equal to 4.25 as of any Adjustment Date preceding such
date.
"LIBOR" means, for each Interest Period, a rate per annum equal to:
(a) the offered rate for deposits in U.S. dollars in an amount
comparable to the amount of the applicable Loan in the London
interbank market which is published by the British Bankers'
Association, and that currently appears on Telerate Page 3750, or any
other source available to Agent, as of 11:00 a.m. (London time) on the
day which is two (2) Business Days prior to the first day of the
relevant Interest Period for a term comparable to such Interest
Period; or if, for any reason, such a rate is not published by the
British Bankers' Association on Telerate or any other source available
to Agent, the rate per annum equal to the average rate (rounded
upwards, if necessary, to the nearest 1/100 of 1%) at which Agent
determines that U.S. dollars in an amount comparable to the amount of
the applicable Loans are being offered to prime banks at approximately
11:00 a.m. (London time) on the day which is two (2) Business Days
prior to the first day of such Interest Period for a term comparable
to such Interest Period for settlement in immediately available funds
by leading banks in the London interbank market selected by Agent;
divided by
(b) a number equal to 1.0 minus the maximum reserve percentages
(expressed as a decimal fraction) (including, without limitation,
basic, supplemental, marginal and emergency reserves under any
regulations of the Board of Governors of the Federal Reserve System or
other governmental authority having jurisdiction with respect thereto,
as now and from time to time in effect) for Eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D
of such Board) which are required to be maintained by any Lender by
the Board of Governors of the Federal Reserve System; such rate to be
rounded upward to the next whole multiple of one-sixteenth of one
percent (.0625%). LIBOR shall be adjusted automatically on and as of
the effective date of any change in any such reserve percentage.
"LIBOR Margin" shall mean (i) as of the Restatement Effective Date,
3.50% per annum, and (ii) thereafter, as of each Adjustment Date,
commencing on February 1, 2002, the LIBOR Margin shall be adjusted, if
necessary, to the applicable percent per annum set forth in the pricing
table set forth on Schedule 1.2 hereto corresponding to Total Indebtedness
to EBITDA Ratio for the applicable Calculation Period; provided, however,
that prior to the Adjustment Date commencing on August 1, 2002, the LIBOR
Margin shall be adjusted only if such Total Indebtedness to EBITDA Ratio
for the applicable Calculation Period is greater than or equal to 4.25 as
of any Adjustment Date preceding such date.
If an Event of Default has occurred and is continuing on an Adjustment
Date, no reduction in the Base Rate Margin or LIBOR Margin shall occur on
such Adjustment Date.
If Borrower shall fail to deliver a monthly Compliance and Pricing
Certificate with respect to a month in which an Adjustment Date occurs by
the date required pursuant to subsection 4.8(C), effective as of the tenth
Business Day following the date on which such
Compliance and Pricing Certificate was due for such relevant month, each
applicable Base Rate Margin and each applicable LIBOR Margin shall be
conclusively presumed, until the date of delivery of the relevant
Compliance and Pricing Certificate, to equal the highest applicable Base
Rate Margin and the highest applicable LIBOR Margin specified in the
pricing table set forth on Schedule 1.2 hereto.
Subject to paragraph (H) below, each LIBOR Loan may be obtained for a
one, two, three or six month period (each being an "Interest Period"). With
respect to all LIBOR Loans: (a) the Interest Period will commence on the
date that the LIBOR Loan is made or the date on which a Base Rate Loan is
converted into a LIBOR Loan, as applicable, or in the case of immediately
successive Interest Periods, each successive Interest Period shall commence
on the day on which the next preceding Interest Period expires, (b) if the
Interest Period expires on a day that is not a Business Day, then it will
expire on the next Business Day (unless the result of such extension would
be to extend such Interest Period into another calendar month in which
event such Interest Period shall end on the immediately preceding Business
Day), (c) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on
the last Business Day of a calendar month, (d) no Interest Period for
Revolving Loans shall extend beyond the Commitment Termination Date, (e) no
Interest Period for any portion of the Term Loan shall extend beyond the
date of the final Scheduled Installment thereof and (f) an Interest Period
may not be selected for any portion of the Term Loan if a Scheduled
Installment for such Term Loan is payable during such Interest Period and
the portion of such Term Loan which constitutes a Base Rate Loan does not
equal or exceed the amount of such Scheduled Installment.
(B) COMMITMENT FEE. From the Restatement Effective Date, (1) if the
Funded Revolver (as hereinafter defined) is greater than or equal to 50% of
the Revolving Loan Commitment, in each case during the preceding month,
Borrower shall pay Agent, for the benefit of all Lenders committed to make
Revolving Loans, a fee in an amount equal to (a)(i) the Revolving Loan
Commitment less (ii) the Funded Revolver, multiplied by (b) one-half of one
percent (0.50%) per annum, or (2) if the Funded Revolver is less than 50%
of the Revolving Loan Commitment, in each case during the preceding month,
Borrower shall pay Agent, for the benefit of all Lenders committed to make
Revolving Loans, a fee in an amount equal to (a)(i) the Revolving Loan
Commitment less (ii) the Funded Revolver, multiplied by (b) three-quarters
of one percent (0.75%) per annum. Such fee is to be paid monthly in arrears
on the first day of each month. "Funded Revolver" means the sum of (i) the
average daily balance of Revolving Loans plus (ii) the average daily
aggregate amount of outstanding Letter of Credit Liability, in each case
during the preceding month.
(C) LETTER OF CREDIT FEE. From the Restatement Effective Date,
Borrower shall pay Agent a fee for each Letter of Credit from the date of
issuance to the date of termination equal to the average daily aggregate
amount of outstanding Letter of Credit Liability during the preceding month
multiplied by three and one-half percent (3.50%) per annum until the first
Adjustment Date and thereafter by a per annum rate equal to the LIBOR
Margin applicable to Revolving Loans as in effect on the date on which the
fee is payable, which fee shall be payable
to Agent for the benefit of all Lenders committed to make Revolving Loans
(based upon their respective Pro Rata Shares). Borrower shall also pay
Agent, for the account of each Issuing Lender, a fronting fee for each
Letter of Credit issued or obtained by such Issuing Lender from the date of
issuance to the date of termination equal to the average daily aggregate
outstanding Letter of Credit Liability with respect to such Letter of
Credit during the preceding month multiplied by one quarter percent (0.25%)
per annum. Such fees are to be paid monthly in arrears on the first day of
each month. Borrower shall also pay or reimburse each Issuing Lender for
its payment of any and all issuance, negotiation, processing or
administrative fees and expenses payable under any risk participation
agreement to any other issuer with respect to any Letters of Credit issued
for the benefit of Borrower or any of its Subsidiaries.
(D) COMPUTATION OF INTEREST AND RELATED FEES. Interest on all Loans
and all other Obligations, including any fees set forth in this subsection
1.2, shall be calculated daily on the basis of a three hundred sixty (360)
day year for the actual number of days elapsed in the period during which
it accrues. The date of funding a Base Rate Loan and the first day of an
Interest Period with respect to a LIBOR Loan shall be included in the
calculation of interest. The date of payment of a Base Rate Loan and the
last day of an Interest Period with respect to a LIBOR Loan shall be
excluded from the calculation of interest. If a Loan is repaid on the same
day that it is made, one (1) days' interest shall be charged. Interest on
all Base Rate Loans is payable in arrears on the first day of each month
and on the maturity of such Loans, whether by acceleration or otherwise.
Interest on LIBOR Loans shall be payable on the last day of the applicable
Interest Period, unless the Interest Period is greater than three (3)
months, in which case interest will also be payable on the last day of each
three (3) month interval. In addition, interest on LIBOR Loans is due on
the maturity of such Loans, whether by acceleration or otherwise.
(E) DEFAULT RATE OF INTEREST. At the election of Agent or Requisite
Lenders, after the occurrence of an Event of Default and for so long as it
continues, the Loans and other Obligations shall bear interest at a rate
that is two percent (2.0%) in excess of the rates otherwise payable under
this Agreement. Furthermore, at the election of Agent or Requisite Lenders
during any period in which any Event of Default is continuing (1) as the
Interest Periods for LIBOR Loans then in effect expire, such Loans shall be
converted into Base Rate Loans and (2) the LIBOR election will not be
available to Borrower.
(F) EXCESS INTEREST. Under no circumstances will the rate of interest
chargeable be in excess of the maximum amount permitted by law. If excess
interest is charged and paid in error, then the excess amount will be
promptly refunded or applied to repayment or prepayment of principal in the
manner set forth in subsection 1.5(E).
(G) LIBOR ELECTION. All Loans made on the Restatement Effective Date
shall be Base Rate Loans and shall remain so until the earlier of ten (10)
days after the Restatement Effective Date or the date Agent notifies
Borrower that it has completed the primary syndication of the Loans;
provided, however, Borrower shall pay Agent any LIBOR Breakage Fees in
connection with the completion of the primary syndication of the Loans if
it occurs on or
between the tenth (10th) and ninetieth (90th) days following the
Restatement Effective Date. Thereafter, Borrower may request that Revolving
Loans to be made be LIBOR Loans, that outstanding portions of Revolving
Loans and outstanding portions of the Term Loan be converted to LIBOR Loans
and that all or any portion of a LIBOR Loan be continued as a LIBOR Loan
upon expiration of the applicable Interest Period. Any such request will be
made by submitting a written notice to Agent in the form of Exhibit 1.1(B).
Once given, and except as provided in subsection 1.2(H), a LIBOR Loan
request shall be irrevocable and Borrower shall be bound thereby. Upon the
expiration of an Interest Period, in the absence of a new LIBOR Loan
request submitted to Agent not less than three (3) Business Days prior to
the end of such Interest Period, the LIBOR Loan then maturing shall be
automatically converted to a Base Rate Loan. There may be no more than
eight (8) LIBOR Loans outstanding at any one time. Loans which are not the
subject of a LIBOR Loan request shall be Base Rate Loans. Agent will notify
Lenders, by telephonic or facsimile notice, of each LIBOR Loan request
received by Agent not less than two (2) Business Days prior to the first
day of the Interest Period of the LIBOR Loan requested thereby.
(H) INABILITY TO DETERMINE LIBOR. In the event, prior to commencement
of any Interest Period relating to a LIBOR Loan, Agent shall determine or
be notified in writing by Requisite Lenders that adequate and reasonable
methods do not exist for ascertaining LIBOR, Agent shall promptly provide
notice of such determination to Borrower and Lenders (which shall be
conclusive and binding on Borrower and Lenders). In such event (1) any
request for a LIBOR Loan or for a conversion to or continuation of a LIBOR
Loan shall be automatically withdrawn and shall be deemed a request for a
Base Rate Loan, (2) each LIBOR Loan will automatically, on the last day of
the then current Interest Period relating thereto, become a Base Rate Loan
and (3) the obligations of Lenders to make LIBOR Loans shall be suspended
until Agent or Requisite Lenders determine that the circumstances giving
rise to such suspension no longer exist, in which event Agent upon the
instructions of Requisite Lenders, shall so notify Borrower and Lenders.
(I) ILLEGALITY. Notwithstanding any other provisions hereof, if any
law, rule, regulation, treaty or directive or interpretation or application
thereof shall make it unlawful for any Lender to make, fund or maintain
LIBOR Loans, such Lender shall promptly give notice of such circumstances
to Agent, Borrower and the other Lenders. In such an event, (1) the
commitment of such Lender to make LIBOR Loans or convert Base Rate Loans to
LIBOR Loans shall be immediately suspended and (2) such Lender's
outstanding LIBOR Loans shall be converted automatically to Base Rate Loans
on the last day of the Interest Period thereof or at such earlier time as
may be required by law.
(J) RESERVED.
1.3. OTHER FEES AND EXPENSES.
(A) CERTAIN FEES.Borrower shall pay to ▇▇▇▇▇▇, individually, the fees
specified in that certain letter agreement dated the date of this Agreement
between Borrower and ▇▇▇▇▇▇ in the amounts and at the times specified
therein.
(B) RESERVED.
(C) LIBOR BREAKAGE FEE.Upon (i) any default by Borrower in making any
borrowing of, conversion into or continuation of any LIBOR Loan following
Borrower's delivery to Agent of any LIBOR Loan request in respect thereof
or (ii) any payment of a LIBOR Loan on any day that is not the last day of
the Interest Period applicable thereto (regardless of the source of such
prepayment and whether voluntary, by acceleration or otherwise, but other
than a conversion requested pursuant to subsection 1.2(I)), Borrower shall
pay Agent, for the benefit of all Lenders that funded or were prepared to
fund any such LIBOR Loan, an amount (the "LIBOR Breakage Fee") equal to the
amount of any losses, expenses and liabilities (including, without
limitation, any loss (including interest paid) in connection with the
re-employment of such funds) that any Lender may sustain as a result of
such default or such payment. For purposes of calculating amounts payable
to a Lender under this subsection, each Lender shall be deemed to have
actually funded its relevant LIBOR Loan through the purchase of a deposit
bearing interest at LIBOR in an amount equal to the amount of that LIBOR
Loan and having a maturity and repricing characteristics comparable to the
relevant Interest Period; provided, however, that each Lender may fund each
of its LIBOR Loans in any manner it sees fit, and the foregoing assumption
shall be utilized only for the calculation of amounts payable under this
subsection.
(D) RESERVED.
(E) EXPENSES AND ATTORNEYS FEES. Borrower agrees to promptly pay all
fees, costs and expenses (including reasonable attorneys' fees and expenses
incurred by Agent in connection with any matters contemplated by or arising
out of the Loan Documents, in connection with the examination, review, due
diligence investigation, documentation, negotiation, closing and
syndication of the transactions contemplated herein and in connection with
the continued administration of the Loan Documents including any
amendments, modifications, consents and waivers. The reasonable attorneys'
fees, cost and expenses of attorneys may include allocated costs of
internal counsel unless objected to by Borrower, in which event any such
work proposed to be performed by internal counsel may be performed by
external counsel at Borrower's expense. Borrower agrees to pay promptly all
fees, costs and expenses (including reasonable attorneys' fees and expenses
incurred by Agent and Lenders in connection with any action to enforce any
Loan Document or to collect any payments due from Borrower or any other
Loan Party. All fees, costs and expenses for which Borrower is responsible
under this subsection 1.3(E) shall be deemed part of the Obligations when
incurred, payable in accordance with the final two sentences of subsection
1.4 and secured by the Collateral.
1.4. PAYMENTS. All payments by Borrower of the Obligations shall be without
deduction, defense, setoff or counterclaim and shall be made in same day funds
and delivered to Agent, for the benefit of Agent and Lenders, as applicable, by
wire transfer to the following account or such other place as Agent may from
time to time designate in writing.
ABA No. ▇▇▇▇-▇▇▇▇-▇
Account Number 55-00540
Bank One, N.A.
▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Reference: ▇▇▇▇▇▇ Corporate Finance
for the benefit of AKI, Inc.
Borrower shall receive credit on the day of receipt for funds received by
Agent by 1:00 p.m. Chicago time. In the absence of timely receipt, such funds
shall be deemed to have been paid on the next Business Day. Whenever any payment
to be made hereunder shall be stated to be due on a day that is not a Business
Day, the payment may be made on the next succeeding Business Day and such
extension of time shall be included in the computation of the amount of interest
and fees due hereunder.
Borrower hereby authorizes Lenders to make Revolving Loans, on the basis of
their Pro Rata Shares, for the payment of Scheduled Installments, interest,
commitment fees, Letter of Credit fees, LIBOR Breakage Fees, Letter of Credit
reimbursement obligations and any amounts required to be deposited with respect
to outstanding Letter of Credit Liability pursuant to subsections 1.5(F) or 6.3.
Prior to an Event of Default, other fees, costs and expenses (including those of
attorneys) reimbursable to Agent pursuant to subsections 1.3(A) and (E) or
elsewhere in any Loan Document may be debited to the Revolving Loan after thirty
(30) days notice. After the occurrence and during the continuance of an Event of
Default, no notice will be required.
1.5. PREPAYMENTS; REPAYMENTS.
(A) VOLUNTARY PREPAYMENTS OR REPAYMENTS OF LOANS. At any time,
Borrower may prepay the Loans, in whole or in part, without premium or
penalty subject to the payment of LIBOR Breakage Fees, if applicable.
Prepayments of the Term Loan and repayments of the Revolving Loans shall be
applied in accordance with subsection 1.5(E) or as otherwise may be agreed
by Requisite Lenders. Prepayments or repayments of Revolving Loans may be
reborrowed. At any time and from time to time after 180 days following the
Restatement Effective Date, Borrower may permanently reduce the Revolving
Loan Commitments, without premium or penalty, provided all of the following
conditions are satisfied:
(1) Borrower shall provide Agent with at least five (5) Business
Days written notice of its intent to reduce a Revolving Loan
Commitment, such notice to specify the amount of the reduction and the
Revolving Loan Commitment to be reduced;
(2) no Default or Event of Default has occurred and is continuing
or would arise as a result of such reduction;
(3) such reduction shall be in an amount not less than $250,000
or $50,000 increments thereof; and
(4) after giving effect to such reduction, the Maximum Revolving
Loan Balance exceeds the aggregate outstanding principal balance of
the Revolving Loans by not less than $5,000,000.
(B) PREPAYMENTS FROM EXCESS CASH FLOW. Within one hundred (100) days
after the end of each of its fiscal years commencing with the fiscal year
ended June 30, 2003, Borrower shall prepay the Term Loan in an amount equal
to (i) fifty percent (50%) of the Excess Cash Flow for such fiscal year, if
the Total Indebtedness to EBITDA Ratio for the trailing twelve month period
ending on the last day of such fiscal year is less than 3.50, or (ii)
seventy-five percent (75%) of the Excess Cash Flow for such fiscal year, if
the Total Indebtedness to EBITDA Ratio for the trailing twelve month period
ending on the last day of such fiscal year is greater than or equal to
3.50. The calculation shall be based on the audited financial statements
for Borrower and determined pursuant to Exhibit 1.5(B). The payments shall
be applied in accordance with subsection 1.5(E). After the Term Loan has
been paid in full, no prepayments from Excess Cash Flow will be required
under this subsection.
(C) PREPAYMENTS FROM ASSET DISPOSITIONS. Immediately upon receipt of
any Net Proceeds in excess of $500,000 for any single transaction or series
of related transactions within a period of twelve consecutive months,
Borrower shall repay the outstanding principal balance of the Revolving
Loan by an amount equal to the amount of any reduction in the Borrowing
Base attributable to the Asset Disposition giving rise to such Net Proceeds
to the extent that any such reduction would result in the outstanding
principal balance of the Revolving Loans exceeding the Maximum Revolving
Loan Balance. Borrower or any Subsidiary may reinvest all remaining Net
Proceeds of such Asset Disposition, within one hundred eighty (180) days,
in productive fixed assets of a kind then used or usable in the business of
Borrower; provided that, to the extent such productive fixed assets were
acquired by Borrower within ninety (90) days prior to the receipt of such
Net Proceeds, such Net Proceeds shall be deemed to be invested in such
productive fixed assets for purposes of this subsection. If Borrower does
not intend to so invest or reinvest such Net Proceeds or if the periods set
forth in the immediately preceding sentence expire without Borrower having
invested or reinvested such Net Proceeds, Borrower shall prepay the Loans
in an amount equal to such remaining Net Proceeds of such Asset
Disposition. The payments shall be applied in accordance with subsection
1.5(E).
(D) PREPAYMENTS FROM ISSUANCE OF SECURITIES. Promptly (but in any
event within thirty (30) days) upon the receipt by Holdings, Borrower or
any of its Subsidiaries of the proceeds of the issuance of equity
securities (other than (1) proceeds of the issuance of equity securities by
Holdings or Borrower received on or before the Restatement Effective Date,
(2) proceeds from the issuance of equity securities to members of the
management of AHC, Holdings or Borrower, (3) proceeds of the issuance of
equity securities to Borrower or any Subsidiary of Borrower, (4) proceeds
from the issuance of equity securities by Holdings or Borrower to the
extent such proceeds are used or to be used (with prior notice to Agent of
such intention) for the purchase or repurchase, as applicable, of certain
of the Holdings 13 1/2% Notes and/or AKI Senior Notes as permitted under
subsection 3.5(H) and (5) proceeds from the issuance of equity securities
by Borrower or any Subsidiary of Borrower to the extent such
proceeds are used or to be used (with prior notice to Agent of such
intention) to consummate an acquisition permitted under subsection 3.3(F)),
Borrower shall prepay the Loans in an amount equal to such proceeds, net of
underwriting discounts and commissions and all other transaction costs
associated therewith. The payments shall be applied in accordance with
subsection 1.5(E).
(E) APPLICATION OF PROCEEDS; REPAYMENTS.
(1) With respect to the mandatory prepayments described in
subsections 1.5(B), 1.5(C) (other than any amount applied to the
Revolving Loans as a result of the reduction of the Borrowing Base as
specified therein) and 1.5(D), such prepayments shall first be applied
in payment of the Term Loan pro rata against all remaining Scheduled
Installments (provided that, if any such prepayment is due within
sixty (60) days prior to the due date of a Scheduled Installment, such
prepayment shall be applied first to reduce the amount of such
Scheduled Installment and second, the remainder, if any, shall be
applied pro rata against all remaining Scheduled Installments) and, at
any time after the Term Loan shall have been prepaid in full, such
prepayments shall be applied to reduce the outstanding principal
balance of the Revolving Loans, without a permanent reduction in the
Revolving Loan Commitment.
(2) Voluntary prepayments of the Term Loan shall be applied pro
rata against all remaining Scheduled Installments; provided that, if
any such prepayment is due within sixty (60) days prior to the due
date of a Scheduled Installment, such prepayment shall be applied
first to reduce the amount of such Scheduled Installment and second,
the remainder, if any, shall be applied pro rata against all remaining
Scheduled Installments.
(3) Voluntary repayments of the Revolving Loans shall be applied
to reduce the outstanding principal balance of the Revolving Loans
without a permanent reduction in the Revolving Loan Commitment.
(4) Considering each type of Loan being prepaid separately, any
such prepayment shall be applied first to Base Rate Loans of the type
required to be prepaid before application to LIBOR Loans of the type
required to be prepaid, in each case in a manner which minimizes any
resulting LIBOR Breakage Fee.
(F) LETTER OF CREDIT ▇▇▇▇▇▇▇▇▇.▇▇ the event any Letters of Credit are
outstanding at the time that Borrower prepays the Obligations or terminates
the Revolving Loan Commitment, Borrower shall (1) deposit with Agent for
the benefit of all Lenders with a Revolving Loan Commitment cash in an
amount equal to 102% of the aggregate outstanding Letter of Credit
Liability to be available to Agent to reimburse payments of drafts drawn
under such Letters of Credit and pay any fees and expenses related thereto
and (2) prepay the fee payable under subsection 1.2(C) with respect to such
Letters of Credit for the full remaining terms of such Letters of Credit.
Upon termination of any such Letter of Credit, the unearned portion of such
prepaid fee attributable to such Letter of Credit shall be refunded to
Borrower.
1.6. MATURITY. All of the Obligations shall become due and payable as
otherwise set forth herein, but in any event all of the remaining Obligations
shall become due and payable upon termination of the Credit Agreement. Until all
Obligations have been fully paid and satisfied (other than contingent
indemnification obligations to the extent no unsatisfied claim has been
asserted), the Revolving Loan Commitment has been terminated and all Letters of
Credit have been terminated or otherwise secured to the satisfaction of Agent,
Agent shall be entitled to retain the security interests in the Collateral
granted under the Security Documents and the ability to exercise all rights and
remedies available to them under the Loan Documents and applicable laws.
1.7. LOAN ACCOUNTS. Agent will maintain loan account records for (a) all
Loans, interest charges and payments thereof, (b) all Letter of Credit
Liability, (c) the charging and payment of all fees, costs and expenses and (d)
all other debits and credits pursuant to this Agreement. The balance in the loan
accounts shall be presumptive evidence of the amounts due and owing to Lenders;
provided that any failure by Agent to so record shall not limit or affect the
Borrower's obligation to pay. Within five (5) days of the first of each month,
Agent shall provide a statement for each loan account setting forth the
principal of each account and interest due thereon. Borrower must deliver a
written objection within sixty (60) days after receipt of the statement or the
statement will be presumptive evidence of the Obligations absent manifest error.
Notwithstanding anything in this Agreement to the contrary, during the
continuance of an Event of Default, Borrower irrevocably waives the right to
direct the application of any and all payments and Borrower hereby irrevocably
agrees that Agent shall have the continuing exclusive right to thereafter apply
payments in any manner it deems appropriate.
1.8. YIELD PROTECTION.
(A) CAPITAL ADEQUACY AND OTHER ADJUSTMENTS. In the event that any
Lender shall have determined that the adoption after the date hereof of any
law, treaty, governmental (or quasi-governmental) rule, regulation,
guideline or order regarding capital adequacy, reserve requirements or
similar requirements or compliance by any Lender or any corporation
controlling such Lender with any request or directive regarding capital
adequacy, reserve requirements or similar requirements (whether or not
having the force of law and whether or not failure to comply therewith
would be unlawful) from any central bank or governmental agency or body
having jurisdiction does or shall have the effect of increasing the amount
of capital, reserves or other funds required to be maintained by such
Lender or any corporation controlling such Lender and thereby reducing the
rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder, then Borrower shall from time to
time within fifteen (15) days after notice and demand from such Lender
(together with the certificate referred to in the next sentence and with a
copy to Agent) pay to Agent, for the account of such Lender, additional
amounts sufficient to compensate such Lender for such reduction; provided
that Borrower shall not be liable for the payment of any amount described
in this subsection to the extent such amount is incurred prior to the 180th
day preceding the date on which Borrower received notice from such Lender
of such amount, provided further, that if such law, treaty, governmental
(or quasi-governmental) rule, regulation, guideline or other order is
retroactive,
then the 180 day period shall be extended to include the period of
retroactive effect. A certificate as to the amount of such cost and showing
the basis of the computation of such cost submitted by such Lender to
Borrower and Agent shall, absent manifest error, be final, conclusive and
binding for all purposes.
(B) INCREASED LIBOR FUNDING COSTS. If, after the date hereof, the
introduction of, change in or interpretation of any law, rule, regulation,
treaty or directive would impose or increase reserve requirements (other
than as taken into account in the definition of LIBOR) or otherwise
increase the cost to any Lender of making or maintaining a LIBOR Loan, then
Borrower shall from time to time within fifteen (15) days after notice and
demand from Agent (together with the certificate referred to in the next
sentence) pay to Agent, for the account of all such affected Lenders,
additional amounts sufficient to compensate such Lenders for such increased
cost; provided that Borrower shall not be liable for the payment of any
amount described in this subsection to the extent such amount is incurred
prior to the 180th day preceding the date on which Borrower received notice
from such Lender of such amount, provided further, that if such law,
treaty, governmental (or quasi-governmental) rule, regulation, guideline or
other order is retroactive, then the 180 day period shall be extended to
include the period of retroactive effect. A certificate as to the amount of
such cost and showing the basis of the computation of such cost submitted
by Agent on behalf of all such affected Lenders to Borrower shall, absent
manifest error, be final, conclusive and binding for all purposes.
1.9. TAXES.
(A) NO DEDUCTIONS. Any and all payments or reimbursements made
hereunder or under the Notes shall be made free and clear of and without
deduction for any and all taxes, levies, imposts, deductions, charges or
withholdings, and all interest penalties or additions to tax with respect
thereto of any nature whatsoever imposed by any taxing authority, excluding
(i) with respect to each Lender or Agent, taxes imposed on its income, and
franchise or branch profit taxes imposed on it, by a jurisdiction under the
laws of which such Lender or Agent (as the case may be) is organized or in
which its principal executive office or applicable lending office is
located and (ii) with respect to each Lender or Agent, taxes imposed by
reason of any present or former connection between such Lender or Agent (as
the case may be) and the jurisdiction imposing such taxes, other than
solely as a result of this Agreement, or any Note or any transaction
contemplated hereby (the non-excluded taxes are hereinafter referred to as
"Indemnifiable Taxes"). If Borrower shall be required by law to deduct any
Indemnifiable Taxes from or in respect of any sum payable hereunder to any
Lender or Agent, then the sum payable hereunder shall be increased as may
be necessary so that, after making all required deductions, such Lender or
Agent receives an amount equal to the sum it would have received had no
such deductions been made.
(B) CHANGES IN TAX LAWS. In the event that, subsequent to the
Restatement Effective Date, (1) any changes in any existing law,
regulation, treaty or directive or in the interpretation or application
thereof, (2) any new law, regulation, treaty or directive enacted or any
interpretation or application thereof, or (3) compliance by Agent or any
Lender with any
request or directive (whether or not having the force of law) from any
governmental authority, agency or instrumentality:
(a) does or shall subject Agent or any Lender to any tax of any
kind whatsoever with respect to this Agreement, the other Loan
Documents or any Loans made or Letters of Credit issued hereunder, or
change the basis of taxation of payments to Agent or such Lender of
principal, fees, interest or any other amount payable hereunder
(except for net income taxes or franchise or branch profit taxes
imposed in lieu of net income taxes, imposed generally by foreign,
federal, state or local taxing authorities with respect to interest or
commitment fees or other fees payable hereunder or changes in the rate
of tax on the overall net income (including franchise or branch profit
taxes) of Agent or such Lender); or
(b) reserved;
and the result of any of the foregoing is to increase the cost to Agent or
any such Lender of issuing any Letter of Credit or making or continuing any
Loan hereunder, as the case may be, or to reduce any amount receivable
hereunder, then, in any such case, Borrower shall from time to time within
fifteen (15) days after notice and demand from Agent (together with the
certificate referred to in the last sentence of this paragraph) pay to
Agent, for the account of all such affected Lenders, any additional amounts
necessary to compensate Agent or such Lender, on an after-tax basis, for
such additional cost or reduced amount receivable, as determined by Agent
or such Lender with respect to this Agreement or the other Loan Documents;
provided that Borrower shall not be liable for the payment of any amount
described in this subsection to the extent such amount is incurred prior to
the 180th day preceding the date on which Borrower received notice from
such Lender of such amount, provided further, that if any of the items
described in clauses (1), (2) or (3) of the first sentence of this
subsection 1.9(B) is retroactive, then the 180 day period shall be extended
to include the period of retroactive effect. If Agent or such Lender
becomes entitled to claim any additional amounts pursuant to this
subsection, it shall promptly notify Borrower of the event by reason of
which Agent or such Lender has become so entitled. A certificate as to any
additional amounts payable pursuant to the foregoing sentence submitted by
Agent or such Lender to Borrower shall, absent manifest error, be final,
conclusive and binding for all purposes.
(C) FOREIGN LENDERS. Each Lender organized under the laws of a
jurisdiction outside the United States (a "Foreign Lender") as to which
payments to be made under this Agreement or under the Notes are exempt from
United States withholding tax or are subject to United States withholding
tax at a reduced rate under an applicable statute or tax treaty shall
provide to Borrower and Agent in duplicate, prior to becoming a Lender
under this Agreement, (1) a properly completed and executed Internal
Revenue Service Form W-8BEN or Form W-8ECI or other applicable form,
certificate or document prescribed by the Internal Revenue Service of the
United States certifying as to such Foreign Lender's entitlement to such
exemption or reduced rate of withholding with respect to payments to be
made to such Foreign Lender under this Agreement and under the Notes (a
"Certificate of Exemption") or (2) a letter from any such
Foreign Lender stating that it is not entitled to any such exemption or
reduced rate of withholding (a "Letter of Non-Exemption"). Each Foreign
Lender that becomes a Lender under this Agreement that has provided a
Certificate of Exemption prior to becoming a Lender hereunder shall provide
to Agent and Borrower, within fifteen (15) days prior to the date the
existing Certificate of Exemption expires or if such Certificate of
Exemption becomes invalid, a new Certificate of Exemption to the extent it
is then able to do so. If a Foreign Lender is entitled to an exemption with
respect to payments to be made to such Foreign Lender under this Agreement
(or to a reduced rate of withholding) and does not provide a Certificate of
Exemption to Borrower and Agent within the time periods set forth in the
preceding paragraph, Borrower shall withhold taxes from payments to such
Foreign Lender at the applicable statutory rates and Borrower shall not be
required to pay any additional amounts as a result of such withholding;
provided that all such withholding shall cease upon delivery by such
Foreign Lender of a Certificate of Exemption to Borrower and Agent.
(D) TAX REFUNDS. If a Lender or Agent (as the case may be) determines
that it has actually received a refund or otherwise obtained and used a
reduction of, or credit against, its tax liabilities in any taxable year in
connection with an Indemnifiable Tax indemnified by the Borrower or with
respect to which the Borrower has paid additional amounts under this
section 1.9, it shall pay to Borrower an amount equal to Lender's or
Agent's determination of the net after-tax value to Lender or Agent (as the
case may be) of such part of such refund, credit or other reduction as
Lender or Agent (as the case may be) considers, in its sole discretion, to
be allocable to such payment by Borrower; provided, however that if Lender
or Agent (as the case may be) has made a payment to Borrower pursuant to
this section 1.9(D) and the applicable refund, credit, or other reduction
in Tax is subsequently disallowed, Borrower shall, promptly upon request by
Lender or Agent in writing, refund to Lender or Agent that portion of such
payment determined by Lender or Agent, in its sole discretion, to be
attributable to the disallowed refund, reduction or credit and provided
further that (x) nothing contained in this section 1.9(D) shall interfere
with Lender's or Agent's right to arrange its tax affairs in whatever
manner it deems fit or (y) Lender or Agent (as the case may be) shall not
be obliged to disclose any information concerning its tax affairs.
1.10. OPTIONAL PREPAYMENT/REPLACEMENT OF LENDERS. Within thirty (30) days
after receipt by Borrower of written notice and demand from any Lender for
payment pursuant to subsection 1.8 or 1.9 or, as provided in subsection 8.3(C),
in the case of certain refusals by any Lender to consent to certain proposed
amendments, modifications, terminations or waivers with respect to this
Agreement that have been approved by Requisite Lenders (any such Lender
demanding such payment or refusing to so consent being referred to herein as an
"Affected Lender"), Borrower may, at its option, notify Agent and such Affected
Lender of its intention to do one of the following:
(A) Borrower may obtain, at Borrower's expense, a replacement Lender
("Replacement Lender") for such Affected Lender, which Replacement Lender
shall be reasonably satisfactory to Agent. In the event Borrower obtains a
Replacement Lender that will purchase all outstanding Obligations owed to
such Affected Lender and assume its commitments
hereunder within ninety (90) days following notice of Borrower's intention
to do so, the Affected Lender shall sell and assign all of its rights and
delegate all of its obligations under this Agreement to such Replacement
Lender in accordance with the provisions of subsection 8.1, provided that
Borrower has reimbursed such Affected Lender for any administrative fee
payable pursuant to subsection 8.1 and, in any case where such replacement
occurs as the result of a demand for payment pursuant to subsection 1.8 or
1.9, paid all amounts required to be paid to such Affected Lender pursuant
to subsection 1.8 or 1.9 through the date of such sale and assignment; or
(B) Borrower may prepay in full all outstanding Obligations owed to
such Affected Lender and terminate such Affected Lender's Pro Rata Share of
the Revolving Loan Commitment, in which case the Revolving Loan Commitment
will be reduced by the amount of such Pro Rata Share. Borrower shall,
within ninety (90) days following notice of its intention to do so, prepay
in full all outstanding Obligations owed to such Affected Lender
(including, in any case where such prepayment occurs as the result of a
demand for payment for increased costs, such Affected Lender's increased
costs for which it is entitled to reimbursement under this Agreement
through the date of such prepayment), and terminate such Affected Lender's
obligations under the Revolving Loan Commitment.
SECTION 2. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that so long as the Revolving Loan Commitment
is in effect and until payment in full of all Obligations (other than contingent
indemnification obligations to the extent no unsatisfied claim has been
asserted) and termination of the obligations of Lenders with respect to all
Letters of Credit, Borrower shall perform and comply with, and shall cause each
of its Subsidiaries to perform and comply with, all covenants in this Section 2
applicable to such Person.
2.1. COMPLIANCE WITH LAWS AND CONTRACTUAL OBLIGATIONS. Borrower will (a)
comply with and cause each of its Subsidiaries to comply with (i) the
requirements of all applicable laws, rules, regulations and orders of any
governmental authority (including, without limitation, laws, rules, regulations
and orders relating to taxes, employer and employee contributions, securities,
employee retirement and welfare benefits, environmental protection matters and
employee health and safety) as now in effect and which may be imposed in the
future in all jurisdictions in which Borrower or its Subsidiaries are now doing
business or may hereafter be doing business and (ii) the obligations, covenants
and conditions contained in all Contractual Obligations of Borrower or such
Subsidiary, as applicable other than (1) those laws, rules, regulations, orders
and provisions of such Contractual Obligations the noncompliance with which
would not have, either individually or in the aggregate, a Material Adverse
Effect or (2) those laws, rules, regulations, orders and Contractual Obligations
being contested in good faith by appropriate proceedings diligently prosecuted;
provided such contest would not have, either individually or in the aggregate, a
Material Adverse Effect, and (b) maintain or obtain and will cause each of its
Subsidiaries to maintain or obtain, all licenses, qualifications and permits now
held or hereafter required to be held by Borrower and its Subsidiaries, for
which the loss,
suspension, revocation or failure to obtain or renew, would not have a Material
Adverse Effect. This subsection 2.1 shall not preclude the Borrower or any
Subsidiary from contesting any taxes or other payments, if they are being
diligently contested in good faith in a manner which stays enforcement thereof
and if appropriate expense provisions have been recorded in conformity with
GAAP. Borrower represents and warrants that, it (i) is in compliance and each of
its Subsidiaries is in compliance with the requirements of all applicable laws,
rules, regulations and orders of any governmental authority and all Contractual
Obligations other than those laws, rules, regulations, orders and provisions of
such governmental authorities or such Contractual Obligations the noncompliance
with which would not have a Material Adverse Effect and (ii) maintains and each
of its Subsidiaries maintains all licenses, qualifications and permits required
to be maintained by Borrower and its Subsidiaries except (x) where the failure
to maintain would not have a Material Adverse Effect or (4) where being
contested in good faith by appropriate proceeding diligently prosecuted,
provided such contest does not have, either individually or in the aggregate, a
Material Adverse Effect.
"Contractual Obligations," as applied to any Person, means 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 including, without limitation,
the Related Transactions Documents.
2.2. MAINTENANCE OF PROPERTIES; INSURANCE. Borrower will maintain or cause
to be maintained in good repair, working order and condition (ordinary wear and
tear excepted) all material properties used in the business of Borrower and its
Subsidiaries and will make or cause to be made all appropriate repairs, renewals
and replacements thereof. Borrower will maintain or cause to be maintained, with
financially sound and reputable insurers, public liability and property damage
insurance with respect to its business and properties and the business and
properties of its Subsidiaries against loss or damage of the kinds customarily
carried or maintained by corporations of established reputation engaged in
similar businesses and in amounts acceptable to Agent and will deliver evidence
thereof to Agent. Borrower will maintain commercially reasonable business
interruption insurance. Borrower shall cause Agent, pursuant to endorsements
and/or assignments in form and substance reasonably satisfactory to Agent, to be
named as lender's loss payee in the case of casualty insurance, additional
insured in the case of all liability insurance and assignee in the case of all
business interruption insurance, in each case for the benefit of Agent and
Lenders. Borrower represents and warrants that it and each of its Subsidiaries
currently maintains all material properties as set forth above and maintains all
insurance described above. In the event Borrower fails to provide Agent with
evidence of the insurance coverage required by this Agreement, Agent may
purchase insurance at Borrower's expense to protect Agent's interests in the
Collateral. This insurance may, but need not, protect Borrower's interests. The
coverage purchased by Agent may not pay any claim made by Borrower or any claim
that is made against Borrower in connection with the Collateral. Borrower may
later cancel any insurance purchased by Agent, but only after providing Agent
with evidence that Borrower has obtained insurance as required by this
Agreement. If Agent purchases insurance for the Collateral, Borrower will be
responsible for the costs of that insurance, including interest and other
charges imposed by Agent in connection with the
placement of the insurance, until the effective date of the cancellation or
expiration of the insurance, provided that Agent will use reasonable efforts to
cooperate with Borrower in obtaining such insurance at commercially reasonable
rates. The costs of the insurance may be added to the Obligations. The costs of
the insurance may be more than the cost of insurance Borrower is able to obtain
on its own.
2.3. INSPECTION; LENDER MEETING. Upon reasonable notice to the Chairman of
Borrower and at Agent's expense (unless an Event of Default exists, in which
event the same shall be at Borrower's expense), Borrower shall with reasonable
frequency (and in any event on no less than one occasion per calendar year)
permit a reasonable number of authorized representatives of Agent and Lenders to
examine and make copies of and abstracts from the records and books of account
of, and to visit and inspect the properties of, Borrower and its Subsidiaries,
and to discuss the affairs, finances and accounts of Borrower and its
Subsidiaries with a Responsible Officer of Borrower and independent accountants
of Borrower and its Subsidiaries; provided that if an Event of Default exists,
Borrower shall permit Agent, Lenders and their authorized representatives to
examine and make copies of and abstracts from the records and books of account
of, to visit and inspect the properties of, and to discuss the affairs, finances
and accounts of Borrower and its Subsidiaries with a Responsible Officer of
Borrower and independent accountants of Borrower or its Subsidiaries without
observing the procedures set forth above. Agent's delivery of an executed copy
of this Agreement to Borrower's independent public accounts (to which Borrower
hereby consents) shall constitute Borrower's consent to its independent public
accountants to engage in such discussions.
2.4. ORGANIZATIONAL EXISTENCE. Except as otherwise permitted by subsection
3.6, Borrower will, and will cause each of its Subsidiaries to, at all times
preserve and keep in full force and effect its organizational existence and all
rights and franchises material to its business.
2.5. ADDITIONAL ENVIRONMENTAL COVENANTS. Without limitation of the
provisions of subsection 2.1 hereof, Borrower shall, as soon as reasonably
practicable but in no event later than one hundred fifty (150) days after the
Restatement Effective Date, demonstrate, to the reasonable satisfaction of
Agent, that IST and its operations are in compliance with (including maintaining
all applicable licenses and permits):
(A) the Maryland Department of Environment laws, rules, regulations,
orders and requirements regarding air emissions, including, without
limitation, maximum emissions of volatile organic compounds; and
(B) the Maryland Department of Public Works laws, rules, regulations,
orders and requirements regarding wastewater discharge, including, in any
event, the installation of a control system to monitor the pH level of
wastewater discharge and establishment and adherence to a wastewater
monitoring plan to test on a semi-weekly basis the pH level of wastewater
discharge.
2.6. FURTHER ASSURANCES.
(A) Subject to the limitations set forth in subsection 2.6(E),
Borrower shall and shall cause each of its Subsidiaries to, from time to
time, execute such guaranties, financing statements, documents, security
agreements and reports as Agent or Requisite Lenders at any time may
reasonably request to evidence, perfect or otherwise implement the
guaranties and security for repayment of the Obligations contemplated by
the Loan Documents.
(B) Subject to the limitations set forth in subsection 2.6(E), in the
event any Loan Party acquires an ownership interest in real property after
the Restatement Effective Date, Borrower shall and shall cause each Loan
Party to deliver to Agent a fully executed mortgage or deed of trust over
such real property in form and substance satisfactory to Agent, together
with such title insurance policies, surveys, appraisals, evidence of
insurance, legal opinions, environmental assessments and other documents
and certificates as shall be required by Agent and are consistent with
requirements imposed with respect to real property interests of such Loan
Parties on the Original Closing Date or any time thereafter.
(C) Subject to the limitations set forth in subsection 2.6(E),
Borrower shall (i) cause each Person, upon its becoming a Subsidiary of
Borrower, promptly to guaranty the Obligations and to grant to Agent, for
the benefit of Agent and Lenders, a security interest in the real, personal
and mixed property of such Person to secure the Obligations and (ii)
pledge, or cause to be pledged, to Agent, for the benefit of Agent and
Lenders, all of the equity securities of such Subsidiary to secure the
Obligations. The documentation for such guaranty and security shall be
substantially similar to the Loan Documents executed on the Original
Closing Date or any time thereafter with such modifications as are
reasonably requested by Agent.
(D) Subject to the limitations set forth in subsection 2.6(E), in the
event Borrower or its Subsidiaries acquires a leasehold interest in real
property after the Restatement Effective Date, Borrower shall and shall
cause such Subsidiary to deliver to Agent a fully executed assignment of
leases or leasehold deed of trust (as Agent shall reasonably request after
consideration of the materiality of such leasehold interest), in favor of
Agent, for the benefit of Agent and Lenders, with respect to the lease
governing such leasehold interest, in form and substance satisfactory to
Agent, together with such title insurance policies, surveys, appraisals,
evidence of insurance, legal opinions, environmental assessments and other
documents and certificates as shall be reasonably required by Agent (after
consideration of the materiality of such leasehold interest) and are
consistent with requirements imposed with respect to the leasehold
interests in real property of such Persons on the Original Closing Date or
any time thereafter, and Borrower shall or shall cause such Subsidiary to
use its best efforts to deliver to Agent a fully executed landlord waiver
and, if requested by Agent, mortgagee waiver, with respect to such
leasehold interest, in each case in form and substance satisfactory to
Agent.
(E) Notwithstanding anything to the contrary contained in this
subsection 2.6, with respect to any Subsidiary that is "foreign" as defined
in Section 7701(a)(5) of the IRC (a "Foreign Subsidiary"), (i) Borrower or
its Subsidiaries shall not be required to pledge greater than 100% of the
non-voting equity securities of such Foreign Subsidiary owned by
such Person or 66% of the voting equity securities of such Foreign
Subsidiary owned by such Person to secure the Obligations if doing so would
result in adverse tax consequences to Borrower of such Subsidiary and (ii)
such Foreign Subsidiary shall not be required to execute any Security
Documents or guarantees with respect to the Obligations if doing so would
result in adverse tax consequences to Borrower or such Foreign Subsidiary.
SECTION 3. NEGATIVE COVENANTS.
Borrower covenants and agrees that so long as the Revolving Loan Commitment
is in effect and until payment in full of all Obligations (other than contingent
indemnification obligations to the extent no unsatisfied claim has been
asserted) and termination of the obligations of Lenders with respect to all
Letters of Credit, Borrower shall perform and comply with, and shall cause each
of the other Loan Parties to perform and comply with, all covenants in this
Section 3 applicable to such Person.
3.1. INDEBTEDNESS. Borrower will not and will not permit any of its
Subsidiaries directly or indirectly to create, incur, assume, or otherwise
become or remain directly or indirectly liable with respect to any Indebtedness
(other than pursuant to a Contingent Obligation) except:
(A) the Obligations;
(B) intercompany Indebtedness among Borrower and its Subsidiaries;
provided that (i) if Borrower is the obligor, the obligations of Borrower
shall be subordinated in right of payment to the Obligations from and after
such time as any portion of the Obligations shall become due and payable
(whether at stated maturity, by acceleration or otherwise), (ii) if the
intercompany Indebtedness is among Borrower and its foreign Subsidiaries,
the aggregate principal amount outstanding from time to time shall not
exceed $5,000,000 and (iii) upon the request of Agent at any time, such
Indebtedness shall be evidenced by promissory notes having terms reasonably
satisfactory to Agent, the sole originally executed counterparts of which
shall be pledged and delivered to Agent, for the benefit of Agent and
Lenders, as security for the Obligations;
(C) reserved;
(D) to the extent permitted under the AKI Senior Notes Indenture and
the Holdings 13 1/2% Notes Indenture, unsecured subordinated Indebtedness
evidenced by Additional Seller Notes and unsecured purchase money
Indebtedness in an aggregate principal amount outstanding from time to time
not to exceed $7,500,000;
(E) unsecured Indebtedness evidenced by the AKI Senior Notes in an
aggregate principal amount not to exceed $103,510,000 at any time
outstanding after the Restatement Effective Date;
(F) to the extent permitted under the AKI Senior Notes Indenture and
the Holdings 13 1/2% Notes Indenture, unsecured subordinated Indebtedness
evidenced by the AHC Subordinated Note in an aggregate principal amount
outstanding from time to time not to exceed $10,000,000, issued pursuant to
the AHC Subordinated Loan Documents;
(G) to the extent permitted under the AKI Senior Notes Indenture and
the Holdings 13 1/2% Notes Indenture, unsecured Indebtedness not permitted
under clauses (A) through (F) above in an aggregate principal amount
outstanding from time to time not to exceed $3,000,000.
3.2. Liens and Related Matters.
(A) No Liens. Borrower will not and will not permit any of its
Subsidiaries directly or indirectly to create, incur, assume or permit to
exist any Lien on or with respect to any property or asset of Borrower or
any of its Subsidiaries, whether now owned or hereafter acquired, or any
income or profits therefrom, except Permitted Encumbrances.
"Permitted Encumbrances" means the following:
(1) Liens for taxes, assessments or other governmental charges
not yet due and payable or which are being contested in good faith by
appropriate proceedings diligently prosecuted and if appropriate
expense provisions have been recorded in conformity with GAAP;
(2) statutory Liens of landlords, carriers, warehousemen,
mechanics, materialmen and other similar liens imposed by law, which
are incurred in the ordinary course of business for sums not more than
thirty (30) days delinquent or which are being diligently contested in
good faith in a manner which stays enforcement of such Liens, provided
that appropriate provisions shall have been established therefore in
accordance with GAAP;
(3) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of
social security, or to secure the performance of tenders, statutory
obligations, surety, stay, customs and appeal bonds, bids, government
contracts, trade contracts, performance and return of money bonds and
other similar obligations (exclusive of obligations for the payment of
borrowed money);
(4) deposits, in an aggregate amount not to exceed $500,000, made
in the ordinary course of business to secure liability to insurance
carriers;
(5) reserved;
(6) any attachment or judgment Lien not constituting an Event of
Default under subsection 6.1(H);
(7) leases or subleases granted to others not interfering in any
material respect with the business of Borrower or any of its
Subsidiaries;
(8) easements, rights of way, restrictions, and other similar
charges or encumbrances not interfering in any material respect with
the ordinary conduct of the business of Borrower or any of its
Subsidiaries;
(9) any interest or title of a lessor or sublessor under any
lease;
(10) Liens arising from filing financing statements regarding
leases not prohibited by this Agreement;
(11) bankers' liens on bank accounts of Borrower or any of its
Subsidiaries but only to the extent such Liens are permitted by, and
such bank accounts are continuously subject to, deposit account
control agreements or a risk participation agreement with a Bank Line
Issuer;
(12) Liens in favor of Agent, for the benefit of Agent and
Lenders;
(13) Liens granted to the issuer/seller of reverse repurchase
agreements, provided such Liens encumber only the securities subject
to such reverse repurchase agreement; and
(14) Liens existing on the Restatement Effective Date and
renewals and extensions thereof, which Liens are set forth on Schedule
3.2(A)(14) hereto.
(B) NO NEGATIVE PLEDGES. Borrower will not and will not permit any of its
Subsidiaries directly or indirectly to enter into or assume any agreement (other
than the Loan Documents, the Holdings 13 1/2% Notes Indenture, the AKI Senior
Notes Indenture and the Subordinated Loan Documents) prohibiting the creation or
assumption of any Lien upon its properties or assets, whether now owned or
hereafter acquired, other than Permitted Encumbrances.
(C) NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO BORROWER. Except as
provided herein, Borrower will not and will not permit any of its Subsidiaries
directly or indirectly to create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of any such Subsidiary to: (1) pay dividends or make any other distribution on
any of such Subsidiary's capital stock owned by Borrower or any other
Subsidiary; (2) pay any Indebtedness owed to Borrower or any other Subsidiary;
(3) make loans or advances to Borrower or any other Subsidiary; or (4) transfer
any of its property or assets to Borrower or any other Subsidiary, except for
any customary restrictions on assets to be sold pursuant to any agreement for
the sale of such assets to the extent permitted under this Agreement.
3.3. INVESTMENTS. Except as permitted by subsection 3.5(H), Borrower will
not and will not permit any of its Subsidiaries directly or indirectly to make
or own any Investment in any Person except:
(A) Borrower and its Subsidiaries may make and own Investments in Cash
Equivalents;
(B) Borrower and its Subsidiaries may make intercompany loans to the
extent permitted under subsection 3.1(A);
(C) Borrower and its Subsidiaries may make loans and advances to
employees for moving, entertainment, travel and other similar expenses in
the ordinary course of business not to exceed $500,000 in the aggregate at
any time outstanding;
(D) Borrower and its Subsidiaries may make capital contributions to
their wholly-owned domestic Subsidiaries; and
(E) IST may consummate the Color Prelude Acquisition in accordance
with the terms of the Color Prelude Acquisition Instruments on the
Restatement Effective Date; and
(F) Borrower and its Subsidiaries may make acquisitions (including
acquisitions of other businesses or business units or product lines and
patents, licenses or other individual assets of another Person) and may
make Investments in joint ventures; provided that (1) the aggregate
consideration paid by Borrower or its Subsidiary in connection with such
Investment is less than or equal to $5,000,000, (2) at the time of such
Investment, no Default or Event of Default shall exist and be continuing or
arise as a result thereof (including, without limitation, subsection 3.9),
(3) after giving effect to such Investment, the Maximum Revolving Loan
Balance exceeds the aggregate outstanding principal balance of Revolving
Loans by not less than $3,000,000 and (4) Borrower and its Subsidiaries
comply with subsection 2.6 with respect to such Investment.
"Investment" means (i) any direct or indirect purchase or other
acquisition by Borrower or any of its Subsidiaries of any beneficial
interest in, including stock, partnership interest or other equity
securities of, or ownership interest in, any other Person; and (ii) any
direct or indirect loan, advance or capital contribution by Borrower or any
of its Subsidiaries 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 decrease in value, or write ups, write downs or write offs
with respect to such Investment.
"Cash Equivalents" means: (i) marketable securities (A) issued or
directly and unconditionally guaranteed as to interest and principal by the
United States government or (B) issued by any agency of the United States
government the obligations of which are backed by the full faith and credit
of the United States, in each case maturing within one year after
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, in each case maturing within one year
after acquisition thereof and having, at the time of acquisition, a rating
of at least A-1 from Standard & Poor's Ratings Group ("S&P") or at least
P-1 from ▇▇▇▇▇'▇ Investors Service, Inc. ("Moody's"); (iii) commercial
paper maturing no more than one year from the date of acquisition and, at
the time of acquisition, having a rating of at least A-1 from S&P or at
least P-1 from Moody's; (iv) certificates of deposit or bankers'
acceptances issued or accepted by any Lender or by any commercial bank
organized under the laws of the United States of America or any state
thereof or the District of Columbia that is at least (A) "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 $250,000,000, in each case maturing within one year after
issuance or acceptance thereof; and (v) shares of any money market mutual
or similar funds that (A) has substantially all of its assets invested
continuously in the types of investments referred to in clauses (i) through
(iv) above, (B) has net assets of not less than $500,000,000 and (C) has
the highest rating obtainable from either S&P or Moody's.
3.4. CONTINGENT OBLIGATIONS. Borrower will not and will not permit any of
its Subsidiaries directly or indirectly to create or become or be liable with
respect to any Contingent Obligation except:
(A) Letter of Credit Liability;
(B) those arising under the Security Documents;
(C) those resulting from endorsement of negotiable instruments for
collection in the ordinary course of business;
(D) those existing on the Restatement Effective Date and described in
Schedule 3.4 annexed hereto;
(E) those arising under indemnity agreements to title insurers to
cause such title insurers to issue to Agent mortgagee title insurance
policies;
(F) those arising with respect to customary indemnification
obligations incurred in connection with Asset Dispositions;
(G) those incurred in the ordinary course of business with respect to
surety and appeal bonds, return-of-money bonds and other similar
obligations not exceeding at any time outstanding $100,000 in aggregate
liability;
(H) those incurred in the ordinary course of business with respect to
performance bonds not exceeding at any time outstanding $3,000,000 in
aggregate liability;
(I) those incurred with respect to Indebtedness permitted by
subsection 3.1 provided that (i) any guaranty of Indebtedness that is
subordinated to the Obligations shall be
subordinated to the same extent and (ii) in no event may Subsidiaries of
Borrower guaranty the obligations of Borrower with respect to Indebtedness
permitted pursuant to subsections 3.1(D), 3.1(E), 3.1(F) or 3.1(G) unless
Agent, for the benefit of Agent and Lenders, shall have received a first
priority pledge of one hundred percent (100%) of the issued and outstanding
capital stock of such Subsidiaries and such Subsidiaries shall have
guaranteed the Obligations and granted security interests in their real,
personal and mixed property in accordance with subsection 2.6;
(J) those incurred with respect to foreign exchange contracts and
currency swap agreements, the notional amount of which does not exceed
$10,000,000 (U.S. Dollars) in the aggregate at any time;
(K) those incurred by Borrower in respect of unsecured obligations of
its Subsidiaries incurred in the ordinary course of business and not
otherwise prohibited by this Agreement; and
(L) any other Contingent Obligation not expressly permitted by clauses
(A) through (K) above, so long as any such other Contingent Obligations, in
the aggregate at any time outstanding, do not exceed $750,000.
"Contingent Obligation", as applied to any Person, means any direct or
indirect liability of that Person: (i) with respect to any indebtedness,
lease, dividend or other obligation of another Person if the purpose or
intent of the Person incurring such liability, or the effect thereof, is to
provide assurance to the obligee of such liability that such liability will
be paid or discharged, or that any agreements relating thereto will be
complied with, or that the holders of such liability will be protected (in
whole or in part) against loss with respect thereto; (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; (iii) under
any foreign exchange contract, currency swap agreement, interest rate swap
agreement or other similar agreement or arrangement designed to alter the
risks of that Person arising from fluctuations in currency values or
interest rates; (iv) to make take-or-pay or similar payments if required
regardless of nonperformance by any other party or parties to an agreement,
or (v) pursuant to any agreement to purchase, repurchase or otherwise
acquire any obligation or any property constituting security therefore, to
provide funds for the payment or discharge of such obligation or to
maintain the solvency, financial condition or any balance sheet item or
level of income of another. The amount of any Contingent Obligation shall
be equal to the amount of the obligation so guaranteed or otherwise
supported or, if not a fixed and determined amount, the maximum amount so
guaranteed.
3.5. RESTRICTED JUNIOR PAYMENTS. Borrower will not and will not permit any
of its Subsidiaries directly or indirectly to declare, order, pay, make or set
apart any sum for any Restricted Junior Payment, except that:
(A) Borrower may make payments and distributions to Holdings to permit
Holdings to pay federal and state income taxes then due and owing,
franchise taxes and other
similar licensing expenses incurred in the ordinary course of business;
provided, however, Borrower's contribution to taxes as a result of the
filing of a consolidated return by Holdings shall not be greater, nor the
receipt of tax benefits less, then they would have been had Borrower not
filed a consolidated return with Holdings;
(B) Subsidiaries of Borrower may make Restricted Junior Payments to
Borrower;
(C) Borrower may make payments and distributions to Holdings, not to
exceed $100,000 in the aggregate in any fiscal year, to permit Holdings to
pay board of director fees and expenses and other out-of-pocket expenses;
(D) Borrower and its Subsidiaries may make required payments with
respect to the Additional Seller Notes, provided that at the time of such
payment and after giving effect thereto, no Default or Event of Default
exists or would arise as a result thereof;
(E) Borrower may make payments and distributions to Holdings solely to
permit Holdings to redeem from officers, directors and employees of
Holdings, the Borrower or Subsidiaries of the Borrower (or their heirs or
estates) shares of Holdings capital stock, provided that all of the
following conditions are satisfied:
(i) no Default or Event of Default has occurred and is
continuing or would arise as a result of such Restricted
Junior Payment or redemption;
(ii) after giving effect to such Restricted Junior Payment,
Borrower is in compliance on a pro forma basis with the
financial covenants set forth in Section 4, recomputed for
the most recent month for which financial statements have
been delivered;
(iii)the aggregate amount of Restricted Junior Payments under
this subsection 3.5(E) permitted (x) in any fiscal year of
Borrower shall not exceed $500,000 and (y) from and after
the Restatement Effective Date, shall not exceed $1,500,000;
and
(iv) after giving effect to such Restricted Junior Payment, the
Maximum Revolving Loan Balance exceeds the aggregate
outstanding principal balance of Revolving Loans by not less
than $3,000,000;
(F) Provided no Default or Event of Default has occurred and is
continuing, Borrower may make payments and distributions to Holdings solely
to permit Holdings to pay,
without duplication of any amounts paid by Borrower, the management,
advisory, consulting or other similar fee to DLJ described in subsection
3.8(a);
(G) Borrower may make scheduled interest and principal payments on
account of the AHC Subordinated Note, provided that all of the following
conditions are satisfied:
(i) no Default or Event of Default has occurred and is
continuing or would arise as a result of any such Restricted
Junior Payment;
(ii) after giving effect to any such Restricted Junior Payment,
Borrower is in compliance on a pro forma basis with the
financial covenants set forth in Section 4, recomputed for
the most recent month for which financial statements have
been delivered; and
(iii)after giving effect to any such Restricted Junior Payment,
the Maximum Revolving Loan Balance exceeds the aggregate
outstanding principal balance of Revolving Loans by not less
than $3,000,000;
(H) Borrower may purchase or repurchase certain of the AKI Senior
Notes, or make dividend payments or distributions to Holdings solely to
permit Holdings to purchase or repurchase certain of the Holdings 13 1/2%
Notes, provided that, in each case, all of the following conditions are
satisfied:
(i) no Default or Event of Default has occurred and is
continuing or would arise as a result of any such Restricted
Junior Payment, purchase or repurchase;
(ii) after giving effect to any such Restricted Junior Payment,
Borrower is in compliance on a pro forma basis with the
financial covenants set forth in Section 4, recomputed for
the most recent month for which financial statements have
been delivered;
(iii)after giving effect to any such Restricted Junior Payment,
the Maximum Revolving Loan Balance exceeds the aggregate
outstanding principal balance of Revolving Loans by not less
than $3,000,000; and
(iv) the aggregate cost of all purchases or repurchases after the
Restatement Effective Date pursuant to this clause (H) of
subsection 3.5 shall not exceed $10,000,000; and
(I) Borrower may make dividend payments or distributions to Holdings
solely to permit Holdings to make scheduled cash payments of interest on
the Holdings 13 1/2% Notes, provided that all of the following conditions
are satisfied:
(i) Borrower shall provide written notice to Agent that the
proceeds of the Revolving Loan are to be used to make
distributions to Holdings to pay scheduled cash payments of
interest on the Holdings 13 1/2% Notes;
(ii) no Default or Event of Default has occurred and is
continuing or would arise as a result of any Restricted
Junior Payment;
(iii)after giving effect to any such Restricted Junior Payment,
Borrower is in compliance on a pro forma basis with the
financial covenants set forth in Section 4, recomputed for
the most recent month for which financing statements have
been delivered; and
(iv) after giving effect to any such Restricted Junior Payment,
the Maximum Revolving Loan Balance exceeds the aggregate
outstanding principal balance of the Revolving Loans by not
less than $3,000,000.
"Restricted Junior Payment" means: (i) any dividend or other
distribution, direct or indirect, on account of any shares of any
class of stock or other equity security of, or ownership interest in,
Borrower or any of its Subsidiaries now or hereafter outstanding,
except a dividend payable solely in shares of that class of stock of
the holders of that class; (ii) any redemption, conversion, exchange,
retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any shares of any class
of stock or other equity security of, or ownership interest in,
Borrower or any of its Subsidiaries now or hereafter outstanding;
(iii) any payment or prepayment of interest on, principal of, premium,
if any, redemption, conversion, exchange, purchase, repurchase,
retirement, defeasance, sinking fund or similar payment with respect
to, any Indebtedness subordinated to the Obligations including,
without limitation, the Indebtedness incurred pursuant to the AHC
Subordinated Loan Documents, or any Indebtedness evidenced by the
Holdings 13 1/2% Notes; (iv) any payment or prepayment of principal,
premium, if any, redemption, conversion, exchange, purchase,
repurchase, retirement, defeasance, sinking fund or similar payment
with respect to, any Indebtedness evidenced by the AKI Senior Notes;
and (v) any payment made to retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire shares of any
class of stock or other equity security of, or ownership interest in,
Borrower or any of its Subsidiaries now or hereafter outstanding.
3.6. RESTRICTION ON FUNDAMENTAL CHANGES. Borrower will not and will not
permit any of its Subsidiaries directly or indirectly to: (a) amend, modify or
waive any term or provision of its organizational documents, including without
limitation its articles of incorporation, certificates of designations
pertaining to preferred stock, by-laws, partnership agreement or operating
agreement unless required by law, other than such immaterial amendments or
modifications which do not and will not adversely affect Agent, or the ability
of Agent to enforce the rights and remedies of Agent and Lenders under the Loan
Documents or to realize upon the Collateral or which otherwise would have a
Material Adverse Effect; (b) enter into any transaction of merger or
consolidation except, upon not less than five (5) Business Days prior written
notice to Agent, any wholly-owned Subsidiary of Borrower may be merged with or
into Borrower (provided that Borrower is the surviving entity) or any other
wholly-owned domestic Subsidiary of Borrower; (c) liquidate, wind-up or dissolve
itself (or suffer any liquidation or dissolution); or (d) acquire by purchase or
otherwise all or any substantial part of the business or assets of any other
Person other than as permitted under subsections 3.3(E) and 3.3(F).
3.7. DISPOSAL OF ASSETS OR SUBSIDIARY STOCK. Borrower will not and will not
permit any of its Subsidiaries directly or indirectly to convey, sell, lease,
sublease, transfer or otherwise dispose of, or grant any Person an option to
acquire, in one transaction or a series of related transactions, any of its
property, business or assets, or the capital stock of or other equity interests
in any of its Subsidiaries, whether now owned or hereafter acquired, except for
(a) sales of inventory in good faith to customers for fair value in the ordinary
course of business and dispositions of obsolete equipment not used or useful in
the business and (b) Asset Dispositions if all of the following conditions are
met: (i) the market value of assets sold or otherwise disposed of in any single
transaction or series of related transactions does not exceed $5,000,000 and the
aggregate market value of assets sold or otherwise disposed of in any fiscal
year of Borrower does not exceed $5,000,000; (ii) the consideration received is
at least equal to the fair market value of such assets; (iii) if the
consideration received is greater than $1,000,000, not less than 75% of such
consideration received is in cash; (iv) the Net Proceeds of such Asset
Disposition are applied as required by subsection 1.5(C); (v) after giving
effect to the Asset Disposition and the repayment of Indebtedness with the
proceeds thereof, Borrower is in compliance on a pro forma basis with the
covenants set forth in Section 4 recomputed for the most recently ended month
for which information is available and is in compliance with all other terms and
conditions of this Agreement; and (vi) no Default or Event of Default then
exists or would result from such Asset Disposition.
3.8. TRANSACTIONS WITH AFFILIATES. Borrower will not and will not permit
any of its Subsidiaries directly or indirectly to enter into or permit to exist
any transaction (including the purchase, sale, lease or exchange of any property
or the rendering of any service) with any Affiliate or with any director,
officer or employee of any Loan Party (excluding the payment of compensation,
bonuses and other incentive compensation in the ordinary course of business to
officers and other employees in the ordinary course of business for actual
services rendered), except (a) without duplication of amounts which may be paid
by Holdings, payment of a management, advisory, consulting or other similar fee
to DLJ not to exceed, in the aggregate, $250,000 per year, payable quarterly in
arrears on the first day of each quarter, commencing
January 1, 2002, (b) to make any Restricted Junior Payments permitted under
subsection 3.5, (c) to enter into and perform their respective obligations under
arrangements with DLJ for underwriting, investment banking and advisory services
on standard and customary terms and conditions which are disclosed in writing to
Agent, (d) as set forth in Schedule 3.8 or (e) transactions in the ordinary
course of and pursuant to the reasonable requirements of the business of
Borrower or any of its Subsidiaries and upon fair and reasonable terms which are
fully disclosed to Agent and are no less favorable to Borrower or such
Subsidiary than would be obtained in a comparable arm's length transaction with
a Person that is not an Affiliate. Notwithstanding the foregoing, no payments
may be made with respect to the management, advisory, consulting or other
similar fee described in clause (a) of this subsection upon the occurrence and
during the continuation of a Default or an Event of Default.
3.9. CONDUCT OF BUSINESS. Borrower will not and will not permit any of its
Subsidiaries directly or indirectly to engage in any business other than
businesses of the type described on Schedule 3.9.
3.10. CHANGES RELATING TO INDEBTEDNESS. Borrower will not and will not
permit any of its Subsidiaries or AHC directly or indirectly to change or amend
the terms of any of the Indebtedness evidenced by the AHC Subordinated Note or
the Additional Seller Notes or any other Subordinated Indebtedness if the effect
of such amendment is to: (a) increase the interest rate on such Indebtedness;
(b) accelerate the dates upon which payments of principal or interest are due on
or principal amount of such Indebtedness; (c) change any event of default or add
or make more restrictive any covenant with respect to such Indebtedness; (d)
change the prepayment provisions of such Indebtedness; (e) change the
subordination provisions thereof (or the subordination terms of any guaranty
thereof); or (f) change or amend any other term if such change or amendment
would materially increase the obligations of the obligor or confer additional
material rights on the holder of such Indebtedness in a manner adverse to
Borrower, any of its Subsidiaries or Lenders.
3.11. FISCAL YEAR. Borrower will not and will not permit any of its
Subsidiaries to change its fiscal year without Agent's consent which shall not
be unreasonably withheld.
3.12. PRESS RELEASE; PUBLIC DISCLOSURE. Borrower will not and will not
permit any of its Subsidiaries to issue any press release or other public
disclosure using the name of General Electric Capital Corporation, Agent or any
Lender or any of their respective Affiliates or referring to this Agreement or
the other Loan Documents without at least two (2) Business Days' prior notice to
Agent and the applicable Lender and without the prior written consent of Agent
and the applicable Lender unless (and only to the extent that) Borrower or such
Subsidiary is required to do so under law or regulation and then, in any event,
Borrower or such Subsidiary will consult with Agent and the applicable Lender
before issuing such press release or other public disclosure (other than in
connection with periodic reports filed with the SEC).
3.13. SUBSIDIARIES. Borrower will not and will not permit any of its
Subsidiaries directly or indirectly to establish, create or acquire any new
Subsidiary without at least five (5)
days' prior written notice to Agent and compliance with the terms of subsection
2.6 of this Agreement.
3.14. SCENT SEAL. Borrower will not permit Scent Seal, Inc., a California
corporation, to employ any employees, acquire any assets, incur any obligations
(other than franchise taxes payable in the ordinary course of business) or
conduct any business activity.
SECTION 4. FINANCIAL COVENANTS/REPORTING.
Borrower covenants and agrees that so long as the Revolving Loan Commitment
is in effect and until payment in full of all Obligations (other than contingent
indemnification obligations to the extent no unsatisfied claim has been
asserted) and termination of the Obligations of Lenders with respect to all
Letters of Credit, Borrower shall perform and comply with, and shall cause each
of the other Loan Parties to perform and comply with, all covenants in this
Section 4 applicable to such Person.
4.1. CAPITAL EXPENDITURE LIMITS. The aggregate amount of all Capital
Expenditures of Borrower and its Subsidiaries in any fiscal year set forth below
will not exceed the amount set forth below (the "Capex Limit") for such fiscal
year.
Fiscal Year Ending Amount
------------------ ------
June 30, 2002 $4,000,000
June 30, 2003 $4,500,000
June 30, 2004 $4,500,000
June 30, 2005 $4,500,000
June 30, 2006 $4,500,000
Notwithstanding the foregoing, in the event Borrower and its Subsidiaries do not
expend the entire Capex Limit permitted in any fiscal year, Borrower and its
Subsidiaries may carry forward to the immediately succeeding fiscal year fifty
percent (50%) of the unutilized portion of the Capex Limit from the prior year.
All Capital Expenditures made by Borrower and its Subsidiaries shall first be
applied to reduce the applicable Capex Limit and then to reduce the carry
forward from the previous year, if any. "Capital Expenditures" will be
calculated as illustrated on Exhibit 4.8(C).
4.2. RESERVED.
4.3. EBITDA. Borrower shall not permit EBITDA for any twelve (12) month
period ending on the last day of any month ending during any of the periods set
forth below to be less than the amount set forth below for such period.
Period Amount
------ ------
Restatement Effective Date
through February 28, 2002 $25,500,000
March 1, 2002 through
August 31, 2002 $26,000,000
September 1, 2002 through
November 30, 2002 $26,500,000
December 1, 2002 through
February 28, 2003 $27,000,000
March 1, 2003 and thereafter $27,500,000
"EBITDA" will be calculated as illustrated on Exhibit 4.8(C).
4.4. FIXED CHARGE COVERAGE. Borrower shall not permit Fixed Charge Coverage
for any twelve (12) month period ending on the last day of any month to be less
than 1.10.
"Fixed Charge Coverage" will be calculated as illustrated on Exhibit 4.8(C).
4.5. TOTAL INTEREST COVERAGE. Borrower shall not permit Total Interest
Coverage for any twelve (12) month period ending on the last day of any month
ending during any of the periods set forth below to be less than the ratio set
forth below for such period.
Period Ratio
------ -----
Restatement Effective Date through
May 31, 2005 2.00
June 1, 2005 through May 31, 2006 2.25
June 1, 2006 and thereafter 2.50
"Total Interest Coverage" will be calculated as illustrated on Exhibit 4.8(C).
4.6. TOTAL INDEBTEDNESS TO EBITDA RATIO. Borrower shall not permit the
ratio of Total Indebtedness calculated as of the last day of any month during
any of the periods set forth below to EBITDA for the twelve (12) month period
ending on such day to be greater than the ratio set forth below for such period.
Period Ratio
------ -----
Restatement Effective Date through
August 31, 2002 4.50
September 1, 2002 through May 31,
2003 4.25
June 1, 2003 through February 28,
2004 4.00
March 1, 2004 through February 28,
2005 3.75
March 1, 2005 and thereafter 3.50
"Total Indebtedness" and "EBITDA" will be calculated as illustrated on Exhibit
4.8(C).
4.7. SENIOR INDEBTEDNESS TO EBITDA RATIO. Borrower shall not permit the
ratio of Senior Indebtedness calculated as of the last day of any month to
EBITDA for the twelve (12) month period ending on such day to be greater than
1.25. "Senior Indebtedness" and "EBITDA" will be calculated as illustrated on
Exhibit 4.8(C).
4.8. FINANCIAL STATEMENTS AND OTHER REPORTS. Borrower will maintain, and
cause each of its Subsidiaries to maintain, a system of accounting established
and administered in accordance with sound business practices to permit
preparation of financial statements in conformity with GAAP (it being understood
that monthly financial statements (a) are not required to have footnote
disclosures, (b) are subject to normal year end adjustments for recurring
accruals and (c) show management fees as deductions from operating income rather
than deductions in computing operating income). Borrower will deliver each of
the financial statements and other reports described below to Agent with
sufficient copies for each Lender.
(A) MONTHLY FINANCIALS. As soon as available and in any event within
forty-five (45) days after the end of each month (including the last month
of Borrower's fiscal year), Borrower will deliver (1) the consolidated
balance sheet of Borrower and its Subsidiaries, as at the end of such
month, and the related consolidated statements of income, stockholders'
equity and cash flow for such month and for the period from the beginning
of the then current fiscal year of Borrower to the end of such month and
(2) a schedule of the outstanding Indebtedness for borrowed money of
Borrower and its Subsidiaries describing in reasonable detail each such
debt issue or loan outstanding and the principal amount and amount of
accrued and unpaid interest with respect to each such debt issue or loan.
(B) YEAR-END FINANCIALS. As soon as available and in any event within
ninety (90) days after the end of each fiscal year of Borrower, Borrower
will deliver (1) the consolidated balance sheet of Borrower and its
Subsidiaries, as at the end of such year, and the related consolidated
statements of income, stockholders' equity and cash flow for such fiscal
year, (2) a schedule of the outstanding Indebtedness for borrowed money of
Borrower and its Subsidiaries describing in reasonable detail each such
debt issue or loan outstanding and the principal amount and amount of
accrued and unpaid interest with respect to each such debt issue or loan
and (3) a report with respect to the consolidated financial statements from
a firm of Certified Public Accountants selected by Borrower and reasonably
acceptable to Agent, which report shall be prepared in accordance with
Statement of Auditing Standards No. 58 (the "Statement") entitled "Reports
on Audited Financial Statements" and such report shall be "Unqualified" (as
such term is defined in such Statement).
(C) COMPLIANCE AND PRICING CERTIFICATE. Together with each delivery of
financial statements of Borrower and its Subsidiaries pursuant to
subsections 4.8(A) and 4.8(B) above, Borrower will deliver a fully and
properly completed Compliance and Pricing Certificate (in substantially the
same form as Exhibit 4.8(C)) signed by a Responsible Officer of Borrower.
(D) ACCOUNTANTS' REPORTS. Promptly upon receipt thereof, Borrower will
deliver copies of all significant reports submitted by Borrower's firm of
certified public accountants in connection with each annual, interim or
special audit or review of any type of the financial statements or related
internal control systems of Borrower or its Subsidiaries made by such
accountants, including any comment letter submitted by such accountants to
management in connection with their services.
(E) BORROWING BASE CERTIFICATE. As soon as available and in any event
within thirty (30) Business Days after the end of each month, and from time
to time upon the request of Agent, Borrower will deliver a Borrowing Base
Certificate (in substantially the same form as Exhibit 4.8(E)) as at the
last day of such period.
(F) MANAGEMENT REPORT. Together with each delivery of financial
statements of Borrower pursuant to subsections 4.8(A) for the months ending
December, March and September of each fiscal year of Borrower and 4.8(B),
Borrower will deliver a management report (1) describing the operations and
financial condition of Borrower and its Subsidiaries for the month then
ended and the portion of the current fiscal year then elapsed (or for the
fiscal year then ended in the case of year-end financials), (2) setting
forth in comparative form the corresponding figures for the corresponding
periods of the previous fiscal year and the corresponding figures from the
most recent Financial Model for the current fiscal year delivered pursuant
to subsection 4.8(I) and (3) discussing the reasons for any significant
variations. The information above shall be presented in reasonable detail
(delivery of Borrower's quarterly reports on Form 10-Q, together with the
delivery of financial statements of Borrower pursuant to subsection 4.8(A)
for the months ending December, March and September, and annual reports on
Form 10-K, together with the delivery of financial statements of Borrower
pursuant to subsection 4.8(B), in each case as filed with the Securities
and Exchange Commission, shall constitute compliance with this subsection)
and shall be certified by a Responsible Officer of Borrower to the effect
that such information fairly presents the results of operations and
financial condition of Borrower and its Subsidiaries as at the dates and
for the periods indicated.
(G) COLLATERAL VALUE REPORT. Upon an Event of Default and so long as
an Event of Default shall be continuing, Borrower, at the request of Agent
(but not more often than quarterly) will obtain and deliver to Agent a
report of an independent collateral auditor satisfactory to Agent (which
may be, or be affiliated with, a Lender) with respect to the accounts,
inventory and property, plant and equipment components included in the
Borrowing Base, which report shall indicate whether or not the information
set forth in the Borrowing Base Certificate most recently delivered is
accurate and complete in all material respects based upon a review by such
auditors of the accounts (including verification with respect to the
amount, aging, identity and credit of the respective account debtors and
the billing practices of Borrower), inventory (including verification as to
the value, location and respective types) and property, plant and equipment
(including verification as to the value, location and respective types).
(H) APPRAISALS. From time to time, if Agent or any Lender in good
faith determines that obtaining appraisals is necessary in order for Agent
or such Lender to comply
with applicable laws or regulations, Agent will, at Borrower's expense,
obtain appraisal reports in form and substance and from appraisers
satisfactory to Agent stating the then current fair market values of all or
any portion of the real estate owned by Borrower or any of its
Subsidiaries. In addition to the foregoing, from time to time, but in the
absence of a Default or Event of Default not more than once during each
calendar year, Agent may require Borrower to obtain and deliver to Agent
appraisal reports in form and substance and from appraisers satisfactory to
Agent stating the then current market values of all or any portion of the
real estate and personal property owned by Borrower or any of its
Subsidiaries.
(I) FINANCIAL MODEL. As soon as available and in any event within
forty-five (45) days after each of Borrower's fiscal years, Borrower will
deliver a Financial Model of Borrower and its Subsidiaries for the
forthcoming fiscal year and, within thirty (30) days after any monthly
period in which there is a material adverse deviation from the then current
Financial Model, a certificate from a Responsible Officer of Borrower
explaining the deviation and what action Borrower has taken, is taking and
proposes to take with respect thereto.
(J) SEC FILINGS AND PRESS RELEASES. Promptly upon their becoming
available, Borrower will deliver copies of (1) all financial statements,
reports, notices and proxy statements sent or made available by Holdings,
Borrower or any of their respective Subsidiaries to their security holders,
(2) all regular and periodic reports and all registration statements and
prospectuses, if any, filed by Holdings, Borrower or any of their
respective Subsidiaries with any securities exchange or with the Securities
and Exchange Commission or any governmental or private regulatory
authority, and (3) all press releases and other statements made available
by Holdings, Borrower or any of their respective Subsidiaries to the public
concerning developments in the business of any such Person.
(K) EVENTS OF DEFAULT, ETC. Promptly upon a Responsible Officer of
Borrower obtaining actual knowledge of any of the following events or
conditions, Borrower shall deliver copies of all notices given or received
by Holdings, Borrower or any of their respective Subsidiaries with respect
to any such event or condition and a certificate of a Responsible Officer
of Borrower specifying the nature and period of existence of such event or
condition and what action Holdings, Borrower or any of their respective
Subsidiaries, as applicable, has taken, is taking and proposes to take with
respect thereto: (1) any condition or event that constitutes, or which
would result in the occurrence of, an Event of Default or Default; (2) any
notice that any Person has given to Holdings, Borrower or any of their
respective Subsidiaries or any other action taken with respect to a claimed
default or event or condition of the type referred to in subsection 6.1(B);
(3) any event or condition that would result in any Material Adverse
Effect; or (4) any default or event of default with respect to any
Indebtedness of Holdings, Borrower or any of their respective Subsidiaries.
(L) LITIGATION. Promptly upon a Responsible Officer of Borrower
obtaining knowledge of (1) the institution of any action, suit, proceeding,
governmental investigation or arbitration against or affecting any Loan
Party or any property of any Loan Party not previously disclosed by
Borrower to Agent, (2) any material development in any action, suit,
proceeding,
governmental investigation or arbitration at any time pending against or
affecting any Loan Party or any property of any Loan Party or (3) any
review or audit by the Internal Revenue Service or any governmental
investigation concerning the violation or possible violation of any law,
which, in each case, would have a Material Adverse Effect, Borrower will
promptly give notice thereof to Agent and provide such other information as
may be reasonably available to them to enable Agent and its counsel to
evaluate such matter.
(M) NOTICE OF CORPORATE AND OTHER CHANGES. Borrower shall provide
prompt written notice of (1) all jurisdictions in which a Loan Party
becomes qualified after the Restatement Effective Date to transact
business, (2) any material change after the Restatement Effective Date in
the authorized and issued equity securities of any Loan Party or any
amendment to their articles or certificate of incorporation, by-laws,
partnership agreement or other organizational documents, (3) any Subsidiary
created or acquired by any Loan Party after the Restatement Effective Date,
such notice, in each case, to identify the applicable jurisdictions,
capital structures or Subsidiaries, as applicable, and (4) any other event
that occurs after the Restatement Effective Date which would cause any of
the representations and warranties in Section 5 of this Agreement or in any
other Loan Document to be untrue or misleading in any material respect as
of the date when made. The foregoing notice requirement shall not be
construed to constitute Requisite Lenders' consent to any transaction
referred to above which is not expressly permitted by the terms of this
Agreement.
(N) RESERVED.
(O) OTHER INFORMATION. With reasonable promptness, Borrower will
deliver such other information and data with respect to any Loan Party or
any Subsidiary of any Loan Party as from time to time may be reasonably
requested by Agent.
4.9. ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS
UNDER AGREEMENT. For purposes of this Agreement, all accounting terms not
otherwise defined herein shall have the meanings assigned to such terms in
conformity with GAAP. For purposes of calculating financial covenants in
accordance with the Compliance and Pricing Certificate, the amount of
Indebtedness shall include the amount of any "earnouts" determined in accordance
with GAAP. Financial statements and other information furnished to Agent
pursuant to subsection 4.8 shall be prepared in accordance with GAAP as in
effect at the time of such preparation. No "Accounting Changes" (as defined
below) shall affect financial covenants, standards or terms in this Agreement;
provided that Borrower shall prepare footnotes to each Compliance and Pricing
Certificate and the financial statements required to be delivered hereunder that
show the differences between the financial statements delivered (which reflect
such Accounting Changes) and the basis for calculating financial covenant
compliance (without reflecting such Accounting Changes). "Accounting Changes"
means: (a) changes in accounting principles required by GAAP and implemented by
Borrower; (b) changes in accounting principles recommended by Borrower's
certified public accountants and implemented by Borrower; and (c) changes in
carrying value of Borrower's or any of its Subsidiaries' assets, liabilities or
equity accounts resulting from (i) the application of purchase accounting
principles
(A.P.B. 16 and/or 17 and EITF 88-16 and FASB 109) to the Related Transactions or
(ii) as the result of any other adjustments that, in each case, were applicable
to, but not included in, the Pro Forma. All such adjustments described in clause
(c) above resulting from expenditures made subsequent to the Restatement
Effective Date (including, but not limited to, capitalization of costs and
expenses or payment of pre-Restatement Effective Date liabilities) shall be
treated as expenses in the period the expenditures are made (such expenses may
include broker fees, advisory fees and legal fees paid post-Restatement
Effective Date and not appearing in pro-forma liability accruals).
SECTION 5. REPRESENTATIONS AND WARRANTIES.
To induce Agent and Lenders to enter into the Loan Documents, to make Loans
and to issue or cause to be issued Letters of Credit, Borrower represents,
warrants and covenants to Agent and each Lender that the following statements
are and, after giving effect to the Related Transactions, will remain true,
correct and complete for so long as any of the Commitments hereunder shall be in
effect and until payment in full of all Obligations:
5.1. DISCLOSURE. No representation or warranty of any Loan Party contained
in this Agreement, the financial statements referred to in subsection 5.5, the
other Loan Documents or any other document, certificate or written statement
furnished to Agent or any Lender by or on behalf of any such Person for use in
connection with the Loan Documents contains, as of the date made, any untrue
statement of a material fact or omitted, omits or will omit to state a material
fact necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances in which the same were made.
5.2. NO MATERIAL ADVERSE EFFECT. As of September 30, 2001 there have been
no events or changes in facts or circumstances affecting any Loan Party which
individually or in the aggregate have had or would have a Material Adverse
Effect and that have not been disclosed herein or in the attached Schedules.
5.3. NO CONFLICT. The consummation of the Related Transactions does not and
will not violate or conflict with any laws, rules, regulations or orders of any
governmental authority or violate, conflict with, result in a breach of, or
constitute a default (with due notice or lapse of time or both) under any
Contractual Obligation or organizational documents of any Loan Party except if
such violations, conflicts, breaches or defaults would not have, either
individually or in the aggregate, a Material Adverse Effect.
5.4. ORGANIZATION, POWERS, CAPITALIZATION AND GOOD STANDING.
(A) ORGANIZATION AND POWERS. Each of the Loan Parties is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and qualified to do business in all states
where such qualification is required except where failure to be so
qualified would not have a Material Adverse Effect. The jurisdiction of
organization and, as of the Restatement Effective Date, all jurisdictions
in which each Loan Party is qualified to do business are set forth on
Schedule 5.4(A). Each of the Loan Parties has all requisite
organizational power and authority to own and operate its properties, to
carry on its business as now conducted and proposed to be conducted, to
enter into each Related Transactions Document to which it is a party and to
incur the Obligations, grant liens and security interests in the Collateral
and carry out the Related Transactions.
(B) CAPITALIZATION. Except as otherwise disclosed in writing to Agent
from time to time, the authorized equity securities of each of the Loan
Parties is as set forth on Schedule 5.4(B). All issued and outstanding
equity securities of each of the Loan Parties are duly authorized and
validly issued, fully paid, nonassessable, free and clear of all Liens
other than those in favor of Agent for the benefit of Agent and Lenders,
and such equity securities were issued in compliance with all applicable
state, federal and foreign laws concerning the issuance of securities.
Except as otherwise disclosed in writing to Agent from time to time, the
identity of the holders of the equity securities of each of the Loan
Parties and the percentage of their fully-diluted ownership of the equity
securities of each of the Loan Parties is set forth on Schedule 5.4(B). No
shares of the capital stock or other equity securities of any Loan Party,
other than those described above, are issued and outstanding. Except as
provided in Schedule 5.4(B) or as otherwise disclosed in writing to Agent
from time to time, there are no preemptive or other outstanding rights,
options, warrants, conversion rights or similar agreements or
understandings for the purchase or acquisition from any Loan Party of any
equity securities of any such entity.
(C) BINDING OBLIGATION. This Agreement is, and the other Related
Transactions Documents when executed and delivered will be, the legally
valid and binding obligations of the applicable parties thereto, each
enforceable against each of such parties, as applicable, in accordance with
their respective terms.
5.5. FINANCIAL STATEMENTS AND FINANCIAL MODEL. All financial statements
concerning Borrower and its Subsidiaries which have been or will hereafter be
furnished to Agent pursuant to this Agreement, including those listed below,
have been or will be prepared in accordance with GAAP consistently applied
(except as disclosed therein) and do or will present fairly in all material
respects the financial condition of the entities covered thereby as at the dates
thereof and the results of their operations for the periods then ended, subject
to, in the case of unaudited financial statements, the absence of footnotes and
year-end adjustments.
(A) The consolidated balance sheet at June 30, 2001 and the related
statement of income of Borrower and its Subsidiaries, for the fiscal year
then ended, audited by PricewaterhouseCoopers.
(B) The unaudited consolidated balance sheet at September 30, 2001 and
the related statement of income of Borrower and its Subsidiaries for the
three (3) months then ended.
The Financial Model delivered on or prior to the Restatement Effective Date and
the updated Financial Model delivered pursuant to subsection 4.8(I) represent
the good faith estimate of Borrower and its senior management concerning the
most probable course of its business.
5.6. INTELLECTUAL PROPERTY. Borrower and each of its Subsidiaries owns, is
licensed to use or otherwise has the right to use, all patents, trademarks,
trade names, copyrights, technology, know-how and processes used in or necessary
for the conduct of its business as currently conducted that are material to the
condition (financial or other), business or operations of Borrower or its
Subsidiaries (collectively called "Intellectual Property") and all such
Intellectual Property is identified on Schedule 5.6 or as otherwise disclosed in
writing to Agent from time to time and fully protected and/or duly and properly
registered, filed or issued in the appropriate office and jurisdictions for such
registrations, filings or issuances. Except as disclosed in Schedule 5.6 or as
otherwise disclosed in writing to Agent from time to time, the use of such
Intellectual Property by Borrower and its Subsidiaries does not and has not been
alleged by any Person to infringe on the rights of any Person.
5.7. INVESTIGATIONS, AUDITS, ETC. Except as set forth on Schedule 5.7 or as
otherwise disclosed in writing to Agent from time to time or required to be
disclosed to Agent pursuant to subsection 4.8(L), to Borrower's knowledge,
neither Borrower nor any of its Subsidiaries, is the subject of any review or
audit by the Internal Revenue Service or any governmental investigation
concerning the violation or possible violation of any law.
5.8. EMPLOYEE MATTERS. Except as set forth on Schedule 5.8 or as otherwise
disclosed in writing to Agent from time to time, (a) no Loan Party nor any of
their respective employees is subject to any collective bargaining agreement and
(b) no petition for certification or union election is pending with respect to
the employees of any Loan Party and no union or collective bargaining unit has
sought such certification or recognition with respect to the employees of any
Loan Party. There are no strikes, slowdowns, work stoppages or controversies
pending or, to the best knowledge of Borrower after due inquiry, threatened
between any Loan Party and its respective employees, other than employee
grievances arising in the ordinary course of business which would not have,
either individually or in the aggregate, a Material Adverse Effect. Except as
set forth on Schedule 5.8 or as otherwise disclosed in writing to Agent from
time to time, neither Borrower nor any of its Subsidiaries is party to an
employment contract which could provide for severance payments in excess of
$150,000 in the aggregate.
5.9. SOLVENCY. Borrower and each of its Subsidiaries: (a) owns and will
own, in the reasonable opinion of Borrower, assets the fair saleable value on a
going concern basis of which are (i) greater than the total amount of its
liabilities (including contingent liabilities) and (ii) greater than the amount
that will be required to pay the probable liabilities of its then existing debts
as they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to it; (b) has capital that is not
unreasonably small in relation to its business as presently conducted or after
giving effect to any contemplated transaction; and (c) does not intend to incur
and does not believe that it will incur debts beyond its ability to pay such
debts as they become due.
5.10. LITIGATION; ADVERSE FACTS. Except as set forth on Subschedule 7.1,
there are no judgments outstanding against any Loan Party or affecting any
property of any Loan Party, nor is there any action, charge, claim, demand,
suit, proceeding, petition, governmental investigation
or arbitration now pending or, to the best knowledge of Borrower after due
inquiry, threatened against or affecting any Loan Party or any property of any
Loan Party which would result in any Material Adverse Effect.
5.11. USE OF PROCEEDS; MARGIN REGULATIONS. No part of the proceeds of any
Loan will be used for "buying" or "carrying" "margin stock" within the
respective meanings of such terms under Regulation U of the Board of Governors
of the Federal Reserve System as now and from time to time hereafter in effect
in violation of Regulation U or for any other purpose that violates the
provisions of the regulations of the Board of Governors of the Federal Reserve
System. If requested by Agent, Borrower will furnish to Agent and each Lender a
statement to the foregoing effect in conformity with the requirements of FR Form
G-3 or FR Form U-1, as applicable, referred to in Regulation U.
5.12. COLOR PRELUDE PURCHASE AGREEMENT. Except as disclosed in writing to
Agent prior to the Restatement Effective Date, to the best of Borrower's
knowledge, the representations and warranties set forth in the Color Prelude
Purchase Agreement are true, correct and complete in all material respects as of
the Restatement Effective Date.
5.13. SCENT SEAL. Scent Seal, Inc., a California corporation, has no
employees, owns no assets, has no obligations (other than franchise taxes
payable in the ordinary course of business) and conducts no business activity.
SECTION 6. DEFAULT, RIGHTS AND REMEDIES.
6.1. EVENT OF DEFAULT. "Event of Default" shall mean the occurrence or
existence of any one or more of the following:
(A) PAYMENT. (1) Failure to pay any installment or other payment of
principal of any Loan when due, to repay Revolving Loans to reduce their
balance to the Maximum Revolving Loan Balance or to reimburse any Issuing
Lender for any payment made by such Issuing Lender under or in respect of
any Letter of Credit when due or (2) failure to pay, within five (5) days
after the due date, any interest on any Loan or any other amount due under
this Agreement or any of the other Loan Documents; or
(B) DEFAULT IN OTHER AGREEMENTS. (1) Failure of Holdings, Borrower or
any of its Subsidiaries to pay when due or within any applicable grace
period any principal or interest on Indebtedness (other than the Loans) or
any Contingent Obligations or (2) breach or default of Holdings, Borrower
or any of its Subsidiaries, or the occurrence of any condition or event,
with respect to any Indebtedness (other than the Loans) or any Contingent
Obligations, if the effect of such breach, default or occurrence is to
cause or to permit the holder or holders then to cause, Indebtedness and/or
Contingent Obligations having an aggregate principal amount in excess of
$1,000,000 to become or be declared due prior to their stated maturity,
unless such failure to pay, default or breach is cured or irrevocably
waived in writing by the holder or holders thereof; or
(C) BREACH OF CERTAIN PROVISIONS. Failure of Borrower to perform or
comply with any term or condition contained in that portion of subsection
2.2 relating to Borrower's obligation to maintain insurance, subsection
2.3, Section 3 or Section 4; or
(D) BREACH OF WARRANTY. Any representation, warranty, certification or
other statement made by any Loan Party in any Loan Document or in any
statement or certificate at any time given by such Person in writing
pursuant or in connection with any Loan Document is false in any material
respect on the date made; or
(E) OTHER DEFAULTS UNDER LOAN DOCUMENTS. Borrower or any other Loan
Party defaults in the performance of or compliance with any term contained
in this Agreement or the other Loan Documents (other than occurrences
described in other provisions of this subsection 6.1 for which a different
grace or cure period is specified or which constitute immediate Events of
Default) and such default is not remedied or waived within thirty (30) days
after the earlier of (1) receipt by Borrower of notice from Agent or
Requisite Lenders of such default or (2) actual knowledge of Borrower or
any other Loan Party of such default; or
(F) INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. (1) A court
enters a decree or order for relief with respect to Holdings. Borrower or
any of its Subsidiaries in an involuntary case under the Bankruptcy Code,
which decree or order is not stayed or other similar relief is not granted
under any applicable federal or state law; or (2) the continuance of any of
the following events for sixty (60) days unless dismissed, bonded or
discharged: (a) an involuntary case is commenced against Holdings, Borrower
or any of its Subsidiaries, under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect; or (b) a decree or order of a
court for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over Holdings, Borrower or
any of its Subsidiaries, or over all or a substantial part of its property,
is entered; or (c) an interim receiver, trustee or other custodian is
appointed without the consent of Holdings, Borrower or any of its
Subsidiaries, for all or a substantial part of the property of Holdings,
Borrower or any such Subsidiary; or
(G) VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. (1) Holdings,
Borrower or any of its Subsidiaries commences a voluntary case under the
Bankruptcy Code, or consents to the entry of an order for relief in an
involuntary case or to the conversion of an involuntary case to a voluntary
case under any such law or consents to the appointment of or taking
possession by a receiver, trustee or other custodian for all or a
substantial part of its property; or (2) Holdings, Borrower or any of its
Subsidiaries makes any assignment for the benefit of creditors; or (3) the
Board of Directors of Holdings, Borrower or any of its Subsidiaries adopts
any resolution or otherwise authorizes action to approve any of the actions
referred to in this subsection 6.1(G); or
(H) JUDGMENT AND ATTACHMENTS. Any money judgment, writ or warrant of
attachment, or similar process (other than those described elsewhere in
this subsection 6.1) involving an amount in the aggregate at any time in
excess of $2,500,000 (not adequately covered by insurance as to which the
insurance company has acknowledged coverage) is entered
or filed against Holdings, Borrower or any of its Subsidiaries or any of
their respective assets and remains undischarged, unvacated, unbonded or
unstayed for a period of thirty (30) days or in any event later than five
(5) Business Days prior to the date of any proposed sale thereunder; or
(I) DISSOLUTION. Any order, judgment or decree is entered against
Holdings, Borrower or any of its Subsidiaries decreeing the dissolution or
split up of Holdings, Borrower or that Subsidiary and such order remains
undischarged or unstayed for a period in excess of fifteen (15) days; or
(J) SOLVENCY. Borrower or any of its Subsidiaries ceases to be solvent
(as represented in subsection 5.9) or admits in writing its present or
prospective inability to pay its debts as they become due; or
(K) INJUNCTION. Holdings, Borrower or any of its Subsidiaries is
enjoined, restrained or in any way prevented by the order of any court or
any administrative or regulatory agency from conducting all or any material
part of its business and such order continues for more than forty-five (45)
days if the same would have a Material Adverse Effect; or
(L) ERISA; PENSION PLANS. (1) Institution of any steps by Borrower or
any other Loan Party to terminate a Pension Plan if as a result of such
termination Borrower or any such Loan Party would be required to make a
contribution to such Pension Plan, or could incur a liability or obligation
to such Pension Plan, in excess of $1,000,000; (2) there shall occur any
withdrawal or partial withdrawal from a Multiemployer Plan and the
withdrawal liability (without unaccrued interest) to Multiemployer Plans as
a result of such withdrawal (including any outstanding withdrawal liability
that Borrower and any other Loan Party have incurred on the date of such
withdrawal) exceeds $1,000,000; (3) with respect to any Plan, Borrower or
any other Loan Party shall incur an accumulated funding deficiency or
request a funding waiver from the IRS; or (4) there shall occur an ERISA
Event or a non-exempt prohibited transaction within the meaning of Section
406 of ERISA or IRC Section 4975; provided, however, that the events listed
in clauses (3) and (4) hereof shall constitute Events of Default only if
the liability, deficiency or waiver request, whether or not assessed, would
have, either individually or in the aggregate, a Material Adverse Effect;
or
(M) ENVIRONMENTAL MATTERS. Borrower or any of its Subsidiaries fails
to: (1) obtain or maintain any operating licenses or permits required by
environmental authorities; (2) begin, continue or complete any remediation
activities as required by any environmental authorities; (3) store or
dispose of any hazardous materials in accordance with applicable
environmental laws and regulations; or (4) comply with any environmental
laws; if any such failure, individually or in the aggregate, would have a
Material Adverse Effect; or
(N) INVALIDITY OF LOAN DOCUMENTS. Any of the Loan Documents for any
reason, other than a partial or full release in accordance with the terms
thereof, ceases to be in full force and effect or is declared to be null
and void, or any Loan Party denies that it has any further liability under
any Loan Documents to which it is party, or gives notice to such effect; or
(O) DAMAGE; STRIKE; CASUALTY. Any material damage to, or loss, theft
or destruction of, any Collateral, whether or not insured, or any strike,
lockout, labor dispute, embargo, condemnation, act of God or public enemy,
or other casualty which causes, for more than fifteen (15) consecutive
days, the cessation or substantial curtailment of revenue producing
activities at any facility of Borrower or any of its Subsidiaries, if any
such event or circumstance would have a Material Adverse Effect; or
(P) LICENSES AND PERMITS. The loss, suspension or revocation of, or
failure to renew, any license or permit now held or hereafter acquired by
Borrower or any of its Subsidiaries, if such loss, suspension, revocation
or failure to renew would have a Material Adverse Effect; or
(Q) FAILURE OF SECURITY. Agent, for the benefit of Agent and Lenders,
does not have or ceases to have a valid and perfected first priority
security interest in the Collateral (subject to Permitted Encumbrances) or
any substantial portion thereof, in each case, for any reason other than
the failure of Agent to take any action within its control; or
(R) BUSINESS ACTIVITIES. Holdings engages in any type of business
activity other than the ownership of stock of Borrower and performance of
its obligations under the Related Transaction Documents to which it is a
party; or
(S) CHANGE IN CONTROL.
(1) the DLJ Affiliates cease to beneficially own and control,
directly and indirectly, at least fifty-one percent (51%) of the
issued and outstanding shares of each class of capital stock of
Holdings entitled (without regard to the occurrence of any
contingency) to vote for the election of a majority of the members of
the board of directors of Holdings determined on a fully diluted basis
(assuming the full exercise of all securities exercisable convertible
or exchangeable for or into capital stock of Holdings); or
(2) Holdings ceases to beneficially own and control all of the
issued and outstanding capital stock or other equity securities of
Borrower free and clear of all Liens other than Liens in favor of
Agent; or
(3) Borrower ceases to beneficially own and control, directly or
indirectly, free and clear of all Liens other than Liens in favor of
Agent, 100% of the issued and outstanding shares of each class of
capital stock or other equity securities entitled (without regard to
the occurrence of any contingency) to vote for the election of a
majority of the members of the boards of directors of any of its
Subsidiaries; provided that, notwithstanding the foregoing, Borrower
may (i) dispose of all or any interest in any Subsidiary to the extent
permitted under subsection 3.7 hereof and (ii) consummate mergers or
consolidations to the extent permitted under subsection 3.6 hereof; or
(T) SUBORDINATED INDEBTEDNESS. The failure of (1) AHC or Borrower to
comply with the subordination provisions any of the AHC Subordinated Loan
Documents or (2)
Borrower or any of its Subsidiaries or any creditor of Borrower or any of
its Subsidiaries bound by any subordination provisions with respect to the
Obligations to comply in any material respect with any material term of any
such subordination provisions contained in any subordination and
intercreditor agreement or in any note or other document running to the
benefit of Agent or Lenders with respect to the Obligations.
6.2. SUSPENSION OR TERMINATION OF COMMITMENTS. Upon the occurrence of
any Default or Event of Default, Agent may, and at the request of Requisite
Lenders Agent shall, without notice or demand, immediately suspend or
terminate all or any portion of Lenders' obligations to make additional
Loans under the Revolving Loan Commitment or otherwise or issue or cause to
be issued Letters of Credit under the Revolving Loan Commitment; provided
that, in the case of a Default, if the subject condition or event is waived
or removed by Requisite Lenders or cured within any applicable grace or
cure period, the Revolving Loan Commitment shall be reinstated.
Notwithstanding the foregoing, in the event all conditions to the
obligation of Lenders to make a Loan set forth in Section 7 hereof have
been satisfied but Lenders do not make such Loan, Agent shall not be
entitled to declare a Default or an Event of Default as a result of
Borrower being unable to perform any of its covenants, liabilities or
obligations hereunder or under the other Loan Documents as a direct result
of Lenders' failure to make such Loan.
6.3. ACCELERATION AND OTHER REMEDIES. Upon the occurrence of any Event
of Default described in subsections 6.1(F) or 6.1(G), the unpaid principal
amount of and accrued interest and fees on the Term Loan and the Revolving
Loans, the aggregate outstanding Letter of Credit Liability and all other
Obligations shall automatically become immediately due and payable, without
presentment, demand, protest, notice of intent to accelerate, notice of
acceleration or other requirements of any kind, all of which are hereby
expressly waived by Borrower, and the Revolving Loan Commitment shall
thereupon terminate. Upon the occurrence and during the continuance of any
other Event of Default, Agent may, and at the request of the Requisite
Lenders Agent shall, by written notice to Borrower (a) declare all or any
portion of the Loans and all or any portion of the other Obligations to be,
and the same shall forthwith become, immediately due and payable together
with accrued interest thereon, and the obligations of Agent, Issuing
Lenders and Lenders to make Revolving Loans and issue Letters of Credit
shall thereupon terminate, (b) demand that Borrower immediately deposit
cash with Agent for the benefit of Issuing Lenders in an amount equal to
102% of the aggregate outstanding Letter of Credit Liability and (c)
exercise any other remedies which may be available under the Loan Documents
or applicable law. Borrower hereby grants to Agent, for the benefit of
Issuing Lenders and each Lender with a participation in any Letters of
Credit then outstanding, a security interest in such cash collateral to
secure all of the Letter of Credit Liability. Any such cash collateral
shall be made available by Agent to Issuing Lenders to reimburse Issuing
Lenders for payments of drafts drawn under such Letters of Credit and any
fees and expenses of Bank Line Issuers or Issuing Lenders with respect to
such Letters of Credit and the unused portion thereof, after all such
Letters of Credit shall have expired or been fully drawn upon, shall be
applied to repay any other Obligations. After all such Letters of Credit
shall have expired or been fully
drawn upon and all Obligations shall have been satisfied and paid in full,
the balance, if any, of such cash collateral shall be returned to Borrower.
Borrower shall from time to time execute and deliver to Agent such further
documents and instruments as Agent may request with respect to such cash
collateral.
6.4. PERFORMANCE BY AGENT. If Borrower shall fail to perform any
covenant, duty or agreement contained in any of the Loan Documents, Agent
may perform or attempt to perform such covenant, duty or agreement on
behalf of Borrower after the expiration of any cure or grace periods set
forth herein. In such event, Agent shall give to Borrower written notice of
the action promptly thereafter and Borrower shall, at the request of Agent,
promptly pay any amount reasonably expended by Agent in such performance or
attempted performance to Agent, together with interest thereon at the
highest rate of interest in effect upon the occurrence of an Event of
Default as specified in subsection 1.2(E) from the date of such expenditure
until paid. Notwithstanding the foregoing, it is expressly agreed that
Agent shall not have any liability or responsibility for the performance of
any obligation of Borrower under this Agreement or any other Loan Document.
6.5. APPLICATION OF PROCEEDS. Notwithstanding anything to the contrary
contained in this Agreement, upon the occurrence and during the continuance
of an Event of Default, (a) Borrower irrevocably waives the right to direct
the application of any and all payments at any time or times thereafter
received by Agent from or on behalf of Borrower, and Agent shall have the
continuing and exclusive right to apply and to reapply any and all payments
received at any time or times after the occurrence and during the
continuance of an Event of Default against the Obligations in such manner
as Agent may deem advisable notwithstanding any previous application by
Agent and (b) in the absence of a specific determination by Agent with
respect thereto, the proceeds of any sale of, or other realization upon,
all or any part of the Collateral shall be applied: first, to all fees,
costs and expenses incurred by or owing to Agent and any Lender with
respect to this Agreement, the other Loan Documents or the Collateral;
second, to accrued and unpaid interest on the Obligations (including any
interest which but for the provisions of the Bankruptcy Code, would have
accrued on such amounts); third, to the principal amount of the Obligations
outstanding; and fourth to any other indebtedness or obligations of
Borrower owing to Agent or any Lender under the Loan Documents. Any balance
remaining shall be delivered to Borrower or to whomever may be lawfully
entitled to receive such balance or as a court of competent jurisdiction
may direct.
SECTION 7. CONDITIONS TO LOANS.
The obligations of Lenders to make Loans and to issue or cause to be issued
Letters of Credit are subject to satisfaction of all of the applicable
conditions set forth below.
7.1. CONDITIONS TO INITIAL LOANS. The obligations of Lenders to make the
initial Loans and to issue or cause to be issued Letters of Credit on the
Restatement Effective Date are, in addition to the conditions precedent
specified in subsection 7.2, subject to the delivery of all documents listed on,
the taking of all actions set forth on and the satisfaction of all other
conditions precedent listed on Schedule 7.1, all in form and substance, or in a
manner, reasonably satisfactory to Agent and Requisite Lenders.
7.2. CONDITIONS TO ALL LOANS. The obligations of Lenders to make Loans and
to issue or cause to be issued Letters of Credit on any date ("Funding Date")
are subject to the further conditions precedent set forth below.
(A) Agent shall have received a request for an advance of a Loan or
the issuance of a Letter of Credit, in each case in accordance with the
applicable provisions of subsection 1.1.
(B) The representations and warranties contained in Section 5 of this
Agreement and elsewhere herein and in the Loan Documents shall be (and each
request by Borrower for a Loan or a Letter of Credit shall constitute a
representation and warranty by Borrower that such representations and
warranties are) true, correct and complete in all material respects on and
as of that Funding Date to the same extent as though made on and as of that
date, except for any representation or warranty expressly limited by its
terms to a specific date and taking into account any amendments to the
schedules, subschedules or exhibits as a result of any disclosures made in
writing by Borrower to Agent after the Restatement Effective Date and
approved by Agent and Requisite Lenders in writing.
(C) No event shall have occurred and be continuing or would result
from the funding or such Loans or the issuance of such Letters of Credit
that would constitute an Event of Default or a Default.
(D) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender from
making any Loan or from issuing or causing to be issued any Letter of
Credit.
SECTION 8. ASSIGNMENT AND PARTICIPATION.
8.1. ASSIGNMENTS AND PARTICIPATIONS.
(A) ASSIGNMENTS. Each Lender may from time to time assign, subject to
the terms of an Assignment and Acceptance Agreement, its rights and
delegate its obligations under this Agreement to another Person, provided
that (1) such Lender shall first obtain the written consent of each of (a)
Agent, which consent shall not be unreasonably withheld, and (b) Borrower,
provided that (i) no Event of Default exists and is continuing or (ii) such
assignment is not to an Affiliate of any Lender or to another Lender, which
consent shall not be unreasonably withheld (Borrower's withholding of
consent to an assignment to a Foreign Lender due to such Lender not being
exempt from United States withholding tax shall be deemed reasonable unless
the assigning Lender shall have made a good faith effort to assign the
Revolving Loan Commitment and/or Term Loan to a Lender that is exempt from
United States withholding tax
but was unable to do so); (2) the Pro Rata Share of the Revolving Loan
Commitment and/or Term Loan being assigned shall in no event be less than
the lesser of (a) $1,000,000 and (b) the entire amount of the Pro Rata
Share of the Revolving Loan Commitment and/or Term Loan of the assigning
Lender; and (3) upon the consummation of each such assignment the assigning
Lender shall pay Agent an administrative fee of $3,500. The administrative
fee referred to in clause (3) of the preceding sentence shall not apply to
an assignment of security interest in the Obligations as described in
paragraph (E)(1) below. In the case of an assignment authorized under this
subsection 8.1, the assignee shall have, to the extent of such assignment,
the same rights, benefits and obligations as it would if it were an initial
Lender hereunder. The assigning Lender shall be relieved of its obligations
hereunder with respect to its Pro Rata Share of the Revolving Loan
Commitment or assigned portion thereof. Borrower hereby acknowledges and
agrees that any assignment will give rise to a direct obligation of
Borrower to the assignee and that the assignee shall be considered to be a
Lender hereunder.
(B) RECORDING OF ASSIGNMENTS. Agent shall maintain at its office in
Chicago, Illinois a copy of each Assignment and Acceptance Agreement
delivered to it and a register for the recordation of the names and
addresses of Lenders, and the commitments of, and principal amount of the
Loans owing to each Lender pursuant to the terms hereof from time to time
(the "Register"). The entries in the Register shall be presumptive evidence
of the amounts due and owing to Lender in the absence of manifest error.
Borrower, Agent and each Lender may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder
for all purposes of this Agreement. The Register shall be available for
inspection by Borrower and any Lender, at any reasonable time upon
reasonable prior notice.
(C) ACCEPTANCE OF ASSIGNMENT BY AGENT. Upon its receipt of a duly
completed Assignment and Acceptance Agreement executed by an assigning
Lender and its assignee (together with the Notes subject to such
assignment) and the administrative fee referred to above, Agent shall
(subject to the consent of each of Agent and Borrower to such assignment,
if required or applicable) (1) accept such Assignment and Acceptance
Agreement, (2) record the information contained therein in the Register and
replace Schedule 10.1(C) to reflect such Assignment and Acceptance
Agreement and (3) give prompt notice thereof to Borrower and Lenders. Upon
request by Agent, Borrower shall promptly execute and deliver to Agent
Notes evidencing the Obligations owed by Borrower to the assignee and, if
applicable, the assigning Lender, after giving effect to the assignment.
Agent shall cancel the Notes delivered to it by the assigning Lender and
deliver the new Notes to the assignee and, unless the assigning Lender has
assigned all of its interests under this Agreement, the assigning Lender.
(D) PARTICIPATIONS. Any Lender may sell participations in all or any
part of its Pro Rata Share of the Revolving Loan Commitment and/or the Term
Loan to another Person provided that such Lender shall first obtain the
prior written consent of each of (1) Agent, which consent shall not be
unreasonably withheld and (2) Borrower, provided that (a) no Event of
Default exists and is continuing or (b) such participation is not to an
Affiliate of any Lender or to another Lender, which consent shall not be
unreasonably withheld. All amounts payable by Borrower hereunder shall be
determined as if that Lender had not sold such participation and the
holder of any such participation shall not be entitled to require such
Lender to take or omit to take any action hereunder except action directly
effecting (i) any reduction in the principal amount or interest rate
payable with respect to any Loan in which such holder participates; (ii)
any extension of the Commitment Termination Date, the date on which any
Scheduled Installment is to be paid or the date fixed for any payment of
interest payable with respect to any Loan in which such holder
participates; or (iii) any release of all or substantially all of the
Collateral (except if the sale, disposition or release of such Collateral
is permitted under subsection 3.7, 8.2 or 9.12 or any other Loan Document).
Borrower hereby acknowledges and agrees that any participation will give
rise to a direct obligation of Borrower to the participant, and the
participant shall for purposes of subsections 1.8, 1.9, 8.4 and 9.1 be
considered to be a Lender hereunder.
(E) SECURITY INTERESTS IN OBLIGATIONS; ASSIGNMENTS TO AFFILIATES.
Notwith-standing any other provision of this Agreement, any Lender may at
any time, following written notice to Agent, (1) pledge the Obligations
held by it or create a security interest in all or any portion of its
rights under this Agreement or the other Loan Documents in favor of any
Person; provided, however, that (a) no such pledge or grant of security
interest to any Person shall release such Lender from its obligations
hereunder or under any other Loan Document and (b) the acquisition of title
to such Lender's Obligations pursuant to any foreclosure or other exercise
of remedies by such Person shall be subject to the provisions of this
Agreement and the other Loan Documents in all respects including, without
limitation, any consent required by subsection 8.1(A) and (2) assign all or
any portion of its funded loans to an Affiliate of such Lender which is at
least 50% owned by such Lender or its parent company, to one or more other
Lenders or to a Related Fund. For purposes of this paragraph, a "Related
Fund" shall mean, with respect to any Lender, a fund or other investment
vehicle that invests in commercial loans and is managed by such Lender or
by the same investment advisor that manages such Lender or by an Affiliate
of such investment advisor.
(F) OTHER MATTERS. Except as otherwise provided in this subsection 8.1
no Lender shall, as between Borrower and that Lender, be relieved of any of
its obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or granting of a participation in, all or any part of the
Loans, the Notes or other Obligations owed to such Lender. Each Lender may
furnish any information concerning Holdings, Borrower and its Subsidiaries
in the possession of that Lender from time to time to assignees and
participants (including prospective assignees and participants), subject to
the provisions of subsection 9.13. Borrower agrees that it will use its
best efforts to assist and cooperate with ▇▇▇▇▇▇ in connection with the
initial syndication of the Loans in any manner reasonably requested by
▇▇▇▇▇▇ to effect the sale of a participation or an assignment described
above, including without limitation assistance in the preparation of
appropriate disclosure documents or placement memoranda. Notwithstanding
anything contained in this Agreement to the contrary, so long as the
Requisite Lenders shall remain capable of making LIBOR Loans, no Person
shall become a Lender hereunder unless such Person shall also be capable of
making LIBOR Loans.
8.2. AGENT.
(A) APPOINTMENT. Each Lender hereby designates and appoints ▇▇▇▇▇▇ as
its Agent under this Agreement and the other Loan Documents, and each
Lender hereby irrevocably authorizes Agent to execute and deliver the
Security Documents and to take such action or to refrain from taking such
action on its behalf under the provisions of this Agreement and the other
Loan Documents and to exercise such powers as are set forth herein or
therein, together with such other powers as are reasonably incidental
thereto. Agent is authorized and empowered to amend, modify, or waive any
provisions of this Agreement or the other Loan Documents on behalf of
Lenders subject to the requirement that certain of Lenders' consent be
obtained in certain instances as provided in this subsection 8.2 and
subsections 8.3 and 9.2. The provisions of this subsection 8.2 are solely
for the benefit of Agent and Lenders and neither Borrower nor any other
Loan Party shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this
Agreement, Agent shall act solely as agent of Lenders and does not assume
and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for Borrower or any other Loan
Party. Agent may perform any of its duties hereunder, or under the Loan
Documents, by or through its agents or employees.
(B) NATURE OF DUTIES. The duties of Agent shall be mechanical and
administrative in nature. Agent shall not have by reason of this Agreement
a fiduciary relationship in respect of any Lender. Nothing in this
Agreement or any of the Loan Documents, express or implied, is intended to
or shall be construed to impose upon Agent any obligations in respect of
this Agreement or any of the Loan Documents except as expressly set forth
herein or therein. Each Lender shall make its own independent investigation
of the financial condition and affairs of Borrower in connection with the
extension of credit hereunder and shall make its own appraisal of the
creditworthiness of Borrower, and Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any
Lender with any credit or other information with respect thereto (other
than as expressly required herein). If Agent seeks the consent or approval
of any Lenders to the taking or refraining from taking any action
hereunder, then Agent shall send notice thereof to each Lender. Agent shall
promptly notify each Lender any time that the Requisite Lenders have
instructed Agent to act or refrain from acting pursuant hereto.
(C) RIGHTS, EXCULPATION, ETC. Neither Agent nor any of its officers,
directors, employees or agents shall be liable to any Lender for any action
taken or omitted by them hereunder or under any of the Loan Documents, or
in connection herewith or therewith, except that Agent shall be liable to
the extent of its own gross negligence or willful misconduct as determined
by a court of competent jurisdiction. Agent shall not be liable for any
apportionment or distribution of payments made by it in good faith and if
any such apportionment or distribution is subsequently determined to have
been made in error the sole recourse of any Lender to whom payment was due
but not made, shall be to recover from other Lenders any payment in excess
of the amount to which they are determined to be entitled (and such other
Lenders hereby agree to return to such Lender any such erroneous payments
received by them). In performing its functions and duties hereunder, Agent
shall exercise the same care which it would in dealing with loans for its
own account, but neither Agent nor any of its agents or representatives
shall be
responsible to any Lender for any recitals, statements, representations or
warranties herein or for the execution, effectiveness, genuineness,
validity, enforceability, collectibility, or sufficiency of this Agreement
or any of the Loan Documents or the transactions contemplated thereby, or
for the financial condition of any Loan Party. Agent shall not be required
to make any inquiry concerning either the performance or observance of any
of the terms, provisions or conditions of this Agreement or any of the Loan
Documents or the financial condition of any Loan Party, or the existence or
possible existence of any Default or Event of Default. Agent may at any
time request instructions from Lenders with respect to any actions or
approvals which by the terms of this Agreement or of any of the Loan
Documents Agent is permitted or required to take or to grant, and if such
instructions are promptly requested, Agent shall be absolutely entitled to
refrain from taking any action or to withhold any approval and shall not be
under any liability whatsoever to any Person for refraining from any action
or withholding any approval under any of the Loan Documents until it shall
have received such instructions from Requisite Lenders or all or such other
portion of the Lenders as shall be prescribed by this Agreement. Without
limiting the foregoing, no Lender shall have any right of action whatsoever
against Agent as a result of Agent acting or refraining from acting under
this Agreement or any of the other Loan Documents in accordance with the
instructions of Requisite Lenders and, notwithstanding the instructions of
Requisite Lenders, Agent shall have no obligation to take any action if it
believes, in good faith, that such action exposes Agent to any liability
for which it has not received satisfactory indemnification in accordance
with subsection 8.2(E).
(D) RELIANCE. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any written or oral notices, statements,
certificates, orders or other documents or any telephone message or other
communication (including any writing, telex, telecopy or telegram) believed
by it in good faith to be genuine and correct and to have been signed, sent
or made by the proper Person, and with respect to all matters pertaining to
this Agreement or any of the Loan Documents and its duties hereunder or
thereunder. Agent shall be entitled to rely upon the advice of legal
counsel, independent accountants, and other experts selected by Agent in
its sole discretion.
(E) INDEMNIFICATION. Lenders will reimburse and indemnify Agent for
and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including, without
limitation, attorneys' fees and expenses), advances or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or asserted
against Agent in any way relating to or arising out of this Agreement or
any of the Loan Documents or any action taken or omitted by Agent under
this Agreement or any of the Loan Documents, in proportion to each Lender's
Pro Rata Share, but only to the extent that any of the foregoing is not
reimbursed by Borrower; provided, however, that no Lender shall be liable
for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, advances or
disbursements to the extent resulting from Agent's gross negligence or
willful misconduct as determined by a court of competent jurisdiction. If
any indemnity furnished to Agent for any purpose shall, in the opinion of
Agent, be insufficient or become impaired, Agent may call for additional
indemnity and cease, or not commence, to do the acts indemnified against
even if so directed by Requisite Lenders until such additional indemnity is
furnished. The obligations of Lenders under this subsection 8.2(E) shall
survive the payment in full of the Obligations and the termination of this
Agreement.
(F) ▇▇▇▇▇▇ INDIVIDUALLY. With respect to its obligations under the
Revolving Loan Commitment and the Loans made by it, ▇▇▇▇▇▇ shall have and
may exercise the same rights and powers hereunder and is subject to the
same obligations and liabilities as and to the extent set forth herein for
any other Lender. The terms "Lenders" or "Requisite Lenders" or any similar
terms shall, unless the context clearly otherwise indicates, include ▇▇▇▇▇▇
in its individual capacity as a Lender or one of the Requisite Lenders.
▇▇▇▇▇▇, either directly or through strategic affiliations, may lend money
to, acquire equity or other ownership interests in, provide advisory
services to and generally engage in any kind of banking, trust or other
business with any Loan Party as if it were not acting as Agent pursuant
hereto and without any duty to account therefore to Lenders. ▇▇▇▇▇▇, either
directly or through strategic affiliations, may accept fees and other
consideration from any Loan Party for services in connection with this
Agreement or otherwise without having to account for the same to Lenders
(G) SUCCESSOR AGENT.
(1) RESIGNATION. Agent may resign from the performance of all its
agency functions and duties hereunder at any time by giving at least
thirty (30) Business Days' prior written notice to Borrower and the
Lenders. Such resignation shall take effect upon the acceptance by a
successor Agent of appointment pursuant to clause (2) below or as
otherwise provided below.
(2) APPOINTMENT OF SUCCESSOR. Upon any such notice of resignation
pursuant to clause (1) above, Requisite Lenders shall appoint a
successor Agent which, unless an Event of Default has occurred and is
continuing, shall be reasonably acceptable to Borrower. If a successor
Agent shall not have been so appointed within the thirty (30) Business
Day period referred to in clause (1) above, the retiring Agent, upon
notice to Borrower, shall then appoint a successor Agent who shall
serve as Agent until such time, if any, as Requisite Lenders appoint a
successor Agent as provided above.
(3) SUCCESSOR AGENT. Upon the acceptance of any appointment as
Agent under the Loan Documents by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations
under the Loan Documents. After any retiring Agent's resignation as
Agent, the provisions of this subsection 8.2 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it
was Agent.
(H) COLLATERAL MATTERS.
(1) RELEASE OF COLLATERAL. Lenders hereby irrevocably authorize
Agent, at its option and in its discretion, to release any Lien
granted to or held by Agent upon any Collateral (i) upon termination
of the Revolving Loan Commitment and payment and satisfaction of all
Obligations (other than contingent indemnification obligations to the
extent no claims
giving rise thereto have been asserted); (ii) constituting property
being sold or disposed of if Borrower certifies to Agent that the sale
or disposition is made in compliance with the provisions of this
Agreement (and Agent may rely in good faith conclusively on any such
certificate, without further inquiry); or (iii) in accordance with the
provisions of the next sentence. In addition, with the consent of
Requisite Lenders, Agent may release any Lien granted to or held by
Agent upon any Collateral having a book value not greater than ten
percent (10%) of the total book value of all Collateral, either in a
single transaction or in a series of related transactions; provided,
however, that in no event will Agent, acting under the authority
granted to it pursuant to this sentence, release Collateral having a
total book value in excess of twenty percent (20%) of the book value
of all Collateral, as determined by Agent, during any calendar year.
(2) CONFIRMATION OF AUTHORITY; EXECUTION OF RELEASES. Without in
any manner limiting Agent's authority to act without any specific or
further authorization or consent by Lenders (as set forth in
subsection 8.2(H)(1)), each Lender agrees to confirm in writing, upon
request by Agent or Borrower, the authority to release any Collateral
conferred upon Agent under clauses (i) and (ii) of subsection
8.2(H)(1). Upon receipt by Agent of any required confirmation from the
Requisite Lenders of its authority to release any particular item or
types of Collateral, and upon at least ten (10) Business Days prior
written request by Borrower, Agent shall (and is hereby irrevocably
authorized by Lenders to) execute such documents as may be necessary
to evidence the release of the Liens granted to Agent upon such
Collateral; provided, however, that (i) Agent shall not be required to
execute any such document on terms which, in Agent's opinion, would
expose Agent to liability or create any obligation or entail any
consequence other than the release of such Liens without recourse or
warranty, and (ii) such release shall not in any manner discharge,
affect or impair the Obligations or any Liens upon (or obligations of
any Loan Party, in respect of), all interests retained by any Loan
Party, including (without limitation) the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.
(3) ABSENCE OF DUTY. Agent shall have no obligation whatsoever to
any Lender or any other Person to assure that the property covered by
the Security Documents exists or is owned by Borrower or is cared for,
protected or insured or has been encumbered or that the Liens granted
to Agent have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular
priority, or to exercise at all or in any particular manner or under
any duty of care, disclosure or fidelity, or to continue exercising,
any of the rights, authorities and powers granted or available to
Agent in this subsection 8.2(H) or in any of the Loan Documents, it
being understood and agreed that in respect of the property covered by
the Security Documents or any act, omission or event related thereto,
Agent may act in any manner it may deem appropriate, in its
discretion, given Agent's own interest in property covered by the
Security Documents as one of the Lenders and that Agent shall have no
duty or liability whatsoever to any of the other Lenders, provided
that Agent shall exercise the same care which it would in dealing with
loans for its own account.
(I) AGENCY FOR PERFECTION. Agent and each Lender hereby appoint each
other Lender as agent for the purpose of perfecting Agent's security
interest in assets which, in accordance with the Uniform Commercial Code in
any applicable jurisdiction, can be perfected
by possession or control. Should any Lender (other than Agent) obtain
possession or control of any such assets, such Lender shall notify Agent
thereof, and, promptly upon Agent's request therefore, shall deliver such
assets to Agent or in accordance with Agent's instructions or transfer
control to Agent in accordance with Agent's instructions. Each Lender
agrees that it will not have any right individually to enforce or seek to
enforce any Security Document or to realize upon any collateral security
for the Loans unless instructed to do so by Agent, it being understood and
agreed that such rights and remedies may be exercised only by Agent.
(J) NOTICE OF DEFAULT. Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default except with
respect to defaults in the payment of principal, interest and fees required
to be paid to Agent for the account of Lenders, unless Agent shall have
received written notice from a Lender or Borrower referring to this
Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default". Agent will notify each Lender of its
receipt of any such notice. Agent shall take such action with respect to
such Default or Event of Default as may be requested by Requisite Lenders
in accordance with Section 6. Unless and until Agent has received any such
request, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable or in the best interests of Lenders.
8.3. AMENDMENTS, CONSENTS AND WAIVERS.
(A) Except as otherwise provided in subsection 8.2, this subsection
8.3 or in subsection 9.2 and except as to matters set forth in other
subsections hereof or in any other Loan Document as requiring only Agent's
consent, the consent of Requisite Lenders and Borrower will be required to
amend, modify, terminate, or waive any provision of this Agreement or any
of the other Loan Documents. The consent of Borrower shall constitute
consent of all of its Subsidiaries.
(B) In the event Agent requests the consent of a Lender and does not
receive a written consent or denial thereof within ten (10) Business Days
after such Lender's receipt of such request, then such Lender will be
deemed to have denied the giving of such consent.
(C) If, in connection with any proposed amendment, modification,
termination or waiver of any of the provisions of this Agreement requiring
the consent or approval of all Lenders under subsection 9.2, the consent of
Requisite Lenders is obtained but the consent of one or more other Lenders
whose consent is required is not obtained, then Borrower shall have the
right, so long as all such non-consenting Lenders are either replaced or
prepaid as described in clauses (A) or (B) below, to either (A) replace the
non-consenting Lenders with one or more Replacement Lenders pursuant to
subsection 1.10(A) so long as each such Replacement Lender consents to the
proposed amendment, modification, termination or waiver or (B) prepay in
full the Obligations of the non-consenting Lenders and terminate the
non-consenting Lenders' Pro Rata Shares of the Revolving Loan Commitment in
accordance with subsection 1.10(B).
8.4. SET OFF AND SHARING OF PAYMENTS. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, during the continuance of any Event of Default, each Lender is hereby
authorized by Borrower at any time or from time to time, with reasonably prompt
subsequent notice to Borrower (any prior or contemporaneous notice being hereby
expressly waived) to set off and to appropriate and to apply any and all (A)
balances held by such Lender at any of its offices for the account of Borrower
or any of its Subsidiaries (regardless of whether such balances are then due to
Borrower or its Subsidiaries), and (B) other property at any time held or owing
by such Lender to or for the credit or for the account of Borrower or any of its
Subsidiaries, against and on account of any of the Obligations; except that no
Lender shall exercise any such right without the prior written consent of Agent.
Any Lender exercising a right to set off shall purchase for cash (and the other
Lenders shall sell) interests in each of such other Lender's Pro Rata Share of
the Obligations as would be necessary to cause all Lenders to share the amount
so set off with each other Lender in accordance with their respective Pro Rata
Shares. Borrower agrees, to the fullest extent permitted by law, that any Lender
may exercise its right to set off with respect to amounts in excess of its Pro
Rata Share of the Obligations and upon doing so shall deliver such amount so set
off to the Agent for the benefit of all Lenders in accordance with their Pro
Rata Shares.
8.5. DISBURSEMENT OF FUNDS. Agent may, on behalf of Lenders, disburse funds
to Borrower for Loans requested. Each Lender shall reimburse Agent on demand for
all funds disbursed on its behalf by Agent, or if Agent so requests, each Lender
will remit to Agent its Pro Rata Share of any Loan before Agent disburses same
to Borrower. If Agent elects to require that each Lender make funds available to
Agent, prior to a disbursement by Agent to Borrower, Agent shall advise each
Lender by telephone or telecopy of the amount of such Lender's Pro Rata Share of
the Loan requested by Borrower no later than 1:00 p.m. Chicago time on the
Funding Date applicable thereto, and each such Lender shall pay Agent such
Lender's Pro Rata Share of such requested Loan, in same day funds, by wire
transfer to Agent's account on such Funding Date. If any Lender fails to pay the
amount of its Pro Rata Share within one (1) Business Day after Agent's demand,
Agent shall promptly notify Borrower, and Borrower shall immediately repay such
amount to Agent. Any repayment required pursuant to this subsection 8.5 shall be
without premium or penalty. Nothing in this subsection 8.5 or elsewhere in this
Agreement or the other Loan Documents, including without limitation the
provisions of subsection 8.6, shall be deemed to require Agent to advance funds
on behalf of any Lender or to relieve any Lender from its obligation to fulfill
its commitments hereunder or to prejudice any rights that Agent or Borrower may
have against any Lender as a result of any default by such Lender hereunder.
8.6. DISBURSEMENTS OF ADVANCES; PAYMENT.
(A) REVOLVING LOAN ADVANCES, PAYMENTS AND SETTLEMENTS; INTEREST AND
FEE PAYMENTS.
(1) The Revolving Loan balance may fluctuate from day to day
through Agent's disbursement of funds to, and receipt of funds from,
Borrower. In order to minimize the frequency of transfers of funds
between Agent and each Lender notwithstanding
terms to the contrary set forth in Section 1 or subsection 8.5,
Revolving Loan advances and payments will be settled among Agent and
Lenders according to the procedures described in this subsection 8.6.
Notwithstanding these procedures, each Lender's obligation to fund its
portion of any advances made by Agent to Borrower will commence on the
date such advances are made by Agent. Such payments will be made by
such Lender without set-off, counterclaim or reduction of any kind.
(2) On the second (2nd) Business Day of each week, or more
frequently (including daily), if Agent so elects (each such day being
a "Settlement Date"), Agent will advise each Lender by telephone or
telecopy of the amount of each such Lender's Pro Rata Share of the
Revolving Loan balance as of the close of business of the (2nd) second
Business Day immediately preceding the Settlement Date. In the event
that payments are necessary to adjust the amount of such Lender's
required Pro Rata Share of the Revolving Loan balance to such Lender's
actual Pro Rata Share of the Revolving Loan balance as of any
Settlement Date, the party from which such payment is due will pay the
other, in same day funds, by wire transfer to the other's account not
later than 3:00 p.m. Chicago time on the Business Day following the
Settlement Date.
(3) For purposes of this subsection 8.6(A), the following terms
and conditions will have the meanings indicated:
(a) "Daily Loan Balance" means an amount calculated as of
the end of each calendar day by subtracting (i) the cumulative
principal amount paid by Agent to a Lender on a Loan from the
Restatement Effective Date through and including such calendar
day, from (ii) the cumulative principal amount on a Loan advanced
by such Lender to Agent on that Loan from the Restatement
Effective Date through and including such calendar day.
(b) "Daily Interest Rate" means an amount calculated by
dividing the interest rate payable to a Lender on a Loan (as set
forth in subsection 1.2) as of each calendar day by three hundred
sixty (360).
(c) "Daily Interest Amount" means an amount calculated by
multiplying the Daily Loan Balance of a Loan by the associated
Daily Interest Rate on that Loan.
(d) "Interest Ratio" means a number calculated by dividing
the total amount of the interest on a Loan received by Agent with
respect to the immediately preceding month by the total amount of
interest on that Loan due from Borrower during the immediately
preceding month.
On the first (1st) Business Day of each month ("Interest Settlement Date"),
Agent will advise each Lender by telephone or telecopy of the amount of
such Lender's share of interest and fees on each of the Loans as of the end
of the last day of the immediately preceding month. Provided that such
Lender has made all payments required to be made by it under this
Agreement, Agent
will pay to such Lender, by wire transfer to such Lender's account (as
specified by such Lender on the signature page of this Agreement or the
applicable Assignment and Acceptance Agreement, as amended by such Lender
from time to time after the date hereof pursuant to the notice provisions
contained herein or in the applicable Assignment and Acceptance Agreement)
not later than 3:00 p.m. Chicago time on the next Business Day following
the Interest Settlement Date, such Lender's share of interest and fees on
each of the Loans. Such Lender's share of interest on each Loan will be
calculated for that Loan by adding together the Daily Interest Amounts for
each calendar day of the prior month for that Loan and multiplying the
total thereof by the Interest Ratio for that Loan. Each Lender's share of
the commitment fee described in subsection 1.2(B) shall be an amount equal
to (1)(a) such Lender's Revolving Loan Commitment less (b) the sum of (i)
such Lender's average Daily Loan Balance of the Revolving Loans plus (ii)
such Lender's Pro Rata Share of the average daily aggregate amount of
Letter of Credit Liability, in each case for the preceding month,
multiplied by (2) the percentage required by subsection 1.2(B). To the
extent Agent does not receive the total amount of the commitment fee owing
by Borrower, the commitment fee payable to each Lender shall be reduced on
a pro rata basis. Any funds disbursed or received by Agent pursuant to
subsection 8.5 or 8.6(A)(1), prior to the Settlement Date for such
disbursement or payment shall be deemed advances or remittances by ▇▇▇▇▇▇,
in its capacity as a Lender, for purposes of calculating interest and fees
pursuant to this subsection 8.6(A).
(B) TERM LOAN PRINCIPAL PAYMENTS. Payments of principal of the Term
Loan will be settled on the date of receipt if received by Agent on the
last Business Day of a quarter or on the Business Day immediately following
the date of receipt if received on any day other than the last Business Day
of a quarter.
(C) AVAILABILITY OF LENDER'S PRO RATA SHARE.
(1) Unless Agent shall have received written notice from a Lender
prior to a Funding Date that such Lender will not make available its
Pro Rata Share of a Loan requested by Borrower, Agent may assume that
such Lender has made such amount available to Agent on the Business
Day following the next Settlement Date. If a Lender has not in fact
made its Pro Rata Share available to the Agent on such date (any such
Lender a "Defaulting Lender"), then the Defaulting Lender and Borrower
severally agree to pay to Agent forthwith on demand such amount
without set-off, counterclaim or deduction of any kind, together with
interest thereon, for each day from and including the date such amount
is made available to Agent by Borrower or such Defaulting Lender to
but excluding the date of payment to Agent, at (a) in the case of the
Defaulting Lender, the greater of the Federal Funds Effective Rate and
a rate determined by Agent in accordance with banking industry rules
on interbank compensation or (b) in the case of Borrower, the interest
rate applicable under this Agreement with respect to such Loan.
(2) Agent shall not be obligated to transfer to a Defaulting
Lender any payment made by Borrower to Agent or any amount otherwise
received by Agent for application
to the Obligations nor shall Defaulting Lender be entitled to the
sharing of any interest, fees or other payments hereunder until full
payment is made to Agent in the manner described above.
(3) For purposes of voting or consenting to matters with respect
to the Loan Documents, a Defaulting Lender shall be deemed not to be a
"Lender" and such Defaulting Lender's Commitments and outstanding
Loans shall be deemed to be zero until full payment is made to Agent
in the manner described above.
(4) Without limiting the generality of the foregoing, each Lender
shall be obligated to fund its Pro Rata Share of any Revolving Loan
made after any Event of Default or acceleration of the Obligations
with respect to any draw on a Letter of Credit.
(D) RETURN OF PAYMENTS.
(1) If Agent pays an amount to a Lender under this Agreement in
the belief or expectation that a related payment has been or will be
received by Agent from Borrower and such related payment is not
received by Agent, then Agent will be entitled to recover such amount
from such Lender without set-off, counterclaim or deduction of any
kind together with interest thereon, for each day from and including
the date such amount is made available by Agent to such Lender to but
excluding the date of repayment to Agent, at the greater of the
Federal Funds Effective Rate and a rate determined by Agent in
accordance with banking industry rules on interbank compensation.
(2) If Agent determines at any time that any amount received by
Agent under this Agreement must be returned to Borrower or paid to any
other person pursuant to any requirement of law, court order or
otherwise, then, notwithstanding any other term or condition of this
Agreement, Agent will not be required to distribute any portion
thereof to any Lender. In addition, each Lender will repay to Agent on
demand any portion of such amount that Agent has distributed to such
Lender, together with interest at such rate, if any, as Agent is
required to pay to Borrower or such other Person, without set-off,
counterclaim or deduction of any kind.
SECTION 9. MISCELLANEOUS.
9.1. INDEMNITIES. Borrower agrees to indemnify, pay, and hold Agent, each
Lender (individually and in their capacity as Issuing Lenders) and their
respective officers, directors, employees, agents, and attorneys (the
"Indemnitees") harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs and
expenses (including all reasonable fees and expenses of counsel to such
Indemnitees) of any kind or nature whatsoever that may be imposed on, incurred
by, or asserted against the Indemnitee as a result of such Indemnitees being a
party to this Agreement or the transactions consummated pursuant to this
Agreement or otherwise relating to any of the Related Transactions; provided
that Borrower shall have no obligation to an Indemnitee hereunder with respect
to liabilities to the extent resulting from the gross negligence or willful
misconduct of that Indemnitee as determined by a court of competent
jurisdiction. If and to the extent that the foregoing undertaking may be
unenforceable for any reason, Borrower agrees to make the
maximum contribution to the payment and satisfaction thereof which is
permissible under applicable law. This subsection and other indemnification
provisions contained within the Loan Documents shall survive the termination of
this Agreement.
9.2. AMENDMENTS AND WAIVERS. Except as otherwise provided herein, no
amendment, modification, termination or waiver of any provision of this
Agreement, the Notes or any of the other Loan Documents, or consent to any
departure by any Loan Party therefrom, shall in any event be effective unless
the same shall be in writing and signed by Requisite Lenders (or Agent, if
expressly set forth herein, in any Note or in any other Loan Document) and the
applicable Loan Party; provided, that except to the extent permitted by the
applicable Assignment and Acceptance Agreement, no amendment, modification,
termination or waiver shall, unless in writing and signed by all Lenders, do any
of the following: (a) increase the Revolving Loan Commitment or any Lender's Pro
Rata Share of the Revolving Loan Commitment; (b) reduce the principal of or the
rate of interest on any Loan or the fees payable with respect to any Loan or
Letter of Credit; (c) extend the Commitment Termination Date, the date on which
any Scheduled Installment is to be paid or any date fixed for any payment of
interest or fees; (d) change the definition of the term Requisite Lenders or the
percentage of Lenders which shall be required for Lenders to take any action
hereunder; (e) release Collateral (except if the sale, disposition or release of
such Collateral is permitted under subsection 3.7 or 8.2 or any other Loan
Document); (f) amend or waive this subsection 9.2 or the definitions of the
terms used in this subsection 9.2 insofar as the definitions affect the
substance of this subsection 9.2; (g) consent to the assignment, delegation or
other transfer by any Loan Party of any of its rights and obligations under any
Loan Document; or (h) increase any of the advance rates by more than five
percent each set forth in the Borrowing Base Certificate; and provided, further,
that no amendment, modification, termination or waiver affecting the rights or
duties of Agent under any Loan Document shall in any event be effective, unless
in writing and signed by Agent, in addition to all Lenders required to take such
action. Notwithstanding anything to the contrary in this subsection 9.2, Agent
and Borrower may execute amendments to this Agreement and the other Loan
Documents for the purpose of correcting typographical errors without the consent
of Lenders. Each amendment, modification, termination or waiver shall be
effective only in the specific instance and for the specific purpose for which
it was given. No amendment, modification, termination or waiver shall be
required for Agent to take additional Collateral pursuant to any Loan Document.
No notice to or demand on Borrower or any other Loan Party in any case shall
entitle Borrower or any other Loan Party to any other or further notice or
demand in similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this subsection 9.2
shall be binding upon each holder of the Notes at the time outstanding, each
future holder of the Notes and, if signed by a Loan Party, on such Loan Party.
9.3. NOTICES. Any notice or other communication required shall be in
writing addressed to the respective party as set forth below and may be
personally served, telecopied, sent by overnight courier service or U.S.
certified or registered mail return receipt requested and shall be deemed to
have been given: (a) if delivered in person, when delivered; (b) if delivered by
telecopy, on the date of transmission if transmitted on a Business Day before
4:00 p.m.
Chicago time; (c) if delivered by overnight courier, one (1) Business Day after
delivery to the courier properly addressed; or (d) if delivered by U.S. mail,
four (4) Business Days after deposit with postage prepaid and properly
addressed.
Notices shall be addressed as follows:
If to Borrower: AKI, Inc.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTN: Chief Financial Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: AKI, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ATTN: Chief Executive Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: CSFB Private Equity
Eleven Madison Avenue, 16th Floor
New York, New York 10010
ATTN: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇,
L.L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ATTN: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Agent or ▇▇▇▇▇▇: ▇▇▇▇▇▇ FINANCIAL, INC.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTN: Account Manager
Corporate Finance
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ FINANCIAL, INC.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTN: Legal Services
Corporate Finance
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to a Lender: To the address set forth on the
signature page hereto or in the
applicable Assignment and
Acceptance Agreement
9.4. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure or
delay on the part of Agent or any Lender to exercise, nor any partial exercise
of, any power, right or privilege hereunder or under any other Loan Documents
shall impair such power, right, or privilege or be construed to be a waiver of
any Default or Event of Default. All rights and remedies existing hereunder or
under any other Loan Document are cumulative to and not exclusive of any rights
or remedies otherwise available.
9.5. MARSHALING; PAYMENTS SET ASIDE. Neither Agent nor any Lender shall be
under any obligation to marshal any assets in payment of any or all of the
Obligations. To the extent that Borrower makes payment(s) or Agent enforces its
Liens or Agent or any Lender exercises its right of set-off, and such payment(s)
or the proceeds of such enforcement or set-off is subsequently invalidated,
declared to be fraudulent or preferential, set aside, or required to be repaid
by anyone, then to the extent of such recovery, the Obligations or part thereof
originally intended to be satisfied, and all Liens, rights and remedies
therefore, shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or set-off had not occurred.
9.6. SEVERABILITY. The invalidity, illegality, or unenforceability in any
jurisdiction of any provision under the Loan Documents shall not affect or
impair the remaining provisions in the Loan Documents.
9.7. LENDERS' OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS.
The obligation of each Lender hereunder is several and not joint and no Lender
shall be responsible for the obligation or commitment of any other Lender
hereunder. In the event that any Lender at any time should fail to make a Loan
as herein provided, the Lenders, or any of them, at their sole option, may make
the Loan that was to have been made by the Lender so failing to make such Loan.
Nothing contained in any Loan Document and no action taken by Agent or any
Lender pursuant hereto or thereto shall be deemed to constitute Lenders to be a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt.
9.8. HEADINGS. Section and subsection headings are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purposes or be given substantive effect.
9.9. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.
9.10. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns except that
Borrower may not assign its rights or obligations hereunder without the written
consent of all Lenders.
9.11. NO FIDUCIARY RELATIONSHIP; LIMITED LIABILITY. No provision in the
Loan Documents and no course of dealing between the parties shall be deemed to
create any fiduciary duty owing to Borrower by Agent or any Lender. Borrower
agrees that neither Agent nor any Lender shall have liability to Borrower
(whether sounding in tort, contract or otherwise) for losses suffered by
Borrower in connection with, arising out of, or in any way related to the
transactions contemplated and the relationship established by the Loan
Documents, or any act, omission or event occurring in connection therewith,
unless and to the extent that it is determined that such losses resulted from
the gross negligence or willful misconduct of the party from which recovery is
sought as determined by a court of competent jurisdiction. Neither Agent nor any
Lender shall have any liability with respect to, and Borrower hereby waives,
releases and agrees not to ▇▇▇ for, any special, indirect or consequential
damages suffered by Borrower in connection with, arising out of, or in any way
related to the Loan Documents or the transactions contemplated thereby.
9.12. AGENT'S ACTIONS TO RELEASE COLLATERAL. Upon any sale or disposition
of a portion of the Collateral of Borrower or any of its Subsidiaries that
complies with subsection 3.7 of this Agreement (the "Disposed Collateral"),
Agent shall use its reasonable efforts to cause the release, discharge and
termination of (i) its Liens in the Disposed Collateral created pursuant to the
Security Documents and (ii) any portion of the Security Documents that directly
relate to the Disposed Collateral. Upon the request of Borrower in connection
with the Disposed Collateral, Agent shall execute and deliver, at Borrower's
expense, such releases, discharges and termination statements (full or partial,
as applicable) as reasonably requested by Borrower to evidence the release,
discharge and termination described in the foregoing clauses (i) and (ii).
9.13. CONSTRUCTION. Agent, each Lender and Borrower acknowledge that each
of them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review the Loan Documents with its legal counsel and
that the Loan Documents shall be construed as if jointly drafted by Agent, each
Lender and Borrower.
9.14. CONFIDENTIALITY. Agent and each Lender agree to keep confidential any
non-public information delivered pursuant to the Loan Documents and to cause its
Affiliates, employees and agents to take, normal and reasonable precautions and
exercise due care to maintain the confidentiality of all information provided to
it by the Borrower, and neither Agent, Lender or any of their Affiliates,
employees or agents shall use any such information other than in connection with
or in enforcement of this Agreement and the other Loan Documents; except to the
extent such information (i) was or becomes generally available to the public
other than as a result of disclosure by Agent or a Lender or (ii) was or becomes
available on a non-confidential basis from a source other than the Borrower, DLJ
or Persons known to Agent or a Lender to be the Borrower's agents, lawyers or
independent auditors, provided that such source is not bound by a
confidentiality agreement with the Borrower known to Agent or a Lender;
provided, however, that Agent or a Lender may disclose such information to
Persons other than to potential
assignees or participants or to Persons employed by or engaged by Agent a Lender
or a Lender's assignees or participants including, without limitation,
attorneys, auditors, professional consultants, rating agencies and portfolio
management services. The confidentiality provisions contained in this subsection
shall not apply to disclosures (i) required to be made by Agent or any Lender to
any regulatory or governmental agency or pursuant to legal process or (ii)
consisting of general portfolio information that does not identify Borrower. The
obligations of Agent and Lenders under this subsection 9.13 shall supersede and
replace the obligations of Agent and Lenders under any confidentiality agreement
in respect of this financing executed and delivered by Agent or any Lender prior
to the date hereof.
9.15. CONSENT TO JURISDICTION. BORROWER HEREBY CONSENTS TO THE JURISDICTION
OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF ▇▇▇▇, STATE OF
ILLINOIS AND IRREVOCABLY AGREES THAT, SUBJECT TO AGENT'S ELECTION, ALL ACTIONS
OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. BORROWER EXPRESSLY SUBMITS AND
CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS. BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON BORROWER BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO BORROWER,
AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE
TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED. IN ANY LITIGATION, TRIAL,
ARBITRATION OR OTHER DISPUTE RESOLUTION PROCEEDING RELATING TO THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS, ALL DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
OF BORROWER OR OF ITS AFFILIATES SHALL BE DEEMED TO BE EMPLOYEES OR MANAGING
AGENTS OF BORROWER FOR PURPOSES OF ALL APPLICABLE LAW OR COURT RULES REGARDING
THE PRODUCTION OF WITNESSES BY NOTICE FOR TESTIMONY (WHETHER IN A DEPOSITION, AT
TRIAL OR OTHERWISE). BORROWER AGREES THAT AGENT'S OR ANY LENDER'S COUNSEL IN ANY
SUCH DISPUTE RESOLUTION PROCEEDING MAY EXAMINE ANY OF THESE INDIVIDUALS AS IF
UNDER CROSS-EXAMINATION AND THAT ANY DISCOVERY DEPOSITION OF ANY OF THEM MAY BE
USED IN THAT PROCEEDING AS IF IT WERE AN EVIDENCE DEPOSITION. BORROWER IN ANY
EVENT WILL USE ALL COMMERCIALLY REASONABLE EFFORTS TO PRODUCE IN ANY SUCH
DISPUTE RESOLUTION PROCEEDING, AT THE TIME AND IN THE MANNER REQUESTED BY AGENT
OR ANY LENDER, ALL PERSONS, DOCUMENTS (WHETHER IN TANGIBLE, ELECTRONIC OR OTHER
FORM) OR OTHER THINGS UNDER ITS CONTROL AND RELATING TO THE DISPUTE.
9.16. WAIVER OF JURY TRIAL. BORROWER, AGENT AND EACH LENDER HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. BORROWER,
AGENT AND EACH LENDER
ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER
IN THEIR RELATED FUTURE DEALINGS. BORROWER, AGENT AND EACH LENDER WARRANT AND
REPRESENT THAT EACH HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH
LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS.
9.17. SURVIVAL OF WARRANTIES AND CERTAIN AGREEMENTS. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement, the making of the Loans, issuances of Letters of
Credit and the execution and delivery of the Notes. Notwithstanding anything in
this Agreement or implied by law to the contrary, the agreements of Borrower set
forth in subsections 1.3(E), 1.8, 1.9 and 9.1 shall survive the repayment of the
Obligations and the termination of this Agreement.
9.18. ENTIRE AGREEMENT. This Agreement, the Notes and the other Loan
Documents embody the entire agreement among the parties hereto and supersede all
prior commitments, agreements, representations, and understandings, whether oral
or written, relating to the subject matter hereof, and may not be contradicted
or varied by evidence of prior, contemporaneous, or subsequent oral agreements
or discussions of the parties hereto.
9.19. 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 of which
counterparts together shall constitute but one in the same instrument. This
Agreement shall become effective upon the execution of a counterpart hereof by
each of the parties hereto.
9.20. PRESS RELEASES. Borrower consents to the publication by Agent of a
tombstone or similar advertising material relating to the financing transactions
contemplated by this Agreement; provided, that Agent shall provide a draft of
any such tombstone or similar advertising material to Borrower for review and
comment prior to the publication thereof. Agent and Lenders reserve the right to
provide to industry trade organizations information necessary and customary for
inclusion in league table measurements.
9.21. NO NOVATION; AMENDMENTS TO LOAN DOCUMENTS. Notwithstanding anything
contained herein, this Agreement is not intended to and does not serve to effect
a novation of the Obligations. Instead, it is the express intention of the
parties hereto to reaffirm the indebtedness created under the Existing Credit
Agreement which is evidenced by the notes provided for therein and secured by
the Collateral. Borrower acknowledges and confirms that (i) the Liens and
security interests granted pursuant to the Loan Documents secure the
indebtedness, liabilities and obligations of Borrower to Agent and Lenders under
the Existing Credit Agreement, as amended and restated hereby, (ii) the term
"Obligations" as used in the
Loan Documents (or any other term used therein to describe or refer to the
indebtedness, liabilities and obligations of Borrower to Agent and Lenders)
includes, without limitation, the indebtedness, liabilities and obligations of
Borrower under the Notes to be delivered hereunder, and under the Credit
Agreement, as amended and restated hereby, as the same may be further amended,
restated, supplemented or otherwise modified from time to time and (iii) all
references to the term "▇▇▇▇▇▇" as used in the Loan Documents shall be
references to the term "Agent" (as defined in this Agreement) on and after the
Restatement Effective Date. The Loan Documents and all agreements, instruments
and documents executed or delivered in connection with any of the foregoing
shall each be deemed to be amended to the extent necessary to give effect to the
provisions of this Agreement. Cross-references in the Loan Documents to
particular section numbers in the Existing Credit Agreement shall be deemed to
be cross-references to the corresponding sections, as applicable, of this
Agreement. ▇▇▇▇▇▇, in its individual capacity, hereby assigns to Agent, for the
benefit of Agent and Lenders, all of the Liens granted to ▇▇▇▇▇▇ in the Security
Documents executed prior to the Restatement Effective Date. Agent, for the
benefit of Agent and Lenders, hereby acknowledges, consents to and accepts the
foregoing assignment.
SECTION 10. DEFINITIONS.
10.1. CERTAIN DEFINED TERMS. The terms defined below are used in this
Agreement as so defined. Terms defined in the preamble and recitals to this
Agreement are used in this Agreement as so defined.
"Additional Seller Notes" means one or more unsecured subordinated
promissory notes of Borrower or any of its Subsidiaries representing all or
a part of the deferred purchase price of a business, business unit or
product line acquired by Borrower or any of its Subsidiaries from the
obligee of such note, on terms including subordination terms, reasonably
satisfactory to Agent.
"Affiliate" means with respect to any Person (a) each Person that is
directly or indirectly controlling, controlled by, or under common control
with such Person; (b) each Person that, directly or indirectly owns or
holds five percent (5%) or more of any equity interest in such Person; or
(c) five percent (5%) or more of whose voting stock or other equity
interest is directly or indirectly owned or held by such Person. For
purposes of this definition, "control" (including with correlative
meanings, the terms "controlling", "controlled by" and "under common
control with") means the possession directly or indirectly of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities or by contract or
otherwise. Notwithstanding the foregoing, none of Agent, any Lender nor any
of their respective Affiliates shall be considered an Affiliate of Borrower
or any of its Subsidiaries.
"Agent" means ▇▇▇▇▇▇ in its capacity as agent for the Lenders under
this Agreement and each of the other Loan Documents and any successor in
such capacity appointed pursuant to subsection 8.2.
"Agreement" means this Credit Agreement (including all schedules,
subschedules and exhibits hereto), as the same may from time to time be
amended, restated, supplemented or otherwise modified.
"AHC" means AHC I Acquisition Corp. a Delaware corporation.
"AHC Subordinated Loan Documents" means, collectively, the AHC
Subordinated Note, that certain Subordination and Intercreditor Agreement
dated as of May 17, 2000, by and among AHC, Borrower and ▇▇▇▇▇▇, and all
documents, agreements and guarantees executed in connection therewith.
"AHC Subordinated Note" means unsecured Subordinated Indebtedness of
Borrower owing to AHC, evidenced by that certain Subordinated Promissory
Note dated as of May 17, 2000, made by Borrower to the order of AHC, up to
an aggregate principal amount not to exceed $10,000,000.
"AKI Senior Notes" means those certain unsecured 10 1/2% senior notes
due 2008 in the aggregate original principal amount of $115,000,000 issued
by Borrower pursuant to the AKI Senior Notes Indenture.
"AKI Senior Notes Indenture" means that certain Indenture dated June
25, 1998, between borrower and IBJ ▇▇▇▇▇▇▇▇ Bank & Trust Company, as
trustee, in connection with the AKI Senior Notes.
"Asset Disposition" means the disposition whether by sale, lease,
transfer, loss, damage, destruction, casualty, condemnation or otherwise of
any of the following: (a) any of the capital stock or other equity or
ownership interest of any of Borrower's Subsidiaries or (b) any or all of
the assets of Borrower or any of its Subsidiaries other than sales of
inventory in the ordinary course of business.
"Assignment and Acceptance Agreement" means an agreement among Agent,
a Lender and such Lender's assignee regarding their respective rights and
obligations with respect to assignments of the Loans, the Revolving Loan
Commitment and other interests under this Agreement and the other Loan
Documents, substantially in the form of Exhibit 10.1(A).
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as amended from time to time or any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect and all rules
and regulations promulgated thereunder.
"Borrower" shall have the meaning ascribed to that term in the
preamble of this Agreement.
"Business Day" means (a) for all purposes other than as covered by
clause (b) below, any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the State of Illinois or the Commonwealth
of Pennsylvania, or is a day on which banking institutions located in any
such states are closed and (b) with respect to all notices, determinations,
fundings and payments in connection with Loans bearing interest at the
LIBOR, any day that is a Business Day described in clause (a) above and
that is also a day for trading by and between banks in Dollar deposits in
the applicable interbank LIBOR market.
"Capitalization/Acquisition Documents" means, collectively: (a) any or
all of the stock certificates, notes, debentures or other instruments
representing securities bought, sold or issued, or loans made, to
facilitate the consummation of the Related Transactions or otherwise
including, without limitation, the AKI Senior Notes and the Holdings 13
1/2% Notes; (b) the indentures or other documents pursuant to which such
stock, notes, debentures or other instruments are issued or to be issued
including, without limitation, the AKI Senior Notes Indenture and the
Holdings 13 1/2% Notes Indenture; (c) each document governing the issuance
of, or setting forth the terms of, such stock, notes, debentures or other
instruments; (d) any stockholders, registration or intercreditor agreement
among or between the holders of such stock, notes, debentures or other
instruments; (e) the Subordinated Loan Documents; and (f) the Color Prelude
Acquisition Instruments; but excluding all Loan Documents.
"Collateral" means, collectively: (a) all equity securities and other
property pledged pursuant to the Security Documents; (b) all "Collateral"
as defined in the Security Documents; (c) all real property mortgaged
pursuant to the Security Documents; and (d) any property or interest
provided in addition to or in substitution for any of the foregoing.
"Color Prelude Acquisition" means the acquisition by IST of all of the
Purchased Assets (as defined in the Color Prelude Purchase Agreement) of
Color Prelude, Inc., a Delaware corporation, pursuant to the terms of the
Color Prelude Acquisition Instruments.
"Color Prelude Acquisition Instruments" means the Color Prelude
Purchase Agreement and all other instruments, documents and agreements
executed in connection with the Color Prelude Acquisition.
"Color Prelude Purchase Agreement" means that certain Asset Purchase
Agreement dated as of December 18, 2001, by and among IST, Color Prelude,
Inc., a Delaware corporation, and Heritage Marketing Corporation, as
amended.
"Default" means a condition or event that, 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.
"DLJ" means DLJ Merchant Banking II, Inc.
"DLJ Affiliates" means, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇, ▇▇▇ Merchant Banking
Partners II, L.P., DLJ Merchant Banking Partners ▇▇-▇, ▇.▇., ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇, ▇▇▇, ▇▇▇ Diversified Partners, L.P., DLJ Diversified Partners-A, L.P.,
DLJ Millennium Partners, L.P., DLJ Millennium Partners-A, L.P., DLJ First
ESC L.P., DLJ Offshore Partners II, C.V., DLJ EAB Partners, L.P., UK
Investment Plan 1997 Partners and ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities
Corporation, together with Persons under common control with the foregoing
entites.
"ERISA" means the Employee Retirement Income Security Act of 1974 (or
any successor legislation thereto), as amended from time to time and any
regulations promulgated thereunder.
"ERISA Event" means, as to Borrower and each other Loan Party, (i) a
Reportable Event, (ii) the withdrawal of Borrower or any other Loan Party
from a Pension Plan in which it was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA or was deemed to be a "substantial employer"
under Section 4062(e) of ERISA, (iii) the termination of a Pension Plan,
the filing of notice of intent to terminate a Pension Plan or the treatment
of a Pension Plan amendment as a termination under Section 4041 of ERISA,
(iv) the institution of proceedings to terminate a Pension Plan by the
PBGC, (v) the partial or complete withdrawal from a Multiemployer Plan by
Borrower or any other Loan Party, (vi) the imposition of a Lien on any
property of Borrower or any other Loan Party, pursuant to IRC Section 412
or Section 302 of ERISA, (vi) any event or condition which results in the
reorganization or insolvency of a Multiemployer Plan in which Borrower or
any other Loan Party is obligated to contribute, and (vii) any event or
condition which results in the termination of a Multiemployer Plan, or the
institution by the PBGC of proceedings to terminate a Multiemployer Plan in
which Borrower or any other Loan Party is obligated to contribute.
"Federal Funds Effective Rate" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100th of 1%) of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the
average (rounded upwards, if necessary, to the next 1/100th of 1%) of the
quotations for such day for such transactions received by Agent from three
Federal funds brokers of recognized standing selected by it.
"Financial Model" means Borrower's forecasted consolidated: (a)
balance sheets; (b) profit and loss statements; (c) cash flow statements;
and (d) capitalization statements, all prepared on a Subsidiary by
Subsidiary basis on a consistent basis with Borrower's historical financial
statements, together with appropriate supporting details and a statement of
underlying assumptions.
"GAAP" means generally accepted accounting principles as set forth in
statements from Auditing Standards No. 69 entitled "The Meaning of `Present
Fairly in Conformance with Generally Accepted Accounting Principles in the
Independent Auditors Reports'" issued by the Auditing Standards Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board that are
applicable to the circumstances as of the date of determination.
"Holdings" means AKI Holding Corp., a Delaware corporation, f/k/a
Arcade Holding Corporation, and a wholly-owned Subsidiary of AHC.
"Holdings 13 1/2% Notes" means those certain unsecured 13 1/2% senior
discount notes due 2009 in the aggregate original principal amount of
$50,000,000, issued pursuant to that certain Holdings 13 1/2% Notes
Indenture.
"Holdings 13 1/2% Notes Indenture" means that certain Indenture dated
as of June 25, 1998 between Holdings and State Street Bank and Trust
Company, as trustee, in connection with the Holdings 13 1/2% Notes.
"Indebtedness" as applied to any Person, means: (a) all indebtedness
for borrowed money; (b) that portion of obligations with respect to capital
leases that is properly classified as a liability on a balance sheet in
conformity with GAAP; (c) any obligation under any lease (a "synthetic
lease") treated as an operating lease under GAAP and as a loan or financing
for United States income tax purposes or creditors rights purposes; (d)
notes payable and drafts accepted representing extensions of credit whether
or not representing obligations for borrowed money; (e) any obligation owed
for all or any part of the deferred purchase price of property or services
if the purchase price is due more than six (6) months from the date the
obligation is incurred or is evidenced by a note or similar written
instrument; (f) "earnouts" and similar payment obligations; and (g) all
indebtedness secured by any Lien on any property or asset owned or held by
that Person regardless of whether the indebtedness secured thereby shall
have been assumed by that Person or is nonrecourse to the credit of that
Person.
"IRC" means the Internal Revenue Code of 1986, as amended from time to
time and all rules and regulations promulgated thereunder.
"IST" means IST, Corp., a Delaware corporation and wholly-owned
Subsidiary of Borrower.
"Issuing Lender" means ▇▇▇▇▇▇, or any other Lender designated from
time to time by Agent, in such Lender's capacity as an issuer of Letters of
Credit hereunder and ▇▇▇▇▇▇ as the representative party for the Lenders
under risk participation agreements with banks supporting the issuance of
Letters of Credit hereunder.
"Lender" or "Lenders" means ▇▇▇▇▇▇ and each other financial
institution listed on the signature pages hereof in its individual capacity
and in its capacity as an Issuing Lender hereunder, together with their
successors and permitted assigns pursuant to subsection 8.1.
"Letter of Credit Liability" means, as to each Letter of Credit, all
reimbursement obligations of Borrower to the issuer of the Letter of Credit
consisting of (a) the amount available to be drawn or which may become
available to be drawn; (b) all amounts which have been paid and made
available by the issuing bank to the extent not reimbursed by Borrower,
whether by the making of a Revolving Loan or otherwise; and (c) all accrued
and unpaid interest, fees and expenses with respect thereto. In any case
where ▇▇▇▇▇▇, as an Issuing Lender, has permitted Borrower to obtain
Letters of Credit from a bank with which ▇▇▇▇▇▇ has entered into a risk
participation agreement, the maximum aggregate amount of Letters of Credit
that may be requested by Borrower from such bank for which ▇▇▇▇▇▇ Lender
may have liability under the risk participation agreement will be
considered outstanding for purposes of determining Letter of Credit
Liability unless the bank which is the beneficiary under the risk
participation agreement reports daily activity to ▇▇▇▇▇▇ showing actual
outstanding Letters of Credit issued for Borrower, in which event the
outstanding amount of Letter of Credit Liability shall be the amount of
such actual outstanding Letters of Credit from time to time.
"Lien" means any lien, mortgage, pledge, security interest, charge,
encumbrance or governmental levy or assessment of any kind, whether
voluntary or involuntary (including any conditional sale or other title
retention agreement and any lease in the nature thereof), and any agreement
to give any lien, mortgage, pledge, security interest, charge or
encumbrance.
"Loan" or "Loans" means an advance or advances under the Revolving
Loan Commitment and the Term Loan.
"Loan Documents" means this Agreement, the Notes, the Security
Documents and all other instruments, documents and agreements executed by
or on behalf of any Loan Party and delivered concurrently herewith or at
any time hereafter to or for the benefit of Agent or any Lender in
connection with the Loans and other transactions contemplated by this
Agreement, all as amended, restated, supplemented or otherwise modified
from time to time; but excluding all Capitalization/Acquisition Documents.
"Loan Party" means, collectively, Holdings, Borrower and each
Subsidiary of Borrower which is or becomes a party to any Loan Document.
"Material Adverse Effect" means (a) a material adverse effect upon the
business, operations, properties, assets or financial condition of the Loan
Parties taken as a whole or (b) the material impairment of the ability of
any Loan Party to perform its obligations under any Loan Document to which
it is a party or of Agent or any Lender to enforce any
Loan Document or collect any of the Obligations. In determining whether any
individual event would result in a Material Adverse Effect, notwithstanding
that such event does not of itself have such effect, a Material Adverse
Effect shall be deemed to have occurred if the cumulative effect of such
event and all other then existing events would result in a Material Adverse
Effect.
"Multiemployer Plan" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, with respect to which Borrower or any other Loan Party
may have any liability.
"Net Proceeds" means cash proceeds received by Borrower or any of its
Subsidiaries from any Asset Disposition (including insurance proceeds,
awards of condemnation, and payments under notes or other debt securities
received in connection with any Asset Disposition), net of (a) the costs of
such sale, lease, transfer or other disposition (including taxes
attributable to such sale, lease or transfer and all transaction expenses
in connection therewith) and (b) amounts applied to repayment of
Indebtedness (other than the Obligations) secured by a Lien on the asset or
property disposed.
"Note" or "Notes" means one or more of the promissory notes of
Borrower substantially in the form of Exhibit 10.1(B), or any combination
thereof.
"Obligations" means all obligations, liabilities and indebtedness of
every nature of each Loan Party from time to time owed to Agent, any
Issuing Lender or any Lender under the Loan Documents including the
principal amount of all debts, claims and indebtedness, accrued and unpaid
interest and all fees, costs and expenses, whether primary, secondary,
direct, contingent, fixed or otherwise, heretofore, now and/or from time to
time hereafter owing, due or payable whether before or after the filing of
a proceeding under the Bankruptcy Code by or against Borrower, any of its
Subsidiaries or any other Loan Party.
"Original Closing Date" means April 30, 1996.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan" means a pension plan, as defined in Section 3(2) of
ERISA, which is subject to Title IV of ERISA (other than a Multiemployer
Plan), and with respect to which Borrower or any other Loan Party may have
any liability, including (but not limited to) any liability by reason of
having been a substantial employer within the meaning of Section 4063 of
ERISA, or by reason of being deemed to be a contributing sponsor under
Section 4069 of ERISA.
"Person" means and includes natural persons, corporations, limited
liability companies, limited partnerships, limited liability 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
and their respective permitted successors and assigns (or in the case of a
governmental person, the successor functional equivalent of such Person).
"Plan" means an employee benefit plan, as such term is defined in
Section 3(3) of ERISA (other than a Multiemployer Plan), with respect to
which Borrower or any other Loan Party may have any liability.
"Pro Forma" means the unaudited consolidated balance sheet of Borrower
and its Subsidiaries prepared in accordance with GAAP as of the Restatement
Effective Date after giving effect to the Related Transactions. The Pro
Forma is annexed hereto as Schedule 10.1(A).
"Pro Rata Share" means (a) with respect to a Lender's obligation to
lend a portion of the Term Loan and such Lender's right to receive payments
of principal with respect thereto, the percentage obtained by dividing (i)
the Term Loan Exposure of such Lender by (ii) the aggregate Term Loan
Exposure of all Lenders, (b) with respect to a Lender's obligation to make
Revolving Loans and such Lender's right to receive payments of principal
with respect thereto and the related commitment fee described in subsection
1.2(B) and with respect to a Lender's obligation to share in Letter of
Credit Liability and to receive the related Letter of Credit fee described
in subsection 1.2(C), the percentage obtained by dividing (i) the Revolving
Credit Exposure of such Lender by (ii) the aggregate Revolving Credit
Exposure of all Lenders and (c) for all other purposes (including without
limitation the indemnification obligations arising under subsection 8.2(E))
with respect to any Lender, the percentage obtained by dividing (i) the sum
of the Term Loan Exposure of that Lender plus the Revolving Credit Exposure
of that Lender by (ii) the sum of the aggregate Term Loan Exposure of all
Lenders and the aggregate Revolving Credit Exposure of all Lenders, in each
case as the applicable percentages may be adjusted by assignments permitted
pursuant to subsection 8.1. The Pro Rata Shares of each Lender and their
respective commitment amounts, as of the Restatement Effective Date, are
set forth on Schedule 10.1(C) hereto.
"Projections" means Borrower's forecasted consolidated: (a) balance
sheets; (b) profit and loss statements; (c) cash flow statements; and (d)
capitalization statements, all prepared on a Subsidiary by Subsidiary basis
on a consistent basis with Borrower's historical financial statements,
together with appropriate supporting details and a statement of underlying
assumptions.
"Related Transactions" means the Color Prelude Acquisition, the
execution and delivery of the Related Transactions Documents to be executed
on the Restatement Effective Date, the funding of all Loans on the
Restatement Effective Date, the repayment of the Indebtedness identified on
Schedule 10.1(B) which is to be paid in full on the
Restatement Effective Date, and the payment of all fees, costs and expenses
associated with all of the foregoing.
"Related Transactions Documents" means the Loan Documents, the
Capitalization/Acquisition Documents and all other agreements, instruments
and documents executed or delivered in connection with the Related
Transactions.
"Reportable Event" means a reportable event as defined in Section 4043
of ERISA other than a reportable event for which the requirement to provide
notice to the PBGC has been waived by regulation.
"Requisite Lenders" means Lenders (other than Defaulting Lenders)
having (a) sixty-six and two-thirds percent (66-2/3%) or more of the sum of
the Revolving Loan Commitment and the outstanding principal balance of the
Term Loan of all Lenders that are not Defaulting Lenders or (b) if the
Revolving Loan Commitment has been terminated, sixty-six and two-thirds
percent (66-2/3%) or more of the aggregate outstanding principal balance of
the Loans of all Lenders that are not Defaulting Lenders.
"Responsible Officer" means the President, Chief Executive Officer,
Chief Financial Officer or Chief Operating Officer of a Loan Party.
"Restatement Effective Date" means December 18, 2001.
"Revolving Credit Exposure" means, with respect to any Lender as of
any date of determination, (a) prior to the termination of the Revolving
Loan Commitment, such Lender's Revolving Loan Commitment and (b) after
termination of the Revolving Loan Commitment, the sum of (i) the aggregate
outstanding principal amount of the Revolving Loans of such Lender plus
(ii) the aggregate amount of all participations purchased by such Lender in
the outstanding Letter of Credit Liability.
"Security Documents" means all instruments, documents and agreements
executed by or on behalf of any Person to guaranty or provide collateral
security with respect to the Obligations including, without limitation, any
security agreement or pledge agreement, any guaranty of the Obligations,
any mortgage or deed of trust, and all instruments, documents and
agreements executed pursuant to the terms of the foregoing.
"Subordinated Indebtedness" means all Indebtedness subordinated to the
Obligations in a manner satisfactory to Agent including, without
limitation, the Indebtedness evidenced by the AHC Subordinated Note and the
Additional Seller Notes.
"Subordinated Loan Documents" means, collectively, the AHC
Subordinated Loan Documents, the Additional Seller Notes and all other
instruments, documents and agreements executed and delivered in connection
with any of the Subordinated Indebtedness.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company, association or other business
entity of which more than fifty percent (50%) of the total voting power of
shares of stock (or equivalent ownership or controlling 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 Subsidiaries of that Person or a combination thereof.
"Term Loan Exposure" means, with respect to any Lender, as of any date
of determination, the outstanding principal amount of the Term Loan of such
Lender; provided, however, that at any time prior to the making of the Term
Loan, the Term Loan Exposure of any Lender shall be equal to the commitment
amount of such Lender with respect to the Term Loan set forth on Schedule
10.1(C).
10.2. OTHER DEFINITIONAL PROVISIONS. References to "Sections",
"subsections", "Exhibits," "Schedules" and "subschedules" shall be to Sections,
subsections, Exhibits, Schedules and subschedules, respectively, of this
Agreement unless otherwise specifically provided. Any of the terms defined in
subsection 10.1 may, unless the context otherwise requires, be used in the
singular or the plural depending on the reference. References to an agreement
shall include all amendments, restatements, modifications and supplements to
such agreement, subject to such consents or approvals of Agent or any Lenders as
may be required by the terms of this Agreement. In this Agreement, "hereof,"
"herein," "hereto," "hereunder" and the like mean and refer to this Agreement as
a whole and not merely to the specific section, paragraph or clause in which the
respective word appears; words importing any gender include the other gender;
references to "writing" include printing, typing, lithography and other means of
reproducing words in a tangible visible form; the words "including," "includes"
and "include" shall be deemed to be followed by the words "without limitation";
references to agreements and other contractual instruments shall be deemed to
include subsequent amendments, assignments, and other modifications thereto, but
only to the extent such amendments, assignments and other modifications are not
prohibited by the terms of this Agreement or any other Loan Document; references
to Persons include their respective permitted successors and assigns or, in the
case of governmental Persons, Persons succeeding to the relevant functions of
such Persons; and all references to statutes and related regulations shall
include any amendments of same and any successor statutes and regulations.
Witness the due execution hereof by the respective duly authorized officers
of the undersigned as of the date first written above.
AKI, INC.
By:__/s/ ▇▇▇▇▇ Prashker_____________
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇▇ FINANCIAL, INC., as
Agent, an Issuing Lender and a Lender
By:__/s/ ▇▇▇▇▇ Zmijeski_____________
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
LIST OF EXHIBITS AND SCHEDULES
------------------------------
Exhibits
--------
Exhibit 1.1(B) - Funding/Conversion/Continuation Request
Exhibit 1.5(B) - Excess Cash Flow Computation
Exhibit 4.8(C) - Pricing and Compliance Certificate
Exhibit 4.8(E) - Borrowing Base Certificate
Exhibit 10.1(A) - Assignment and Acceptance Agreement
Exhibit 10.1(B) - Notes
Schedules
---------
Schedule 1.2 - Pricing Table
Schedule 3.2(A)(14) - Liens
Schedule 3.4 - Contingent Obligations
Schedule 3.8 - Affiliate Transactions
Schedule 3.9 - Business Description
Schedule 5.4(A) - Jurisdictions of Organization and Qualifications
Schedule 5.4(B) - Capitalization
Schedule 5.6 - Intellectual Property
Schedule 5.7 - Investigations and Audits
Schedule 5.8 - Employee Matters
Schedule 7.1 - List of Closing Documents
Subschedule 7.1 - Litigation
Subschedule 7.2 - Employee Benefit Plans
Subschedule 7.3 - Closing Fees
Subschedule 7.4 - Investments
Subschedule 7.5 - Derivatives
Subschedule 7.6 - Bank Accounts
Subschedule 7.7 - Subsidiaries
Schedule 10.1(A) - Pro Forma
Schedule 10.1(B) - Indebtedness to be Repaid
Schedule 10.1(C) - Pro Rata Shares and Commitment Amounts
SCHEDULE 1.2
------------
PRICING TABLE
Total
Indebtedness to Applicable Base Applicable
EBITDA Ratio Rate Margins LIBOR Margins
------------ ------------ -------------
> 4.25 2.50% 3.75%
-
> 3.75 but < 4.25 2.25% 3.50%
-
> 3.25 but < 3.75 2.00% 3.25%
-
< 3.25 1.75% 3.00%
SCHEDULE 10.1(C)
PRO RATA SHARES AND COMMITMENT AMOUNTS OF LENDERS
REVOLVING LOAN COMMITMENT:
Name of Lender Commitment Amount Pro Rata Share
-------------- ----------------- --------------
▇▇▇▇▇▇ Financial, Inc. $20,000,000 100.00%
TERM LOAN:
Name of Lender Commitment Amount Pro Rata Share
-------------- ----------------- --------------
▇▇▇▇▇▇ Financial, Inc. $10,000,000 100.00%
