Exhibit 4.3
CFP GROUP, INC.
CFP HOLDINGS, INC.
CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of December 30, 1996 and entered into by
and among CFP HOLDINGS, INC., a Delaware corporation ("Borrower"), CFP GROUP,
INC., a Delaware corporation ("Parent"), THE FINANCIAL INSTITUTIONS LISTED ON
THE SIGNATURE PAGES HEREOF (each individually referred to herein as a "Lender"
and collectively as "Lenders"), NATIONSBANK OF TEXAS, N.A. ("NATIONSBANK"), as
administrative agent for Lenders (in such capacity, "Administrative Agent"),
NATIONS-BANC CAPITAL MARKETS, INC. ("NCMI"), as arranging agent (in such
capacity, "Arranging Agent") and as syndication agent (in such capacity,
"Syndication Agent"), and FLEET NATIONAL BANK, as Documentation Agent (in such
capacity, "Documentation Agent").
R E C I T A L S
WHEREAS, on the Closing Date (this and other capitalized terms used herein
without definition shall have the meanings assigned to those terms in subsection
1.1), (x) Borrower intends to purchase substantially all of the outstanding
limited partnership interests in Quality Foods, L.P. and all of the outstanding
shares of capital stock of QF Acquisition and QF Management pursuant to the
Acquisition Agreement, (y) the remaining limited partnership interests in
Quality Foods, L.P. will be exchanged for capital stock of Parent and all
limited partnership interests of Quality Foods, L.P. will be contributed to QF
Acquisition and (z) immediately upon the consummation of the Acquisition, (i) QF
Management will be merged with and into QF Acquisition with QF Acquisition being
the surviving corporation in such merger, (ii) Quality Foods, L.P. will transfer
all of its assets and liabilities to QF Acquisition and (iii) Quality Foods,
L.P. will be liquidated and dissolved;
WHEREAS, Lenders have agreed to extend certain credit facilities to
Borrower, the proceeds of which will be used (i) together with the proceeds of
the Bridge Financing, to fund (1) the purchase price payable in connection with
the Acquisition, (2) the refinancing of certain indebtedness, (3) the repurchase
of certain preferred stock of Parent, and (4) the payment of the Transaction
Costs, and (ii) to provide financing for general corporate purposes of Borrower
and its Subsidiaries;
WHEREAS, upon the request of Borrower and subject to the terms and
conditions hereof, on the Closing Date, Lenders have agreed to make certain Term
Loans and Revolving Loans, to issue the Acquisition Letter of Credit in support
of the Seller Notes and to enter into the IRB Reimbursement Agreement;
WHEREAS, Lenders have agreed to make the remaining Term Loans available
hereunder to Borrower to pay the sum due on the Seller Notes, or if not paid, to
reimburse the Issuing Lender for a drawing under the Acquisition Letter of
Credit;
WHEREAS, upon a Permitted Securities Issuance, the Net Securities Proceeds
therefrom shall be applied (i) to all obligations of Borrower under the Bridge
Notes, (ii) under certain circumstances set forth herein, to fund the
Distribution Transaction in an amount not to exceed $16,000,000, (iii) to the
extent of any remaining portion of such Net Securities Proceeds, first to prepay
the Tranche A and Tranche B Term Loans as provided herein and to the extent of
any remaining proceeds, to prepay Revolving Loans to the full extent thereof;
WHEREAS, Borrower desires to secure all of the Obligations hereunder and
under the other Loan Documents by granting to Administrative Agent, on behalf of
Lenders, a first priority Lien on substantially all of its real, personal and
mixed property, including without limitation a pledge of all of the capital
stock of each of its Subsidiaries; and
WHEREAS, Parent and all of the Subsidiaries of Borrower have agreed to
guarantee the Obligations hereunder and under the other Loan Documents and to
secure their guaranties by granting to Administrative Agent, on behalf of
Lenders, a first priority Lien on substantially all of their respective real,
personal and mixed property, including without limitation a pledge of all of the
capital stock of each of their respective Subsidiaries.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Parent, Borrower, Lenders, Arranging
Agent and Syndication Agent agree as follows:
Section 1. DEFINITIONS
1.1 Certain Defined Terms.
The following terms used in this Agreement shall have the following
meanings:
"Accepting Tranche B Lenders" has the meaning assigned to that term in
subsection 2.4B(iv)(c).
"Accounts Receivable" means, as at any date of determination, the unpaid
portion of the obligations (which, if an invoice has been issued, shall be as
stated on the respective invoice issued to a customer) with respect to (a)
Inventory sold and shipped in the ordinary course of business by any Operating
Subsidiary and (b) services provided in the ordinary course of business by any
Operating Subsidiary.
"Acquisition" means the acquisition by Borrower of all of the outstanding
limited partnership interests in Quality Foods, L.P. and all of the outstanding
shares of capital stock of
2
QF Acquisition and QF Management, and the other transactions contemplated by the
Acquisition Agreement.
"Acquisition Agreement" means that certain Securities Purchase Agreement
by and among Quality Foods, L.P., the partners of Quality Foods, L.P., the
stockholders of QF Acquisition and QF Management and Borrower dated as of
December 31, 1996, in the form delivered to Administrative Agent and Lenders
prior to their execution of this Agreement and as such agreement may be amended
from time to time thereafter to the extent permitted under subsection 7.13A.
"Acquisition Documents" means the Acquisition Agreement and all material
agreements and documents entered into in connection with the Acquisition
(including the Assignment and Assumption Agreement between Quality Foods, L.P.
and QF Acquisition), in each case, in the form delivered to Administrative Agent
and Lenders prior to their execution of this Agreement, as any such Acquisition
Document may be amended from time to time thereafter to the extent permitted
under subsection 7.13A
"Acquisition Financing Requirements" means the aggregate of all amounts
necessary (i) to finance the purchase price payable in connection with the
Acquisition, (ii) to refinance the Indebtedness set forth on Schedule 4.1E and
(iii) to pay Transaction Costs.
"Acquisition Letter of Credit" means the letters of credit substantially
in the forms attached hereto as Exhibit IV issued for the purpose of supporting
the obligation of Borrower to pay the Seller Notes pursuant to subsection
3.1A(2).
"Acquisition Reimbursement Date" means the earlier of (i) the
Reimbursement Date in respect of the Acquisition Letter of Credit and (ii)
January 8, 1997.
"Additional Subordinated Note Documents" the Additional Subordinated Notes
and all material agreements entered into in connection with the Additional
Subordinated Notes in such form and substance reasonably satisfactory to
Administrative Agent and Requisite Lenders, as any of such Additional
Subordinated Note Documents may be amended from time to time to the extent
permitted under subsection 7.13B.
"Additional Subordinated Notes" means the promissory notes of Borrower or
its Subsidiaries issued after the Closing Date in an aggregate principal amount
permitted under subsection 7.1(xii) pursuant to documentation containing
maturities, amortization schedules, covenants, defaults, remedies, subordination
provisions and other material terms which taken as a whole are no less favorable
to Lenders or Borrower and its Subsidiaries than the corresponding terms in the
Bridge Financing Documents; provided that in no event shall such Additional
Subordinated Notes contain any provision granting holders thereof the rights
with respect to amendments to the Loan Documents set forth in Section 9.16(a) of
the note purchase agreement relating to the Bridge Notes as in effect on the
Closing Date.
3
"Adjusted Eurodollar Rate" means, for any Interest Rate Determination Date
with respect to an Interest Period for a Eurodollar Rate Loan, the rate per
annum obtained by dividing (i) the offered quotation (rounded upward to the
nearest 1/16 of one percent) to first class banks in the London interbank market
by NationsBank for U.S. dollar deposits of amounts in same day funds comparable
to the principal amount of the Eurodollar Rate Loan of NationsBank for which the
Adjusted Eurodollar Rate is then being determined (which principal amount shall
be deemed to be $1,000,000 in the event NationsBank is not making, converting to
or continuing such a Eurodollar Rate Loan) with maturities comparable to such
Interest Period as of approximately 11:00 a.m. (London time) on such Interest
Rate Determination Date by (ii) a percentage equal to 100% minus the stated
maximum rate of all reserve requirements (including, without limitation, any
marginal, emergency, supplemental, special or other reserves) applicable on such
Interest Rate Determination Date to any member bank of the Federal Reserve
System in respect of "Eurocurrency liabilities" as defined in Regulation D (or
any successor category of liabilities under Regulation D).
"Affected Lender" has the meaning assigned to that term in subsection
2.6C.
"Affected Loan" has the meaning assigned to that term in subsection 2.6C.
"Affiliate" means, with respect to any specified Person, (a) any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person or (b) any executive officer
or director of any such specified Person or other Person or, with respect to any
natural Person, any Person having a relationship with such Person by blood,
marriage or adoption not more remote than first cousin. For the purposes of this
definition, "control", when used with respect to any specified Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling", "controlled" and "under common control" have
meanings correlative to the foregoing.
"Administrative Agent" has the meaning assigned to that term in the
introduction to this Agreement and also means and includes any successor
Administrative Agent appointed pursuant to subsection 9.5A.
"Agreement" means this Credit Agreement dated as of December 30, 1996, as
it may be amended, supplemented or otherwise modified from time to time.
"Applicable Margin" means the following:
(i) for Term Loans A and Tranche A Term Loans for the period prior
to the Permitted Securities Issuance Prepayment Date, (1) from the Closing
Date until delivery of financial statements for the period ending December
31, 1997 as required pursuant to subsection 6.1(ii), 1.5% per annum for
Base Rate Loans and 2.75% per annum for Eurodollar Rate Loans, and (2)
thereafter, the percentage per annum determined by reference to the
applicable Level set forth below:
4
=====================================================
Eurodollar Base
Level Rate Loans Rate Loans
=====================================================
Level I 2.75% 1.50%
=====================================================
Level II 2.50% 1.50%
=====================================================
Level III 2.25% 1.25%
=====================================================
Level IV 2.00% 1.00%
=====================================================
(ii) for Term Loans A for the period from and after the Permitted
Securities Issuance Prepayment Date, (1) from the Permitted Securities
Issuance Prepayment Date until delivery of financial statements for the
period ending December 31, 1997 as required pursuant to subsection
6.1(ii), 2% per annum for Base Rate Loans and 3% per annum for Eurodollar
Rate Loans, and (2) thereafter, the percentage per annum determined by
reference to the applicable Level set forth below:
=====================================================
Eurodollar Base
Level Rate Loans Rate Loans
=====================================================
Level I 3.00% 2.00%
=====================================================
Level II 2.75% 1.75%
=====================================================
Level III 2.50% 1.50%
=====================================================
Level IV 2.25% 1.25%
=====================================================
(iii) for Revolving Loans (1) from the Closing Date until delivery
of financial statements for the period ending December 31, 1997 as
required pursuant to subsection 6.1(ii), 1.25% per annum for Base Rate
Loans and 2.5% per annum for Eurodollar Rate Loans, and (2) thereafter,
the percentage per annum determined by reference to the applicable Level
set forth below:
5
=====================================================
Eurodollar Base
Level Rate Loans Rate Loans
=====================================================
Level I 2.50% 1.25%
=====================================================
Level II 2.25% 1.25%
=====================================================
Level III 2.00% 1.00%
=====================================================
Level IV 1.75% 0.75%
=====================================================
The Level with respect to the Applicable Margin shall be determined
as of each Measurement Date and shall be the basis for determining the
Applicable Margin until the next succeeding Measurement Date; provided,
however, that the Applicable Margin for each Loan shall be the percentage
per annum determined by reference to Level I for such Loan, for so long as
Borrower has not submitted to the Administrative Agent the information
necessary for determining the applicable Level as and when required under
subsection 6.1(ii) and 6.1(iv).
"Applied Amount" has the meaning assigned to that term in subsection
2.4B(iv)(b).
"Asset Sale" means the sale by Parent or any of its Subsidiaries to any
Person other than Borrower or any of its Subsidiaries of (i) any of the stock of
Borrower or any of Borrower's Subsidiaries, (ii) all or substantially all of the
assets of any division or line of business of Parent or any of its Subsidiaries,
or (iii) any other assets (whether tangible or intangible) of Parent or any of
its Subsidiaries outside of the ordinary course of business (other than (a)
inventory sold in the ordinary course of business and (b) any such other assets
to the extent that the aggregate value of such assets sold in any single
transaction or related series of transactions does not exceed $250,000 and in
all transactions during any twelve month period does not exceed $1,000,000).
"Assignment Agreement" means an Assignment Agreement in substantially the
form of Exhibit XII annexed hereto.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"Base Rate" means, at any time, the higher of (x) the Prime Rate or (y)
the rate which is 1/2 of 1% in excess of the Federal Funds Effective Rate.
"Base Rate Loans" means Loans bearing interest at rates determined by
reference to the Base Rate as provided in subsection 2.2A.
"Borrower" means CFP Holdings, Inc., a Delaware corporation.
6
"Borrower Pledge Agreement" means the Borrower Pledge Agreement executed
and delivered by Borrower on the Closing Date, substantially in the form of
Exhibit XVII annexed hereto, as such Borrower Pledge Agreement may thereafter be
amended, supplemented or otherwise modified from time to time.
"Borrower Security Agreement" means the Borrower Security Agreement
executed and delivered by Borrower on the Closing Date, substantially in the
form of Exhibit XVIII annexed hereto, as such Borrower Security Agreement may
thereafter be amended, supplemented or otherwise modified from time to time.
"Borrowing Base" means, as of any date of determination, the sum of 85% of
Eligible Accounts Receivable plus 60% of Eligible Inventory in which
Administrative Agent, for the benefit of itself and Lenders, holds a fully
perfected First Priority security interest, plus, from the Closing Date until
the second anniversary of the Closing Date, an amount equal to $750,000 less any
proceeds of PIDC Loans (up to $750,000) received after the Closing Date
(provided that such amount shall not exceed $375,000 from the first anniversary
of the Closing Date to the second anniversary of the Closing Date), as
calculated pursuant to the most recent Borrowing Base Certificate and otherwise
in accordance with the provisions of subsection 6.12.
"Borrowing Base Certificate" means a certificate substantially in the form
annexed hereto as Exhibit XXVIII delivered by Borrower pursuant to subsection
6.1(xviii).
"Bridge Financing" means the loans obtained from the issuance by Borrower
of the Bridge Notes.
"Bridge Financing Documents" means all of the Bridge Notes, the note
purchase agreements and related agreements and documents pursuant to which the
Bridge Financing is being made, in each case, in the form delivered to
Administrative Agent and Lenders prior to their execution of this Agreement, as
any such Bridge Financing Document may be amended, supplemented or otherwise
modified from time to time thereafter to the extent permitted under subsection
7.13B.
"Bridge Notes" means the promissory notes of Borrower in the initial
principal amount of $25,000,000 issued on the Closing Date (and any notes issued
in exchange therefor in the same principal amount pursuant to the Bridge
Financing Documents and any additional notes issued in payment of interest
thereon, in either case, pursuant to the Bridge Financing Documents) in the form
delivered to Administrative Agent and Lenders prior to their execution of this
Agreement, as such Bridge Notes may be amended, supplemented or otherwise
modified from time to time thereafter to the extent permitted under subsection
7.13B.
"Business Day" means (i) for all purposes other than as covered by clause
(ii) below, any day excluding Saturday, Sunday and any day which is a legal
holiday under the laws of the State of New York or is a day on which banking
institutions located in such state are authorized or required by law or other
governmental action to close, and (ii) with respect to all notices,
determinations, fundings and payments in connection with the Adjusted Eurodollar
Rate or any
7
Eurodollar Rate Loans, any day that is a Business Day described in clause (i)
above and that is also a day for trading by and between banks in Dollar deposits
in the London interbank market.
"Capital Lease", as applied to any Person, means any lease of any property
(whether real, personal or mixed) by that Person as lessee that, in conformity
with GAAP, is accounted for as a capital lease on the balance sheet of that
Person.
"Cash" means money, currency or a credit balance in a Deposit Account of
Parent or any of its Subsidiaries.
"Cash Equivalents" means, as at any date of determination, (i) marketable
securities (a) issued or directly and unconditionally guaranteed as to interest
and principal by the United States Government or (b) issued by any agency of the
United States the obligations of which are backed by the full faith and credit
of the United States, in each case maturing within one year after such date;
(ii) marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof, in each case maturing within one year after such date
and having, at the time of the acquisition thereof, the highest rating
obtainable from either Standard & Poor's Ratings Group ("S&P") or ▇▇▇▇▇'▇
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more
than one year from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit or bankers' acceptances maturing within
one year after such date and issued or accepted by any Lender or by any
commercial bank organized under the laws of the United States of America or any
state thereof or the District of Columbia that (a) is at least "adequately
capitalized" (as defined in the regulations of its primary Federal banking
regulator) and (b) has Tier 1 capital (as defined in such regulations) of not
less than $100,000,000; and (v) shares of any money market mutual fund that (a)
has at least 95% of its assets invested continuously in the types of investments
referred to in clauses (i) and (ii) above, (b) has net assets of not less than
$500,000,000, and (c) has the highest rating obtainable from either S&P or
Moody's.
"Certificate re Non-Bank Status" means a certificate substantially in the
form of Exhibit XIV annexed hereto delivered by a Lender to Administrative Agent
pursuant to subsection 2.7B(iii).
"Change of Control" means the occurrence of any of the following events:
(i) prior to an Initial Public Offering, Atlantic Equity Partners,
L.P. and/or its Affiliates shall cease to beneficially own and control (x)
at least 66-2/3% of the number of shares of equity Securities (excluding
(a) the Series A Preferred Stock owned by Atlantic Equity Partners, L.P.
and its Affiliates and (b) from and after the Permitted Securities
Issuance Prepayment Date, the Preferred Distribution Stock) of
Parent (as such number of shares may be adjusted to take into account
stock splits, reverse stock splits, dividends payable in share of capital
stock and similar transactions) beneficially owned and controlled by such
Persons as of the Closing Date and (y) a majority of the issued and
outstanding Voting Stock of Parent;
8
(ii) any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act), other than Atlantic Equity Partners,
L.P., its Affiliates and/or management employees of Parent or any of its
Subsidiaries is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of (1) more than
30% of the voting power of all classes of Voting Stock of Parent prior to
the Permitted Securities Issuance Prepayment Date and (2) more than 50% of
voting power of all classes of Voting Stock of Parent from and after the
Permitted Securities Issuance Prepayment Date;
(iii) Parent, either individually or in conjunction with one or more
Subsidiaries, sells, assigns, conveys, transfers, leases or otherwise
disposes of, or the Subsidiaries sell, assign, convey, transfer, lease or
otherwise dispose of, all or substantially all of the properties of Parent
and the Subsidiaries, taken as a whole (either in one transaction or a
series of related transactions), including capital stock of the
Subsidiaries, to any person (other than Borrower or a Subsidiary);
(iv) during any consecutive two-year period, individuals who at the
beginning of such period constituted the Board of Directors of Parent
(together with any new directors whose election by such Board of Directors
or whose nomination for election by the stockholders of Parent was
approved by a vote of a majority of the directors then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason
to constitute a majority of the Board of Directors of Parent then in
office; or
(v) Parent or Borrower is liquidated or dissolved or adopts a plan
of liquidation or dissolution (other than as a result of a merger,
liquidation or dissolution of Borrower into Parent or Parent into
Borrower).
"Class" means, as applied to Lenders, each of the following two classes of
Lenders: (i) Lenders having Term Loans A, Tranche A Term Loan Exposure and/or
Revolving Loan Exposure (taken together as a single class) and (ii) Lenders
having Tranche B Term Loan Exposure.
"Closing Date" means the date on or before December 31, 1996, on which
either the initial Loans are made and/or the Acquisition Letter of Credit is
issued.
"Collateral" means, collectively, all of the real, personal and mixed
property (including capital stock) in which Liens are purported to be granted
pursuant to the Collateral Documents as security for the Obligations.
"Collateral Account" has the meaning assigned to that term in the
Collateral Account Agreement.
"Collateral Account Agreement" means the Collateral Account Agreement
executed and delivered by Borrower and Administrative Agent on the Closing Date,
substantially in the form
9
of Exhibit XVI annexed hereto, as such Collateral Account Agreement may
hereafter be amended, supplemented or otherwise modified from time to time.
"Collateral Documents" means the Parent Pledge Agreement, the Borrower
Pledge Agreement, the Parent Security Agreement, the Borrower Security
Agreement, the Collateral Account Agreement, the Subsidiary Pledge Agreements,
the Subsidiary Security Agreements, the Subsidiary Patent Security Agreements,
the Subsidiary Trademark Security Agreements, the Mortgages, the MELF
Intercreditor Agreement and all other instruments or documents delivered by any
Loan Party pursuant to this Agreement or any of the other Loan Documents in
order to grant to Administrative Agent, on behalf of Lenders, a Lien on any
real, personal or mixed property of that Loan Party as security for the
Obligations.
"Commitments" means the commitments of Lenders to make Loans as set forth
in subsection 2.1A.
"Compliance Certificate" means a certificate substantially in the form of
Exhibit IX annexed hereto delivered to Administrative Agent and Lenders by
Borrower pursuant to subsection 6.1(iv).
"Conforming Leasehold Interest" means any Recorded Leasehold Interest as
to which the lessor has agreed in writing for the benefit of Administrative
Agent (which writing has been delivered to Administrative Agent), whether under
the terms of the applicable lease, under the terms of a Landlord Consent and
Estoppel, or otherwise, to the matters described in the definition of "Landlord
Consent and Estoppel", which interest, if a subleasehold or sub-subleasehold
interest, is not subject to any contrary restrictions contained in a superior
lease or sublease.
"Consolidated Adjusted EBITDA" means, for any period, the sum of the
amounts for such period of (i) Consolidated Net Income, (ii) Consolidated
Interest Expense, (iii) provisions for taxes based on income, (iv) total
depreciation expense, (v) total amortization expense, (vi) total Transaction
Costs (to the extent deducted in arriving at Consolidated Net Income), (vii)
non-recurring non-operating costs and non-recurring adjustments reducing
Consolidated Net Income, in each case, as mutually acceptable to Borrower and
Administrative Agent (after consultation with Lenders), and (viii) other
non-cash items reducing Consolidated Net Income less other non-cash items
increasing Consolidated Net Income, all of the foregoing as determined on a
consolidated basis for Parent and its Subsidiaries in conformity with GAAP.
"Consolidated Adjusted Net Income" means Consolidated Net Income in any
Fiscal period adjusted for the after-tax effect, on a cumulative basis from the
Closing Date, of (i) purchase accounting adjustments including, but not limited
to, amortization of acquired intangibles and step-up depreciation, (ii) the
amount of all fees and expenses incurred, expensed, written off, or amortized in
conjunction with the Acquisition, the Restructuring, the Distribution
Transaction and subsequent refinancings, and (iii) other non-cash expenses
incurred including accretion of warrant value and compensation costs resulting
from exercise and disposition of, or accretion in value of employee stock
options.
10
"Consolidated Adjusted Net Worth" means Consolidated Net Worth at the time
of determination, adjusted for the after-tax effect, on a cumulative basis from
the Closing Date, of (i) purchase accounting adjustments including, but not
limited to, amortization of acquired intangibles, step-up depreciation and
write-up and/or write-down of inventory and accounts receivable, (ii) the amount
of all fees and expenses incurred, expensed, written-off, or amortized in
conjunction with the Acquisition, the Restructuring, the Distribution
Transaction and subsequent refinancings, and (iii) other non-cash expenses
incurred including accretion of warrant value and compensation costs resulting
from exercise and disposition of, or accretion in value of employee stock
options.
"Consolidated Capital Expenditures" means, for any period, the sum of (i)
the aggregate of all expenditures (whether paid in cash or other consideration
or accrued as a liability and including that portion of Capital Leases which is
capitalized on the consolidated balance sheet of Parent and its Subsidiaries) by
Parent and its Subsidiaries during such period that, in conformity with GAAP,
are included in "additions to property, plant or equipment" or comparable items
reflected in the consolidated statement of cash flows of Parent and its
Subsidiaries plus (ii) to the extent not covered by clause (i) of this
definition, the aggregate of all expenditures by Parent and its Subsidiaries
during that period to acquire (by purchase or otherwise) the business, property
or fixed assets of any Person, or the stock or other evidence of beneficial
ownership of any Person that, as a result of such acquisition, becomes a
Subsidiary of Parent minus the sum of all Net Asset Sale Proceeds and proceeds
of sales of assets pursuant to clause (b) of the definition of "Asset Sale";
provided that expenditures made in order to consummate acquisitions pursuant to
subsection 7.7(vii) shall not be included in the defined term Consolidated
Capital Expenditures.
"Consolidated Cash Interest Expense" means, for any period, Consolidated
Interest Expense for such period excluding, however, any interest expense not
payable in Cash (including amortization of discount, amortization of debt
issuance costs and accretion of value of warrants or non-cash charges with
respect to warrants).
"Consolidated Current Assets" means, as at any date of determination, the
total assets of Parent and its Subsidiaries on a consolidated basis which may
properly be classified as current assets in conformity with GAAP, excluding Cash
and Cash Equivalents.
"Consolidated Current Liabilities" means, as at any date of determination,
the total liabilities of Parent and its Subsidiaries on a consolidated basis
which may properly be classified as current liabilities in conformity with GAAP,
excluding any current portion of any long term liabilities and any other
liabilities for borrowed money payable in one year or less from the date of
incurrence.
"Consolidated Excess Cash Flow" means, for any period, an amount (if
positive) equal to (i) the sum, without duplication, of the amounts for such
period of (a) Consolidated Adjusted EBITDA and (b) the Consolidated Working
Capital Adjustment minus (ii) the sum, without duplication, of the amounts for
such period of (a) voluntary and scheduled repayments of Consolidated Total Debt
(excluding repayments of Revolving Loans except to the extent the
11
Revolving Loan Commitments are permanently reduced in connection with such
repayments), (b) Consolidated Capital Expenditures and expenditures made to
consummate acquisitions in accordance with the provisions of subsection 7.7(vii)
(net of any proceeds of any related financings with respect to such
expenditures), (c) Consolidated Cash Interest Expense, (d) the provision for
current taxes based on income of Parent and its Subsidiaries and payable in cash
with respect to such period and (e) non-recurring and non operating costs
referred to in clause (vii) of the definition of Consolidated Adjusted EBITDA
with respect to such period.
"Consolidated Fixed Charges" means, for any period, the sum (without
duplication) of the amounts for such period of (i) Consolidated Interest
Expense, (ii) all scheduled principal payments on Consolidated Total Debt
(including the principal portion of Capitalized Leases), (iii) actual payments
of taxes, and (iv) to the extent not included in Consolidated Adjusted EBITDA,
all Restricted Junior Payments (excluding the Distribution Transactions, the
Preferred Stock Redemption and any payments made to First Atlantic, Ltd. or any
of its Affiliates in respect of management consulting or other services to
Parent and/or its Subsidiaries), all of the foregoing as determined on a
consolidated basis for Parent and its Subsidiaries in conformity with GAAP.
"Consolidated Interest Expense" means, for any period, total interest
expense (including that portion attributable to Capital Leases in accordance
with GAAP and capitalized interest and Operating Lease payments to the extent
not deducted in calculating Consolidated Net Income) of Parent and its
Subsidiaries on a consolidated basis with respect to all outstanding
Indebtedness of Parent and its Subsidiaries, including, without limitation, all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing and net costs under Interest Rate
Agreements, but excluding, however, any amounts referred to in subsection 2.3
payable to Administrative Agent and Lenders on or before the Closing Date.
"Consolidated Net Income" means, for any period, the net income (or loss)
of Parent and its Subsidiaries on a consolidated basis for such period taken as
a single accounting period determined in conformity with GAAP; provided that
there shall be excluded (i) the income (or loss) of any Person (other than a
Subsidiary of Parent) in which any other Person (other than Parent or any of its
Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Parent or any of its
Subsidiaries by such Person during such period, (ii) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of Parent or is merged
into or consolidated with Parent or any of its Subsidiaries or that Person's
assets are acquired by Parent or any of its Subsidiaries, (iii) the income of
any Subsidiary of Parent to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary, (iv) any after-tax gains or losses attributable
to Asset Sales or returned surplus assets of any Pension Plan, (v) (to the
extent not included in clauses (i) through (iv) above) any net extraordinary
gains or net non-cash extraordinary losses and (vi) the after-tax effect of
purchase accounting adjustments related to the write-up and/or write-down of
inventory and accounts receivable.
12
"Consolidated Net Worth" means, as at any date of determination, the sum
of the capital stock and additional paid-in capital plus retained earnings (or
minus accumulated deficits) of Parent and its Subsidiaries on a consolidated
basis determined in conformity with GAAP.
"Consolidated Rental Payments" means, for any period, the aggregate amount
of all rents paid or payable by Parent and its Subsidiaries on a consolidated
basis during that period under all Operating Leases to which Parent or any of
its Subsidiaries is a party as lessee (net of sublease income).
"Consolidated Total Debt" means, as at any date of determination, the
aggregate stated balance sheet amount of all Indebtedness of Parent and its
Subsidiaries less Cash and Cash Equivalents, determined on a consolidated basis
in accordance with GAAP.
"Consolidated Working Capital" means, as at any date of determination, the
excess of Consolidated Current Assets over Consolidated Current Liabilities.
"Consolidated Working Capital Adjustment" means, for any period on a
consolidated basis, the amount (which may be a negative number) by which
Consolidated Working Capital as of the beginning of such period exceeds (or is
less than) Consolidated Working Capital as of the end of such period, excluding
the effect of purchase accounting adjustments related to the write-up and/or
write-down of inventory and accounts receivable.
"Contingent Obligation", as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person (i) with respect to
any Indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect thereof, (ii)
with respect to any letter of credit issued for the account of that Person or
under acceptance or similar facilities or as to which that Person is otherwise
liable for reimbursement of drawings, or (iii) under Hedge Agreements.
Contingent Obligations shall include, without limitation, (a) the direct or
indirect guaranty, endorsement (otherwise than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse or sale with
recourse by such Person of the obligation of another, (b) the obligation to make
take-or-pay or similar payments if required regardless of non-performance by any
other party or parties to an agreement, and (c) any liability of such Person for
the obligation of another through any agreement (contingent or otherwise) (X) to
purchase, repurchase or otherwise acquire such obligation or any security
therefor, or to provide funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases, capital contributions
or otherwise) or (Y) to maintain the solvency or any balance sheet item, level
of income or financial condition of another if, in the case of any agreement
described under subclauses (X) or (Y) of this sentence, the primary purpose or
intent thereof is as described in the preceding sentence. The amount of any
Contingent Obligation shall be equal to the amount of the obligation so
guaranteed or otherwise supported or, if less, the amount to which such
Contingent Obligation is specifically limited.
13
"Contractual Obligation", as applied to any Person, means any provision of
any Security issued by that Person or of any indenture, mortgage, deed of trust,
contract, undertaking, agreement or other instrument relating to the issuance of
such Security to which that Person is a party or by which it or any of its
properties is bound or to which it or any of its properties is subject.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement, futures contract, option contract, synthetic cap or other similar
agreement or arrangement to which Parent or any of its Subsidiaries is a party.
"Custom Foods" means Custom Food Products, Inc., a California corporation.
"Declined Tranche B Prepayment Amount" has the meaning assigned to that
term in subsection 2.4B(iv)(c).
"Declining Tranche B Lenders" has the meaning assigned to that term in
subsection 2.4B(iv)(c).
"Deposit Account" means a demand, time, savings, passbook or like account
with a bank, savings and loan association, credit union or like organization,
other than an account evidenced by a negotiable certificate of deposit.
"Distribution Transaction" means the declaration and payment by Borrower
of a distribution to Parent and the subsequent declaration and payment of a
distribution by Parent, in an aggregate amount not exceeding $16,000,000, on and
with respect to Parent's Class A (Voting and Nonvoting) Common Stock.
"Dollars" and the sign "$" mean the lawful money of the United States of
America.
"Eligible Accounts Receivable" means, at any date of determination, except
as hereinafter provided in this definition, the face amount of all Accounts
Receivable of any Operating Subsidiary payable in Dollars, reduced (without
duplication for the amounts referred to in clauses (i) through (xv) below) by
the amount of all returns, discounts, claims, credits, charges or other
allowances. Unless otherwise approved in writing by Administrative Agent, no
Account Receivable shall be deemed to be an Eligible Account Receivable if:
(i) it arises out of a sale made by any Operating Subsidiary to an
Affiliate (other than a Subsidiary of Borrower) unless made on an arms
length basis in accordance with past practice; or
(ii) the Account Receivable is unpaid more than 75 days after its
due date or more than 105 days after the date of the original invoice with
respect thereto; or
14
(iii) it is from the same account debtor (or any Affiliate thereof)
and 50% or more, in face amount, of all Accounts Receivable from such
account debtor (or any Affiliate thereof) are ineligible pursuant to
clause (ii) above; or
(iv) it is from (a) an account debtor (other than a Major Customer)
the aggregate Accounts Receivable of which, at the date of determination,
exceed 10% of the aggregate amount of all Accounts Receivable at such date
of determination or (b) any Major Customer or any Affiliate thereof the
aggregate Accounts Receivable of which, at the date of determination,
exceed 40% of the aggregate amount of all Accounts Receivable at such date
of determination, but in each case under (a) or (b) only to the extent of
such excess; or
(v) the account debtor has disputed in writing its liability on, or
the account debtor has made any claim with respect to, such Account
Receivable or any other Account Receivable due from such account debtor to
the applicable Operating Subsidiary, which has not been resolved within 90
days, to the extent of the amount of such dispute or claim; or
(vi) the account debtor has commenced a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or made
an assignment for the benefit of creditors, or if a decree or order for
relief has been entered by a court having jurisdiction over the account
debtor in an involuntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or if any other petition or other
application for relief under the federal bankruptcy laws has been filed by
or against the account debtor, or if the account debtor has filed a
certificate of dissolution under applicable law or shall be liquidated,
dissolved or wound-up, or shall authorize or commence any action or
proceeding for dissolution, winding-up or liquidation, or if the account
debtor has failed, suspended business, declared itself to be insolvent, is
generally not paying its debts as they become due or has consented to or
suffered a receiver, trustee, liquidator or custodian to be appointed for
it or for all or a significant portion of its assets or affairs; unless
(a) the payment of Accounts Receivable from such account debtor is secured
in a manner reasonably satisfactory to Administrative Agent and
Administrative Agent does not notify Borrower in writing within 10 days of
receipt of notice with respect thereto that such security is not
reasonably satisfactory or (b) the Account Receivable from such account
debtor arises subsequent to a decree or order for relief with respect to
such account debtor under the federal bankruptcy laws as now or hereafter
in effect and Agent notifies Borrower in writing that it has determined
that the timely payment and collection of such Account Receivable will not
be impaired; or
(vii) the sale is to an account debtor outside of the continental
United States or Canada, unless (a) the account debtor thereon has
supplied Borrower or the applicable Operating Subsidiary with an
irrevocable letter of credit in form and substance reasonably satisfactory
to Administrative Agent, issued by a financial institution reasonably
satisfactory to Administrative Agent and which has been duly transferred
to Administrative Agent (together with sufficient documentation to permit
direct draws by ▇▇▇▇▇▇▇▇▇▇-
▇▇
tive Agent) and Administrative Agent does not notify Borrower in writing
within 10 days of receipt that such security is not reasonably
satisfactory or (b) payment of the Accounts Receivable is unconditionally
guarantied by an Affiliate of such account debtor located in the United
States or Canada (and, at Administrative Agent's reasonable request,
Administrative Agent shall have received reasonable assurance of the
enforceability of such guaranty) or secured by a letter of credit or other
arrangement that is, in each case, upon terms and conditions reasonably
satisfactory to Administrative Agent; or
(viii) Administrative Agent determines in its reasonable discretion
based upon standard practices in the banking industry consistent with past
determinations made by Administrative Agent pursuant to this Agreement
that collection of such Account Receivable is unlikely or that such
Account Receivable may not be paid by reason of the account debtor's
financial inability to pay and notifies Borrower in writing to such
effect; or
(ix) the account debtor is the United States of America or any
department, agency or instrumentality thereof, unless the applicable
Operating Subsidiary duly assigns its rights to payment of such Account
Receivable to Agent pursuant to the Assignment of Claims Act of 1940, as
amended (31 U.S.C. ss.3727 et seq.); or
(x) the goods giving rise to such Account Receivable have not been
shipped to the account debtor or the services giving rise to such Account
Receivable have not been performed by the applicable Operating Subsidiary
and accepted by the account debtor or the Account Receivable otherwise
does not represent a final sale or is on a guarantied sale,
sale-and-return, sale on approval or consignment basis or made pursuant to
any other written agreement providing for repurchase or return; or
(xi) Administrative Agent does not have a valid and perfected First
Priority security interest in such Account Receivable or the Account
Receivable does not otherwise materially conform to the representations
and warranties contained in this Agreement or the other Loan Documents; or
(xii) the Accounts Receivable arises out of a service contract or
other contract other than with respect to Inventory sold to an account
debtor or pursuant to co-packing or other commodity processing
arrangements; or
(xiii) any Accounts Receivable against which the account debtor or
any Person obligated to make payment thereon asserts in writing any
defense, offset, counterclaim, or other right to avoid or reduce the
liability represented by such Accounts Receivable, other than discounts in
the ordinary course of business (but only to the extent thereof); or
(xiv) the Account Receivable is not based upon an actual and bona
fide sale and shipment or delivery of goods to customers, or upon the
provision of services to
16
customers, in either case made by the Operating Subsidiaries in the
ordinary course of business; or
(xv) the Account Receivable does not meet such additional standards
of eligibility for Eligible Accounts Receivable as shall be imposed by
Administrative Agent in its reasonable discretion based upon standard
practices in the banking industry consistent with past determinations made
by Administrative Agent pursuant to this Agreement and of which Borrower
has been notified in advance in writing.
"Eligible Assignee" means (A) (i) a commercial bank organized under the
laws of the United States or any state thereof; (ii) a savings and loan
association or savings bank organized under the laws of the United States or any
state thereof; (iii) a commercial bank organized under the laws of any other
country or a political subdivision thereof; provided that (x) such bank is
acting through a branch or agency located in the United States or (y) such bank
is organized under the laws of a country that is a member of the Organization
for Economic Cooperation and Development or a political subdivision of such
country; and (iv) any other entity which is an "accredited investor" (as defined
in Regulation D under the Securities Act) which extends credit or buys loans as
one of its businesses including, but not limited to, insurance companies, mutual
funds and lease financing companies; and (B) any Lender and any Affiliate of any
Lender; provided that no Affiliate of Borrower shall be an Eligible Assignee.
"Eligible Inventory" means, as at any date of determination, the Dollar
value valued at the lower of cost or market value of all of each Operating
Subsidiary's Inventory, excluding the following:
(a) any Inventory which is not owned solely by an Operating
Subsidiary free and clear of all Liens except the security interests
granted pursuant to the Collateral Documents;
(b) any Inventory which is (i) not located on an Operating
Subsidiary's owned premises or (ii) not located on premises leased by an
Operating Subsidiary with respect to which a Landlord's Consent and
Estoppel has been obtained, or (iii) is in transit to a location other
than an Operating Subsidiary's owned premises or premises leased by an
Operating Subsidiary with respect to which a Landlord's Consent and
Estoppel has been obtained, or (iv) in any case, not located in the United
States of America or other locations approved by Administrative Agent;
(c) any Inventory which is on lease or consignment from any Person
to an Operating Subsidiary;
(d) any Inventory which is packaging material or supplies;
(e) any Inventory which is obsolete, damaged, unsalable or otherwise
unfit for its intended use or sale; and
17
(f) to the extent not already excluded from or reflected in the
value of Eligible Inventory, any reserves required by the Administrative
Agent in its discretion for special order goods, market value declines and
▇▇▇▇-and-hold (deferred shipment) sales in accordance with standard
practices in the banking industry consistent, as applicable, with past
determinations made by Administrative Agent pursuant to this Agreement for
the evaluation of Inventory.
"Employee Benefit Plan" means any "employee benefit plan" as defined in
Section 3(3) of ERISA which is or was maintained or contributed to by Borrower,
any of its Subsidiaries or any of their respective ERISA Affiliates.
"Environmental Claim" means any investigation, notice, notice of
violation, claim, action, suit, proceeding, demand, abatement order or other
order or directive (conditional or otherwise), by any governmental authority or
any other Person, arising (i) pursuant to or in connection with any actual or
alleged violation of any Environmental Law, (ii) in connection with any
Hazardous Materials or any actual or alleged Hazardous Materials Activity, or
(iii) in connection with any actual or alleged damage, injury, threat or harm to
health, safety, natural resources or the environment.
"Environmental Laws" means any and all current or future statutes,
ordinances, orders, rules, regulations, guidance documents, judgments,
Governmental Authorizations, or any other requirements of governmental
authorities relating to (i) environmental matters, including those relating to
any Hazardous Materials Activity, (ii) the generation, use, storage,
transportation or disposal of Hazardous Materials, or (iii) occupational safety
and health, industrial hygiene, land use or the protection of human, plant or
animal health or welfare, in any manner applicable to Parent or any of its
Subsidiaries or any Facility, including the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. ss. 9601 et seq.), the
Hazardous Materials Transportation Act (49 U.S.C. ss. 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), the Federal
Water Pollution Control Act (33 U.S.C. ss. 1251 et seq.), the Clean Air Act (42
U.S.C. ss. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. ss. 2601
et seq.), the Federal Insec- ticide, Fungicide and Rodenticide Act (7 U.S.C.
ss.136 et seq.), the Occupational Safety and Health Act (29 U.S.C. ss. 651 et
seq.), the Oil Pollution Act (33 U.S.C. ss. 2701 et seq) and the Emergency
Planning and Community Right-to-Know Act (42 U.S.C. ss. 11001 et seq.), each as
amended or supplemented, any analogous present or future state or local statutes
or laws, and any regulations promulgated pursuant to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, the rules and regulations promulgated thereunder from
time to time in effect, and any successor thereto.
"ERISA Affiliate" means, as applied to any Person, (i) any corporation
which is a member of a controlled group of corporations within the meaning of
Section 414(b) of the Internal Revenue Code of which that Person is a member;
(ii) any trade or business (whether or not incorporated) which is a member of a
group of trades or businesses under common control within the meaning of Section
414(c) of the Internal Revenue Code of which that Person is a
18
member; and (iii) any member of an affiliated service group within the meaning
of Section 414(m) or (o) of the Internal Revenue Code of which that Person, any
corporation described in clause (i) above or any trade or business described in
clause (ii) above is a member. Any former ERISA Affiliate of Parent or any of
its Subsidiaries shall continue to be considered an ERISA Affiliate of Parent or
such Subsidiary within the meaning of this definition with respect to the period
such entity was an ERISA Affiliate of Parent or such Subsidiary and with respect
to liabilities arising after such period for which Parent or such Subsidiary
could be liable under the Internal Revenue Code or ERISA.
"ERISA Event" means (i) a "reportable event" within the meaning of Section
4043 of ERISA and the regulations issued thereunder with respect to any Pension
Plan (excluding those for which the provision for 30-day notice to the PBGC has
been waived by regulation); (ii) the failure to meet the minimum funding
standard of Section 412 of the Internal Revenue Code with respect to any Pension
Plan (whether or not waived in accordance with Section 412(d) of the Internal
Revenue Code) or the failure to make by its due date a required installment
under Section 412(m) of the Internal Revenue Code with respect to any Pension
Plan or the failure to make any required contribution to a Multiemployer Plan;
(iii) the provision by the administrator of any Pension Plan pursuant to Section
4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress
termination described in Section 4041(c) of ERISA; (iv) the withdrawal by
Parent, any of its Subsidiaries or any of their respective ERISA Affiliates from
any Pension Plan with two or more contributing sponsors or the termination of
any such Pension Plan resulting in liability pursuant to Section 4063 or 4064 of
ERISA; (v) the institution by the PBGC of proceedings to terminate any Pension
Plan, or the occurrence of any event or condition which might constitute grounds
under ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; (vi) the imposition of liability on Parent, any of
its Subsidiaries or any of their respective ERISA Affiliates pursuant to Section
4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of
ERISA; (vii) the withdrawal of Parent, any of its Subsidiaries or any of their
respective ERISA Affiliates in a complete or partial withdrawal (within the
meaning of Sections 4203 and 4205 of ERISA) from any Multi-employer Plan if
there is any potential liability therefor, or the receipt by Parent, any of its
Subsidiaries or any of their respective ERISA Affiliates of notice from any
Multiemployer Plan that it is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA, or that it intends to terminate or has terminated
under Section 4041A or 4042 of ERISA; (viii) the occurrence of an act or
omission which could give rise to the imposition on Parent, any of its
Subsidiaries or any of their respective ERISA Affiliates of fines, penalties,
taxes or related charges under Chapter 43 of the Internal Revenue Code or under
Section 409, Section 502(c), (i) or (l), or Section 4071 of ERISA in respect of
any Employee Benefit Plan; (ix) the assertion of a material claim (other than
routine claims for benefits) against any Employee Benefit Plan other than a
Multiemployer Plan or the assets thereof, or against Parent, any of its
Subsidiaries or any of their respective ERISA Affiliates in connection with any
Employee Benefit Plan; (x) receipt from the Internal Revenue Service of notice
of the failure of any Pension Plan (or any other Employee Benefit Plan intended
to be qualified under Section 401(a) of the Internal Revenue Code) to qualify
under Section 401(a) of the Internal Revenue Code, or the failure of any trust
forming part of any Pension Plan to qualify for exemption from taxation under
Section 501(a) of the Internal Revenue Code; or
19
(xi) the imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the
Internal Revenue Code or pursuant to ERISA with respect to any Pension Plan.
"Escrow Funds" shall mean any and all Cash held in escrow as provided in
the Acquisition Agreement.
"Estimated Tranche B Prepayment Amount" has the meaning assigned to that
term in subsection 2.4B(iv)(c).
"Eurodollar Rate Loans" means Loans bearing interest at rates determined
by reference to the Adjusted Eurodollar Rate as provided in subsection 2.2A.
"Event of Default" means each of the events set forth in Section 8.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor statute.
"Facilities" means any and all real property (including, without
limitation, all buildings, fixtures or other improvements located thereon) now,
hereafter or heretofore owned, leased, operated or used by Parent or any of its
Subsidiaries or any of their respective predecessors.
"Federal Funds Effective Rate" means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by Administrative Agent from three Federal funds brokers
of recognized standing selected by Administrative Agent.
"Financial Plan" has the meaning assigned to that term in subsection
6.1(xiii).
"Financial Statements" has the meaning assigned to that term in subsection
4.1L.
"First Priority" means, with respect to any Lien purported to be created
in any Collateral pursuant to any Collateral Document, that such Lien is the
most senior Lien (other than Permitted Liens to the extent not perfected by
filing of any UCC financing statements) to which such Collateral is subject.
"Fiscal Quarter" means a fiscal quarter of any Fiscal Year.
"Fiscal Year" means the fiscal year of Parent and its Subsidiaries ending
on September 30 (provided that at Borrower's election the Fiscal Year of Parent
and its Subsidiaries may be changed on or prior to September 30, 1997 to any
date from December 31 through March 31 of each calendar year) except that, in
the case of Quality Foods, L.P., QF Management
20
and QF Acquisition for any period prior to the Closing Date, "Fiscal Year" means
the fiscal year of such Persons ending on December 31 of each calendar year. For
purposes of this Agreement, any particular Fiscal Year shall be designated by
reference to the calendar year in which such Fiscal Year ends.
"Flood Hazard Property" means a Mortgaged Property located in an area
designated by the Federal Emergency Management Agency as having special flood or
mud slide hazards.
"Funding and Payment Office" means (i) the office of Administrative Agent
and Swing Line Lender located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ or (ii)
such other office of Administrative Agent and Swing Line Lender as may from time
to time hereafter be designated as such in a written notice delivered by
Administrative Agent and Swing Line Lender to Borrower and each Lender.
"Funding Date" means the date of the funding of a Loan.
"GAAP" means, subject to the limitations on the application thereof set
forth in subsection 1.2, generally accepted accounting principles set forth in
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, in each case as the same are applicable to the circumstances as of
the date of determination.
"Governmental Acts" has the meaning assigned to that term in subsection
3.5A.
"Governmental Authorization" means any permit, license, authorization,
plan, directive, consent order or consent decree of or from any federal, state
or local governmental authority, agency or court.
"Guaranties" means the Parent Guaranty and the Subsidiary Guaranty.
"Hazardous Materials" means (i) any chemical, material or substance at any
time defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous waste", acutely
hazardous waste, "radioactive waste", "biohazardous waste", "pollutant", "toxic
pollutant", "contaminant", "restricted hazardous waste", "infectious waste",
"toxic substances", or any other term or expression intended to define, list or
classify substances by reason of properties harmful to health, safety or the
indoor or outdoor environment (including harmful properties such as
ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive
toxicity, "TCLP toxicity" or "EP toxicity" or words of similar import under any
applicable Environmental Laws); (ii) any oil, petroleum, petroleum fraction or
petroleum derived substance; (iii) any drilling fluids, produced waters and
other wastes associated with the exploration, development or production of crude
oil, natural gas or geothermal resources; (iv) any flammable substances or
explosives; (v) any radioactive materials; (vi) any asbestos-containing
materials; (vii) urea formaldehyde foam insulation;
21
(viii) electrical equipment which contains any oil or dielectric fluid
containing polychlorinated biphenyls; (ix) pesticides; and (x) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any governmental authority or which may or could pose a hazard to
the health and safety of the owners, occupants or any Persons in the vicinity of
any Facility or to the indoor or outdoor environment.
"Hazardous Materials Activity" means any past, current, proposed or
threatened activity, event or occurrence involving any Hazardous Materials,
including the use, manufacture, possession, storage, holding, presence,
existence, location, Release, threatened Release, discharge, placement,
generation, transportation, processing, construction, treatment, abatement,
removal, remediation, disposal, disposition or handling of any Hazardous
Materials, and any corrective action or response action with respect to any of
the foregoing.
"Hedge Agreement" means an Interest Rate Agreement or a Currency Agreement
designed to hedge against fluctuations in interest rates or currency values,
respectively.
"Indebtedness", as applied to any Person, means (i) all indebtedness for
borrowed money, (ii) that portion of obligations of such Person as lessee under
Capital Leases that is properly classified as a liability on a balance sheet in
conformity with GAAP, (iii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed money,
(iv) any obligation owed for all or any part of the deferred purchase price of
property or services (excluding any such obligations incurred under ERISA),
which purchase price is (a) due more than six months from the date of incurrence
of the obligation in respect thereof or (b) evidenced by a note or similar
written instrument, and (v) all indebtedness secured by any Lien on any property
or asset owned or held by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is nonrecourse to the
credit of that Person. Obligations under Interest Rate Agreements and Currency
Agreements shall constitute (X) in the case of Hedge Agreements, Contingent
Obligations and (Y) in all other cases, Investments, and in neither case
constitute Indebtedness.
"Indemnitee" has the meaning assigned to that term in subsection 10.3.
"Initial Public Offering" means a public offering of the capital stock of
Parent that first results in the capital stock of Parent becoming listed for
trading on the New York Stock Exchange, the American Stock Exchange or the
NASDAQ National Market and, if the Permitted Securities Issuance Prepayment Date
has not occurred, results in gross proceeds to Parent of not less than
$30,000,000.
"Intellectual Property" means all patents, trademarks, tradenames,
copyrights, technology, know-how and processes used in or necessary for the
conduct of the business of Borrower and its Subsidiaries as currently conducted
that are material to the condition (financial or otherwise), business or
operations of Borrower and its Subsidiaries, taken as a whole.
"Interest Payment Date" means (i) with respect to any Base Rate Loan, each
March 31, June 30, September 30 and December 31 of each year, commencing on
March 31, 1997, and
22
(ii) with respect to any Eurodollar Rate Loan, the last day of each Interest
Period applicable to such Loan; provided that in the case of each Interest
Period of longer than three months "Interest Payment Date" shall also include
each date that is three months, or an integral multiple thereof, after the
commencement of such Interest Period.
"Interest Period" has the meaning assigned to that term in subsection
2.2B.
"Interest Rate Agreement" means any interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement or other similar agreement or
arrangement to which Borrower or any of its Subsidiaries is a party.
"Interest Rate Determination Date" means, with respect to any Interest
Period, the second Business Day prior to the first day of such Interest Period.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter, and any successor
statute.
"Inventory" means, with respect to any Person as of any date of
determination, all goods, merchandise and other personal property which are then
held by such Person for sale or lease, including raw materials and work in
process.
"Investment" means (i) any direct or indirect purchase or other
acquisition by Parent or any Subsidiary of Parent of, or of a beneficial
interest in, any Securities of any other Person (including any Subsidiary of
Parent), (ii) any direct or indirect redemption, retirement, purchase or other
acquisition for value, by Parent or any Subsidiary of Parent from any Person
other than Parent or any of its Subsidiaries, of any equity Securities of such
Loan Party, (iii) any direct or indirect loan, advance (other than advances to
employees for moving, entertainment and travel expenses, drawing accounts and
similar expenditures in the ordinary course of business) or capital contribution
by Parent or any of its Subsidiaries to, or any other investment by Parent or
any of its Subsidiaries in, any other Person, including all indebtedness and
accounts receivable from that other Person that are not current assets or did
not arise from sales to that other Person in the ordinary course of business, or
(iv) Interest Rate Agreements or Currency Agreements not constituting Hedge
Agreements. The amount of any Investment shall be the original cost of such
Investment plus the cost of all additions thereto, without any adjustments for
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment.
"IP Collateral" means, collectively, the Collateral under the Subsidiary
Trademark Security Agreements and the Subsidiary Patent Security Agreements.
"IRB Debt" means the Indebtedness evidenced by the Taxable Development
Revenue Bonds, 1995 Series D issued by PEDFA on December 27, 1995 in the
original aggregate principal amount of $4,400,000.
"IRB Letter of Credit" means the PNC Letter of Credit attached hereto as
Schedule 9.2 and any replacement letter of credit issued by the Issuing Lender
as set forth in subsection 9.2A.
23
"IRB Reimbursement Advance" means any amounts paid or payable by the
Issuing Lender under the IRB Reimbursement Agreement.
"IRB Reimbursement Agreement" means the Participation and Reimbursement
Agreement and the Pledge, Security and Indemnification Agreement, in each case,
dated as of December 30, 1996 between NationsBank and PNC Bank, National
Association, substantially in the form of Exhibit XXIX annexed hereto, as such
Participation and Reimbursement Agreement or Pledge, Security and
Indemnification Agreement may be amended, supplemented or otherwise modified
from time to time, together with the any replacement agreements having
substantially the same terms.
"IRB Trust Indenture" means that certain Trust Indenture dated as of
December 1, 1995 between PEDFA and Mellon Bank, N.A., as in effect on the
Closing Date.
"Issuing Lender" means NationsBank in its capacity as the issuer of a
Letter of Credit or in its capacity as the "Participation Bank" under the IRB
Reimbursement Agreement, as applicable.
"Joint Venture" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided
that in no event shall any corporate Subsidiary of any Person be considered to
be a Joint Venture to which such Person is a party.
"Landlord Consent and Estoppel" means, with respect to any Leasehold
Property, a letter, certificate or other instrument in writing from the lessor
under the related lease, substantially in the form of either Exhibit XXIIIA or
Exhibit XXIIIB.
"Leasehold Property" means any leasehold interest of any Loan Party as
lessee under any lease of real property, other than any such leasehold interest
designated from time to time by Administrative Agent in its sole discretion as
not being required to be included in the Collateral.
"Lender" and "Lenders" means the persons identified as "Lenders" and
listed on the signature pages of this Agreement, together with their successors
and permitted assigns pursuant to subsection 10.1, and the term "Lenders" shall
include Swing Line Lender unless the context otherwise requires; provided that
the term "Lenders", when used in the context of a particular Commitment, shall
mean Lenders having that Commitment.
"Letter of Credit" or "Letters of Credit" means the Revolving Letters of
Credit and the Acquisition Letter of Credit.
"Level" means Level I, Level II or Level III, as applicable.
"Level I" means the existence, as of any Measurement Date, of a Leverage
Ratio for the twelve consecutive month period ending on the last day of the
period covered by the financial statements relating to such Measurement Date of
greater than or equal to 3.70 to 1.00; provided
24
that for purposes of determining the Applicable Margin for Term Loans A after
the Permitted Securities Issuance Prepayment Date, Level I means the existence
of a Leverage Ratio of greater than or equal to 4.40 to 1.00.
"Level II" means the existence, as of any Measurement Date, of a Leverage
Ratio for the twelve consecutive month period ending on the last day of the
period covered by the financial statements relating to such Measurement Date of
less than 3.70 to 1.00 but greater than or equal to 3.00 to 1.00; provided that
for purposes of determining the Applicable Margin for Term Loans A after the
Permitted Securities Issuance Prepayment Date, Level II means the existence of a
Leverage Ratio of less than 4.40 to 1.00 but greater than or equal to 3.80 to
1.00.
"Level III" means the existence, as of any Measurement Date, of a Leverage
Ratio for the twelve consecutive month period ending on the last day of the
period covered by the financial statements relating to such Measurement Date of
less than 3.00 to 1.00 but greater than or equal to 2.30 to 1.00; provided that
for purposes of determining the Applicable Margin for Term Loans A after the
Permitted Securities Issuance Prepayment Date, Level III means the existence of
a Leverage Ratio of less than 3.80 to 1.00 but greater than or equal to 3.00 to
1.00.
"Level IV" means the existence, as of any Measurement Date, of a Leverage
Ratio for the twelve consecutive month period ending on the last day of the
twelve consecutive month period ending on the last day of the period covered by
the financial statements relating to such measurement Date of less than 2.30 to
1.00; provided that for purposes of determining the Applicable Margin for Term
Loans A after the Permitted Securities Issuance Prepayment Date, Level IV means
the existence of a Leverage Ratio of less than 3.00 to 1.00.
"Leverage Ratio" has the meaning set forth in subsection 7.6C.
"Lien" means any lien, mortgage, pledge, assignment, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest) and any option, trust or other preferential arrangement
having the practical effect of any of the foregoing.
"Loan" or "Loans" means one or more of the Term Loans A, Tranche A Term
Loans, Tranche B Term Loans, Revolving Loans or Swing Line Loans or any
combination thereof.
"Loan Documents" means this Agreement, the Notes and the Letters of Credit
(and any applications for, or reimbursement agreements or other documents or
certificates executed by Borrower in favor of Issuing Lender relating to the
Letters of Credit), the Guaranties, IRB Reimbursement Agreement and the
Collateral Documents.
"Loan Party" means each of Parent, Borrower and any of Borrower's
Subsidiaries from time to time executing a Loan Document, and "Loan Parties"
means all such Persons, collectively.
25
"Major Customer" means any of (i) Chef America, Inc., (ii) Sysco Corp.,
(iii) Arby's, together with all of its distributors, franchisees, buying
cooperatives and company-owned stores, and (iv) Subway, together with all of its
distributors, franchisees, buying cooperatives and company-owned stores.
"Management Consulting Agreement" means that certain Management Consulting
Agreement dated as of December 30, 1996, by and between First Atlantic Capital,
Ltd. and Parent.
"Margin Stock" has the meaning assigned to that term in Regulation U of
the Board of Governors of the Federal Reserve System as in effect from time to
time.
"Material Adverse Effect" means any change or changes, or effect or
effects, that have occurred or are threatened, and that individually or in the
aggregate could be reasonably likely to be materially adverse to (a) the
business, operations, assets, prospects or condition (financial or otherwise) of
Borrower individually or Parent together with its Subsidiaries taken as a whole,
or (b) the legality, validity, binding nature or enforceability against Borrower
of any Loan Document or any Material Contract to which it is a party or pursuant
to which it has any obligation.
"Material Contract" means any contract or other arrangement to which
Parent or any of its Subsidiaries is a party (other than the Loan Documents and
the Related Agreements), or by which any of their assets or properties are
bound, for which breach, nonperformance, cancellation or failure to renew would
have a Material Adverse Effect.
"Material Leasehold Property" means a Leasehold Property reasonably
determined by Administrative Agent to be of material value as Collateral or of
material importance to the operations of Borrower or any of its Subsidiaries;
provided, however that a Leasehold Property with respect to which the aggregate
amount of all rents payable during any one Fiscal Year does not exceed $350,000
shall not be a "Material Leasehold Property".
"Material Subsidiary" means Custom Foods, QF Acquisition and each
Subsidiary of Borrower or Parent now existing or hereafter acquired or formed by
Borrower which, on a consolidated basis for such Subsidiary and its
Subsidiaries, (i) for the most recent Fiscal Year accounted for more than 7.5%
of the consolidated revenues of Borrower and its Subsidiaries or (ii) as at the
end of such Fiscal Year, was the owner of more than 7.5% of the consolidated
assets of Borrower and its Subsidiaries.
"Maximum Exposure Under IRB Reimbursement Agreement" means, as of the date
of determination, the maximum exposure of Issuing Lender under the IRB
Reimbursement Agreement, including possible exposure for reimbursement payments,
interest, fees, expenses, increased costs and indemnification claims, all as
determined in good faith by Issuing Lender.
"Measurement Date" means the third Business Day following receipt by
Lenders of the financial statements required to be delivered pursuant to
subsection 6.1(ii) and the Compliance
26
Certificate required to be delivered by subsection 6.1(iv)(b) with respect to
the accounting period covered by such financial statements.
"MELF" means the Commonwealth of Pennsylvania, acting through the
Department of Commerce Machinery and Equipment Loan Fund.
"MELF Intercreditor Agreement" means the Intercreditor Agreement executed
and delivered by Administrative Agent and MELF on the Closing Date,
substantially in the form of Exhibit XXX annexed hereto, as such Intercreditor
Agreement may be amended, supplemented or otherwise modified from time to time.
"Mortgage" means (i) a security instrument (whether designated as a deed
of trust or a mortgage or by any similar title) executed and delivered by any
Loan Party, substantially in the form of Exhibit XXVII annexed hereto or in such
other form as may be approved by Administrative Agent in its sole discretion, in
each case with such changes thereto as may be recommended by Administrative
Agent's local counsel based on local laws or customary local mortgage or deed of
trust practices, or (ii) at Administrative Agent's option, in the case of an
Additional Mortgaged Property (as defined in subsection 6.9), an amendment to an
existing Mortgage, in form satisfactory to Administrative Agent, adding such
Additional Mortgaged Property to the Real Property Assets encumbered by such
existing Mortgage, in either case as such security instrument or amendment may
be amended, supplemented or otherwise modified from time to time. "Mortgages"
means all such instruments, including the Closing Date Mortgages (as defined in
subsection 4.1H) and any Additional Mortgages (as defined in subsection 6.9),
collectively.
"Mortgaged Property" means a Closing Date Mortgaged Property (as defined
in subsection 4.1H) or an Additional Mortgaged Property (as defined in
subsection 6.9).
"Multiemployer Plan" means any Employee Benefit Plan which is a
"multiemployer plan" as defined in Section 3(37) of ERISA.
"NationsBank" has the meaning assigned to that term in the introduction to
this Agreement.
"Net Asset Sale Proceeds" means, with respect to any Asset Sale, Cash
payments (including any Cash received by way of deferred payment pursuant to, or
by monetization of, a note receivable or otherwise, but only as and when so
received) received by Parent or any of its Subsidiaries from such Asset Sale,
net of any bona fide direct costs incurred in connection with such Asset Sale,
including without limitation (i) taxes reasonably estimated to be actually
payable in connection with such Asset Sale, (ii) payment of liabilities relating
to assets sold at the time of, or within 30 days after the date of such Asset
Sale, (iii) payment of the outstanding principal amount of, premium or penalty,
if any, and interest on any Indebtedness (other than the Loans, the Bridge
Financing or any Permitted Securities Issuance) that is secured by a Lien on the
stock or assets in question and that is required to be repaid under the terms
thereof as a result of such Asset Sale and (iv) reasonable and customary fees,
commissions and expenses, other costs paid
27
by Parent or any of its Subsidiaries to any Person (other than an Affiliate of
Parent) in connection with such Asset Sale.
"Net Insurance/Condemnation Proceeds" means any Cash payments or proceeds
received by Parent or any of its Subsidiaries (i) under any business
interruption or casualty insurance policy in respect of a covered loss
thereunder or (ii) as a result of the taking of any assets of Parent or any of
its Subsidiaries by any Person pursuant to the power of eminent domain,
condemnation or otherwise, or pursuant to a sale of any such assets to a
purchaser with such power under threat of such a taking, in each case net of any
actual and reasonable documented costs incurred by Parent or any of its
Subsidiaries in connection with the adjustment or settlement of any claims of
Parent or such Subsidiary in respect thereof.
"Net Pension Proceeds" has the meaning assigned to that term in subsec-
tion 2.4B(iii)(c).
"Net Securities Proceeds" means, with respect to any sale or issuance of
any Indebtedness or capital stock or other ownership or profit interest, any
securities convertible into or exchangeable for capital stock or other ownership
or profit interest or any warrants, rights, options or other securities to
acquire capital stock or other ownership or profit interest or any other
Securities by any Person, the aggregate amount of Cash received from time to
time (whether as initial consideration or through payment or disposition of
deferred consideration) by or on behalf of such Person in connection with such
transaction after deducting therefrom only (without duplication) (a) reasonable
and customary brokerage commissions, underwriting fees and discounts, legal
fees, finder's fees and other similar fees and commissions and (b) the amount of
taxes payable in connection with or as a result of such transaction, in each
case to the extent, but only to the extent, that the fees, commissions and other
amounts so deducted are, at the time of receipt of such Cash, actually paid to a
Person pursuant to an arm's-length transaction on commercially reasonable terms
to Parent and/or its Subsidiaries and are properly attributable to such
transaction or to the asset that is the subject thereof.
"Notes" means one or more of the Term Loans A Notes, Tranche A Term Notes,
Tranche B Term Notes, Revolving Notes or Swing Line Note or any combination
thereof.
"Notice of Borrowing" means a notice substantially in the form of Exhibit
I annexed hereto delivered by Borrower to Administrative Agent pursuant to
subsection 2.1B with respect to a proposed borrowing.
"Notice of Conversion/Continuation" means a notice substantially in the
form of Exhibit II annexed hereto delivered by Borrower to Administrative Agent
pursuant to subsection 2.2D with respect to a proposed conversion or
continuation of the applicable basis for determining the interest rate with
respect to the Loans specified therein.
"Notice of Issuance of Letter of Credit" means a notice substantially in
the form of Exhibit III annexed hereto delivered by Borrower to Administrative
Agent pursuant to subsection 3.1B(i) with respect to the proposed issuance of a
Letter of Credit.
28
"Obligations" means all obligations of every nature of each Loan Party
from time to time owed to Administrative Agent, Lenders or any of them under the
Loan Documents, whether for principal, interest, reimbursement of amounts drawn
under Letters of Credit or the IRB Reimbursement Agreement, fees, expenses,
indemnification or otherwise.
"Officers' Certificate" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its chairman of the board
(if an officer) or its president or one of its vice presidents and by its chief
financial officer or its treasurer; provided that every Officers' Certificate
with respect to the compliance with a condition precedent to the making of any
Loans hereunder shall include (i) a statement that the officer or officers
making or giving such Officers' Certificate have read such condition and any
definitions or other provisions contained in this Agreement relating thereto,
(ii) a statement that, in the opinion of the signers, they have made or have
caused to be made such examination or investigation as is necessary to enable
them to express an informed opinion as to whether or not such condition has been
complied with, and (iii) a statement as to whether, in the opinion of the
signers, such condition has been complied with; provided further that no officer
of any Loan Party executing and delivering an Officer's Certificate in good
faith shall be personally liable under such Officer's Certificate, except to the
extent of fraud, gross negligence or willful misconduct.
"Operating Lease" means, as applied to any Person, any lease (including,
without limitation, leases that may be terminated by the lessee at any time) of
any property (whether real, personal or mixed) that is not a Capital Lease other
than any such lease under which that Person is the lessor.
"Operating Subsidiary" means each Subsidiary of Parent other than
Borrower, and "Operating Subsidiaries" means all such Subsidiaries collectively.
"Parent" means CFP Group, Inc., a Delaware corporation.
"Parent Guaranty" means the Parent Guaranty executed and delivered by
Parent on the Closing Date, substantially in the form of Exhibit XXIV annexed
hereto, as such Parent Guaranty may thereafter be amended, supplemented or
otherwise modified from time to time.
"Parent Pledge Agreement" means the Parent Pledge Agreement executed and
delivered by Parent on the Closing Date, substantially in the form of Exhibit
XXV annexed hereto, as such Parent Pledge Agreement may thereafter be amended,
supplemented or otherwise modified from time to time.
"Parent Security Agreement" means the Parent Security Agreement executed
and delivered by Parent on the Closing Date, substantially in the form of
Exhibit XXVI annexed hereto, as such Parent Security Agreement may thereafter be
amended, supplemented or otherwise modified from time to time.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
29
"PEDFA" means the Pennsylvania Economic Development Financing Authority, a
public instrumentality and body corporate and politic of the Commonwealth of
Pennsylvania.
"Pension Plan" means any Employee Benefit Plan, other than a Multiemployer
Plan, which is subject to Section 412 of the Internal Revenue Code or Section
302 of ERISA.
"Permitted Encumbrances" means the following types of Liens (excluding any
such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal
Revenue Code or by ERISA, any such Lien relating to or imposed in connection
with any Environmental Claim, and any such Lien expressly prohibited by any
applicable terms of any of the Collateral Documents):
(i) Liens for taxes, assessments or governmental charges or claims
the payment of which is not, at the time, required by subsection 6.3;
(ii) statutory Liens of landlords, statutory Liens of banks and
rights of set-off, statutory Liens of carriers, warehousemen, mechanics,
repairmen, workmen and materialmen, and other Liens imposed by law, in
each case incurred in the ordinary course of business (a) for amounts not
yet overdue or (b) for amounts that are overdue and that (in the case of
any such amounts overdue for a period in excess of 5 days) are being
contested in good faith by appropriate proceedings, so long as (1) such
reserves or other appropriate provisions, if any, as shall be required by
GAAP shall have been made for any such contested amounts, and (2) in the
case of a Lien with respect to any portion of the Collateral, such contest
proceedings conclusively operate to stay the sale of any portion of the
Collateral on account of such Lien;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, trade contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money), so long as no foreclosure, sale or similar
proceedings have been commenced with respect to any portion of the
Collateral on account thereof;
(iv) any attachment or judgment Lien not constituting an Event of
Default under subsection 8.8;
(v) leases or subleases granted to third parties in accordance with
any applicable terms of the Collateral Documents and not interfering in
any material respect with the ordinary conduct of the business of Borrower
or any of its Subsidiaries or resulting in a material diminution in the
value of any Collateral as security for the Obligations;
(vi) easements, rights-of-way, restrictions, encroachments, and
other minor defects or irregularities in title, in each case which do not
and will not interfere in any material respect with the ordinary conduct
of the business of Borrower or any of its
30
Subsidiaries or result in a material diminution in the value of any
Collateral as security for the Obligations and exceptions to title set
forth on title reports delivered to Administrative Agent pursuant to
subsection 4.1H(v);
(vii) any (a) interest or title of a lessor or sublessor under any
lease, (b) restriction or encumbrance that the interest or title of such
lessor or sublessor may be subject to, or (c) subordination of the
interest of the lessee or sublessee under such lease to any restriction or
encumbrance referred to in the preceding clause (b), so long as the holder
of such restriction or encumbrance agrees to recognize the rights of such
lessee or sublessee under such lease;
(viii) Liens arising from filing UCC financing statements relating
solely to leases permitted by this Agreement;
(ix) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(x) any zoning or similar law or right reserved to or vested in any
governmental office or agency to control or regulate the use of any real
property;
(xi) Liens securing obligations (other than obligations representing
Indebtedness for borrowed money) under operating, reciprocal easement or
similar agreements entered into in the ordinary course of business of
Borrower and its Subsidiaries; and
(xii) licenses of patents, trademarks and other intellectual
property rights granted by Borrower or any of its Subsidiaries in the
ordinary course of business and not interfering in any material respect
with the ordinary conduct of the business of Borrower or such Subsidiary.
"Permitted Liens" means the Liens permitted pursuant to subsection 7.2A.
"Permitted Securities Issuance" means any of the following issued after
the Closing Date: (i) the Senior Guaranteed Notes; (ii) the Subordinated Notes;
and (iii) equity Securities of Parent, in each case, to the extent proceeds
thereof are applied in accordance with subsection 2.4B(iii)(e).
"Permitted Securities Issuance Prepayment Date" means the date on which
the Net Securities Proceeds from one or more Permitted Securities Issuances
results in a prepayment of all Term Loans other than Term Loans A.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, Joint Ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments (whether federal,
state or
31
local, domestic or foreign, and including political subdivisions thereof) and
agencies or other administrative or regulatory bodies thereof.
"PIDA Loan" means the loans in the aggregate principal amount of
$1,750,000 to be made by the Pennsylvania Industrial Development Authority after
the Closing Date, in form and substance reasonably satisfactory to
Administrative Agent and the Requisite Lenders.
"PIDC Loan" means the loans in the aggregate principal amount of at least
$750,000 to be made by the Pennsylvania Industrial Development Corporation after
the Closing Date, in form and substance reasonably satisfactory to
Administrative Agent and the Requisite Lenders.
"Pledged Collateral" means, collectively, the "Pledged Collateral" as
defined in the Parent Pledge Agreement, Borrower Pledge Agreement and the
Subsidiary Pledge Agreements.
"Potential Event of Default" means a condition or event that, after notice
or lapse of time or both, would constitute an Event of Default.
"Preferred Distribution Stock" means a new class of preferred stock of
Parent (having aggregate liquidation preference of $16,000,000) issued as a
dividend or distribution on and with respect to Parent's Class A (Voting and
Nonvoting) Common Stock, which preferred stock shall have rights, preferences
and designations reasonably acceptable to Administrative Agent (after
consultation with Lenders).
"Preferred Stock Redemption" means the redemption or repurchase by Parent
of up to 3,528 shares of the Series A Preferred Stock of Parent, in accordance
with Parent's Certificate of Incorporation on or prior to June 30, 1997 for an
aggregate amount not to exceed $1,225,000.
"Prepayment Date" has the meaning assigned to that term in subsection
2.4B(iv)(c).
"Prepayment Notice" has the meaning assigned to that term in subsection
2.4B(iv)(c).
"Prime Rate" means the rate that NationsBank announces from time to time
as its prime lending rate, as in effect from time to time. The Prime Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. NationsBank or any other Lender may make
commercial loans or other loans at rates of interest at, above or below the
Prime Rate.
"Pro Rata Share" means (i) with respect to all payments, computations and
other matters relating to the Term Loans A Commitment or Term Loans A of any
Lender, the percentage obtained by dividing (x) the outstanding principal amount
of the Term Loans A of that Lender by (y) the aggregate principal amount of all
Term Loans A of all Lenders, (ii) with respect to all payments, computations and
other matters relating to the Tranche A Term Loan Commitment or the Tranche A
Term Loan of any Lender, the percentage obtained by dividing (x) the Tranche A
Term Loan Exposure of that Lender by (y) the aggregate Tranche A Term Loan
Exposure of all Lenders, (iii) with respect to all payments, computations and
other matters
32
relating to the Tranche B Term Loan Commitment or the Tranche B Term Loan of any
Lender, the percentage obtained by dividing (x) the Tranche B Term Loan Exposure
of that Lender by (y) the aggregate Tranche B Term Loan Exposure of all Lenders,
(iv) with respect to all payments, computations and other matters relating to
the Revolving Loan Commitment or the Revolving Loans of any Lender or any
Letters of Credit issued or participations therein purchased by any Lender or
the IRB Reimbursement Agreement or any participations in any Swing Line Loans
purchased by any Lender, the percentage obtained by dividing (x) the Revolving
Loan Exposure of that Lender by (y) the aggregate Revolving Loan Exposure of all
Lenders, and (v) for all other purposes with respect to each Lender, the
percentage obtained by dividing (x) the sum of the Term Loans A of that Lender,
the Tranche A Term Loan Exposure of that Lender plus the Tranche B Term Loan
Exposure of that Lender plus the Revolving Loan Exposure of that Lender by (y)
the sum of the aggregate Term Loans A of all Lenders, Tranche A Term Loan
Exposure of all Lenders plus the aggregate Tranche B Term Loan Exposure of all
Lenders plus the aggregate Revolving Loan Exposure of all Lenders, in any such
case as the applicable percentage may be adjusted as a result of prepayments of
the Declined Tranche B Prepayment Amount pursuant to subsection 2.4B(iv)(c) or
by assignments permitted pursuant to subsection 10.1. The initial Pro Rata Share
of each Lender for purposes of each of clauses (i), (ii), (iii), (iv) and (v) of
the preceding sentence is set forth opposite the name of that Lender in Schedule
2.1 annexed hereto.
"PTO" means the United States Patent and Trademark Office or any successor
or substitute office in which filings are necessary or, in the opinion of
Administrative Agent, desirable in order to create or perfect Liens on any IP
Collateral.
"Purchase Price Adjustment Payments" means any and all Cash received by
Borrower or any other Loan Party pursuant to the purchase price adjustment
provisions of the Acquisition Agreement.
"QF Acquisition" means QF Acquisition Corp., a Delaware corporation.
"QF Management" means QF Management Corp., a Delaware corporation.
"Quality Foods, L.P." means Quality Foods, L.P., a Delaware limited
partnership.
"Real Property Asset" means, at any time of determination, any interest
then owned by any Loan Party in any real property.
"Recorded Leasehold Interest" means a Leasehold Property with respect to
which a Record Document (as hereinafter defined) has been recorded in all places
necessary or desirable, in Administrative Agent's reasonable judgment, to give
constructive notice of such Leasehold Property to third-party purchasers and
encumbrancers of the affected real property. For purposes of this definition,
the term "Record Document" means, with respect to any Leasehold Property, (a)
the lease evidencing such Leasehold Property or a memorandum thereof, executed
and acknowledged by the owner of the affected real property, as lessor, or (b)
if such Leasehold Property was acquired or subleased from the holder of a
Recorded Leasehold Interest, the
33
applicable assignment or sublease document, executed and acknowledged by such
holder, in each case in form sufficient to give such constructive notice upon
recordation and otherwise in form reasonably satisfactory to Administrative
Agent.
"Refunded Swing Line Loans" has the meaning assigned to that term in
subsection 2.1A(v).
"Register" has the meaning assigned to that term in subsection 2.1D.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System, as in effect from time to time.
"Reimbursement Date" has the meaning assigned to that term in subsection
3.3B.
"Related Agreements" means, collectively, the Acquisition Documents, the
Senior Guaranteed Note Documents, the Bridge Financing Documents, the
Subordinated Note Documents, the Seller Notes, the Stockholders Agreement, the
Additional Subordinated Note Documents and all material agreements entered into
in connection with the IRB Debt, PIDA Loan, PIDC Loan or any loan from MELF to
any Loan Party.
"Release" means any release, spill, emission, leaking, pumping, pouring,
injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of Hazardous Materials into the indoor or outdoor environment
(including, without limitation, the abandonment or disposal of any barrels,
containers or other closed receptacles containing any Hazardous Materials),
including the movement of any Hazardous Materials through the air, soil, surface
water or groundwater.
"Requisite Class Lenders" means, at any time of determination (i) for the
Class of Lenders having outstanding Term Loans A, Tranche A Term Loan Exposure
and/or Revolving Loan Exposure, Lenders having or holding more than 50% of the
sum of the aggregate outstanding Term Loans A of all Lenders plus the aggregate
Tranche A Term Loan Exposure of all Lenders plus the aggregate Revolving Loan
Exposure of all Lenders and (ii) for the Class of Lenders having Tranche B Term
Loan Exposure, Lenders having or holding more than 50% of the aggregate Tranche
B Term Loan Exposure of all Lenders.
"Requisite Lenders" means Lenders having or holding more than 66 2/3% of
the sum of the aggregate principal amount of outstanding Term Loans A, plus
Tranche A Term Loan Exposure of all Lenders plus the aggregate Tranche B Term
Loan Exposure of all Lenders plus the aggregate Revolving Loan Exposure of all
Lenders.
"Responsible Officer" means any senior financial officer and any other
officer of Parent, Borrower or any of their Subsidiaries with responsibility for
the administration of the relevant portion of this Agreement.
34
"Restricted Junior Payment" means (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of Borrower
or Parent now or hereafter outstanding, except a dividend payable solely in
shares of that class of stock to the holders of that class, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of stock of Borrower or
Parent now or hereafter outstanding, (iii) any payment made to retire, or to
obtain the surrender of, any outstanding warrants, options or other rights to
acquire shares of any class of stock of Borrower or Parent now or hereafter
outstanding, (iv) any payment or prepayment of principal of, premium, if any, or
interest on, or redemption, purchase, retirement, defeasance (including
in-substance or legal defeasance), sinking fund or similar payment with respect
to, the Bridge Financing, Seller Notes, any Senior Guaranteed Notes, any
Subordinated Notes and any Additional Subordinated Notes and (v) any payment
made to First Atlantic Capital, Ltd. or any of its Affiliates in respect of
management consulting or other services provided to Parent and/or its
Subsidiaries.
"Restructuring" means the following transactions, as a result of which
substantially all of the assets and liabilities of Quality Foods, L.P. will be
transferred to and assumed by QF Acquisition: (i) the merger of QF Management
with and into QF Acquisition with QF Acquisition being the surviving
corporation; (ii) the contribution by Parent and Borrower of all limited
partnership interests of Quality Foods, L.P. to QF Acquisition, as a result of
which QF Acquisition holds all of the limited partnership interests of Quality
Foods, L.P.; (iii) the transfer of all assets and liabilities of Quality Foods,
L.P. to QF Acquisitions; and (iv) the liquidation and dissolution of Quality
Foods, L.P., all on terms and conditions reasonably satisfactory to
Administrative Agent and Requisite Lenders.
"Revolving Letter of Credit" or "Revolving Letters of Credit" means the
Letters of Credit issued or to be issued by Issuing Lender for the account of
Borrower pursuant to subsection 3.1A(1) for the purpose of supporting
obligations of Borrower and or any of its Subsidiaries in the ordinary course of
business of Borrower or such Subsidiary.
"Revolving Letter of Credit Usage" means, as at any date of determination,
the sum of (i) the maximum aggregate amount which is or at any time thereafter
may become available for drawing under all Revolving Letters of Credit then
outstanding plus (ii) the aggregate amount of all drawings under Revolving
Letters of Credit honored by Issuing Lender and not theretofore reimbursed by
Borrower (including any such reimbursement out of the proceeds of Revolving
Loans pursuant to subsection 3.3B) plus (iii) the Maximum Exposure Under IRB
Reimbursement Agreement.
"Revolving Loan Commitment" means the commitment of a Lender to make
Revolving Loans to Borrower pursuant to subsection 2.1A(iv), and "Revolving Loan
Commitments" means such commitments of all Lenders in the aggregate.
"Revolving Loan Commitment Termination Date" means June 30, 2002.
"Revolving Loan Exposure" means, with respect to any Lender as of any date
of determination (i) prior to the termination of the Revolving Loan Commitments,
that Lender's
35
Revolving Loan Commitment and (ii) after the termination of the Revolving Loan
Commitments, the sum of (a) the aggregate outstanding principal amount of the
Revolving Loans of that Lender plus (b) in the case of Issuing Lender, the
aggregate Revolving Letter of Credit Usage (net of any participations purchased
by other Lenders in any Letter of Credit, the IRB Reimbursement Agreement or any
unreimbursed drawings under such Letter of Credit or IRB Reimbursement Advance)
plus (c) the aggregate amount of all participations purchased by that Lender in
any outstanding Letters of Credit, the IRB Reimbursement Agreement or any
unreimbursed drawings under any Letters of Credit or IRB Reimbursement Advance
plus (d) in the case of Swing Line Lender, the aggregate outstanding principal
amount of all Swing Line Loans (net of any participations therein purchased by
other Lenders) plus (e) the aggregate amount of all participations purchased by
that Lender in any outstanding Swing Line Loans.
"Revolving Loans" means the Loans made by Lenders to Borrower pursuant to
subsection 2.1A(iv).
"Revolving Notes" means (i) the promissory notes of Borrower issued
pursuant to subsection 2.1E(i)(c) on the Closing Date and (ii) any promissory
notes issued by Borrower pursuant to the last sentence of subsection 10.1B(i) in
connection with assignments of the Revolving Loan Commitments and Revolving
Loans of any Lenders, in each case substantially in the form of Exhibit VII
annexed hereto, as they may be amended, supplemented or otherwise modified from
time to time.
"Securities" means any stock, shares, partnership interests, voting trust
certificates, certificates of interest or participation in any profit-sharing
agreement or arrangement, options, warrants, bonds, debentures, notes, or other
evidences of indebtedness, secured or unsecured, convertible, subordinated or
otherwise, or in general any instruments commonly known as "securities" or any
certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, and any successor statute.
"Sellers" means all of the stockholders of QF Acquisition and QF
Management and all of the limited partners of Quality Foods, L.P.
"Seller Notes" means the promissory notes of Borrower in an aggregate
principal amount of up to $58,000,000 issued on the Closing Date to the Sellers
in connection with the Acquisition in the form delivered to Administrative Agent
and Lenders prior to their execution of this Agreement, as such Seller Notes may
be amended from time to time thereafter to the extent permitted under subsection
7.13B.
"Seller Notes Maturity Date" means January 3, 1997.
36
"Senior Guaranteed Note Documents" means the Senior Guaranteed Notes, the
indenture pursuant to which the Senior Guaranteed Notes will be issued, and all
other material agreements entered into in connection with the Senior Guaranteed
Notes (including only such terms and conditions as described in the draft
"Description of the Notes" section of the Preliminary Offering Memorandum
delivered to Lenders on or before the Closing Date pursuant to subsection 4.1E
or other terms and conditions no less favorable to Borrower and its Subsidiaries
or Lenders, taken as a whole, from those set forth therein), as any of such
Senior Guaranteed Note Documents may be amended from time to time to the extent
permitted under subsection 7.13B.
"Senior Guaranteed Notes" means the Senior Guaranteed Notes of Borrower in
an aggregate amount of not less than $110,000,000 (or, if the Distribution
Transaction is not effected, $94,000,000) issued pursuant to the Senior
Guaranteed Note Documents, as such Senior Guaranteed Notes may be amended from
time to time to the extent permitted under subsection 7.13B.
"Solvent" and "Solvency" mean, with respect to any Person on a particular
date, that on such date (a) the fair value of the property of such Person is
greater than the total amount of liabilities, including, without limitation,
contingent liabilities, of such Person, (b) the present fair saleable value of
the assets of such Person is not less than the amount that will be required to
pay the probable liability of such Person on its debts as they become absolute
or matured, (c) such Person does not intend to, and does not believe that it
will, incur debts and liabilities beyond such Person's ability to pay as such
debts and liabilities mature and (d) such Person is not engaged in a business or
a transaction, and is not about to engage in a business or a transaction, for
which such Person's property would constitute an unreasonably small capital.
"Stockholders Agreement" means the Stockholders Agreement executed and
delivered by Parent and certain of its stockholders on the Closing Date,
delivered to Administrative Agent and Lenders pursuant to subsection 4.1A, as
such Stockholders Agreement may thereafter be amended, supplemented or otherwise
modified from time to time to the extent permitted under subsection 7.13B.
"Subordinated Note Documents" means Subordinated Notes, the indenture
pursuant to which the Subordinated Notes will be issued, and all other material
agreements entered into in connection with the Subordinated Notes, as any of
such Subordinated Note Documents may be amended from time to time to the extent
permitted under subsection 7.13B.
"Subordinated Notes" means the promissory notes of Borrower issued after
the Closing Date in an aggregate principal amount of not less than the amount of
all outstanding Bridge Financing outstanding on the date of issuance of the
Subordinated Notes issued pursuant to documentation containing maturities,
amortization schedules, covenants, defaults, remedies, subordination provisions
and other material terms which taken as a whole are no less favorable to Lenders
or Borrower and its Subsidiaries taken as a whole than the corresponding terms
of the Bridge Financing being repaid with the proceeds thereof; provided that
(x) such Subordinated Notes shall not contain any provision granting holders
thereof the right to approve amendments
37
to or waiver of the Loan Documents and (y) such Subordinated Notes shall contain
a provision comparable to the "standstill" provisions of subsection
13.2(b)(b)(2) of the note purchase agreement for the Bridge Financing except
that the standstill period provided thereby shall be no less than twenty-five
days.
"Subsidiary" of any Person at any time shall mean (i) any corporation,
joint venture, limited liability company, trust, estate or other entity of which
50% or more (by number of shares or number of votes) of the outstanding Voting
Stock is at such time owned directly or indirectly by such Person or one or more
of such Person's Subsidiaries, or any partnership of which such Person is a
general partner or of which 50% or more of the partnership interests is at the
time directly or indirectly owned by such Person or one or more of such Person's
Subsidiaries, or (ii) any corporation, trust, partnership or other entity which
is controlled or capable of being controlled by such Person and/or one or more
of such Person's Subsidiaries.
"Subsidiary Guarantor" means any Subsidiary of Borrower that executes and
delivers a counterpart of the Subsidiary Guaranty on the Closing Date or from
time to time thereafter pursuant to subsection 6.8.
"Subsidiary Guaranty" means the Subsidiary Guaranty executed and delivered
by existing Subsidiaries of Borrower on the Closing Date and to be executed and
delivered by additional Subsidiaries of Borrower from time to time thereafter in
accordance with subsection 6.8, substantially in the form of Exhibit XIX annexed
hereto, as such Subsidiary Guaranty may hereafter be amended, supplemented or
otherwise modified from time to time.
"Subsidiary Pledge Agreement" means each Subsidiary Pledge Agreement
executed and delivered by an existing Subsidiary Guarantor on the Closing Date
(if any) or executed and delivered by any additional Subsidiary Guarantor from
time to time thereafter in accordance with subsection 6.8, in each case
substantially in the form of Exhibit XX annexed hereto, as such Subsidiary
Pledge Agreement may be amended, supplemented or otherwise modified from time to
time, and "Subsidiary Pledge Agreements" means all such Subsidiary Pledge
Agreements, collectively.
"Subsidiary Security Agreement" means each Subsidiary Security Agreement
executed and delivered by an existing Subsidiary Guarantor on the Closing Date
or executed and delivered by any additional Subsidiary Guarantor from time to
time thereafter in accordance with subsection 6.8, in each case substantially in
the form of Exhibit XXI annexed hereto, as such Subsidiary Security Agreement
may be amended, supplemented or
38
otherwise modified from time to time, and "Subsidiary Security Agreements" means
all such Subsidiary Security Agreements, collectively.
"Subsidiary Patent Security Agreement" means each Subsidiary Patent
Security Agreement executed and delivered by an existing Subsidiary Guarantor on
the Closing Date or executed and delivered by any additional Subsidiary
Guarantor from time to time thereafter in accordance with subsection 6.8, in
each case substantially in the form of Exhibit XXII annexed hereto, as such
Subsidiary Patent Security Agreement may be amended, supplemented or otherwise
modified from time to time, and "Subsidiary Patent Security Agreements" means
all such Subsidiary Patent Security Agreements, collectively.
"Subsidiary Trademark Security Agreement" means each Subsidiary Trademark
Security Agreement executed and delivered by an existing Subsidiary Guarantor on
the Closing Date or executed and delivered by an additional Subsidiary Guarantor
from time to time thereafter in accordance with subsection 6.8, in each case
substantially in the form of Exhibit XXIII annexed hereto, as such Subsidiary
Trademark Security Agreement ▇▇▇ be amended, supplemented or otherwise modified
from time to time, and "Subsidiary Trademark Security Agreements" means all such
Subsidiary Trademark Security Agreements, collectively.
"Supplemental Collateral Agent" has the meaning assigned to that term in
subsection 9.1B.
"Swing Line Lender" means NationsBank, or any Person serving as a
successor Administrative Agent hereunder, in its capacity as Swing Line Lender
hereunder.
"Swing Line Loan Commitment" means the commitment of Swing Line Lender to
make Swing Line Loans to Borrower pursuant to subsection 2.1A(v).
"Swing Line Loans" means the Loans made by Swing Line Lender to Borrower
pursuant to subsection 2.1A(v).
"Swing Line Note" means (i) the promissory note of Borrower issued
pursuant to subsection 2.1E(ii) on the Closing Date and (ii) any promissory note
issued by Borrower to any successor Administrative Agent and Swing Line Lender
pursuant to the last sentence of subsection 9.5B, in each case substantially in
the form of Exhibit VIII annexed hereto, as it may be amended, supplemented or
otherwise modified from time to time.
"Tax" or "Taxes" means any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever called, by
whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or
assessed; provided that "Tax on the overall net income" of a Person shall be
construed as a reference to a tax imposed by the jurisdiction in which that
Person is organized or in which that Person's principal office (and/or, in the
case of a Lender, its lending office) is located or in which that Person
(and/or, in the case of a Lender, its lending office) is deemed to be doing
business on all or part of the net income, profits or gains (whether worldwide,
or only insofar as such income, profits or gains are considered to arise in or
to relate to a particular jurisdiction, or otherwise) of that Person (and/or, in
the case of a Lender, its lending office), including a franchise tax that is
measured by net income.
"Term Loans" means, collectively, Term Loans A, the Tranche A Term Loans
and the Tranche B Term Loans.
39
"Term Loans A Commitment" means the commitment of a Lender to make Term
Loans A to Borrower pursuant to subsection 2.1A(i), and "Term Loans A
Commitments" means such commitments of all Lenders in the aggregate.
"Term Loans A" means the Loans made by Lenders to Borrower pursuant to
subsection 2.1A(i).
"Term Loans A Notes" means (i) the promissory notes of Borrower issued
pursuant to subsection 2.1E(i)(a) on the Closing Date and (ii) any promissory
notes issued by Borrower pursuant to the last sentence of subsection 10.1B(i) in
connection with assignments of the Term Loan A Commitments or Term Loans A of
any Lenders, in each case substantially in the form of Exhibit V-A annexed
hereto, as they may be amended, supplemented or otherwise modified from time to
time.
"Title Company" means, collectively, First American Title Insurance
Company and/or one or more other title insurance companies reasonably
satisfactory to Administrative Agent.
"Total Utilization of Revolving Loan Commitments" means, as at any date of
determination, the sum of (i) the aggregate principal amount of all outstanding
Revolving Loans (other than Revolving Loans made for the purpose of repaying any
Refunded Swing Line Loans or reimbursing Issuing Lender for any amount drawn
under any Revolving Letter of Credit but not yet so applied) plus (ii) the
aggregate principal amount of all outstanding Swing Line Loans plus (iii) the
Revolving Letter of Credit Usage.
"Tranche A Term Loan Commitment" means the commitment of a Lender to make
Tranche A Term Loans to Borrower pursuant to subsection 2.1A(ii), and "Tranche A
Term Loan Commitments" means such commitments of all Lenders in the aggregate.
"Tranche A Term Loan Exposure" means, with respect to any Lender as of any
date of determination (i) prior to the Acquisition Reimbursement Date, that
Lender's Tranche A Term Loan Commitment plus the outstanding principal amount of
any Tranche A Term Loan of that Lender and (ii) after the Acquisition
Reimbursement Date, the outstanding principal amount of all Tranche A Term Loans
of that Lender.
"Tranche A Term Loans" means the Loans made by Lenders to Borrower
pursuant to subsection 2.1A(ii).
"Tranche A Term Notes" means (i) the promissory notes of Borrower issued
pursuant to subsection 2.1E(i)(b) on the Closing Date and (ii) any promissory
notes issued by Borrower pursuant to the last sentence of subsection 10.1B(i) in
connection with assignments of the Tranche A Term Loan Commitments or Tranche A
Term Loans of any Lenders, in each case substantially in the form of Exhibit V-B
annexed hereto, as they may be amended, supplemented or otherwise modified from
time to time.
40
"Tranche B Prepayment Amount" has the meaning assigned to that term in
subsection 2.4B(iv)(c).
"Tranche B Term Lender" means any Lender of the Tranche B Term Loans.
"Tranche B Term Loan Commitment" means the commitment of a Lender to make
Tranche B Term Loans to Borrower pursuant to subsection 2.1A(iii), and "Tranche
B Term Loan Commitments" means such commitments of all Lenders in the aggregate.
"Tranche B Term Loan Exposure" means, with respect to any Lender as of any
date of determination (i) prior to the Acquisition Reimbursement Date, that
Lender's Tranche B Term Loan Commitment plus the outstanding principal amount of
any Tranche B Term Loan of that Lender and (ii) after the Acquisition
Reimbursement Date, the outstanding principal amount of all Tranche B Term Loans
of that Lender.
"Tranche B Term Loans" means the Loans made by Lenders to Borrower
pursuant to subsection 2.1A(iii).
"Tranche B Term Notes" means (i) the promissory notes of Borrower issued
pursuant to subsection 2.1E(i)(c) on the Closing Date and (ii) any promissory
notes issued by Borrower pursuant to the last sentence of subsection 10.1B(i) in
connection with assignments of the Tranche B Term Loan Commitments or Tranche B
Term Loans of any Lenders, in each case substantially in the form of Exhibit VI
annexed hereto, as they may be amended, supplemented or otherwise modified from
time to time.
"Transaction Costs" means the fees, costs and expenses payable by Borrower
or Parent on or before the Closing Date in connection with the transactions
contemplated by the Loan Documents and the Related Agreements.
"UCC" means the Uniform Commercial Code (or any similar or equivalent
legislation) as in effect in any applicable jurisdiction.
"Voting Stock" means capital stock issued by, or equivalent interests in,
any Person, the holders of which are ordinarily, in the absence of any
contingency, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even though the right so to vote
has been suspended by the happening of such a contingency.
"Withdrawal Liability" has the meaning specified in Part I of Subtitle E
of Title IV of ERISA.
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under
Agreement.
Except as otherwise expressly provided in this Agreement, all accounting
terms not otherwise defined herein shall have the meanings assigned to them in
conformity with GAAP.
41
Financial statements and other information required to be delivered by Borrower
to Lenders pursuant to clauses (i), (ii), (iii) and (xiii) of subsection 6.1
shall be prepared in accordance with GAAP as in effect at the time of such
preparation (and delivered together with the reconciliation statements provided
for in subsection 6.1(v)). Calculations in connection with the definitions,
covenants and other provisions of this Agreement shall utilize accounting
principles and policies in conformity with those used to prepare the financial
statements referred to in subsection 5.3.
1.3 Other Definitional Provisions and Rules of Construction.
A. Any of the terms defined herein may, unless the context otherwise
requires, be used in the singular or the plural, depending on the reference.
B. References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided.
C. The use herein of the word "include" or "including", when following any
general statement, term or matter, shall not be construed to limit such
statement, term or matter to the specific items or matters set forth immediately
following such word or to similar items or matters, whether or not nonlimiting
language (such as "without limitation" or "but not limited to" or words of
similar import) is used with reference thereto, but rather shall be deemed to
refer to all other items or matters that fall within the broadest possible scope
of such general statement, term or matter.
Section 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 Commitments; Making of Loans; the Register; Notes.
A. Commitments. Subject to the terms and conditions of this Agreement and
in reliance upon the representations and warranties of Parent and Borrower
herein set forth, each Lender hereby severally agrees to make the Loans
described in subsections 2.1A(i), 2.1A(ii), 2.1A(iii) and 2.1A(iv) and Swing
Line Lender hereby agrees to make the Loans described in subsection 2.1A(v).
(i) Term Loans A. Each Lender severally agrees to lend to Borrower
on the Closing Date an aggregate amount not exceeding its Pro Rata Share
of the aggregate amount of the Term Loans A Commitments to be used for the
purposes identified in subsection 2.5A. The amount of each Lender's Term
Loans A Commitment is set forth opposite its name on Schedule 2.1 annexed
hereto and the aggregate amount of the Term Loans A Commitments is
$10,000,000; provided that the Term Loans A Commitments of Lenders shall
be adjusted to give effect to any assignments of the Term Loans A
Commitments pursuant to subsection 10.1B. Each Lender's Term Loan A
Commitment shall expire immediately and without further action on December
31, 1996 if the Term Loans A are not made on or before that date. Borrower
may make one borrowing under
42
the Term Loans A Commitments on the Closing Date. Amounts borrowed under
this subsection 2.1A(i) and subsequently repaid or prepaid may not be
reborrowed.
(ii) Tranche A Term Loans. Each Lender severally agrees to lend to
Borrower an aggregate amount not exceeding its Pro Rata Share of the
aggregate amount of the Tranche A Term Loan Commitments to be used for the
purposes identified in subsection 2.5A. The amount of each Lender's
Tranche A Term Loan Commitment is set forth opposite its name on Schedule
2.1 annexed hereto and the aggregate amount of the Tranche A Term Loan
Commitments is $41,000,000; provided that the Tranche A Term Loan
Commitments of Lenders shall be adjusted to give effect to any assignments
of the Tranche A Term Loan Commitments pursuant to subsection 10.1B. Each
Lender's Tranche A Term Loan Commitment shall expire immediately and
without further action on January 12, 1997 if the Tranche A Term Loans are
not made on or before that date. Borrower may make one borrowing under the
Tranche A Term Loan Commitments on the Closing Date in an amount not
exceeding $8,000,000.00 and a second borrowing under the Tranche A Term
Loan Commitments on the earlier to occur of the Seller Note Maturity Date
and the Acquisition Reimbursement Date in an amount not exceeding
$33,000,000.00; provided that unless no drawing under the Acquisition
Letter of Credit has been made and the Acquisition Letter of Credit has
been returned to the Issuing Lender and cancelled on or before the
Acquisition Reimbursement Date, no Tranche A Term Loans shall be made
other than pursuant to subsection 3.3B for the purpose of reimbursing
drawings under the Acquisition Letter of Credit. Amounts borrowed under
this subsection 2.1A(ii) and subsequently repaid or prepaid may not be
reborrowed.
(iii) Tranche B Term Loans. Each Lender severally agrees to lend to
Borrower an aggregate amount not exceeding its Pro Rata Share of the
aggregate amount of the Tranche B Term Loan Commitments to be used for the
purposes identified in subsection 2.5A. The amount of each Lender's
Tranche B Term Loan Commitment is set forth opposite its name on Schedule
2.1 annexed hereto and the aggregate amount of the Tranche B Term Loan
Commitments is $25,000,000; provided that the Tranche B Term Loan
Commitments of Lenders shall be adjusted to give effect to any assignments
of the Tranche B Term Loan Commitments pursuant to subsection 10.1B. Each
Lender's Tranche B Term Loan Commitment shall expire immediately and
without further action on January 12, 1997 if the Tranche B Term Loans are
not made on or before that date. Borrower may make one borrowing under the
Tranche B Term Loan Commitments which borrowing shall be on the earlier to
occur of the Seller Notes Maturity Date and the Acquisition Reimbursement
Date; provided that, unless no drawing under the Acquisition Letter of
Credit has been made and the Acquisition Letter of Credit has been
returned to the Issuing Lender and cancelled on or before the Acquisition
Reimbursement Date, no Tranche B Term Loans shall be made other than
pursuant to subsection 3.3B for the purpose of reimbursing drawings under
the Acquisition Letter of Credit. Amounts borrowed under this subsection
2.1A(iii) and subsequently repaid or prepaid may not be reborrowed.
43
(iv) Revolving Loans. Each Lender severally agrees, subject to the
limitations set forth below with respect to the maximum amount of
Revolving Loans permitted to be outstanding from time to time, to lend to
Borrower from time to time during the period from the Closing Date to but
excluding the Revolving Loan Commitment Termination Date an aggregate
amount not exceeding its Pro Rata Share of the aggregate amount of the
Revolving Loan Commitments to be used for the purposes identified in
subsection 2.5B. The original amount of each Lender's Revolving Loan
Commitment is set forth opposite its name on Schedule 2.1 annexed hereto
and the aggregate original amount of the Revolving Loan Commitments is
$20,000,000; provided that the Revolving Loan Commitments of Lenders shall
be adjusted to give effect to any assignments of the Revolving Loan
Commitments pursuant to subsection 10.1B; and provided, further that the
amount of the Revolving Loan Commitments shall be reduced from time to
time by the amount of any reductions thereto made pursuant to subsection
2.4B(ii). Each Lender's Revolving Loan Commitment shall expire on the
Revolving Loan Commitment Termination Date and all Revolving Loans and all
other amounts owed hereunder with respect to the Revolving Loans and the
Revolving Loan Commitments shall be paid in full no later than that date;
provided that each Lender's Revolving Loan Commitment shall expire
immediately and without further action on January 12, 1997 if initial Term
Loans are not made on or before that date. Amounts borrowed under this
subsection 2.1A(iv) may be repaid and reborrowed to but excluding the
Revolving Loan Commitment Termination Date.
Anything contained in this Agreement to the contrary
notwithstanding, the Revolving Loans and the Revolving Loan Commitments
shall be subject to the limitation that in no event shall the Total
Utilization of Revolving Loan Commitments at any time exceed the lesser of
(1) the Revolving Loan Commitments then in effect and (2) the Borrowing
Base then in effect.
(v) Swing Line Loans. Swing Line Lender hereby agrees, subject to
the limitations set forth below with respect to the maximum amount of
Swing Line Loans permitted to be outstanding from time to time, to make a
portion of the Revolving Loan Commitments available to Borrower from time
to time during the period from the Closing Date to but excluding the
Revolving Loan Commitment Termination Date by making Swing Line Loans to
Borrower in an aggregate amount not exceeding the amount of the Swing Line
Loan Commitment to be used for the purposes identified in subsection 2.5B,
notwithstanding the fact that such Swing Line Loans, when aggregated with
Swing Line Lender's outstanding Revolving Loans and Swing Line Lender's
Pro Rata Share of the Revolving Letter of Credit Usage then in effect, may
exceed Swing Line Lender's Revolving Loan Commitment. The original amount
of the Swing Line Loan Commitment is $5,000,000; provided that any
reduction of the Revolving Loan Commitments made pursuant to subsection
2.4B(ii) which reduces the aggregate Revolving Loan Commitments to an
amount less than the then current amount of the Swing Line Loan Commitment
shall result in an automatic corresponding reduction of the Swing Line
Loan Commitment to the amount of the Revolving Loan Commitments, as so
reduced, without any further action on the part of Borrower,
Administrative Agent or Swing Line Lender. The Swing
44
Line Loan Commitment shall expire on the Revolving Loan Commitment
Termination Date and all Swing Line Loans and all other amounts owed
hereunder with respect to the Swing Line Loans shall be paid in full no
later than that date; provided that the Swing Line Loan Commitment shall
expire immediately and without further action on January 12, 1997 if
initial Term Loans are not made on or before that date. Amounts borrowed
under this subsection 2.1A(v) may be repaid and reborrowed to but
excluding the Revolving Loan Commitment Termination Date.
Anything contained in this Agreement to the contrary
notwithstanding, the Swing Line Loans and the Swing Line Loan Commitment
shall be subject to the limitation that in no event shall the Total
Utilization of Revolving Loan Commitments at any time exceed the Revolving
Loan Commitments then in effect.
With respect to any Swing Line Loans which have not been voluntarily
prepaid by Borrower pursuant to subsection 2.4B(i), Swing Line Lender may,
at any time in its sole and absolute discretion, deliver to Administrative
Agent (with a copy to Borrower), no later than 11:00 A.M. (Dallas, Texas
time) on the first Business Day in advance of the proposed Funding Date, a
notice (which shall be deemed to be a Notice of Borrowing given by
Borrower) requesting Lenders to make Revolving Loans that are Base Rate
Loans on such Funding Date in an amount equal to the amount of such Swing
Line Loans (the "Refunded Swing Line Loans") outstanding on the date such
notice is given which Swing Line Lender requests Lenders to prepay.
Anything contained in this Agreement to the contrary notwithstanding, (i)
the proceeds of such Revolving Loans made by Lenders other than Swing Line
Lender shall be immediately delivered by Administrative Agent to Swing
Line Lender (and not to Borrower) and applied to repay a corresponding
portion of the Refunded Swing Line Loans and (ii) on the day such
Revolving Loans are made, Swing Line Lender's Pro Rata Share of the
Refunded Swing Line Loans shall be deemed to be paid with the proceeds of
a Revolving Loan made by Swing Line Lender, and such portion of the Swing
Line Loans deemed to be so paid shall no longer be outstanding as Swing
Line Loans and shall no longer be due under the Swing Line Note of Swing
Line Lender but shall instead constitute part of Swing Line Lender's
outstanding Revolving Loans and shall be due under the Revolving Note of
Swing Line Lender. Borrower hereby authorizes Administrative Agent and
Swing Line Lender to charge Borrower's accounts with Administrative Agent
and Swing Line Lender (up to the amount available in each such account) in
order to immediately pay Swing Line Lender the amount of the Refunded
Swing Line Loans to the extent the proceeds of such Revolving Loans made
by Lenders, including the Revolving Loan deemed to be made by Swing Line
Lender, are not sufficient to repay in full the Refunded Swing Line Loans.
If any portion of any such amount paid (or deemed to be paid) to Swing
Line Lender should be recovered by or on behalf of Borrower from Swing
Line Lender in bankruptcy, by assignment for the benefit of creditors or
otherwise, the loss of the amount so recovered shall be ratably shared
among all Lenders in the manner contemplated by subsection 10.5.
If for any reason (a) Revolving Loans are not made upon the request
of Swing Line Lender as provided in the immediately preceding paragraph in
an amount sufficient
45
to repay any amounts owed to Swing Line Lender in respect of any
outstanding Swing Line Loans or (b) the Revolving Loan Commitments are
terminated at a time when any Swing Line Loans are outstanding, each
Lender shall be deemed to, and hereby agrees to, have purchased a
participation in such outstanding Swing Line Loans in an amount equal to
its Pro Rata Share (calculated, in the case of the foregoing clause (b),
immediately prior to such termination of the Revolving Loan Commitments)
of the unpaid amount of such Swing Line Loans together with accrued
interest thereon. Upon one Business Day's notice from Swing Line Lender,
each Lender shall deliver to Swing Line Lender an amount equal to its
respective participation in same day funds at the Funding and Payment
Office. In order to further evidence such participation (and without
prejudice to the effectiveness of the participation provisions set forth
above), each Lender agrees to enter into a separate participation
agreement at the request of Swing Line Lender in form and substance
reasonably satisfactory to Swing Line Lender. In the event any Lender
fails to make available to Swing Line Lender the amount of such Lender's
participation as provided in this paragraph, Swing Line Lender shall be
entitled to recover such amount on demand from such Lender together with
interest thereon at the rate customarily used by Swing Line Lender for the
correction of errors among banks for three Business Days and thereafter at
the Base Rate. In the event Swing Line Lender receives a payment of any
amount in which other Lenders have purchased participations as provided in
this paragraph, Swing Line Lender shall promptly distribute to each such
other Lender its Pro Rata Share of such payment.
Anything contained herein to the contrary notwithstanding, each
Lender's obligation to make Revolving Loans for the purpose of repaying
any Refunded Swing Line Loans pursuant to the second preceding paragraph
and each Lender's obligation to purchase a participation in any unpaid
Swing Line Loans pursuant to the immediately preceding paragraph shall be
absolute and unconditional and shall not be affected by any circumstance,
including without limitation (a) any set-off, counter-claim, recoupment,
defense or other right which such Lender may have against Swing Line
Lender, Borrower or any other Person for any reason whatsoever; (b) the
occurrence or continuation of an Event of Default or a Potential Event of
Default; (c) any adverse change in the business, operations, properties,
assets, condition (financial or otherwise) or prospects of Borrower or any
of its Subsidiaries; (d) any breach of this Agreement or any other Loan
Document by any party thereto; or (e) any other circumstance, happening or
event whatsoever, whether or not similar to any of the foregoing; provided
that such obligations of each Lender are subject to the condition that (X)
Swing Line Lender believed in good faith that all conditions under Section
4 to the making of the applicable Refunded Swing Line Loans or other
unpaid Swing Line Loans, as the case may be, were satisfied at the time
such Refunded Swing Line Loans or unpaid Swing Line Loans were made or (Y)
the satisfaction of any such condition not satisfied had been waived in
accordance with subsection 10.6 prior to or at the time such Refunded
Swing Line Loans or other unpaid Swing Line Loans were made.
B. Borrowing Mechanics. Term Loans A, Tranche A Term Loans, Tranche B Term
Loans or Revolving Loans made on any Funding Date (other than Revolving Loans
made
46
pursuant to a request by Swing Line Lender pursuant to subsection 2.1A(v) for
the purpose of repaying any Refunded Swing Line Loans, or Revolving Loans or
Term Loans, as the case may be, made pursuant to subsection 3.3B for the purpose
of reimbursing Issuing Lender for the amount of a drawing under a Letter of
Credit or an IRB Reimbursement Advance) shall be in an aggregate minimum amount
of $2,000,000 and integral multiples of $500,000 in excess of that amount;
provided that Term Loans A, Tranche A Term Loans or Tranche B Term Loans or
Revolving Loans made on any Funding Date as Eurodollar Rate Loans with a
particular Interest Period shall be in an aggregate minimum amount of $2,000,000
and integral multiples of $500,000 in excess of that amount. Swing Line Loans
made on any Funding Date shall be in an aggregate minimum amount of $500,000 and
integral multiples of $500,000 in excess of that amount. Whenever Borrower
desires that Lenders make Term Loans or Revolving Loans it shall deliver to
Administrative Agent a Notice of Borrowing no later than 11:00 A.M. (Dallas,
Texas time) at least three Business Days in advance of the proposed Funding Date
(in the case of a Eurodollar Rate Loan) or at least one Business Day in advance
of the proposed Funding Date (in the case of a Base Rate Loan). Whenever
Borrower desires that Swing Line Lender make a Swing Line Loan, it shall deliver
to Administrative Agent a Notice of Borrowing no later than 11:00 A.M. (Dallas,
Texas time) on the proposed Funding Date. The Notice of Borrowing shall specify
(i) the proposed Funding Date (which shall be a Business Day), (ii) the amount
and type of Loans requested, (iii) in the case of any Loans made on the Closing
Date, the Acquisition Reimbursement Date or at any time prior to February 1,
1997, that such Loans shall be Base Rate Loans, (iv) in the case of Revolving
Loans made on or after February 1, 1997, whether such Loans shall be Base Rate
Loans or Eurodollar Rate Loans, and (v) in the case of any Loans requested to be
made as Eurodollar Rate Loans, the initial Interest Period requested therefor.
Term Loans and Revolving Loans may be continued as or converted into Base Rate
Loans and Eurodollar Rate Loans in the manner provided in subsection 2.2D. In
lieu of delivering the above-described Notice of Borrowing, Borrower may give
Administrative Agent telephonic notice by the required time of any proposed
borrowing under this subsection 2.1B; provided that such notice shall be
promptly confirmed in writing by delivery of a Notice of Borrowing to
Administrative Agent on or before the applicable Funding Date.
Neither Administrative Agent nor any Lender shall incur any liability to
Borrower in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow on behalf of Borrower or
for otherwise acting in good faith under this subsection 2.1B, and upon funding
of Loans by Lenders in accordance with this Agreement pursuant to any such
telephonic notice Borrower shall have effected Loans hereunder.
Borrower shall notify Administrative Agent prior to the funding of any
Loans in the event that any of the matters to which Borrower is required to
certify in the applicable Notice of Borrowing is no longer true and correct as
of the applicable Funding Date, and the acceptance by Borrower of the proceeds
of any Loans shall constitute a re-certification by Borrower, as of the
applicable Funding Date, as to the matters to which Borrower is required to
certify in the applicable Notice of Borrowing.
47
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice
of Borrowing for a Eurodollar Rate Loan (or telephonic notice in lieu thereof)
shall be irrevocable on and after the related Interest Rate Determination Date,
and Borrower shall be bound to make a borrowing in accordance therewith.
C. Disbursement of Funds. All Term Loans and Revolving Loans under this
Agreement shall be made by Lenders simultaneously and proportionately to their
respective Pro Rata Shares, it being understood that no Lender shall be
responsible for any default by any other Lender in that other Lender's
obligation to make a Loan requested hereunder nor shall the Commitment of any
Lender to make the particular type of Loan requested be increased or decreased
as a result of a default by any other Lender in that other Lender's obligation
to make a Loan requested hereunder. Promptly after receipt by Administrative
Agent of a Notice of Borrowing pursuant to subsection 2.1B (or telephonic notice
in lieu thereof), Administrative Agent shall notify each Lender or Swing Line
Lender, as the case may be, of the proposed borrowing. Each Lender shall make
the amount of its Loan available to Administrative Agent not later than 2:00
P.M. (Dallas, Texas time) on the applicable Funding Date, and Swing Line Lender
shall make the amount of its Swing Line Loan available to Administrative Agent
not later than 2:00 P.M. (Dallas, Texas time) on the applicable Funding Date, in
each case in same day funds in Dollars, at the Funding and Payment Office.
Except as provided in subsection 2.1A(v) with respect to Revolving Loans used to
repay Refunded Swing Line Loans, or subsection 3.3B with respect to Revolving
Loans or Term Loans, as the case may be, used to reimburse Issuing Lender for
the amount of a drawing under a Letter of Credit or an IRB Reimbursement
Advance, upon satisfaction or waiver of the conditions precedent specified in
subsections 4.1 (in the case of Loans made on the Closing Date) and 4.2 (in the
case of all Loans), Administrative Agent shall make the proceeds of such Loans
available to Borrower on the applicable Funding Date by causing an amount of
same day funds in Dollars equal to the proceeds of all such Loans received by
Administrative Agent from Lenders or Swing Line Lender, as the case may be, to
be credited to the account of Borrower at the Funding and Payment Office.
Unless Administrative Agent shall have been notified by any Lender prior
to the Funding Date for any Loans that such Lender does not intend to make
available to Administrative Agent the amount of such Lender's Loan requested on
such Funding Date, Administrative Agent may assume that such Lender has made
such amount available to Administrative Agent on such Funding Date and
Administrative Agent may, in its sole discretion, but shall not be obligated to,
make available to Borrower a corresponding amount on such Funding Date. If such
corresponding amount is not in fact made available to Administrative Agent by
such Lender, Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest thereon,
for each day from such Funding Date until the date such amount is paid to
Administrative Agent, at the customary rate set by Administrative Agent for the
correction of errors among banks for three Business Days and thereafter at the
Base Rate. If such Lender does not pay such corresponding amount forthwith upon
Administrative Agent's demand therefor, Administrative Agent shall promptly
notify Borrower and Borrower shall immediately pay such corresponding amount to
Administrative Agent together with interest thereon, for each day from such
Funding Date until the date such amount is paid to Administrative Agent, at the
rate payable under this Agreement for Base Rate Loans. Nothing in this
48
subsection 2.1C shall be deemed to relieve any Lender from its obligation to
fulfill its Commitments hereunder or to prejudice any rights that Borrower may
have against any Lender as a result of any default by such Lender hereunder.
D. The Register.
(i) Agent shall maintain, at its address referred to in subsection
10.8, a register for the recordation of the names and addresses of Lenders
and the Commitments and Loans of each Lender from time to time (the
"Register"). The Register shall be available for inspection by Borrower or
any Lender at any reasonable time and from time to time upon reasonable
prior notice.
(ii) Agent shall record in the Register the Term Loans A Commitment,
Tranche A Term Loan Commitment, Tranche B Term Loan Commitment and
Revolving Loan Commitment and the Term Loans A, Tranche A Term Loan,
Tranche B Term Loan and Revolving Loans from time to time of each Lender,
the Swing Line Loan Commitment and the Swing Line Loans from time to time
of Swing Line Lender, and each repayment or prepayment in respect of the
principal amount of the Term Loans A, Tranche A Term Loan, Tranche B Term
Loan or Revolving Loans of each Lender or the Swing Line Loans of Swing
Line Lender. Any such recordation shall be conclusive and binding on
Borrower and each Lender, absent manifest error; provided that failure to
make any such recordation, or any error in such recordation, shall not
affect any Lender's Commitments or Borrower's Obligations in respect of
any applicable Loans.
(iii) Each Lender shall record on its internal records (including,
without limitation, the Notes held by such Lender) the amount of the Term
Loans A, Tranche A Term Loan, Tranche B Term Loan and each Revolving Loan
made by it and each payment in respect thereof. Any such recordation shall
be conclusive and binding on Borrower, absent manifest error; provided
that failure to make any such recordation, or any error in such
recordation, shall not affect any Lender's Commitments or Borrower's
Obligations in respect of any applicable Loans; and provided, further that
in the event of any inconsistency between the Register and any Lender's
records, the recordations in the Register shall govern.
(iv) Borrower, Administrative Agent and Lenders shall deem and treat
the Persons listed as Lenders in the Register as the holders and owners of
the corresponding Commitments and Loans listed therein for all purposes
hereof, and no assignment or transfer of any such Commitment or Loan shall
be effective, in each case unless and until an Assignment Agreement
effecting the assignment or transfer thereof shall have been accepted by
Administrative Agent and recorded in the Register as provided in
subsection 10.1B(ii). Prior to such recordation, all amounts owed with
respect to the applicable Commitment or Loan shall be owed to the Lender
listed in the Register as the owner thereof, and any request, authority or
consent of any Person who, at the time of making such request or giving
such authority or consent, is listed in the Register as a Lender shall
49
be conclusive and binding on any subsequent holder, assignee or transferee
of the corresponding Commitments or Loans.
(v) Borrower hereby designates NationsBank to serve as Borrower's
agent solely for purposes of maintaining the Register as provided in this
subsection 2.1D, and Borrower hereby agrees that, to the extent
NationsBank serves in such capacity, NationsBank and its officers,
directors, employees, agents and affiliates shall constitute Indemnitees
for all purposes under subsection 10.3.
E. Notes. Borrower shall execute and deliver on the Closing Date (i) to
each Lender (or to Administrative Agent for that Lender) (a) a Term Loans A Note
substantially in the form of Exhibit V-A annexed hereto to evidence that
Lender's Term Loans A and with other appropriate insertions, (b) a Tranche A
Term Note substantially in the form of Exhibit V-B annexed hereto to evidence
that Lender's Tranche A Term Loan, in the principal amount of that Lender's
Tranche A Term Loan Commitment and with other appropriate insertions, (c) a
Tranche B Term Note substantially in the form of Exhibit VI annexed hereto to
evidence that Lender's Tranche B Term Loan, in the principal amount of that
Lender's Tranche B Term Loan Commitment and with other appropriate insertions,
and (d) a Revolving Note substantially in the form of Exhibit VII annexed hereto
to evidence that Lender's Revolving Loans, in the principal amount of that
Lender's Revolving Loan Commitment and with other appropriate insertions, and
(ii) to Swing Line Lender (or to Administrative Agent for Swing Line Lender) a
Swing Line Note substantially in the form of Exhibit VIII annexed hereto to
evidence Swing Line Lender's Swing Line Loans, in the principal amount of the
Swing Line Loan Commitment and with other appropriate insertions.
Agent may deem and treat the payee of any Note as the owner thereof for
all purposes hereof unless and until an Assignment Agreement effecting the
assignment or transfer thereof shall have been accepted by Administrative Agent
as provided in subsection 10.1B(ii). Any request, authority or consent of any
person or entity who, at the time of making such request or giving such
authority or consent, is the holder of any Note shall be conclusive and binding
on any subsequent holder, assignee or transferee of that Note or of any Note or
Notes issued in exchange therefor.
2.2 Interest on the Loans.
A. Rate of Interest. Subject to the provisions of subsections 2.6 and 2.7,
each Term Loan and each Revolving Loan shall bear interest on the unpaid
principal amount thereof from the date made through maturity (whether by
acceleration or otherwise) at a rate determined by reference to the Base Rate or
the Adjusted Eurodollar Rate; provided that until February 1, 1997 Loans shall
bear interest only at a rate determined by reference to the Base Rate. Subject
to the provisions of subsection 2.7, each Swing Line Loan shall bear interest on
the unpaid principal amount thereof from the date made through maturity (whether
by acceleration or otherwise) at a rate determined by reference to the Base
Rate. The applicable basis for determining the rate of interest with respect to
any Term Loan or any Revolving Loan shall be selected by Borrower initially at
the time a Notice of Borrowing is given with respect to such Loan pursuant to
sub-
50
section 2.1B, and the basis for determining the interest rate with respect to
any Term Loan or any Revolving Loan may be changed from time to time pursuant to
subsection 2.2D. If on any day a Term Loan or Revolving Loan is outstanding with
respect to which notice has not been delivered to Administrative Agent in
accordance with the terms of this Agreement specifying the applicable basis for
determining the rate of interest, then for that day that Loan shall bear
interest determined by reference to the Base Rate.
(i) Subject to the provisions of subsections 2.2E and 2.7, the Term
Loans A and Tranche A Term Loans shall bear interest through maturity as
follows:
(a) if a Base Rate Loan, then at the sum of the Base Rate plus
the Applicable Margin; or
(b) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate plus the Applicable Margin.
(ii) Subject to the provisions of subsections 2.2E and 2.7, the
Tranche B Term Loans shall bear interest through maturity as follows:
(a) if a Base Rate Loan, then at the sum of the Base Rate plus
2% per annum; or
(b) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate plus 3.25% per annum.
(iii) Subject to the provisions of subsections 2.2E and 2.7, the
Revolving Loans shall bear interest through maturity as follows:
(a) if a Base Rate Loan, then at the sum of the Base Rate plus
the Applicable Margin; or
(b) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate plus the Applicable Margin.
(iv) Subject to the provisions of subsections 2.2E and 2.7, the
Swing Line Loans shall bear interest through maturity at the sum of the
Base Rate plus 0.75% per annum.
B. Interest Periods. In connection with each Eurodollar Rate Loan,
Borrower may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, select an interest period (each an
"Interest Period") to be applicable to such Loan, which Interest Period shall
be, at Borrower's option, either a one, two, three or six month period; provided
that:
51
(i) the initial Interest Period for any Eurodollar Rate Loan shall
commence on the Funding Date in respect of such Loan, in the case of a
Loan initially made as a Eurodollar Rate Loan, or on the date specified in
the applicable Notice of Conversion/Continuation, in the case of a Loan
converted to a Eurodollar Rate Loan;
(ii) in the case of immediately successive Interest Periods
applicable to a Eurodollar Rate Loan continued as such pursuant to a
Notice of Conver-sion/Continuation, each successive Interest Period shall
commence on the day on which the next preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day that is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that, if any Interest Period would
otherwise expire on a day that is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall, subject to clause (v) of this subsection 2.2B, end on the
last Business Day of a calendar month;
(v) no Interest Period with respect to any portion of the Term Loans
A or Tranche A Term Loans shall extend beyond June 30, 2002, no Interest
Period with respect to any portion of the Tranche B Term Loans shall
extend beyond December 31, 2003, and no Interest Period with respect to
any portion of the Revolving Loans shall extend beyond the Revolving Loan
Commitment Termination Date;
(vi) no Interest Period with respect to any portion of the Term
Loans A, Tranche A Term Loans or Tranche B Term Loans shall extend beyond
a date on which Borrower is required to make a scheduled payment of
principal of the Term Loans A, Tranche A Term Loans or Tranche B Term
Loans, as the case may be, unless the sum of (a) the aggregate principal
amount of Term Loans A, Tranche A Term Loans or Tranche B Term Loans, as
the case may be, that are Base Rate Loans plus (b) the aggregate principal
amount of Term Loans A, Tranche A Term Loans or Tranche B Term Loans, as
the case may be, that are Eurodollar Rate Loans with Interest Periods
expiring on or before such date equals or exceeds the principal amount
required to be paid on the Term Loans A, Tranche A Term Loans or Tranche B
Term Loans, as the case may be, on such date;
(vii) prior to the Permitted Securities Issuance Prepayment Date,
there shall be no more than seven Interest Periods outstanding at any time
and thereafter, there shall be no more than five Interest Periods
outstanding at any time; and
52
(viii) in the event Borrower fails to specify an Interest Period for
any Eurodollar Rate Loan in the applicable Notice of Borrowing or Notice
of Conver-sion/Continuation, Borrower shall be deemed to have selected an
Interest Period of one month.
C. Interest Payments. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity); provided that in the event any Swing Line Loans or any Revolving
Loans that are Base Rate Loans are prepaid pursuant to subsection 2.4B(i),
interest accrued on such Swing Line Loans or Revolving Loans through the date of
such prepayment shall be payable on the next succeeding Interest Payment Date
applicable to Base Rate Loans (or, if earlier, at final maturity).
D. Conversion or Continuation. Subject to the provisions of subsection
2.6, Borrower shall have the option (i) to convert at any time all or any part
of its outstanding Term Loans A, Tranche A Term Loans, Tranche B Term Loans or
Revolving Loans equal to $2,000,000 and integral multiples of $500,000 in excess
of that amount from Loans bearing interest at a rate determined by reference to
one basis to Loans bearing interest at a rate determined by reference to an
alternative basis or (ii) upon the expiration of any Interest Period applicable
to a Eurodollar Rate Loan, to continue all or any portion of such Loan equal to
$2,000,000 and integral multiples of $500,000 in excess of that amount as a
Eurodollar Rate Loan; provided, however, that a Eurodollar Rate Loan may only be
converted into a Base Rate Loan on the expiration date of an Interest Period
applicable thereto.
Borrower shall deliver a Notice of Conversion/Continuation to
Administrative Agent no later than 11:00 A.M. (Dallas, Texas time) at least one
Business Day in advance of the proposed conversion date (in the case of a
conversion to a Base Rate Loan) and at least three Business Days in advance of
the proposed conversion/continuation date (in the case of a conversion to, or a
continuation of, a Eurodollar Rate Loan). A Notice of Conver-sion/Continuation
shall specify (i) the proposed conversion/continuation date (which shall be a
Business Day), (ii) the amount and type of the Loan to be converted/continued,
(iii) the nature of the proposed conversion/continuation, (iv) in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan, the requested
Interest Period, and (v) in the case of a conversion to, or a continuation of, a
Eurodollar Rate Loan, that no Potential Event of Default or Event of Default has
occurred and is continuing. In lieu of delivering the above-described Notice of
Conversion/Continuation, Borrower may give Administrative Agent telephonic
notice by the required time of any proposed conversion/continuation under this
subsection 2.2D; provided that such notice shall be promptly confirmed in
writing by delivery of a Notice of Conversion/Continuation to Administrative
Agent on or before the proposed conversion/continuation date. Upon receipt of
written or telephonic notice of any proposed conversion/continuation under this
subsection 2.2D, Administrative Agent shall promptly transmit such notice by
telefacsimile or telephone to each Lender.
Neither Administrative Agent nor any Lender shall incur any liability to
Borrower in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to act on behalf
53
of Borrower or for otherwise acting in good faith under this subsection 2.2D,
and upon conversion or continuation of the applicable basis for determining the
interest rate with respect to any Loans in accordance with this Agreement
pursuant to any such telephonic notice Borrower shall have effected a conversion
or continuation, as the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice
of Conver-sion/Continuation for conversion to, or continuation of, a Eurodollar
Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable on and
after the related Interest Rate Determination Date, and Borrower shall be bound
to effect a conversion or continuation in accordance therewith.
E. Post-Maturity Interest. Any principal payments on the Loans not paid
when due and, to the extent permitted by applicable law, any interest payments
on the Loans or any fees or other amounts owed hereunder not paid when due, in
each case whether at stated maturity, by notice of prepayment, by acceleration
or otherwise, shall thereafter bear interest (including post-petition interest
in any proceeding under the Bankruptcy Code or other applicable bankruptcy laws)
payable on demand at a rate which is 2% per annum in excess of the interest rate
otherwise payable under this Agreement with respect to the applicable Loans (or,
in the case of any such fees and other amounts, at a rate which is 2% per annum
in excess of the interest rate otherwise payable under this Agreement for Base
Rate Loans); provided that, in the case of Eurodollar Rate Loans, upon the
expiration of the Interest Period in effect at the time any such increase in
interest rate is effective such Eurodollar Rate Loans shall thereupon become
Base Rate Loans and shall thereafter bear interest payable upon demand at a rate
which is 2% per annum in excess of the interest rate otherwise payable under
this Agreement for Base Rate Loans. Payment or acceptance of the increased rates
of interest provided for in this subsection 2.2E is not a permitted alternative
to timely payment and shall not constitute a waiver of any Event of Default or
otherwise prejudice or limit any rights or remedies of Administrative Agent or
any Lender.
F. Computation of Interest. Interest on the Loans shall be computed (i) in
the case of Base Rate Loans, on the basis of a 365-day or 366 day year, as the
case may be, and (ii) in the case of Eurodollar Rate Loans, on the basis of a
360-day year, in each case for the actual number of days elapsed in the period
during which it accrues. In computing interest on any Loan, the date of the
making of such Loan or the first day of an Interest Period applicable to such
Loan or, with respect to a Base Rate Loan being converted from a Eurodollar Rate
Loan, the date of conversion of such Eurodollar Rate Loan to such Base Rate
Loan, as the case may be, shall be included, and the date of payment of such
Loan or the expiration date of an Interest Period applicable to such Loan or,
with respect to a Base Rate Loan being converted to a Eurodollar Rate Loan, the
date of conversion of such Base Rate Loan to such Eurodollar Rate Loan, as the
case may be, shall be excluded; provided that if a Loan is repaid on the same
day on which it is made, one day's interest shall be paid on that Loan.
2.3 Fees.
A. Commitment Fees. Borrower agrees to pay to Administrative Agent, for
distribution to each Lender in proportion to that Lender's Pro Rata Share,
commitment fees for the period from and including the Closing Date to and
excluding the Revolving Loan
54
Commitment Termination Date equal to the average of the daily excess of the
Revolving Loan Commitments over the sum of (i) the aggregate principal amount of
outstanding Revolving Loans (but not any outstanding Swing Line Loans) plus (ii)
the Revolving Letter of Credit Usage multiplied by 1/2 of 1% per annum, such
commitment fees to be calculated on the basis of a 360-day year and the actual
number of days elapsed and to be payable quarterly in arrears on March 31, June
30, September 30 and December 31 of each year, commencing on March 31, 1997, and
on the Revolving Loan Commitment Termination Date.
B. Annual Administrative Fee. Borrower agrees to pay to Administrative
Agent an annual administrative fee payable in advance on February 15, 1997 and
on each anniversary thereof, in an amount equal to the greater of (x) 0.1%
multiplied by the sum of (i) the Revolving Loan Commitments, (ii) the
outstanding principal amount of Term Loans A, (iii) the Tranche A Term Loan
Exposure and (iv) the Tranche B Term Loan Exposure and (y) $50,000.
C. Other Fees. Borrower agrees to pay to Administrative Agent such other
fees in the amounts and at the times separately agreed upon between Borrower or
Parent and Administrative Agent.
2.4 Repayments, Prepayments and Reductions in Revolving Loan Commitments;
General Provisions Regarding Payments; Application of Proceeds of
Collateral and Payments Under Subsidiary Guaranty.
A. Scheduled Payments of Term Loans.
(i) Scheduled Payments of Term Loans A.
(a) Borrower shall make principal payments on the Term Loans A
in installments on the dates and in the amounts set forth below
until such time the Term Loans A are repaid in full:
==============================================================
Scheduled Repayment
Date of Term Loans A
==============================================================
--------------------------------------------------------------
June 30, 1997 $333,333
--------------------------------------------------------------
September 30, 1997 $333,333
--------------------------------------------------------------
December 31, 1997 $333,334
--------------------------------------------------------------
March 31, 1998 $375,000
--------------------------------------------------------------
June 30, 1998 $375,000
--------------------------------------------------------------
September 30, 1998 $375,000
--------------------------------------------------------------
December 31, 1998 $375,000
--------------------------------------------------------------
55
==============================================================
Scheduled Repayment
Date of Term Loans A
==============================================================
March 31, 1999 $500,000
--------------------------------------------------------------
June 30, 1999 $500,000
--------------------------------------------------------------
September 30, 1999 $500,000
--------------------------------------------------------------
December 31, 1999 $500,000
--------------------------------------------------------------
March 31, 2000 $525,000
--------------------------------------------------------------
June 30, 2000 $525,000
--------------------------------------------------------------
September 30, 2000 $525,000
--------------------------------------------------------------
December 31, 2000 $525,000
--------------------------------------------------------------
March 31, 2001 $550,000
--------------------------------------------------------------
June 30, 2001 $550,000
--------------------------------------------------------------
September 30, 2001 $550,000
--------------------------------------------------------------
December 31, 2001 $550,000
--------------------------------------------------------------
March 31, 2002 $600,000
--------------------------------------------------------------
June 30, 2002 $600,000
==============================================================
; provided that the scheduled installments of principal of the Term
Loans A set forth above shall be reduced in connection with any
voluntary or mandatory prepayments of the Term Loans A in accordance
with subsection 2.4B(iv); and provided, further that the Term Loans
A and all other amounts owed hereunder with respect to the Term
Loans A shall be paid in full no later than June 30, 2002, and the
final installment payable by Borrower in respect of the Term Loans A
on such date shall be in an amount, if such amount is different from
that specified above, sufficient to repay all amounts owing by
Borrower under this Agreement with respect to the Term Loans A.
(ii) Scheduled Payments of Tranche A Term Loans. Borrower shall make
principal payments on the Tranche A Term Loans in installments on the
dates and in the amounts set forth below until such time the Tranche A
Term Loans are repaid in full:
56
=======================================================
Scheduled Repayment
Date of Tranche A Term Loans
=======================================================
-------------------------------------------------------
June 30, 1997 $ 917,000
-------------------------------------------------------
September 30, 1997 $1,292,000
-------------------------------------------------------
December 31, 1997 $1,041,000
-------------------------------------------------------
March 31, 1998 $1,437,500
-------------------------------------------------------
June 30, 1998 $1,437,500
-------------------------------------------------------
September 30, 1998 $1,437,500
-------------------------------------------------------
December 31, 1998 $1,437,500
-------------------------------------------------------
March 31, 1999 $2,062,500
-------------------------------------------------------
June 30, 1999 $2,062,500
-------------------------------------------------------
September 30, 1999 $2,062,500
-------------------------------------------------------
December 31, 1999 $2,062,500
-------------------------------------------------------
March 31, 2000 $2,162,500
-------------------------------------------------------
June 30, 2000 $2,162,500
-------------------------------------------------------
September 30, 2000 $2,162,500
-------------------------------------------------------
December 31, 2000 $2,162,500
-------------------------------------------------------
March 31, 2001 $2,262,500
-------------------------------------------------------
June 30, 2001 $2,262,500
-------------------------------------------------------
September 30, 2001 $2,262,500
-------------------------------------------------------
December 31, 2001 $2,262,500
-------------------------------------------------------
March 31, 2002 $3,025,000
-------------------------------------------------------
June 30, 2002 $3,025,000
=======================================================
; provided that the scheduled installments of principal of the
Tranche A Term Loans set forth above shall be reduced in connection
with any voluntary or mandatory prepayments of the Tranche A Term
Loans in accordance with subsection 2.4B(iv); and provided, further
that the Tranche A Term Loans and all other amounts owed hereunder
with respect to the Tranche A Term Loans shall be paid in full no
later than June 30, 2002, and the final installment payable by
Borrower in respect of the Tranche A Term Loans on such date shall
be in an
57
amount, if such amount is different from that specified above,
sufficient to repay all amounts owing by Borrower under this
Agreement with respect to the Tranche A Term Loans.
(iii) Scheduled Payments of Tranche B Term Loans. Borrower shall
make principal payments on the Tranche B Term Loans in installments on the
dates and in the amounts set forth below:
=======================================================
Scheduled Repayment
Date of Tranche B Term Loans
=======================================================
-------------------------------------------------------
December 31, 1997 $ 250,000
-------------------------------------------------------
December 31, 1998 $ 250,000
-------------------------------------------------------
December 31, 1999 $ 250,000
-------------------------------------------------------
December 31, 2000 $ 250,000
-------------------------------------------------------
December 31, 2001 $ 250,000
-------------------------------------------------------
December 31, 2002 $ 8,000,000
-------------------------------------------------------
December 31, 2003 $15,750,000
=======================================================
; provided that the scheduled installments of principal of the Tranche B
Term Loans set forth above shall be reduced in connection with any
voluntary or mandatory prepayments of the Tranche B Term Loans in
accordance with subsection 2.4B(iv); and provided, further that the
Tranche B Term Loans and all other amounts owed hereunder with respect to
the Tranche B Term Loans shall be paid in full no later than December 31,
2003, and the final installment payable by Borrower in respect of the
Tranche B Term Loans on such date shall be in an amount, if such amount is
different from that specified above, sufficient to repay all amounts owing
by Borrower under this Agreement with respect to the Tranche B Term Loans.
B. Prepayments and Reductions in Revolving Loan Commitments.
(i) Voluntary Prepayments. Borrower may, upon written or telephonic
notice to Administrative Agent on or prior to 11:00 A.M. (Dallas, Texas
time) on the date of prepayment, which notice, if telephonic, shall be
promptly confirmed in writing, at any time and from time to time prepay
any Swing Line Loan on any Business Day in whole or in part in an
aggregate minimum amount of $500,000 and integral multiples of $500,000 in
excess of that amount. Borrower may, upon not less than one Business Day's
prior written or telephonic notice, in the case of Base Rate Loans, and
three Business Days' prior written or telephonic notice, in the case of
Eurodollar Rate Loans, in each case given to Administrative Agent by 11:00
A.M. (Dallas, Texas time) on the date required and, if given by telephone,
promptly confirmed in writing to Administrative
58
Agent (which original written or telephonic notice Administrative Agent
will promptly transmit by telefacsimile or telephone to each Lender), at
any time and from time to time prepay any Term Loans or Revolving Loans on
any Business Day in whole or in part in an aggregate minimum amount of
$2,000,000 and integral multiples of $500,000 in excess of that amount;
provided, however, that a Eurodollar Rate Loan may only be prepaid on the
expiration of the Interest Period applicable thereto. Notice of prepayment
having been given as aforesaid, the principal amount of the Loans
specified in such notice shall become due and payable on the prepayment
date specified therein. Any such voluntary prepayment shall be applied as
specified in subsection 2.4B(iv).
(ii) Voluntary Reductions of Revolving Loan Commitments. Borrower
may, upon not less than three Business Days' prior written or telephonic
notice confirmed in writing to Administrative Agent (which original
written or telephonic notice Administrative Agent will promptly transmit
by telefacsimile or telephone to each Lender), at any time and from time
to time terminate in whole or permanently reduce in part, without premium
or penalty, the Revolving Loan Commitments in an amount up to the amount
by which the Revolving Loan Commitments exceed the Total Utilization of
Revolving Loan Commitments at the time of such proposed termination or
reduction; provided that any such partial reduction of the Revolving Loan
Commitments shall be in an aggregate minimum amount of $2,000,000 and
integral multiples of $500,000 in excess of that amount. Borrower's notice
to Administrative Agent shall designate the date (which shall be a
Business Day) of such termination or reduction and the amount of any
partial reduction, and such termination or reduction of the Revolving Loan
Commitments shall be effective on the date specified in Borrower's notice
and shall reduce the Revolving Loan Commitment of each Lender
proportionately to its Pro Rata Share.
(iii) Mandatory Prepayments of Loans. The Loans shall be prepaid in
the amounts and under the circumstances set forth below, all such
prepayments to be applied as set forth below or as more specifically
provided in subsection 2.4B(iv):
(a) Prepayments From Net Asset Sale Proceeds. No later than
the first Business Day following the date of receipt by Borrower or
any of its Subsidiaries of any Net Asset Sale Proceeds in respect of
any Asset Sale, Borrower shall prepay the Loans in an aggregate
amount equal to such Net Asset Sale Proceeds; provided that, except
with respect to an Asset Sale involving a sale and leaseback
transaction, to the extent such Net Asset Sale Proceeds will be used
within 180 days of such Asset Sale to purchase replacement assets
(as certified by Borrower to Administrative Agent in an Officer's
Certificate) no such payment or reduction shall be required unless
any of such Net Asset Sale Proceeds are not so used within 180 days,
in which case, Borrower shall, at the end of such 180th day, deliver
to the Administrative Agent an Officer's Certificate specifying the
amount of Net Asset Sale Proceeds not so used and shall prepay the
Loans in such amount on the first Business Day after the end of such
period.
59
(b) Prepayments From Net Insurance/ Condemnation Proceeds. No
later than the first Business Day following the date of receipt by
Administrative Agent or by Borrower or any of its Subsidiaries of
any Net Insur-ance/Condemnation Proceeds that are required to be
applied to prepay the Loans pursuant to the provisions of subsection
6.4C, Borrower shall prepay the Loans in an aggregate amount equal
to the amount of such Net Insur-ance/Condemnation Proceeds.
(c) Prepayments Due to Reversion of Surplus Assets of Pension
Plans. On the date of return to Borrower or any of its Subsidiaries
of any surplus assets of any pension plan of Borrower or any of its
Subsidiaries, Borrower shall prepay the Loans in an aggregate amount
(such amount being the "Net Pension Proceeds") equal to 100% of such
returned surplus assets, net of transaction costs and expenses
incurred in obtaining such return, including incremental taxes
payable as a result thereof.
(d) Prepayments Upon Issuance of Debt or Equity Securities. On
the date of receipt by Borrower of the Net Securities Proceeds from
the issuance of any debt or equity Securities of Borrower after the
Closing Date (other than any Permitted Securities Issuance),
Borrower shall prepay the Loans in an aggregate amount equal to such
Net Securities Proceeds. In the event the Preferred Stock Redemption
is not consummated by June 30, 1997 and the PIDA Loan is funded,
Borrower shall on such date prepay Term Loans in an amount equal to
the gross proceeds of the PIDA Loan minus the face amount of any
Letter of Credit issued to support the PIDA Loan as contemplated by
the PIDA Commitment Letter annexed hereto as Schedule 7.2(vii).
(e) Prepayments Upon a Permitted Securities Issuance. On the
date of receipt by Parent or any of its Subsidiaries of the Net
Securities Proceeds from any Permitted Securities Issuance, Parent
shall immediately make a capital contribution of such Net Securities
Proceeds (in the case of a Permitted Securities Issuance
constituting equity Securities of Parent) and Borrower shall, in all
cases, apply such Net Securities Proceeds first to all obligations
of Borrower under the Bridge Notes, second, to the extent the
remaining portion of such Net Securities Proceeds exceeds
$69,000,000 (in the case of Senior Guaranteed Notes) or $59,000,000
(in the case of Subordinated Notes), to fund the Distribution
Transaction in an amount not to exceed $16,000,000, third, to the
extent of any remaining portion of such Net Securities Proceeds, to
prepay the Tranche A Term Loans and Tranche B Term Loans, and
fourth, to the extent of any remaining portion of such Net
Securities Proceeds, to repay Revolving Loans to the full extent
thereof.
(f) Prepayments From Consolidated Excess Cash Flow. In the
event that there shall be Consolidated Excess Cash Flow for any
Fiscal Year (commencing with the first Fiscal Year ending after the
Closing Date), Borrower shall, no later than 90 days after the end
of such Fiscal Year, prepay the Loans in an
60
aggregate amount equal to (i) 75% of such Consolidated Excess Cash
Flow if the Leverage Ratio at such time (as most recently calculated
prior to making any prepayment required hereunder) is equal to or
greater than 3:1 or (ii) 50% of such Consolidated Excess Cash Flow
if the Leverage Ratio at such time (as most recently calculated
prior to making any prepayment required hereunder) is less than 3:1.
(g) Prepayments Due to Purchase Price Adjustment and Escrow
Funds. On the date of receipt by Borrower of any Purchase Price
Adjustment Payments pursuant to the Acquisition Documents, to the
extent such funds in the aggregate exceed $2,000,000, Borrower shall
apply such funds to the full extent thereof to repay Revolving
Loans. On the date of receipt by Borrower of any Escrow Funds
pursuant to the Acquisition Documents, Borrower shall apply such
funds, to the extent such funds are not owed to third party
claimants, to repay Term Loans.
(h) Calculations of Net Proceeds Amounts; Additional
Prepayments and Reductions Based on Subsequent Calculations.
Concurrently with any prepayment of the Loans pursuant to
subsections 2.4B(iii)(a)-(g), Borrower shall deliver to
Administrative Agent an Officers' Certificate demonstrating the
calculation of the amount (the "Net Proceeds Amount") of the
applicable Net Asset Sale Proceeds, Net Insurance/Condemnation
Proceeds, the applicable Net Pension Proceeds or Net Securities
Proceeds, or the applicable Consolidated Excess Cash Flow, as the
case may be, that gave rise to such prepayment and/or reduction. In
the event that Borrower shall subsequently determine that the actual
Net Proceeds Amount was greater than the amount set forth in such
Officers' Certificate, Borrower shall promptly make an additional
prepayment of the Loans in an amount equal to the amount of such
excess, and Borrower shall concurrently therewith deliver to
Administrative Agent an Officers' Certificate demonstrating the
derivation of the additional Net Proceeds Amount resulting in such
excess.
(i) Prepayments Due to Reductions or Restrictions of Revolving
Loan Commitments. Borrower shall from time to time prepay first the
Swing Line Loans and second the Revolving Loans to the extent
necessary so that the Total Utilization of Revolving Loan
Commitments shall not at any time exceed the lesser of (x) the
Revolving Loan Commitments then in effect and (y) the Borrowing Base
then in effect.
(iv) Application of Prepayments and Reductions of Revolving Loan
Commitments.
(a) Application of Voluntary Prepayments by Type of Loans and
Order of Maturity. Any voluntary prepayments pursuant to subsection
2.4B(i) shall be applied as specified by Borrower in the applicable
notice of prepayment; provided that in the event Borrower fails to
specify the Loans to which any such prepayment shall be applied,
such prepayment shall be applied first to repay outstanding Swing
Line Loans to the full extent thereof, second to repay outstanding
61
Revolving Loans to the full extent thereof, and third to repay
outstanding Term Loans to the full extent thereof. Any voluntary
prepayments of the Term Loans pursuant to subsection 2.4B(i) shall
be applied first to prepay the Tranche A Term Loans and the Tranche
B Term Loans on a pro rata basis (in accordance with the respective
outstanding principal amounts thereof) and to reduce the scheduled
installments of principal of the Tranche A Term Loans and Tranche B
Term Loans set forth in subsections 2.4A(ii) and 2.4A(iii) on a pro
rata basis and second to prepay Term Loans A and to reduce the
scheduled installments of Term Loans A set forth in subsection
2.4A(i) in inverse order or maturity.
(b) Application of Mandatory Prepayments by Type of Loans.
Except as otherwise set forth in subsection 2.4B(iii)(e) and (h),
any amount (the "Applied Amount") required to be applied as a
mandatory prepayment of the Loans pursuant to subsections
2.4B(iii)(a)-(g) shall be applied first to prepay the Tranche A Term
Loan and Tranche B Term Loans to the full extent thereof, second to
the extent of any remaining portion of the Applied Amount, to prepay
Term Loans A to the full extent thereof, third, to the extent of any
remaining portion of the Applied Amount, to prepay the Swing Line
Loans to the full extent thereof and to permanently reduce the
Revolving Loan Commitments by the amount of such prepayment and
fourth, to the extent of any remaining portion of the Applied
Amount, to prepay the Revolving Loans to the full extent thereof.
(c) Application of Mandatory Prepayments of Term Loans to Term
Loans A, Tranche A Term Loans and Tranche B Term Loans and the
Scheduled Installments of Principal Thereof.
(1) Any mandatory prepayments of the Term Loans pursuant
to subsection 2.4B(iii) shall initially be applied to prepay
the Tranche A Term Loans and the Tranche B Term Loans on a pro
rata basis (in accordance with the respective outstanding
principal amounts thereof) and to reduce the scheduled
installments of principal of the Tranche A Term Loans and the
Tranche B Term Loans set forth in subsections 2.4A(ii) and
2.4A(iii) on a pro rata basis and thereafter to prepay Term
Loans A and to reduce scheduled installments of principal on
Term Loans A set forth in subsection 2.4(i) on a pro rata
basis.
Notwithstanding the foregoing, any mandatory prepayment
of the Term Loans pursuant to subsection 2.4B(iii) which would
otherwise be applied to prepay the Tranche B Term Loans in
accordance with the foregoing (the "Tranche B Prepayment
Amount") shall be applied as follows:
At any time not less than three Business Days prior to
the anticipated receipt, or upon receipt by Borrower, of any
amount required to be applied as a mandatory prepayment under
subsection 2.4B(iii) (other
62
than subsection 2.4B(iii)(e)), Borrower shall deliver written
notice to Administrative Agent (a "Prepayment Notice") setting
forth (A) the Tranche B Prepayment Amount, or, if unknown at
the time the Prepayment Notice is given, a good faith estimate
by Borrower of the Tranche B Prepayment Amount (such estimate
being the "Estimated Tranche B Prepayment Amount"), and (B)
the date of such prepayment in accordance with subsection
2.4B(iii) (the "Prepayment Date"). On the second Business Day
immediately preceding the Prepayment Date, Administrative
Agent shall give written notice to each Tranche B Lender (y)
stating the Tranche B Prepayment Amount (or the Estimated
Tranche B Prepayment Amount, as the case may be) and the
Prepayment Date and (z) stating that any Tranche B Lender may
elect to decline such prepayment (Tranche B Lenders electing
to so decline such prepayment are referred to in this
subsection as "Declining Tranche B Lenders" and the portion of
the Tranche B Prepayment Amount that the Declining Tranche B
Lenders have elected to decline a prepayment hereunder are
referred to in this subsection as "Declined Tranche B
Prepayment Amount") by delivering written notice of its
election to Administrative Agent no later than 11:00 A.M.
(Dallas, Texas time) on the Business Day immediately preceding
the Prepayment Date. If notice of the Tranche B Lender's
election to decline prepayment is not received by
Administrative Agent by such time, such Tranche B Lender will
be deemed to have accepted prepayment of the Tranche B Term
Loans. On the Business Day immediately preceding the
Prepayment Date, Administrative Agent shall determine the
amount of the Declined Tranche B Prepayment Amount and
distribute to Borrower and Lenders a written notice stating
the Declined Tranche B Prepayment Amount which will be applied
toward the prepayment of Tranche A Term Loans and Tranche B
Term Loans held by Tranche B Lenders other than the Declining
Tranche B Lenders ("Accepting Tranche B Lenders"). The
Declined Tranche B Prepayment Amount shall be applied toward
the Tranche A Term Loans and the Tranche B Term Loans of the
Accepting Tranche B Lenders on a pro rata basis in accordance
with the respective outstanding principal amounts thereof.
(2) Any mandatory prepayment applied to the Tranche A
Term Loans and the Tranche B Term Loans held by Accepting
Tranche B Lenders in accordance with the terms of this
subsection 2.4B(iv)(c) shall be applied on a pro rata basis
(in accordance with the respective outstanding principal
amounts thereof) to each scheduled installment of principal of
the Tranche A Term Loans or the Tranche B Term Loans, as the
case may be, set forth in subsection 2.4A(i) or 2.4A(ii),
respectively, that is unpaid at the time of such prepayment.
(d) Application of Prepayments to Base Rate Loans and
Eurodollar Rate Loans. Considering Term Loans A, Tranche A Term
Loans, Tranche B Term
63
Loans and Revolving Loans being prepaid separately, any prepayment
thereof shall be applied first to Base Rate Loans to the full extent
thereof before application to Eurodollar Rate Loans, in each case in
a manner which minimizes the amount of any payments required to be
made by Borrower pursuant to subsection 2.6D.
C. General Provisions Regarding Payments.
(i) Manner and Time of Payment. All payments by Borrower of
principal, interest, fees and other Obligations hereunder and under the
Notes shall be made in Dollars in same day funds, without defense, setoff
or counterclaim, free of any restriction or condition, and delivered to
Administrative Agent not later than 11:00 A.M. (Dallas, Texas time) on the
date due at the Funding and Payment Office for the account of Lenders;
funds received by Administrative Agent after that time on such due date
shall be deemed to have been paid by Borrower on the next succeeding
Business Day. Borrower hereby authorizes Administrative Agent to charge
its accounts with Administrative Agent in order to cause timely payment to
be made to Administrative Agent of all principal, interest, fees and
expenses due hereunder (subject to sufficient funds being available in its
accounts for that purpose).
(ii) Application of Payments to Principal and Interest. Except as
provided in subsection 2.2C, all payments in respect of the principal
amount of any Loan shall include payment of accrued interest on the
principal amount being repaid or prepaid, and all such payments (and, in
any event, any payments in respect of any Loan on a date when interest is
due and payable with respect to such Loan) shall be applied to the payment
of interest before application to principal.
(iii) Apportionment of Payments. Except as permitted in subsection
2.4B(iv)(c), aggregate principal and interest payments in respect of Term
Loans and Revolving Loans shall be apportioned among all outstanding Loans
to which such payments relate, in each case proportionately to Lenders'
respective Pro Rata Shares. Administrative Agent shall promptly distribute
to each Lender, at its primary address set forth below its name on the
appropriate signature page hereof or at such other address as such Lender
may request, its Pro Rata Share of all such payments received by
Administrative Agent and the commitment fees of such Lender when received
by Administrative Agent pursuant to subsection 2.3. Notwithstanding the
foregoing provisions of this subsection 2.4C(iii), if, pursuant to the
provisions of subsection 2.6C, any Notice of Conversion/Continuation is
withdrawn as to any Affected Lender or if any Affected Lender makes Base
Rate Loans in lieu of its Pro Rata Share of any Eurodollar Rate Loans,
Administrative Agent shall give effect thereto in apportioning payments
received thereafter.
(iv) Payments on Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day,
such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of the payment of
interest hereunder or of the commitment fees hereunder, as the case may
be.
64
(v) Notation of Payment. Each Lender agrees that before disposing of
any Note held by it, or any part thereof (other than by granting
participations therein), that Lender will make a notation thereon of all
Loans evidenced by that Note and all principal payments previously made
thereon and of the date to which interest thereon has been paid; provided
that the failure to make (or any error in the making of) a notation of any
Loan made under such Note shall not limit or otherwise affect the
obligations of Borrower hereunder or under such Note with respect to any
Loan or any payments of principal or interest on such Note.
D. Application of Proceeds of Collateral and Payments Under Subsidiary
Guaranty.
(i) Application of Proceeds of Collateral. Except as otherwise
provided in subsection 2.4B(iii), all proceeds received by Administrative
Agent in respect of any sale of, collection from, or other realization
upon all or any part of the Collateral under any Collateral Document may,
in the discretion of Administrative Agent, be held by Administrative Agent
as Collateral for, and/or (then or at any time thereafter) applied in full
or in part by Administrative Agent against, the applicable Secured
Obligations (as defined in such Collateral Document) in the following
order of priority:
(a) To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation
to Administrative Agent and its agents and counsel, and all other
expenses, liabilities and advances made or incurred by
Administrative Agent in connection therewith, and all amounts for
which Administrative Agent is entitled to indemnification under such
Collateral Document and all advances made by Administrative Agent
thereunder for the account of the applicable Loan Party, and to the
payment of all costs and expenses paid or incurred by Administrative
Agent in connection with the exercise of any right or remedy under
such Collateral Document, all in accordance with the terms of this
Agreement and such Collateral Document;
(b) thereafter, to the extent of any excess such proceeds, to
the payment of all other such Secured Obligations for the ratable
benefit of the holders thereof; and
(c) thereafter, to the extent of any excess such proceeds, to
the payment to or upon the order of such Loan Party or to whosoever
may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct.
(ii) Application of Payments Under Guaranties. All payments received
by Administrative Agent under either Guaranty shall be applied promptly
from time to time by Administrative Agent in the following order of
priority:
(a) To the payment of the reasonable costs and expenses of any
collection or other realization under such Guaranty, including
reasonable
65
compensation to Administrative Agent and its agents and counsel, and
all reasonable expenses, liabilities and advances made or incurred
by Administrative Agent in connection therewith, all in accordance
with the terms of this Agreement and such Guaranty;
(b) thereafter, to the extent of any excess such payments, to
the payment of all other Guarantied Obligations (as defined in such
Guaranty) for the ratable benefit of the holders thereof; and
(c) thereafter, to the extent of any excess such payments, to
the payment to Parent or the applicable Subsidiary Guarantor or to
whosoever may be lawfully entitled to receive the same or as a court
of competent jurisdiction may direct.
2.5 Use of Proceeds.
A. Term Loans. On the Closing Date, up to $8,000,000.00 in proceeds of the
Tranche A Term Loans, together with the proceeds of the Term Loans A and up to
$4,000,000 in proceeds of the initial Revolving Loans (the "Acquisition
Revolving Loans") and the proceeds of the Bridge Financing described in
subsection 4.1D, shall be applied by Borrower to fund the Acquisition Financing
Requirements. If the Acquisition Letter of Credit is no longer outstanding and
no drawings have been made thereunder, on the Seller Notes Maturity Date, the
remaining proceeds of the Term Loans may be immediately utilized to satisfy the
obligations under the Seller Notes, and, to the extent the Seller Notes are not
so satisfied, then on the Acquisition Reimbursement Date, the remaining proceeds
of the Term Loans may be immediately utilized to pay the reimbursement
obligations under the Acquisition Letter of Credit.
B. Revolving Loans; Swing Line Loans. The proceeds of the Acquisition
Revolving Loans shall be applied by Borrower as provided in subsection 2.5A. The
proceeds of any other Revolving Loans and any Swing Line Loans shall be applied
by Borrower for general corporate purposes, which may include the making of
intercompany loans to any of Borrower's Subsidiaries, in accordance with
subsection 7.1(iv) and to consummate the Preferred Stock Redemption in
accordance with subsection 7.5.
C. Margin Regulations. No portion of the proceeds of any borrowing under
this Agreement shall be used by Borrower or any of its Subsidiaries in any
manner that might cause the borrowing or the application of such proceeds to
violate Regulation G, Regulation U, Regulation T or Regulation X of the Board of
Governors of the Federal Reserve System or any other regulation of such Board or
to violate the Exchange Act, in each case as in effect on the date or dates of
such borrowing and such use of proceeds.
66
2.6 Special Provisions Governing Eurodollar Rate Loans.
Notwithstanding any other provision of this Agreement to the contrary, the
following provisions shall govern with respect to Eurodollar Rate Loans as to
the matters covered:
A. Determination of Applicable Interest Rate. As soon as practicable after
12:00 Noon (Dallas, Texas time) on each Interest Rate Determination Date,
Administrative Agent shall determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) the interest rate that
shall apply to the Eurodollar Rate Loans for which an interest rate is then
being determined for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to Borrower and
each Lender.
B. Inability to Determine Applicable Interest Rate. In the event that
Administrative Agent shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Eurodollar Rate Loans, that by reason of
circumstances affecting the London interbank market adequate and fair means do
not exist for ascertaining the interest rate applicable to such Loans on the
basis provided for in the definition of Adjusted Eurodollar Rate, Administrative
Agent shall on such date give notice (by telefacsimile or by telephone confirmed
in writing) to Borrower and each Lender of such determination, whereupon (i) no
Loans may be made as, or converted to, Eurodollar Rate Loans until such time as
Administrative Agent notifies Borrower and Lenders that the circumstances giving
rise to such notice no longer exist and (ii) any Notice of Borrowing or Notice
of Conver-sion/Continuation given by Borrower with respect to the Loans in
respect of which such determination was made shall be deemed to be rescinded by
Borrower.
C. Illegality or Impracticability of Eurodollar Rate Loans. In the event
that on any date any Lender shall have determined (which determination shall be
final and conclusive and binding upon all parties hereto but shall be made only
after consultation with Borrower and Administrative Agent) that the making,
maintaining or continuation of its Eurodollar Rate Loans (i) has become unlawful
as a result of compliance by such Lender in good faith with any law, treaty,
governmental rule, regulation, guideline or order (or would conflict with any
such treaty, governmental rule, regulation, guideline or order not having the
force of law even though the failure to comply therewith would not be unlawful)
or (ii) has become impracticable, or would cause such Lender material hardship,
as a result of contingencies occurring, in each case, after the date of this
Agreement which materially and adversely affect the London interbank market or
the position of such Lender in that market, then, and in any such event, such
Lender shall be an "Affected Lender" and it shall on that day give notice (by
telefacsimile or by telephone confirmed in writing) to Borrower and
Administrative Agent of such determination (which notice Administrative Agent
shall promptly transmit to each other Lender). Thereafter (a) the obligation of
the Affected Lender to make Loans as, or to convert Loans to, Eurodollar Rate
Loans shall be suspended until such notice shall be withdrawn by the Affected
Lender, (b) to the extent such determination by the Affected Lender relates to a
Eurodollar Rate Loan then being requested by Borrower pursuant to a Notice of
Borrowing or a Notice of Conver-sion/Continuation, the Affected Lender shall
make such Loan as (or convert such Loan to, as the case may be) a Base Rate
Loan, (c) the Affected Lender's obligation to maintain its outstanding
Eurodollar Rate Loans
67
(the "Affected Loans") shall be terminated at the earlier to occur of the
expiration of the Interest Period then in effect with respect to the Affected
Loans or when required by law, and (d) the Affected Loans shall automatically
convert into Base Rate Loans on the date of such termination. Notwithstanding
the foregoing, to the extent a determination by an Affected Lender as described
above relates to a Eurodollar Rate Loan then being requested by Borrower
pursuant to a Notice of Borrowing or a Notice of Conversion/Continuation,
Borrower shall have the option, subject to the provisions of subsection 2.6D, to
rescind such Notice of Borrowing or Notice of Conversion/Continuation as to all
Lenders by giving notice (by telefacsimile or by telephone confirmed in writing)
to Administrative Agent of such rescission on the date on which the Affected
Lender gives notice of its determination as described above (which notice of
rescission Administrative Agent shall promptly transmit to each other Lender).
Except as provided in the immediately preceding sentence, nothing in this
subsection 2.6C shall affect the obligation of any Lender other than an Affected
Lender to make or maintain Loans as, or to convert Loans to, Eurodollar Rate
Loans in accordance with the terms of this Agreement.
D. Compensation For Breakage or Non-Commencement of Interest Periods.
Borrower shall compensate each Lender, upon written request by that Lender
(which request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including, without limitation, any
interest paid by that Lender to lenders of funds borrowed by it to make or carry
its Eurodollar Rate Loans and any loss, expense or liability sustained by that
Lender in connection with the liquidation or re-employment of such funds but
excluding, in any case, loss of anticipated profits) which that Lender may
sustain: (i) if for any reason (other than a default by that Lender) a borrowing
of any Eurodollar Rate Loan does not occur on a date specified therefor in a
Notice of Borrowing or a telephonic request for borrowing, or a conversion to or
continuation of any Eurodollar Rate Loan does not occur on a date specified
therefor in a Notice of Conver-sion/Continuation or a telephonic request for
conversion or continuation, (ii) if any prepayment (including without limitation
any prepayment pursuant to subsection 2.4B(i)) or other principal payment or any
conversion of any of its Eurodollar Rate Loans occurs on a date prior to the
last day of an Interest Period applicable to that Loan, (iii) if any prepayment
of any of its Eurodollar Rate Loans is not made on any date specified in a
notice of prepayment given by Borrower, (iv) as a consequence of any other
default by Borrower in the repayment of its Eurodollar Rate Loans when required
by the terms of this Agreement, or (v) as a consequence of any assignment of the
Commitments, Loans, Letters of Credit, the IRB Reimbursement Agreement or
participations therein by NationsBank at any time during the first ninety (90)
days after the Closing Date.
E. Booking of Eurodollar Rate Loans. Any Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of any of its branch
offices or the office of an Affiliate of that Lender.
F. Assumptions Concerning Funding of Eurodollar Rate Loans. Calculation of
all amounts payable to a Lender under this subsection 2.6 and under subsection
2.7A shall be made as though that Lender had actually funded each of its
relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to clause (i) of the definition
of Adjusted Eurodollar Rate in an amount equal to the amount of such
68
Eurodollar Rate Loan and having a maturity and a principal amount comparable to
the relevant Interest Period and through the transfer of such Eurodollar deposit
from an offshore office of that Lender to a domestic office of that Lender in
the United States of America; provided, however, that each Lender may fund each
of its Eurodollar Rate Loans in any manner it sees fit and the foregoing
assumptions shall be utilized only for the purposes of calculating amounts
payable under this subsection 2.6 and under subsection 2.7A.
G. Eurodollar Rate Loans After Default. After the occurrence of and during
the continuation of a Potential Event of Default or an Event of Default, (i)
Borrower may not elect to have a Loan be made or maintained as, or converted to,
a Eurodollar Rate Loan after the expiration of any Interest Period then in
effect for that Loan and (ii) subject to the provisions of subsection 2.6D, any
Notice of Borrowing or Notice of Conver-sion/Continuation given by Borrower with
respect to a requested borrowing or conver-sion/continuation that has not yet
occurred shall be deemed to be rescinded by Borrower.
2.7 Increased Costs; Taxes; Capital Adequacy.
A. Compensation for Increased Costs and Taxes. Subject to the provisions
of subsection 2.7B (which shall be controlling with respect to the matters
covered thereby), in the event that any Lender shall determine (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) that any law, treaty or governmental rule, regulation
or order, or any change therein or in the interpretation, administration or
application thereof (including the introduction of any new law, treaty or
governmental rule, regulation or order), or any determination of a court or
governmental authority, in each case that becomes effective after the date
hereof, or compliance by such Lender with any guideline, request or directive
issued or made after the date hereof by any central bank or other governmental
or quasi-governmental authority (whether or not having the force of law):
(i) subjects such Lender (or its applicable lending office) to any
additional Tax (other than any Tax on the overall net income of such
Lender) with respect to this Agreement or any of its obligations hereunder
or any payments to such Lender (or its applicable lending office) of
principal, interest, fees or any other amount payable hereunder;
(ii) imposes, modifies or holds applicable any reserve (including
without limitation any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement against assets held by, or deposits or other liabilities in or
for the account of, or advances or loans by, or other credit extended by,
or any other acquisition of funds by, any office of such Lender (other
than any such reserve or other requirements with respect to Eurodollar
Rate Loans that are reflected in the definition of Adjusted Eurodollar
Rate); or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Lender (or its applicable lending office)
causing it to have increased costs in connection with its participation in
the London interbank market;
69
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Loans hereunder or to reduce any amount
received or receivable by such Lender (or its applicable lending office) with
respect thereto; then, in any such case, Borrower shall promptly pay to such
Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
sole discretion shall determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder. Such Lender shall deliver to Borrower (with a copy to Administrative
Agent) a written statement, setting forth in reasonable detail the basis for
calculating the additional amounts owed to such Lender under this subsection
2.7A, which statement shall be conclusive and binding upon all parties hereto
absent manifest error.
B. Withholding of Taxes.
(i) Payments to Be Free and Clear. Subject to the provisions of the
following clause (ii), all sums payable by Borrower under this Agreement
and the other Loan Documents shall (except to the extent required by law)
be paid free and clear of, and without any deduction or withholding on
account of, any Tax (other than a Tax on the overall net income of any
Lender) imposed, levied, collected, withheld or assessed by or within the
United States of America or any political subdivision in or of the United
States of America or any other jurisdiction from or to which a payment is
made by or on behalf of Borrower or by any federation or organization of
which the United States of America or any such jurisdiction is a member at
the time of payment.
(ii) Grossing-up of Payments. If Borrower or any other Person is
required by law to make any deduction or withholding on account of any
such Tax from any sum paid or payable by Borrower to Administrative Agent
or any Lender under any of the Loan Documents:
(a) Borrower shall notify Administrative Agent of any such
requirement or any change in any such requirement as soon as
Borrower becomes aware of it;
(b) Borrower shall pay any such Tax before the date on which
penalties attach thereto, such payment to be made (if the liability
to pay is imposed on Borrower) for its own account or (if that
liability is imposed on Administrative Agent or such Lender, as the
case may be) on behalf of and in the name of Administrative Agent or
such Lender;
(c) the sum payable by Borrower in respect of which the
relevant deduction, withholding or payment is required shall be
increased to the extent necessary to ensure that, after the making
of that deduction, withholding or payment, Administrative Agent or
such Lender, as the case may be, receives on the due date a net sum
equal to what it would have received had no such deduction,
withholding or payment been required or made; and
70
(d) within 30 days after paying any sum from which it is
required by law to make any deduction or withholding, and within 30
days after the due date of payment of any Tax which it is required
by clause (b) above to pay, Borrower shall deliver to Administrative
Agent evidence satisfactory to the other affected parties of such
deduction, withholding or payment and of the remittance thereof to
the relevant taxing or other authority;
provided that no such additional amount shall be required to be paid to or
on behalf of any Lender under clause (b) or (c) above except to the extent
that any change after the date hereof (in the case of each Lender listed
on the signature pages hereof) or after the date of the Assignment
Agreement pursuant to which such Lender became a Lender (in the case of
each other Lender) in any such requirement for a deduction, withholding or
payment as is mentioned therein shall result in an increase in the rate of
such deduction, withholding or payment from that in effect at the date of
this Agreement or at the date of such Assignment Agreement, as the case
may be, in respect of payments to such Lender.
(iii) Evidence of Exemption from U.S. Withholding Tax.
(a) Each Lender that is organized under the laws of any
jurisdiction other than the United States or any state or other
political subdivision thereof (for purposes of this subsection
2.7B(iii), a "Non-US Lender") shall deliver to Administrative Agent
for transmission to Borrower, on or prior to the Closing Date (in
the case of each Lender listed on the signature pages hereof) or on
or prior to the date of the Assignment Agreement pursuant to which
it becomes a Lender (in the case of each other Lender), and at such
other times as may be necessary in the determination of Borrower or
Administrative Agent (each in the reasonable exercise of its
discretion), (1) two original copies of Internal Revenue Service
Form 1001 or 4224 (or any successor forms), properly completed and
duly executed by such Lender, together with any other certificate or
statement of exemption required under the Internal Revenue Code or
the regulations issued thereunder to establish that such Lender is
not subject to deduction or withholding of United States federal
income tax with respect to any payments to such Lender of principal,
interest, fees or other amounts payable under any of the Loan
Documents or (2) if such Lender is not a "bank" or other Person
described in Section 881(c)(3) of the Internal Revenue Code and
cannot deliver either Internal Revenue Service Form 1001 or 4224
pursuant to clause (1) above, a Certificate re Non-Bank Status
together with two original copies of Internal Revenue Service Form
W-8 (or any successor form), properly completed and duly executed by
such Lender, together with any other certificate or statement of
exemption required under the Internal Revenue Code or the
regulations issued thereunder to establish that such Lender is not
subject to deduction or withholding of United States federal income
tax with respect to any payments to such Lender of interest payable
under any of the Loan Documents.
71
(b) Each Lender required to deliver any forms, certificates or
other evidence with respect to United States federal income tax
withholding matters pursuant to subsection 2.7B(iii)(a) hereby
agrees, from time to time after the initial delivery by such Lender
of such forms, certificates or other evidence, whenever a lapse in
time or change in circumstances renders such forms, certificates or
other evidence obsolete or inaccurate in any material respect, that
such Lender shall promptly (1) deliver to Administrative Agent for
transmission to Borrower two new original copies of Internal Revenue
Service Form 1001 or 4224, or a Certificate re Non-Bank Status and
two original copies of Internal Revenue Service Form W-8, as the
case may be, properly completed and duly executed by such Lender,
together with any other certificate or statement of exemption
required in order to confirm or establish that such Lender is not
subject to deduction or withholding of United States federal income
tax with respect to payments to such Lender under the Loan Documents
or (2) notify Administrative Agent and Borrower of its inability to
deliver any such forms, certificates or other evidence.
(c) Borrower shall not be required to pay any additional
amount to or on behalf of any Non-US Lender under clause (b) or (c)
of subsection 2.7B(ii) if such Lender shall have failed to satisfy
the requirements of clause (a) or (b)(1) of this subsection
2.7B(iii) or if the representations set forth in clauses (a) or (b)
of this subsection 2.7B(iii) made by any Lender are not true;
provided that if such Lender shall have satisfied the requirements
of subsection 2.7B(iii)(a) on the Closing Date (in the case of each
Lender listed on the signature pages hereof) or on the date of the
Assignment Agreement pursuant to which it became a Lender (in the
case of each other Lender), nothing in this subsection 2.7B(iii)(c)
shall relieve Borrower of its obligation to pay any additional
amounts pursuant to clause (c) of subsection 2.7B(ii) in the event
that, as a result of any change in any applicable law, treaty or
governmental rule, regulation or order, or any change in the
interpretation, administration or application thereof, such Lender
is no longer properly entitled to deliver forms, certificates or
other evidence at a subsequent date establishing the fact that such
Lender is not subject to withholding as described in subsection
2.7B(iii)(a).
(d) If any Lender shall become aware that it is entitled to
receive a refund in respect of Taxes or other taxes as to which it
has been indemnified by Borrower pursuant to this Section 2.7
(including any Taxes applicable to any additional amounts payable
under this Section), it shall promptly notify Borrower of the
availability of such refund and shall, within 30 days after receipt
of a request by Borrower, apply for such refund at the expense of
Borrower. If any Lender receives a refund in respect of any Taxes or
other taxes as to which it has been indemnified by Borrower pursuant
to this Section (including any Taxes applicable to any additional
amounts payable under this Section), it shall promptly notify
Borrower of such refund and shall, within 30 days after receipt of a
request by Borrower (or promptly upon receipt, if Borrower has
requested application for such refund pursuant hereto), repay such
refund (including any interest actually
72
received from the taxing authority with respect thereto) to Borrower
(to the extent of amounts that have been paid by Borrower under this
subsection 2.7B with respect to such refund), net of all
out-of-pocket expenses of such Lender and taxes imposed with respect
to such refund; provided that Borrower, upon the request of such
Lender, agrees to return such refund (plus penalties, interest or
other charges) to such Lender in the event such Lender is required
to repay such refund. Nothing contained in this subsection (e) shall
require any Lender to make available any tax returns (or any other
information relating to its taxes that it deems confidential).
(e) Any Lender claiming any additional amounts payable
pursuant to this Section 2.7, shall use reasonable efforts
(consistent with legal and regulatory restrictions) to file any
certificate or document requested by the Borrower if the making of
such a filing or change would avoid the need for or reduce the
amount of any such additional amounts that may thereafter accrue and
would not, in the sole determination of such Lender, be otherwise
disadvantageous to such Lender, and Borrower shall pay all
reasonable costs associated therewith.
C. Capital Adequacy Adjustment. If any Lender shall have determined that
the adoption, effectiveness, phase-in or applicability after the date hereof of
any law, rule or regulation (or any provision thereof) regarding capital
adequacy, or any change therein or in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Lender
(or its applicable lending office) with any guideline, request or directive
regarding capital adequacy (whether or not having the force of law) of any such
governmental authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of, or with reference to,
such Lender's Loans or Commitments or Letters of Credit or the IRB Reimbursement
Agreement or participations therein or other obligations hereunder with respect
to the Loans or the Letters of Credit or the IRB Reimbursement Agreement to a
level below that which such Lender or such controlling corporation could have
achieved but for such adoption, effectiveness, phase-in, applicability, change
or compliance (taking into consideration the policies of such Lender or such
controlling corporation with regard to capital adequacy), then from time to
time, within five Business Days after receipt by Borrower from such Lender of
the statement referred to in the next sentence, Borrower shall pay to such
Lender such additional amount or amounts as will compensate such Lender or such
controlling corporation on an after-tax basis for such reduction. Such Lender
shall deliver to Borrower (with a copy to Administrative Agent) a written
statement, setting forth in reasonable detail the basis of the calculation of
such additional amounts, which statement shall be conclusive and binding upon
all parties hereto absent manifest error.
2.8 Obligation of Lenders and Issuing Lender to Mitigate.
Each Lender and Issuing Lender agrees that, as promptly as practicable
after the officer of such Lender or Issuing Lender responsible for administering
the Loans or Letters of Credit of such Lender or Issuing Lender, as the case may
be, becomes aware of the occurrence of an event
73
or the existence of a condition that would cause such Lender to become an
Affected Lender or that would entitle such Lender or Issuing Lender to receive
payments under subsection 2.7 or subsection 3.6, it will, to the extent not
inconsistent with the internal policies of such Lender or Issuing Lender and any
applicable legal or regulatory restrictions, use reasonable efforts (i) to make,
issue, fund or maintain the Commitments of such Lender or the affected Loans or
Letters of Credit of such Lender or Issuing Lender through another lending or
letter of credit office of such Lender or Issuing Lender, or (ii) take such
other measures as such Lender or Issuing Lender may deem reasonable, if as a
result thereof the circumstances which would cause such Lender to be an Affected
Lender would cease to exist or the additional amounts which would otherwise be
required to be paid to such Lender or Issuing Lender pursuant to subsection 2.7
or subsection 3.6 would be materially reduced and if, as determined by such
Lender or Issuing Lender in its sole discretion, the making, issuing, funding or
maintaining of such Commitments or Loans or Letters of Credit through such other
lending or letter of credit office or in accordance with such other measures, as
the case may be, would not otherwise materially adversely affect such
Commitments or Loans or Letters of Credit or the interests of such Lender or
Issuing Lender; provided that such Lender or Issuing Lender will not be
obligated to utilize such other lending or letter of credit office pursuant to
this subsection 2.8 unless Borrower agrees to pay all incremental expenses
incurred by such Lender or Issuing Lender as a result of utilizing such other
lending or letter of credit office as described in clause (i) above. A
certificate as to the amount of any such expenses payable by Borrower pursuant
to this subsection 2.8 (setting forth in reasonable detail the basis for
requesting such amount) submitted by such Lender or Issuing Lender to Borrower
(with a copy to Administrative Agent) shall be conclusive absent manifest error.
Section 3. LETTERS OF CREDIT; IRB REIMBURSEMENT AGREEMENT
3.1 Issuance of Letters of Credit, Execution of IRB Reimbursement Agreement
and Lenders' Purchase of Participations Therein.
A. Revolving Letters of Credit; Acquisition Letter of Credit; and IRB
Reimburse- ment Agreement.
1. Revolving Letters of Credit. In addition to Borrower requesting
that Lenders make Loans pursuant to subsection 2.1A, Borrower may request,
in accordance with the provisions of this subsection 3.1, from time to
time during the period from the Closing Date to but excluding the
Revolving Loan Commitment Termination Date, that Issuing Lender issue
Revolving Letters of Credit for the account of Borrower for the purposes
specified in the definition of Revolving Letter of Credit. Subject to the
terms and conditions of this Agreement and in reliance upon the
representations and warranties of Borrower herein set forth, Issuing
Lender shall issue Revolving Letters of Credit in accordance with the
provisions of this subsection 3.1; provided that Borrower shall not
request that Issuing Lender issue and Issuing Lender shall not issue:
74
(i) any Revolving Letter of Credit if, after giving effect to
such issuance, the Total Utilization of Revolving Loan Commitments
(including the Maximum Exposure Under IRB Reimbursement Agreement),
would exceed the lesser of (1) the Revolving Loan Commitments then
in effect and (2) the Borrowing Base then in effect;
(ii) any Revolving Letter of Credit if, after giving effect to
such issuance, the Revolving Letter of Credit Usage would exceed
$3,000,000;
(iii) any Revolving Letter of Credit having an expiration date
(a) later than the earlier of (x) the Revolving Loan Commitment
Termination Date and (y) the date which is one year from the date of
issuance of such Revolving Letter of Credit; provided that the
immediately preceding clause (y) shall not prevent Issuing Lender
from agreeing that a Revolving Letter of Credit will automatically
be extended for one or more successive periods not to exceed one
year each unless Issuing Lender elects not to extend for any such
additional period; and provided, further that Issuing Lender shall
elect not to extend such Revolving Letter of Credit if it has
knowledge that an Event of Default has occurred and is continuing
(and has not been waived in accordance with subsection 10.6) at the
time Issuing Lender must elect whether or not to allow such
extension or (b) that is otherwise unacceptable to Issuing Lender in
its reasonable discretion; or
(iv) any Revolving Letter of Credit denominated in a currency
other than Dollars.
2. Acquisition Letter of Credit. In addition to Borrower requesting
that Lenders make Loans pursuant to subsection 2.1A and that Issuing
Lender issue Revolving Letters of Credit pursuant to subsection 3.1A.1,
Borrower may request, in accordance with the provisions of this subsection
3.1A.2, that Issuing Lender issue the Acquisition Letter of Credit for the
account of Borrower for the purposes specified in the definition of
Acquisition Letter of Credit. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of
Borrower herein set forth, Issuing Lender shall issue the Acquisition
Letter of Credit in accordance with the provisions of this subsection 3.1;
provided that (i) the maximum aggregate amount which is or at any time may
become available for drawing under the Acquisition Letter of Credit shall
not exceed $58,000,000 and (ii) the Acquisition Letter of Credit shall
have an expiration date no later than January 8, 1997.
3. IRB Reimbursement Agreement. Borrower may request, in accordance
with the provisions of this subsection 3.1A.3, that Issuing Lender enter
into the IRB Reimbursement Agreement for the account of Borrower and its
Subsidiaries. Subject to the terms and conditions of this Agreement and in
reliance upon the representations and warranties of Borrower set forth
herein, Issuing Lender shall make IRB Reimbursement Advances in accordance
with the provisions of the IRB Reimbursement Agreement.
75
B. Mechanics of Issuance.
(i) Notice of Issuance. Whenever Borrower desires the issuance of a
Letter of Credit, it shall deliver to Administrative Agent a Notice of
Issuance of Letter of Credit substantially in the form of Exhibit III
annexed hereto no later than 11:00 A.M. (Dallas, Texas time) at least five
Business Days (in the case of Revolving Letters of Credit), or one
Business Day (in the case of the Acquisition Letter of Credit), or in each
case such shorter period as may be agreed to by Issuing Lender in any
particular instance, in advance of the proposed date of issuance. The
Notice of Issuance of Letter of Credit shall specify (a) the proposed date
of issuance (which shall be a Business Day), (b) whether the Letter of
Credit is to be a Revolving Letter of Credit or Acquisition Letter of
Credit, (c) the face amount of the Letter of Credit, (d) the expiration
date of the Letter of Credit, (e) the name and address of the beneficiary,
and (f) in the case of a Revolving Letter of Credit, either the verbatim
text of the proposed Revolving Letter of Credit or the proposed terms and
conditions thereof, including a precise description of any documents to be
presented by the beneficiary which, if presented by the beneficiary prior
to the expiration date of the Revolving Letter of Credit, would require
Issuing Lender to make payment under the Revolving Letter of Credit;
provided that Issuing Lender, in its reasonable discretion, may require
changes in the text of the proposed Revolving Letter of Credit or any such
documents; and provided, further that no Revolving Letter of Credit shall
require payment against a conforming draft to be made thereunder on the
same business day (under the laws of the jurisdiction in which the office
of Issuing Lender to which such draft is required to be presented is
located) that such draft is presented if such presentation is made after
10:00 A.M. (in the time zone of such office of Issuing Lender) on such
business day.
Borrower shall notify Issuing Lender prior to the issuance of any
Letter of Credit in the event that any of the matters to which Borrower is
required to certify in the applicable Notice of Issuance of Letter of
Credit is no longer true and correct as of the proposed date of issuance
of such Letter of Credit, and upon the issuance of any Letter of Credit,
Borrower shall be deemed to have re-certified, as of the date of such
issuance, as to the matters to which Borrower is required to certify in
the applicable Notice of Issuance of Letter of Credit.
(ii) Issuance of Letter of Credit. Upon satisfaction or waiver (in
accordance with subsection 10.6) of the conditions set forth in subsection
4.3, Issuing Lender shall issue the requested Letter of Credit in
accordance with Issuing Lender's standard operating procedures.
(iii) Execution of IRB Reimbursement Agreement. Upon satisfaction or
waiver (in accordance with Section 10.6) of the conditions set forth in
subsection 4.1, Issuing Lender shall enter into IRB Reimbursement
Agreement. Each Lender agrees that, unless otherwise notified by Issuing
Lender, the IRB Reimbursement Agreement shall be executed and delivered by
Issuing Lender on the Closing Date.
76
(iv) Notification to Lenders. Upon the issuance of any Letter of
Credit Issuing Lender shall promptly notify Administrative Agent and each
other Lender of such issuance, which notice shall be accompanied by a copy
of such Letter of Credit and identify the amount of such Lender's
respective participation in such Letter of Credit, determined in
accordance with subsection 3.1C.
C. Lenders' Purchase of Participations.
(i) Letters of Credit. Immediately upon the issuance of each Letter
of Credit, each Lender shall be deemed to, and hereby agrees to, have
irrevocably purchased from Issuing Lender a participation in such Letter
of Credit and any drawings honored thereunder in an amount equal to such
Lender's Pro Rata Share of the maximum amount which is or at any time may
become available to be drawn thereunder (assuming, for purposes of
determining such Pro Rata Share with respect to the Acquisition Letter of
Credit, that the Acquisition Letter of Credit is comprised of up to
$33,000,000.00 of Tranche A Term Loans and $25,000,000 of Tranche B Term
Loans).
(ii) IRB Reimbursement Agreement. Immediately upon the execution of
the IRB Reimbursement Agreement, each Lender shall be deemed to, and
hereby agrees to, have irrevocably purchased from Issuing Lender a
participation in the IRB Reimbursement Agreement (including any IRB
Reimbursement Advances thereunder) in an amount equal to such Lender's Pro
Rata Share of the Maximum Exposure Under IRB Reimbursement Agreement
3.2 Letter of Credit Fees; IRB Reimbursement Account Fees.
A. Letter of Credit Fees. Borrower agrees to pay the following amounts
with respect to Letters of Credit issued hereunder:
(i) with respect to each Letter of Credit, (a) a fronting fee,
payable directly to Issuing Lender for its own account, equal to 0.25% per
annum of the daily amount available to be drawn under such Letter of
Credit and (b) a letter of credit fee, payable to Administrative Agent for
the account of Lenders, equal to (A) the product of (x) the Applicable
Margin for Revolving Loans made as Eurodollar Rate Loans and (y) the
available amount to be drawn under any Revolving Letter of Credit and (B)
3% per annum of the available amount to be drawn under the Acquisition
Letter of Credit, each such fronting fee or letter of credit fee to be
payable in arrears on and to (but excluding) each March 31, June 30,
September 30 and December 31 of each year commencing on March 31, 1997 and
in the case of such fees with respect to the Acquisition Letter of Credit,
on January 8, 1997, and, in each case, computed on the basis of a 360-day
year for the actual number of days elapsed; and
(ii) with respect to the issuance, amendment or transfer of each
Letter of Credit and each payment of a drawing made thereunder (without
duplication of the fees payable under clauses (i) above), documentary and
processing charges payable directly to Issuing
77
Lender for its own account in accordance with Issuing Lender's standard
schedule for such charges in effect at the time of such issuance,
amendment, transfer or payment, as the case may be.
For purposes of calculating any fees payable under clauses (i) and (ii) of this
subsection 3.2A, the daily amount available to be drawn under any Letter of
Credit shall be determined as of the close of business on any date of
determination. Promptly upon receipt by Administrative Agent of any amount
described in clause (i)(b) of this subsection 3.2A, Administrative Agent shall
distribute to each Lender its Pro Rata Share of such amount (determined in
accordance with the parenthetical in subsection 3.1C in the case of the
Acquisition Letter of Credit).
B. IRB Reimbursement Agreement Fees. Borrower agrees to pay the following
amounts with respect to the IRB Reimbursement Agreement:
(i) with respect to the IRB Reimbursement Agreement, (a) a fronting
fee, payable directly to Issuing Lender for its own account, equal to
0.25% per annum of the Maximum Exposure Under IRB Reimbursement Agreement
and (b) an IRB Reimbursement Advance fee, payable to Administrative Agent
for the account of Lenders, equal to the product of (x) the Applicable
Margin for Revolving Loans made as Eurodollar Rate Loans and (y) the
Maximum Exposure Under IRB Reimbursement Agreement, each such fronting fee
or IRB Reimbursement Advance fee to be payable in arrears on and to (but
excluding) each March 31, June 30, September 30 and December 31 of each
year commencing on March 31, 1997 and, in each case, computed on the basis
of a 360-day year for the actual number of days elapsed; and
(ii) with respect to the IRB Reimbursement Agreement and each IRB
Reimbursement Advance (without duplication of the fees payable under
clause (i) above), documentary and processing charges payable directly to
Issuing Lender for its own account in accordance with Issuing Lender's
standard schedule for such charges in effect at the time of such payment
(treating, for these purposes, the execution of the IRB Reimbursement
Agreement as the issuance of a Letter of Credit and each IRB Reimbursement
Advance as a draw under a Letter of Credit).
For purposes of calculating any fees payable under clauses (i) and (ii) of this
subsection 3.2B, the daily Maximum Exposure Under IRB Reimbursement Agreement
shall be determined as of the close of business on any date of determination.
Promptly upon receipt by Administrative Agent of any amount described in clause
(i) of this subsection 3.2B, Administrative Agent shall distribute to each
Lender its Pro Rata Share of such amount.
3.3 Drawings and Reimbursement of Amounts Paid Under Letters of Credit and the
IRB Reimbursement Agreement.
A. Responsibility of Issuing Lender With Respect to Drawings. In
determining whether to honor any drawing under any Letter of Credit by the
beneficiary thereof, Issuing Lender shall be responsible only to examine the
documents delivered under such Letter of Credit
78
with reasonable care so as to ascertain whether they appear on their face to be
in accordance with the terms and conditions of such Letter of Credit.
B. Reimbursement by Borrower of Amounts Paid Under Letters of Credit and
the IRB Reimbursement Agreement. In the event that either (x) Issuing Lender has
determined to honor a drawing under a Letter of Credit issued by it or (y)
Issuing Lender makes any IRB Reimbursement Advance under the IRB Reimbursement
Agreement, Issuing Lender shall immediately notify Borrower, and Borrower shall
reimburse Issuing Lender on or before the Business Day immediately following the
date on which such drawing is honored or such IRB Reimbursement Advance is made,
as applicable (the "Reimbursement Date"), in an amount in Dollars and in same
day funds equal to the amount of such honored drawing or such IRB Reimbursement
Advance; provided that, anything contained in this Agreement to the contrary
notwithstanding, (i) unless Borrower shall have notified Administrative Agent
and Issuing Lender prior to 10:00 A.M. (Dallas, Texas time) on the date such
drawing is honored or IRB Reimbursement Advance is made that Borrower intends to
reimburse Issuing Lender for the amount of such honored drawing or IRB
Reimbursement Advance with funds other than the proceeds of Revolving Loans (or
in the case of the Acquisition Letter of Credit, the Term Loans), Borrower shall
be deemed to have given a timely Notice of Borrowing to Administrative Agent
requesting Lenders to make Revolving Loans (or in the case of the Acquisition
Letter of Credit, Term Loans) that are Base Rate Loans on the Reimbursement Date
in an amount in Dollars equal to the amount of such honored drawing or IRB
Reimbursement Advance and (ii) subject to satisfaction or waiver of the
conditions specified in subsection 4.2B, Lenders shall, on the Reimbursement
Date, make Revolving Loans (or in the case of the Acquisition Letter of Credit,
Term Loans) that are Base Rate Loans in the amount of such honored drawing or
IRB Reimbursement Advance, the proceeds of which shall be applied directly by
Administrative Agent to reimburse Issuing Lender for the amount of such honored
drawing or IRB Reimbursement Advance; and provided, further that if for any
reason proceeds of Revolving Loans (or in the case of the Acquisition Letter of
Credit, the Term Loans) are not received by Issuing Lender on the Reimbursement
Date in an amount equal to the amount of such honored drawing or IRB
Reimbursement Advance, Borrower shall reimburse Issuing Lender, on demand, in an
amount in same day funds equal to the excess of the amount of such honored
drawing or IRB Reimbursement Advance over the aggregate amount of such Loans, if
any, which are so received. Nothing in this subsection 3.3B shall be deemed to
relieve any Lender from its obligation to make Loans on the terms and conditions
set forth in this Agreement, and Borrower shall retain any and all rights it may
have against any Lender resulting from the failure of such Lender to make such
Loans under this subsection 3.3B.
C. Payment by Lenders of Unreimbursed Amounts Paid Under Letters of Credit
or the IRB Reimbursement Agreement.
(i) Payment by Lenders. In the event that Borrower shall fail for
any reason to reimburse Issuing Lender as provided in subsection 3.3B in
an amount equal to the amount of any drawing honored by Issuing Lender
under a Letter of Credit issued by it or under the IRB Reimbursement
Agreement, as applicable, Issuing Lender shall promptly notify each other
Lender of the unreimbursed amount of such honored drawing or IRB
79
Reimbursement Advance and of such other Lender's respective participation
therein based on such Lender's Pro Rata Share (determined in accordance
with the parenthetical in subsection 3.1C in the case of the Acquisition
Letter of Credit). Each Lender shall make available to Issuing Lender an
amount equal to its respective participation, in Dollars and in same day
funds, at the office of Issuing Lender specified in such notice, not later
than 2:00 P.M. (Dallas, Texas time) on the first business day (under the
laws of the jurisdiction in which such office of Issuing Lender is
located) after the date notified by Issuing Lender. In the event that any
Lender fails to make available to Issuing Lender on such business day the
amount of such Lender's participation in such Letter of Credit or the IRB
Reimbursement Agreement, as applicable, as provided in this subsection
3.3C, Issuing Lender shall be entitled to recover such amount on demand
from such Lender together with interest thereon at the rate customarily
used by Issuing Lender for the correction of errors among banks for three
Business Days and thereafter at the Base Rate. Nothing in this subsection
3.3C shall be deemed to prejudice the right of any Lender to recover from
Issuing Lender any amounts made available by such Lender to Issuing Lender
pursuant to this subsection 3.3C in the event that it is determined by the
final judgment of a court of competent jurisdiction that the payment with
respect to a Letter of Credit or the IRB Reimbursement Agreement by
Issuing Lender in respect of which payment was made by such Lender
constituted gross negligence or willful misconduct on the part of Issuing
Lender.
(ii) Distribution to Lenders of Reimbursements Received From
Borrower. In the event Issuing Lender shall have been reimbursed by other
Lenders pursuant to subsection 3.3C(i) for all or any portion of any
drawing honored by Issuing Lender under a Letter of Credit issued by it,
or under the IRB Reimbursement Agreement, as applicable, Issuing Lender
shall distribute to each other Lender which has paid all amounts payable
by it under subsection 3.3C(i) with respect to such honored drawing such
other Lender's Pro Rata Share of all payments subsequently received by
Issuing Lender from Borrower in reimbursement of such honored drawing or
IRB Reimbursement Advance when such payments are received. Any such
distribution shall be made to a Lender at its primary address set forth
below its name on the appropriate signature page hereof or at such other
address as such Lender may request.
D. Interest on Amounts Paid Under Letters of Credit and the IRB Reimburse-
ment Agreement.
(i) Payment of Interest by Borrower. Borrower agrees to pay to
Issuing Lender, with respect to drawings honored under any Letters of
Credit issued by it, and with respect to IRB Reimbursement Advances,
interest on the amount paid by Issuing Lender in respect of each such
honored drawing or IRB Reimbursement Advance from the date such drawing is
honored or IRB Reimbursement Advance is made to but excluding the date
such amount is reimbursed by Borrower (including any such reimbursement
out of the proceeds of Revolving Loans pursuant to subsection 3.3B) at a
rate equal to (a) for the period from the date such drawing is honored or
IRB Reimbursement Advance is made to but excluding the Reimbursement Date,
the rate then
80
in effect under this Agreement with respect to Revolving Loans that are
Base Rate Loans and (b) thereafter, a rate which is 2% per annum in excess
of the rate of interest otherwise payable under this Agreement with
respect to Revolving Loans that are Base Rate Loans. Interest payable
pursuant to this subsection 3.3D(i) shall be computed on the basis of a
365-day year for the actual number of days elapsed in the period during
which it accrues and shall be payable on demand or, if no demand is made,
on the date on which the related drawing under a Letter of Credit or IRB
Reimbursement Advance is reimbursed in full.
(ii) Distribution of Interest Payments by Issuing Lender. Promptly
upon receipt by Issuing Lender of any payment of interest pursuant to
subsection 3.3D(i) with respect to a drawing honored under a Letter of
Credit issued by it, or with respect to an IRB Reimbursement Advance, (a)
Issuing Lender shall distribute to each other Lender, out of the interest
received by Issuing Lender in respect of the period from the date such
drawing is honored or such IRB Reimbursement is made to but excluding the
date on which Issuing Lender is reimbursed for the amount of such drawing
or IRB Reimbursement Advance (including any such reimbursement out of the
proceeds of Revolving Loans or Term Loans, as the case may be, pursuant to
subsection 3.3B), the amount that such other Lender would have been
entitled to receive either (x) in respect of the letter of credit fee that
would have been payable in respect of such Letter of Credit for such
period pursuant to subsection 3.2 if no drawing had been honored under
such Letter of Credit, or (y) in respect of the IRB Reimbursement
Agreement fee that would have been payable for such period pursuant to
subsection 3.2 if no IRB Reimbursement Advance had been made, as
applicable, and (b) in the event Issuing Lender shall have been reimbursed
by other Lenders pursuant to subsection 3.3C(i) for all or any portion of
such honored drawing, or IRB Reimbursement Advance, Issuing Lender shall
distribute to each other Lender which has paid all amounts payable by it
under subsection 3.3C(i) with respect to such honored drawing or IRB
Reimbursement Advance such other Lender's Pro Rata Share of any interest
received by Issuing Lender in respect of that portion of such honored
drawing or IRB Reimbursement Advance so reimbursed by other Lenders for
the period from the date on which Issuing Lender was so reimbursed by
other Lenders to but excluding the date on which such portion of such
honored drawing or IRB Reimbursement Advance is reimbursed by Borrower.
Any such distribution shall be made to a Lender at its primary address set
forth below its name on the appropriate signature page hereof or at such
other address as such Lender may request.
3.4 Obligations Absolute.
The obligation of Borrower to reimburse Issuing Lender for drawings
honored under Letters of Credit and IRB Reimbursement Advances and to repay any
Revolving Loans made by Lenders pursuant to subsection 3.3B and the obligations
of Lenders under subsection 3.3C(i) shall be unconditional and irrevocable and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances including, without limitation, any of the following circumstances:
81
(i) any lack of validity or enforceability of any Letter of Credit
or the IRB Reimbursement Agreement;
(ii) the existence of any claim, set-off, defense or other right
which Borrower or any Lender may have at any time against a beneficiary or
any transferee of any Letter of Credit (or any Persons for whom any such
transferee may be acting) or any beneficiary of the IRB Reimbursement
Agreement, Issuing Lender or other Lender or any other Person or, in the
case of a Lender, against Borrower, whether in connection with this
Agreement, the transactions contemplated herein or any unrelated
transaction (including any underlying transaction between Borrower or one
of its Subsidiaries and the beneficiary for which any Letter of Credit was
procured);
(iii) any draft or other document presented under any Letter of
Credit or with respect to the IRB Reimbursement Agreement proving to be
forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;
(iv) payment by Issuing Lender under any Letter of Credit against
presentation of a draft or other document which does not comply with the
terms of such Letter of Credit;
(v) any adverse change in the business, operations, properties,
assets, condition (financial or otherwise) or prospects of Borrower or any
of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan Document by any
party thereto;
(vii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing; or
(viii) the fact that an Event of Default or a Potential Event of
Default shall have occurred and be continuing;
provided, in each case, that payment by Issuing Lender under the applicable
Letter of Credit or with respect to the IRB Reimbursement Agreement shall not
have constituted gross negligence or willful misconduct of Issuing Lender under
the circumstances in question.
3.5 Indemnification; Nature of Issuing Lender's Duties.
A. Indemnification. In addition to amounts payable as provided in
subsection 3.6, Borrower hereby agrees to protect, indemnify, pay and save
harmless Issuing Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and allocated costs of internal
counsel) which Issuing Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit by Issuing
Lender, other than, subject to the following
82
clause (ii), the wrongful dishonor by Issuing Lender of a proper demand for
payment made under any Letter of Credit issued by it, (ii) the failure of
Issuing Lender to honor a drawing under any such Letter of Credit as a result of
any act or omission, whether rightful or wrongful, of any present or future de
jure or de facto government or governmental authority (all such acts or
omissions herein called "Governmental Acts") or (iii) the execution, delivery
and performance of the IRB Reimbursement Agreement, in any case, other than as a
result of the gross negligence or willful misconduct of Issuing Lender.
B. Nature of Issuing Lender's Duties. As between Borrower and Issuing
Lender, Borrower assumes all risks of the acts and omissions of, or misuse of
the Letters of Credit issued by Issuing Lender by, the respective beneficiaries
of such Letters of Credit. In furtherance and not in limitation of the
foregoing, Issuing Lender shall not be responsible for: (i) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document submitted by
any party in connection with the application for and issuance of any such Letter
of Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or assign
any such Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or ineffective for
any reason; (iii) failure of the beneficiary of any such Letter of Credit to
comply fully with any conditions required in order to draw upon such Letter of
Credit; (iv) errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether
or not they be in cipher; (v) errors in interpretation of technical terms; (vi)
any loss or delay in the transmission or otherwise of any document required in
order to make a drawing under any such Letter of Credit or of the proceeds
thereof; (vii) the misapplication by the beneficiary of any such Letter of
Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any
consequences arising from causes beyond the control of Issuing Lender, including
without limitation any Governmental Acts, and none of the above shall affect or
impair, or prevent the vesting of, any of Issuing Lender's rights or powers
hereunder, except, in any case, as a result of the gross negligence or willful
misconduct of the Issuing Lender. As between Borrower and Issuing Lender,
Borrower assumes all risks of the acts and omissions of the beneficiaries of the
IRB Reimbursement Agreement.
In furtherance and extension and not in limitation of the specific
provisions set forth in the first paragraph of this subsection 3.5B, any action
taken or omitted by Issuing Lender under or in connection with the Letters of
Credit issued by it, the IRB Reimbursement Agreement or any documents and
certificates delivered thereunder, if taken or omitted in good faith and without
gross negligence or willful misconduct, shall not put Issuing Lender under any
resulting liability to Borrower.
Notwithstanding anything to the contrary contained in this subsection 3.5,
Borrower shall retain any and all rights it may have against Issuing Lender for
any liability arising solely out of the gross negligence or willful misconduct
of Issuing Lender, as determined by a final judgment of a court of competent
jurisdiction.
83
3.6 Increased Costs and Taxes Relating to Letters of Credit.
Subject to the provisions of subsection 2.7B (which shall be controlling
with respect to the matters covered thereby), in the event that Issuing Lender
or Lender shall determine (which determination shall, absent manifest error, be
final and conclusive and binding upon all parties hereto) that any law, treaty
or governmental rule, regulation or order, or any change therein or in the
interpretation, administration or application thereof (including the
introduction of any new law, treaty or governmental rule, regulation or order),
or any determination of a court or governmental authority, in each case that
becomes effective after the date hereof, or compliance by Issuing Lender or
Lender with any guideline, request or directive issued or made after the date
hereof by any central bank or other governmental or quasi-governmental authority
(whether or not having the force of law):
(i) subjects Issuing Lender or Lender (or its applicable lending or
letter of credit office) to any additional Tax (other than any Tax on the
overall net income of Issuing Lender or Lender) with respect to the
issuing or maintaining of any Letters of Credit or the purchasing or
maintaining of any participations therein or any other obligations under
this Section 3, whether directly or by such being imposed on or suffered
by any particular Issuing Lender;
(ii) imposes, modifies or holds applicable any reserve (including
without limitation any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement in respect of any Letters of Credit issued by Issuing Lender
or participations therein purchased by any Lender; or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting Issuing Lender or Lender (or its applicable
lending or letter of credit office) regarding this Section 3, any Letter
of Credit or any participation therein or the IRB Reimbursement Agreement;
and the result of any of the foregoing is (x) to increase the cost to Issuing
Lender or Lender of agreeing to issue, issuing or maintaining any Letter of
Credit or agreeing to purchase, purchasing or maintaining any participation
therein or purchasing its obligations under the IRB Reimbursement Agreement or
(y) to reduce any amount received or receivable by Issuing Lender or Lender (or
its applicable lending or letter of credit office) with respect thereto; then,
in any case, Borrower shall promptly pay to Issuing Lender or Lender, upon
receipt of the statement referred to in the next sentence, such additional
amount or amounts as may be necessary to compensate Issuing Lender or Lender for
any such increased cost or reduction in amounts received or receivable
hereunder. Issuing Lender or Lender, as the case may be, shall deliver to
Borrower a written statement, setting forth in reasonable detail the basis for
calculating the additional amounts owed to Issuing Lender or Lender under this
subsection 3.6, which statement shall be conclusive and binding upon all parties
hereto absent manifest error.
84
Section 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT
The obligations of Lenders to make Loans and the issuance of Letters of
Credit hereunder are subject to the satisfaction of the following conditions.
4.1 Conditions to Term Loans, Initial Revolving Loans, Swing Line Loans and
Acquisi- tion Letter of Credit.
The obligations of Lenders to make any Term Loans and any Revolving Loans
and Swing Line Loans to be made on the Closing Date, to issue the Acquisition
Letter of Credit and to enter into the IRB Reimbursement Agreement on the
Closing Date are, in addition to the conditions precedent specified in
subsections 4.2 and 4.3, as the case may be, subject to prior or concurrent
satisfaction of the following conditions:
A. Loan Party Documents. On or before the Closing Date, Parent shall, and
shall cause each other Loan Party to, deliver to Lenders (or to Administrative
Agent for Lenders with sufficient originally executed copies, where appropriate,
for each Lender and its counsel) the following with respect to Parent or such
Loan Party, as the case may be, each, unless otherwise noted, dated the Closing
Date:
(i) Certified copies of the Certificate or Articles of Incorporation
of such Person, together with a good standing certificate from the
Secretary of State of its jurisdiction of incorporation and each other
state in which such Person is qualified as a foreign corporation to do
business and, to the extent generally available, a certificate or other
evidence of good standing as to payment of any applicable franchise or
similar taxes from the appropriate taxing authority of each of such
jurisdictions, each dated a recent date prior to the Closing Date;
(ii) Copies of the Bylaws of such Person, certified as of the
Closing Date by such Person's corporate secretary or an assistant
secretary;
(iii) Resolutions of the Board of Directors of such Person approving
and authorizing the execution, delivery and performance of the Loan
Documents and Related Agreements to which it is a party, certified as of
the Closing Date by the corporate secretary or an assistant secretary of
such Person as being in full force and effect without modification or
amendment;
(iv) Signature and incumbency certificates of the officers of such
Person executing the Loan Documents to which it is a party;
(v) Executed originals of the Loan Documents to which such Person is
a party;
(vi) Correct copies of all Related Agreements entered into on or
prior to the Closing Date including all exhibits and schedules thereto;
and
85
(vii) Such other documents as Administrative Agent may reasonably
request.
B. No Material Adverse Effect. There shall have occurred no Material
Adverse Effect (in the reasonable opinion of Administrative Agent) since
September 30, 1995 in the case of Borrower and Custom Foods Products, Inc. and
since December 31, 1995 in the case of Quality Foods, L.P., QF Acquisition and
QF Management.
C. Corporate and Capital Structure, Ownership, Management, Etc.
(i) Corporate Structure. The corporate organizational structure of
Parent and its Subsidiaries, both before and after giving effect to the
Acquisition and the Restructuring, shall be as set forth on Schedule 4.1C
annexed hereto.
(ii) Capital Structure and Ownership. The capital structure and
ownership of Parent and Borrower, both before and after giving effect to
the Acquisition and the Restructuring, shall be as set forth on Schedule
4.1C annexed hereto.
(iii) Management; Employment Contracts. The management structure of
Parent and Borrower after giving effect to the Acquisition and the
Restructuring shall be as set forth on Schedule 4.1C annexed hereto, and
Administrative Agent shall have received copies of, and shall be satisfied
with the form and substance of (1) any and all employment contracts with
and senior management of Parent, Borrower and its Subsidiaries, (2) any
and all shareholders agreement among any of the shareholders of Parent and
(3) any stock option plans and similar arrangements provided by Parent to
any Person.
D. Proceeds of Bridge Financing.
(i) Bridge Financing. Borrower and its Subsidiaries shall have
entered into the Bridge Financing Documents to which it is a party and the
Borrower shall have received an gross aggregate principal amount of not
less than $25,000,000 under the Bridge Financing.
(ii) Use of Proceeds by Borrower. Borrower shall have provided
evidence satisfactory to Administrative Agent that the proceeds of the
Bridge Financing have been irrevocably committed, prior to the application
of the proceeds of any Term Loans and any Revolving Loans made on the
Closing Date or the issuance of the Acquisition Letter of Credit, to the
payment of a portion of the Acquisition Financing Requirements.
E. Matters Relating to Existing Indebtedness and Senior Guaranteed Notes.
(i) Termination of Certain Existing Indebtedness and Related Liens;
Existing Letters of Credit. On the Closing Date, Borrower and its
Subsidiaries shall have (a) repaid in full all Indebtedness set forth on
Schedule 4.1E (the aggregate principal amount of which Indebtedness shall
not exceed $36,500,000), (b) terminated any commitments
86
to lend or make other extensions of credit thereunder, (c) delivered to
Administrative Agent all documents or instruments necessary to release all
Liens securing Indebtedness or other obligations of Borrower and its
Subsidiaries thereunder, and (d) made arrangements satisfactory to
Administrative Agent with respect to the cancellation of any letters of
credit outstanding thereunder or the issuance of Letters of Credit to
support the obligations of Borrower and its Subsidiaries with respect
thereto.
(ii) Consent. Borrower shall have obtained all such consents with
respect to the IRB Trust Indenture as may be required to permit the
consummation of the Acquisition and the Restructuring, the related
financings (including the incurrence of the Obligations hereunder) and the
other transactions contemplated by the Loan Documents and the Related
Agreements. The terms and conditions of such consents shall be in form and
substance satisfactory to Administrative Agent. Borrower shall have
delivered to Administrative Agent a fully executed or conformed copy of
the IRB Trust Indenture.
(iii) Existing Indebtedness to Remain Outstanding. Administrative
Agent shall have received an Officers' Certificate of Borrower stating
that, after giving effect to the transactions described in this subsection
4.1E, the Indebtedness of Loan Parties (other than Indebtedness under the
Loan Documents, the Bridge Financing Documents and the Seller Notes) shall
consist solely of Indebtedness and Capital Leases (in such outstanding
principal amounts) described in Schedule 7.1 annexed hereto.
(iv) Description of Senior Guaranteed Notes. On or before the
Closing Date, Lenders shall have received from Borrower a draft of the
"Description of the Notes" section of the Preliminary Offering Memorandum
relating to the Senior Guaranteed Notes, the terms and conditions of which
shall be reasonably satisfactory to Administrative Agent and Requisite
Lenders.
F. Necessary Governmental Authorizations and Consents; Expiration of
Waiting Periods, Etc. Borrower shall have obtained all Governmental
Authorizations and all consents of other Persons, in each case that are
necessary or advisable in connection with the Acquisition and the Restructuring,
the other transactions contemplated by the Loan Documents and the Related
Agreements, and the continued operation of the business conducted by Quality
Foods, L.P. in substantially the same manner as conducted prior to the
consummation of the Acquisition and the Restructuring, and each of the foregoing
shall be in full force and effect, in each case other than those the failure to
obtain or maintain which, either individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. All applicable waiting
periods shall have expired without any action being taken or threatened by any
competent authority which would restrain, prevent or otherwise impose adverse
conditions on the Acquisition or the Restructuring or the financing thereof. No
action, request for stay, petition for review or rehearing, reconsideration, or
appeal with respect to any of the foregoing shall be pending, and the time for
any applicable agency to take action to set aside its consent on its own motion
shall have expired.
87
G. Consummation of Acquisition and Restructuring.
(i) All conditions to the Acquisition and the Restructuring,
including those set forth in the Acquisition Agreement, shall have been
satisfied or the fulfillment of any such conditions shall have been waived
with the consent of Administrative Agent;
(ii) the Acquisition shall have become effective in accordance with
the terms of the Acquisition Agreement;
(iii) the Restructuring shall have become effective in accordance
with applicable law;
(iv) the Seller Notes shall have been issued to each of the Sellers
and the aggregate cash consideration (including the Seller Notes) paid to
the Sellers in connection with the Acquisition shall not exceed
$63,000,000;
(v) Transaction Costs shall not exceed $9,000,000, and
Administrative Agent shall have received evidence to its satisfaction to
such effect; and
(vi) Agent shall have received an Officers' Certificate of Borrower
to the effect set forth in clauses (i)-(v) above and stating that Borrower
will proceed to consummate the Acquisition and the Restructuring
immediately upon the making of the initial Loans or the issuance of the
Acquisition Letter of Credit.
H. Closing Date Mortgages; Closing Date Mortgage Policies; Etc.
Administrative Agent shall have received from Borrower and each applicable
Subsidiary Guarantor:
(i) Closing Date Mortgages. Fully executed and notarized Mortgages
(each a "Closing Date Mortgage" and, collectively, the "Closing Date
Mortgages"), in proper form for recording in all appropriate places in all
applicable jurisdictions, encumbering each Real Property Asset listed in
Part A of Schedule 4.1H annexed hereto (each a "Closing Date Mortgaged
Property" and, collectively, the "Closing Date Mortgaged Properties");
(ii) Opinions of Local Counsel. An opinion of counsel (which counsel
shall be reasonably satisfactory to Administrative Agent) in each state in
which a Closing Date Mortgaged Property is located with respect to the
enforceability of the form(s) of Closing Date Mortgages to be recorded in
such state and such other matters as Administrative Agent may reasonably
request, in each case in form and substance reasonably satisfactory to
Administrative Agent;
(iii) Landlord Consents and Estoppels; Recorded Leasehold Interests.
In the case of each Real Property Asset listed on Part B of Schedule 4.1H,
a Landlord Consent and Estoppel with respect thereto;
88
(iv) Title Insurance. (a) ALTA mortgagee title insurance policies or
unconditional commitments therefor (the "Closing Date Mortgage Policies")
issued by the Title Company with respect to the Closing Date Mortgaged
Properties listed (and marked with an asterisk) in Part A of Schedule 4.1H
annexed hereto, in amounts not less than the respective amounts designated
therein with respect to any particular Closing Date Mortgaged Properties,
insuring fee simple title to, or a valid leasehold interest in, each such
Closing Date Mortgaged Property vested in such Loan Party and assuring
Administrative Agent that the applicable Closing Date Mortgages create
valid and enforceable First Priority mortgage Liens on the respective
Closing Date Mortgaged Properties encumbered thereby, subject only to a
standard survey exception, which Closing Date Mortgage Policies (1) shall
include an endorsement for mechanics' liens, for future advances under
this Agreement and for any other matters reasonably requested by
Administrative Agent and (2) shall provide for affirmative insurance and
such reinsurance as Administrative Agent may reasonably request, all of
the foregoing in form and substance reasonably satisfactory to
Administrative Agent; and (b) evidence satisfactory to Administrative
Agent that such Loan Party has (i) delivered to the Title Company all
certificates and affidavits required by the Title Company in connection
with the issuance of the Closing Date Mortgage Policies and (ii) paid to
the Title Company or to the appropriate governmental authorities all
expenses and premiums of the Title Company in connection with the issuance
of the Closing Date Mortgage Policies and all recording and stamp taxes
(including mortgage recording and intangible taxes) payable in connection
with recording the Closing Date Mortgages in the appropriate real estate
records;
(v) Title Reports. With respect to each Closing Date Mortgaged
Property listed (and marked with an asterisk) in Part A of Schedule 4.1H
annexed hereto, a title report issued by the Title Company with respect
thereto, dated not more than 30 days prior to the Closing Date and
satisfactory in form and substance to Administrative Agent;
(vi) Copies of Documents Relating to Title Exceptions. Copies of all
recorded documents listed as exceptions to title or otherwise referred to
in the Closing Date Mortgage Policies or in the title reports delivered
pursuant to subsection 4.1H(v);
(vii) Matters Relating to Flood Hazard Properties. (a) Evidence,
which may be in the form of a letter from an insurance broker or a
municipal engineer, as to whether (1) any Closing Date Mortgaged Property
is a Flood Hazard Property and (2) the community in which any such Flood
Hazard Property is located is participating in the National Flood
Insurance Program, (b) if there are any such Flood Hazard Properties, such
Loan Party's written acknowledgement of receipt of written notification
from Administrative Agent (1) as to the existence of each such Flood
Hazard Property and (2) as to whether the community in which each such
Flood Hazard Property is located is participating in the National Flood
Insurance Program, and (c) in the event any such Flood Hazard Property is
located in a community that participates in the National Flood Insurance
Program, evidence that Borrower has obtained flood insurance in respect of
such Flood Hazard Property to the extent required under the applicable
regulations of the Board of Governors of the Federal Reserve System; and
89
(viii) Environmental Indemnity . An environmental indemnity
agreement, satisfactory in form and substance to Administrative Agent and
its counsel, with respect to the indemnification of Administrative Agent
and Lenders for any liabilities that may be imposed on or incurred by any
of them as a result of any Hazardous Materials Activity.
I. Security Interests in Personal and Mixed Property. To the extent not
otherwise satisfied pursuant to subsection 4.1H, Administrative Agent shall have
received evidence satisfactory to it that Parent, Borrower and Subsidiary
Guarantors shall have taken or caused to be taken all such actions, executed and
delivered or caused to be executed and delivered all such agreements, documents
and instruments, and made or caused to be made all such filings and recordings
(other than the filing or recording of items described in clauses (iii), (iv)
and (v) below) that may be necessary or, in the opinion of Administrative Agent,
desirable in order to create in favor of Administrative Agent, for the benefit
of Lenders, a valid and (upon such filing and recording) perfected First
Priority security interest in the entire personal and mixed property Collateral.
Such actions shall include, without limitation, the following:
(i) Schedules to Collateral Documents. Delivery to Administrative
Agent of accurate and complete schedules to all of the applicable
Collateral Documents.
(ii) Stock Certificates and Instruments. Delivery to Administrative
Agent of (a) certificates (which certificates shall be accompanied by
irrevocable undated stock powers, duly endorsed in blank and otherwise
satisfactory in form and substance to Administrative Agent) representing
all capital stock pledged pursuant to the Parent Pledge Agreement,
Borrower Pledge Agreement and the Subsidiary Pledge Agreements and (b) all
promissory notes or other instruments (duly endorsed, where appropriate,
in a manner satisfactory to Administrative Agent) evidencing any
Collateral;
(iii) Lien Searches and UCC Termination Statements. Delivery to
Administrative Agent of (a) the results of a recent search, by a Person
satisfactory to Administrative Agent, of all effective UCC financing
statements and fixture filings and all judgment and tax lien filings which
may have been made with respect to any personal or mixed property of any
Loan Party, together with copies of all such filings disclosed by such
search, and (b) UCC termination statements duly executed by all applicable
Persons for filing in all applicable jurisdictions as may be necessary to
terminate any effective UCC financing statements or fixture filings
disclosed in such search (other than any such financing statements or
fixture filings in respect of Liens permitted to remain outstanding
pursuant to the terms of this Agreement).
(iv) UCC Financing Statements and Fixture Filings. Delivery to
Administrative Agent of UCC financing statements and, where appropriate,
fixture filings, duly executed by each applicable Loan Party with respect
to all personal and mixed property Collateral of such Loan Party, for
filing in all jurisdictions as may be necessary or, in the opinion of
Administrative Agent, desirable to perfect the security interests created
in such Collateral pursuant to the Collateral Documents;
90
(v) PTO Cover Sheets, Etc. Delivery to Administrative Agent of all
cover sheets or other documents or instruments required to be filed with
the PTO in order to create or perfect Liens in respect of any IP
Collateral;
(vi) Opinions of Local Counsel. Delivery to Administrative Agent of
an opinion of counsel (which counsel shall be reasonably satisfactory to
Administrative Agent) under the laws of each jurisdiction in which any
Loan Party or any personal or mixed property Collateral is located with
respect to the creation and perfection of the security interests in favor
of Administrative Agent in such Collateral and such other matters governed
by the laws of such jurisdiction regarding such security interests as
Administrative Agent may reasonably request, in each case in form and
substance reasonably satisfactory to Administrative Agent.
J. Real Estate Appraisals. Administrative Agent shall have received
appraisals from one or more independent real estate appraisers satisfactory to
Administrative Agent, in form, scope and substance satisfactory to
Administrative Agent and satisfying the requirements of any applicable laws and
regulations, concerning any Closing Date Mortgaged Properties (as defined in
subsection 4.1H), in each case to the extent required under such laws and
regulations as determined by Administrative Agent in its discretion.
K. Environmental Reports. Administrative Agent shall have received reports
and other information, in form, scope and substance satisfactory to
Administrative Agent, regarding environmental matters relating to the
Facilities, which reports shall include (i) a Phase I environmental assessment
for each of the Facilities listed in Schedule 4.1K annexed hereto (collectively,
the "Phase I Report") which (a) conforms to the ASTM Standard Practice for
Environmental Site Assessments: Phase I Environmental Site Assessment Process E
1527 and (b) was conducted by one or more environmental consulting firms
reasonably satisfactory to Administrative Agent, and (ii) a compliance audit
setting forth an assessment of Borrower's, its Subsidiaries' and such
Facilities' current and past compliance with Environmental Laws.
L. Financial Statements; Pro Forma Balance Sheet. On or before the Closing
Date, Lenders shall have received from Borrower the following (the "Financial
Statements"):
(i) the consolidated balance sheets of Borrower and its Subsidiaries
as at September 30, 1994, 1995 and 1996, and the related consolidated
statements of income and cash flows of Borrower and its Subsidiaries for
the fiscal years then ended, accompanied, in the case of the financial
statements for the fiscal years ended September 30, 1994 and September 30,
1995, by an opinion of Borrower's accountants, and accompanied, in the
case of the financial statements for the fiscal year ended September 30,
1996, by a form of opinion of Borrower's accountants, together with a
letter from Borrower's accountants with respect thereto, and the
consolidated and consolidating balance sheets of Borrower and its
Subsidiaries as at October 31, 1996, together with selected consolidated
statements of income, stockholders' equity and cash flow for the one month
period then ended, duly certified by the chief financial officer of
Borrower that such financial statements fairly present (subject, in the
case of such balance sheet as at
91
October 31, 1996 and such statements of income and cash flows for the one
month then ended, to normal year-end audit adjustments) the consolidated
financial condition of Borrower and its Subsidiaries as at such dates and
the consolidated results of the operation of Borrower and its Subsidiaries
for the periods ended on such dates and that all such financial
statements, including the related schedules and notes thereto, have been
prepared in accordance with GAAP applied consistently throughout the
periods involved;
(ii) the consolidated balance sheets of Quality Foods, L.P. and its
Subsidiaries as at December 31, 1993, 1994 and 1995, and the related
statements of income and cash flows of Quality Foods, L.P. and its
Subsidiaries for the fiscal years then ended, accompanied by an opinion of
Quality Foods, L.P.'s accountants; the consolidated balance sheet of
Quality Foods, L.P. and its Subsidiaries as at September 30, 1995 and
1996, and the related consolidated statements of income and cash flows of
Quality Foods, L.P. and its Subsidiaries for the nine months then ended,
duly certified by the chief financial officer of Quality Foods, L.P. that
such financial statements fairly present (subject, in the case of such
balance sheet as at September 30, 1996 and such statements of income and
cash flows for the nine months then ended, to normal year-end audit
adjustments) the consolidated financial condition of Quality Foods, L.P.
and its Subsidiaries as at such dates and the consolidated results of the
operations of Quality Foods, L.P. and its Subsidiaries for the periods
ended on such dates and that all such financial statements, including the
related schedules and notes thereto, have been prepared in accordance with
GAAP applied consistently throughout the periods involved;
(iii) pro forma financial statements of Borrower and its
Subsidiaries as of September 30, 1996, giving effect to the Acquisition,
the Restructuring and the other transactions contemplated hereby and
reflecting estimated purchase price accounting adjustments, prepared by
Borrower, and substantially in compliance with Article 11 of Regulation
S-X of the Securities and Exchange Commission (assuming such pro forma
financial statements were furnished in connection with a public offering),
which pro forma financial statements shall be accompanied by a certificate
of the chief financial officer of Borrower to the effect that, based on
his discussion with Borrower's accountants, such pro forma financial
statements are substantially in compliance with such Article 11; and
(iv) together with each of the interim financial statements referred
to in subdivision (ii) above, an independent accountant's review report
signed by Quality Foods, L.P.'s accountants to the effect that they have
conducted a limited review with respect to such interim financial
statements in accordance with Statement on Auditing Standards No. 71.
M. Solvency Assurances. On the Closing Date, Administrative Agent and
Lenders shall have received (i) a letter from Houlihan, Lokey, ▇▇▇▇▇▇ & ▇▇▇▇▇,
Inc. dated the Closing Date and addressed to Administrative Agent and Lenders,
in form and substance satisfactory to Administrative Agent and with appropriate
attachments, and (ii) a Financial Condition Certificate dated the Closing Date,
substantially in the form of Exhibit XV annexed hereto and with appropriate
attachments, in each case demonstrating that, after giving effect to the
consummation
92
of the Acquisition and the Restructuring, the related financings and the other
transactions contemplated by the Loan Documents and the Related Agreements,
Parent, Borrower and each Subsidiary will be Solvent.
N. Evidence of Insurance. Administrative Agent shall have received a
certificate from Borrower's insurance broker or other evidence satisfactory to
it that all insurance required to be maintained pursuant to subsection 6.4 is in
full force and effect and that Administrative Agent on behalf of Lenders has
been named as additional insured and/or loss payee thereunder to the extent
required under subsection 6.4.
O. Opinions of Counsel to Loan Parties. Lenders and their respective
counsel shall have received (i) originally executed copies of one or more
favorable written opinions of ▇'▇▇▇▇▇▇▇▇ Graev & Karabell, LLP, counsel for Loan
Parties, and ▇▇▇▇ & ▇▇▇▇▇, counsel for Custom Foods, in form and substance
reasonably satisfactory to Administrative Agent and its counsel, dated as of the
Closing Date and setting forth substantially the matters in the opinions
designated in Exhibit X-A and Exhibit X-B annexed hereto and as to such other
matters as Administrative Agent acting on behalf of Lenders may reasonably
request and (ii) evidence satisfactory to Administrative Agent that Borrower has
requested such counsel to deliver such opinions to Lenders.
P. Opinions of Administrative Agent's Counsel. Lenders shall have received
originally executed copies of one or more favorable written opinions of
O'Melveny & ▇▇▇▇▇ LLP, counsel to Administrative Agent, dated as of the Closing
Date, substantially in the form of Exhibit XI annexed hereto and as to such
other matters as Administrative Agent acting on behalf of Lenders may reasonably
request.
Q. Opinions of Counsel Delivered Under Related Agreements. Administrative
Agent and its counsel shall have received copies of each of the opinions of
counsel delivered to the parties under the Related Agreements delivered on or
prior to the Closing Date, together with a letter from each such counsel (to the
extent not inconsistent with such counsel's established internal policies)
authorizing Lenders to rely upon such opinion to the same extent as though it
were addressed to Lenders.
R. Fees. Borrower shall have paid to Administrative Agent, for
distribution (as appropriate) to Administrative Agent and Lenders, the fees
payable on the Closing Date referred to in subsection 2.3.
S. Representations and Warranties; Performance of Agreements. Borrower
shall have delivered to Administrative Agent an Officers' Certificate, in form
and substance satisfactory to Administrative Agent, to the effect that the
representations and warranties in Section 5 hereof are true, correct and
complete in all material respects on and as of the Closing Date to the same
extent as though made on and as of that date (or, to the extent such
representations and warranties specifically relate to an earlier date, that such
representations and warranties were true, correct and complete in all material
respects on and as of such earlier date) and that Parent and Borrower shall have
performed in all material respects all agreements and satisfied all conditions
which this
93
Agreement provides shall be performed or satisfied by it on or before the
Closing Date except as otherwise disclosed to and agreed to in writing by
Administrative Agent.
T. Completion of Proceedings. All corporate and other proceedings taken or
to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Administrative
Agent, acting on behalf of Lenders, and its counsel shall be satisfactory in
form and substance to Administrative Agent and such counsel, and Administrative
Agent and such counsel shall have received all such counterpart originals or
certified copies of such documents as Administrative Agent may reasonably
request.
4.2 Conditions to All Loans.
The obligations of Lenders to make Loans on each Funding Date are subject
to the following further conditions precedent:
A. Agent shall have received before that Funding Date, in accordance with
the provisions of subsection 2.1B, an originally executed Notice of Borrowing,
in each case signed by the chief executive officer, the chief financial officer
or the treasurer of Borrower or by any executive officer of Borrower designated
by any of the above-described officers on behalf of Borrower in a writing
delivered to Administrative Agent.
B. As of that Funding Date:
(i) The representations and warranties contained herein and in the
other Loan Documents shall be true, correct and complete in all material
respects on and as of that Funding Date to the same extent as though made
on and as of that date, except to the extent such representations and
warranties specifically relate to an earlier date, in which case such
representations and warranties shall have been true, correct and complete
in all material respects on and as of such earlier date;
(ii) No event shall have occurred and be continuing or would result
from the consummation of the borrowing contemplated by such Notice of
Borrowing that would constitute an Event of Default or a Potential Event
of Default;
(iii) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender from
making the Loans to be made by it on that Funding Date; and
(iv) The making of the Loans requested on such Funding Date shall
not violate any law including, without limitation, Regulation G,
Regulation T, Regulation U or Regulation X of the Board of Governors of
the Federal Reserve System.
94
4.3 Conditions to Letters of Credit.
The issuance of any Letter of Credit hereunder is subject to the following
conditions precedent:
A. On or before the date of issuance of the initial Revolving Letter of
Credit pursuant to this Agreement, the initial Loans shall have been made.
B. On or before the date of issuance of such Letter of Credit,
Administrative Agent shall have received, in accordance with the provisions of
subsection 3.1B(i), an originally executed Notice of Issuance of Letter of
Credit, in each case signed by the chief executive officer, the chief financial
officer or the treasurer of Borrower or by any executive officer of Borrower
designated by any of the above-described officers on behalf of Borrower in a
writing delivered to Administrative Agent, together with all other information
specified in subsection 3.1B(i) and such other documents or information as
Issuing Lender may reasonably require in connection with the issuance of such
Letter of Credit.
C. On the date of issuance of the Acquisition Letter of Credit (in
addition to the satisfaction of all conditions precedent described in subsection
4.1), all conditions precedent described in subsection 4.2B shall be satisfied
to the same extent as if the issuance of the Letter of Credit were the making of
a Loan and the date of issuance of the Letter of Credit were a Funding Date.
Section 5. BORROWER'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to make the
Loans, to induce Issuing Lender to issue Letters of Credit and to enter into the
IRB Reimbursement Agreement, and to induce other Lenders to purchase
participations in the Letters of Credit and the IRB Reimbursement Agreement,
each of Parent and Borrower, jointly and severally, represents and warrants to
each Lender, on the date of this Agreement, on each Funding Date and on the date
of issuance of each Letter of Credit, that the following statements are true,
correct and complete:
5.1 Organization, Powers, Qualification, Good Standing, Business, Subsidiaries
and Restructuring.
A. Organization and Powers. Each Loan Party is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation as specified in Schedule 5.1 annexed hereto. Each
Loan Party has all requisite corporate power and authority to own and operate
its properties, to carry on its business as now conducted and as proposed to be
conducted, to enter into the Loan Documents and Related Agreements to which it
is a party and to carry out the transactions contemplated thereby.
B. Qualification and Good Standing. Each Loan Party is qualified to do
business and in good standing in every jurisdiction where its assets are located
and wherever necessary to
95
carry out its business and operations, except in jurisdictions where the failure
to be so qualified or in good standing has not had and will not have a Material
Adverse Effect.
C. Conduct of Business. Parent and its Subsidiaries are engaged only in
the businesses permitted to be engaged in pursuant to subsection 7.12.
D. Subsidiaries. All of the Subsidiaries of Borrower are wholly owned and
identified in Schedule 5.1 annexed hereto, as said Schedule 5.1 may be
supplemented from time to time pursuant to the provisions of subsection
6.1(xvi). The capital stock of each of the Subsidiaries of Borrower identified
in Schedule 5.1 annexed hereto (as so supplemented) is duly authorized, validly
issued, fully paid and nonassessable and none of such capital stock constitutes
Margin Stock. Each of the Subsidiaries of Borrower identified in Schedule 5.1
annexed hereto (as so supplemented) is a corporation duly organized, validly
existing and in good standing under the laws of its respective jurisdiction of
incorporation set forth therein (which jurisdiction shall be in the United
States), has all requisite corporate power and authority to own and operate its
properties and to carry on its business as now conducted and as proposed to be
conducted, and is qualified to do business and in good standing in every
jurisdiction where its assets are located and wherever necessary to carry out
its business and operations, in each case except where failure to be so
qualified or in good standing or a lack of such corporate power and authority
has not had and will not have a Material Adverse Effect. Schedule 5.1 annexed
hereto (as so supplemented) correctly sets forth the ownership interest of
Borrower and each of its Subsidiaries in each of the Subsidiaries of Borrower
identified therein.
E. Restructuring. The Restructuring has been consummated as of the Closing
Date in accordance with the terms thereof.
5.2 Authorization of Borrowing, etc.
A. Authorization of Borrowing. The execution, delivery and performance of
the Loan Documents and the Related Agreements have been duly authorized by all
necessary corporate action on the part of each Loan Party that is a party
thereto.
B. No Conflict. The execution, delivery and performance by Loan Parties of
the Loan Documents and the Related Agreements to which they are parties and the
consummation of the transactions contemplated by the Loan Documents and such
Related Agreements do not and will not (i) violate any provision of any law or
any governmental rule or regulation applicable to Parent or any of its
Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of Parent
or any of its Subsidiaries or any order, judgment or decree of any court or
other agency of government binding on Parent or any of its Subsidiaries, (ii)
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any material Contractual Obligation of Parent or
any of its Subsidiaries, (iii) result in or require the creation or imposition
of any Lien upon any of the properties or assets of Parent or any of its
Subsidiaries (other than any Liens created under any of the Loan Documents in
favor of Administrative Agent on behalf of Lenders), or (iv) require any
approval of stockholders or any approval or consent of any Person under any
material Contractual Obligation of Parent or any of its Subsidiaries,
96
except for such approvals or consents that are (i) listed on Schedule 5.2B and
(ii) that will be obtained on or before the Closing Date or where the failure to
obtain such approvals or consents has not had and would not be reasonably likely
to have a Material Adverse Effect.
C. Governmental Consents. The execution, delivery and performance by Loan
Parties of the Loan Documents and the Related Agreements to which they are
parties and the consummation of the transactions contemplated by the Loan
Documents and such Related Agreements do not and will not require any
registration with, consent or approval of, or notice to, or other action to,
with or by, any federal, state or other governmental authority or regulatory
body, except for such registrations, consents, approvals, notices and other
actions that are (i) listed on Schedule 5.2C, all of which have been obtained or
made on or prior to the Closing Date and are in full force and effect or (ii)
are required exclusively in connection with the Acquisition and the
Restructuring, the failure to obtain of which has not and had and would not be
reasonably likely to have a Material Adverse Effect.
D. Binding Obligation. Each of the Loan Documents and Related Agreements
has been duly executed and delivered by each Loan Party that is a party thereto
and is the legally valid and binding obligation of such Loan Party, enforceable
against such Loan Party in accordance with its respective terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or by equitable principles
relating to enforceability.
E. Valid Issuance of Senior Guaranteed Notes, the Subordinated Notes and
the Bridge Notes. Borrower has the corporate power and authority to issue the
Senior Guaranteed Notes or Subordinated Notes, as applicable, and the Bridge
Notes. The Senior Guaranteed Notes or Subordinated Notes, as applicable, and the
Bridge Notes when issued and paid for, will be the legally valid and binding
obligations of Borrower, enforceable against Borrower in accordance with their
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability. The
Senior Guaranteed Notes or the Subordinated Notes, as applicable, and the Bridge
Notes when issued and sold, will either (a) have been registered or qualified
under applicable federal and state securities laws or (b) be exempt therefrom.
5.3 Financial Condition.
Borrower has heretofore delivered to Lenders, at Lenders' request, the
Financial Statements. The Financial Statements (other than pro forma financial
statements) were prepared in conformity with GAAP and fairly present, in all
material respects, the financial position (on a consolidated and, where
applicable, consolidating basis) of the entities described in such Financial
Statements as at the respective dates thereof and the results of operations and
cash flows (on a consolidated and, where applicable, consolidating basis) of the
entities described therein for each of the periods then ended, subject, in the
case of any unaudited Financial Statements, to changes resulting from audit and
normal year-end adjustments. The pro forma financial statements included in the
Financial Statements present fairly the information shown therein, have been
properly compiled on the pro forma basis described therein, and in Borrower's
opinion, the
97
assumptions used in the preparation thereof are reasonable and the adjustments
used therein are appropriate to give effect to the transactions or circumstances
referred to herein. Parent and its Subsidiaries do not (and will not following
the funding of the initial Loans) have any Contingent Obligation, contingent
liability or liability for taxes, long-term lease or unusual forward or
long-term commitment that is not reflected in the foregoing financial statements
or the notes thereto and which in any such case is material in relation to the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of Parent or any of its Subsidiaries.
5.4 No Material Adverse Change; No Restricted Junior Payments.
Since September 30, 1995, no event or change has occurred that has caused
or evidences, either in any case or in the aggregate, a Material Adverse Effect.
Neither Parent nor any of its Subsidiaries has directly or indirectly declared,
ordered, paid or made, or set apart any sum or property for, any Restricted
Junior Payment or agreed to do so except as permitted by subsection 7.5 and as
set forth in Schedule 5.4.
5.5 Title to Properties; Liens; Real Property.
A. Title to Properties; Liens. Subject to Permitted Liens, Parent and its
Subsidiaries have (i) good, sufficient and legal title to (in the case of fee
interests in real property), (ii) valid leasehold interests in (in the case of
leasehold interests in real or personal property), or (iii) good title to (in
the case of all other personal property), all of their respective properties and
assets reflected in the financial statements referred to in subsection 5.3 or in
the most recent financial statements delivered pursuant to subsection 6.1, in
each case except for assets disposed of since the date of such financial
statements in the ordinary course of business or as otherwise permitted under
subsection 7.7. Except as permitted by this Agreement, all such properties and
assets are free and clear of Liens.
B. Real Property. As of the Closing Date, Schedule 5.5 annexed hereto
contains a true, accurate and complete list of (i) all owned Real Property
Assets and (ii) all leases, subleases or assignments of leases (together with
all amendments, modifications, supplements, renewals or extensions of any
thereof) affecting each Real Property Asset of any Loan Party, regardless of
whether such Loan Party is the landlord or tenant (whether directly or as an
assignee or successor in interest) under such lease, sublease or assignment.
Except as specified in Schedule 5.5 annexed hereto, each agreement listed in
clause (ii) of the immediately preceding sentence is in full force and effect
and neither Parent nor Borrower has any knowledge of any default that has
occurred and is continuing thereunder, and each such agreement constitutes the
legally valid and binding obligation of each applicable Loan Party, enforceable
against such Loan Party in accordance with its terms, except as enforcement may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or by equitable principles.
98
5.6 Litigation; Adverse Facts.
Except as set forth in Schedule 5.6 annexed hereto, there are no actions,
suits, proceedings, arbitrations or governmental investigations at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign (including any Environmental Claims) that are pending or, to the
knowledge of Borrower or Parent, threatened against or affecting Parent or any
of its Subsidiaries or any property of Parent or any of its Subsidiaries and
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect. Neither Parent nor any of its Subsidiaries (i) is
in violation of any applicable laws (including Environmental Laws) that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect, or (ii) is subject to or in default with respect to any
final judgments, writs, injunctions, decrees, rules or regulations of any court
or any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.
5.7 Payment of Taxes.
Except to the extent permitted by subsection 6.3, all tax returns and
reports of Parent and its Subsidiaries required to be filed by any of them have
been timely filed, and all taxes due and payable and all assessments, fees and
other governmental charges upon Parent and its Subsidiaries and upon their
respective properties, assets, income, businesses and franchises which are due
and payable have been paid when due and payable. Neither Parent nor Borrower
knows of any proposed tax assessment against Parent or any of its Subsidiaries
which is not being actively contested by Parent or such Subsidiary in good faith
and by appropriate proceedings; provided that such reserves or other appropriate
provisions, if any, as shall be required in conformity with GAAP shall have been
made or provided therefor.
5.8 Performance of Agreements; Materially Adverse Agreements; Material
Contracts.
A. Neither Parent nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any of its Contractual Obligations, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences of such default or
defaults, if any, would not have a Material Adverse Effect.
B. Schedule 5.8 contains a true, correct and complete list of all the
Material Contracts in effect on the Closing Date. All such Material Contracts
are in full force and effect and no material defaults currently exist
thereunder, and except where the consequences of such default or defaults, if
any, would not reasonably be likely to have a Material Adverse Effect.
99
5.9 Governmental Regulation.
Neither Parent nor any of its Subsidiaries is subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its ability to incur
Indebtedness or which may otherwise render all or any portion of the Obligations
unenforceable.
5.10 Securities Activities.
A. Neither Parent nor any of its Subsidiaries is engaged principally, or
as one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any Margin Stock.
B. Following application of the proceeds of each Loan, not more than 25%
of the value of the assets (either of Borrower only or of Borrower and its
Subsidiaries on a consolidated basis) subject to the provisions of subsection
7.2 or 7.7 or subject to any restriction contained in any agreement or
instrument, between Borrower and any Lender or any Affiliate of any Lender,
relating to Indebtedness and within the scope of subsection 8.2, will be Margin
Stock.
5.11 Employee Benefit Plans.
A. Parent, each of its Subsidiaries and each of their respective ERISA
Affiliates are in material compliance with all applicable provisions and
requirements of ERISA and the regulations and published interpretations
thereunder with respect to each Employee Benefit Plan, and have performed all
their material obligations under each Employee Benefit Plan. Each Employee
Benefit Plan which is intended to qualify under Section 401(a) of the Internal
Revenue Code is so qualified.
B. No ERISA Event has occurred or is reasonably expected to occur.
C. Except to the extent required under Section 4980B of the Internal
Revenue Code or except as set forth in Schedule 5.11 annexed hereto, no Employee
Benefit Plan provides health or welfare benefits (through the purchase of
insurance or otherwise) for any retired or former employee of Parent, any of its
Subsidiaries or any of their respective ERISA Affiliates.
D. As of the most recent valuation date for any Pension Plan, the amount
of unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA),
individually or in the aggregate for all Pension Plans (excluding for purposes
of such computation any Pension Plans with respect to which assets exceed
benefit liabilities), does not exceed $500,000.
E. As of the most recent valuation date for each Multiemployer Plan for
which the actuarial report is available, the potential liability of Parent, its
Subsidiaries and their respective ERISA Affiliates for a complete withdrawal
from such Multiemployer Plan (within the meaning of Section 4203 of ERISA), when
aggregated with such potential liability for a complete
100
withdrawal from all Multiemployer Plans, based on information available pursuant
to Section 4221(e) of ERISA, does not exceed $500,000.
5.12 Certain Fees.
No broker's or finder's fee or commission will be payable with respect to
this Agreement, and Parent and Borrower hereby, jointly and severally, indemnify
Lenders against, and agrees that it will hold Lenders harmless from, any claim,
demand or liability for any such broker's or finder's fees alleged to have been
incurred in connection herewith or therewith and any expenses (including
reasonable fees, expenses and disbursements of counsel) arising in connection
with any such claim, demand or liability.
5.13 Environmental Protection.
Except as set forth in Schedule 5.13 annexed hereto:
(i) neither Parent nor any of its Subsidiaries nor any of their
respective Facilities or operations are subject to any outstanding written
order, consent decree or settlement agreement with any Person relating to
(a) any Environmental Law, (b) any Environmental Claim, or (c) any
Hazardous Materials Activity;
(ii) neither Parent nor any of its Subsidiaries has received any
letter or request for information under Section 104 of the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. ss.
9604) or any comparable state law;
(iii) there are and, to Parent's and Borrower's knowledge, have been
no conditions, occurrences, or Hazardous Materials Activities which could
reasonably be expected to form the basis of an Environmental Claim against
Parent or any of its Subsidiaries;
(iv) for at least three years prior to the Closing Date, each of
Borrower and its Subsidiaries has maintained an environmental management
system for its operations that demonstrates a commitment to environmental
compliance and includes procedures for (a) preparing and updating
appropriate written compliance manuals covering pertinent regulatory
areas, (b) tracking changes in applicable Environmental Laws and modifying
operations to comply with new requirements thereunder and (c) training
employees to comply with applicable environmental requirements and
updating such training as necessary; and
(v) compliance with all current or reasonably foreseeable future
requirements pursuant to or under Environmental Laws will not,
individually or in the aggregate, have a reasonable possibility of giving
rise to a Material Adverse Effect.
Notwithstanding anything in this subsection 5.13 to the contrary, no event or
condition has occurred or is occurring with respect to Parent or any of its
Subsidiaries relating to any
101
Environmental Law, any Release of Hazardous Materials, or any Hazardous
Materials Activity (including those set forth in Schedule 5.13 annexed hereto)
which individually or in the aggregate has had or could reasonably be expected
to have a Material Adverse Effect.
5.14 Employee Matters.
There is no strike or work stoppage in existence or threatened involving
Parent or any of its Subsidiaries that could reasonably be expected to have a
Material Adverse Effect.
5.15 Solvency.
Each Loan Party is, and the Loan Parties taken as a whole are, and upon
the incurrence of any Loans by such Loan Party on any date on which this
representation is made each Loan Party and the Loan Parties taken as a whole
will be, Solvent. Without limiting the foregoing, each Loan Party and the Loan
Parties taken as a whole will be Solvent on the Closing Date after giving effect
to the Acquisition, the Restructuring and the borrowings made in connection
therewith.
5.16 Matters Relating to Collateral.
A. Creation, Perfection and Priority of Liens. The execution and delivery
of the Collateral Documents by Loan Parties, together with (i) the actions taken
on or prior to the date hereof pursuant to subsections 4.1H, 4.1I, 6.8 and 6.9
and (ii) the delivery to Administrative Agent of any Pledged Collateral not
delivered to Administrative Agent at the time of execution and delivery of the
applicable Collateral Document (all of which Pledged Collateral has been so
delivered) are effective to create in favor of Administrative Agent for the
benefit of Lenders, as security for the respective Secured Obligations (as
defined in the applicable Collateral Document in respect of any Collateral), a
valid and perfected First Priority Lien on all of the Collateral, and all
filings and other actions necessary or desirable to perfect and maintain the
perfection and First Priority status of such Liens have been duly made or taken
and remain in full force and effect, other than the filing of any UCC financing
statements delivered to Administrative Agent for filing (but not yet filed) and
the periodic filing of UCC continuation statements in respect of UCC financing
statements filed by or on behalf of Administrative Agent.
B. Governmental Authorizations. No authorization, approval or other action
by, and no notice to or filing with, any governmental authority or regulatory
body is required for either (i) the pledge or grant by any Loan Party of the
Liens purported to be created in favor of Administrative Agent pursuant to any
of the Collateral Documents or (ii) the exercise by Administrative Agent of any
rights or remedies in respect of any Collateral (whether specifically granted or
created pursuant to any of the Collateral Documents or created or provided for
by applicable law), except for filings or recordings contemplated by subsection
5.16A and except as may be required, in connection with the disposition of any
Pledged Collateral, by laws generally affecting the offering and sale of
securities.
102
C. Absence of Third-Party Filings. Except such as may have been filed in
favor of Administrative Agent as contemplated by subsection 5.16A and except as
set forth in Schedule 5.16C, (i) no effective UCC financing statement, fixture
filing or other instrument similar in effect covering all or any part of the
Collateral is on file in any filing or recording office (other than with respect
to Permitted Liens) and (ii) no effective filing covering all or any part of the
IP Collateral is on file in the PTO.
D. Margin Regulations. The pledge of the Pledged Collateral pursuant to
the Collateral Documents does not violate Regulation G, T, U or X of the Board
of Governors of the Federal Reserve System.
E. Information Regarding Collateral. All information supplied to
Administrative Agent by or on behalf of any Loan Party with respect to any of
the Collateral (in each case taken as a whole with respect to any particular
Collateral) is accurate and complete in all material respects.
5.17 Related Agreements.
A. Delivery of Related Agreements. Borrower has delivered to Lenders
complete and correct copies of each effective Related Agreement and of all
exhibits and schedules thereto.
B. Warranties of Borrower. Subject to the qualifications set forth
therein, each of the representations and warranties given by Borrower to Sellers
in the Acquisition Agreement is true and correct in all material respects as of
the date hereof and will be true and correct in all material respects as of the
Closing Date.
C. Survival. Notwithstanding anything in the Acquisition Agreement to the
contrary, the representations and warranties of Borrower set forth in
subsections 5.17B shall, solely for purposes of this Agreement, survive the
Closing Date for the benefit of Lenders.
5.18 Disclosure.
No representation or warranty of Parent or any of its Subsidiaries
contained in any Loan Document or Related Agreement or in any other document,
certificate or written statement furnished to Lenders by or on behalf of Parent
or any of its Subsidiaries for use in connection with the transactions
contemplated by this Agreement contains any untrue statement of a material fact
or omits to state a material fact (known to Parent or Borrower, in the case of
any document not furnished by it) necessary in order to make the statements
contained herein or therein not misleading in light of the circumstances in
which the same were made and that individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect. Any projections and
pro forma financial information contained in such materials are based upon good
faith estimates and assumptions believed by Parent and its Subsidiaries to be
reasonable at the time made, it being recognized by Lenders that such
projections as to future events are not to be viewed as facts and that actual
results during the period or periods covered by any such projections may
materially differ from the projected results.
103
Section 6. PARENT'S AND BORROWER'S AFFIRMATIVE COVENANTS
Parent and Borrower, jointly and severally, covenant and agree that, so
long as any of the Commitments hereunder shall remain in effect and until
payment in full of all of the Loans and other Obligations and the cancellation
or expiration of all Letters of Credit and the termination of the IRB
Reimbursement Agreement, unless Requisite Lenders shall otherwise give prior
written consent, Parent shall perform, and shall cause each of its Subsidiaries
to perform, all covenants in this Section 6.
6.1 Financial Statements and Other Reports.
Parent will maintain, and cause each of its Subsidiaries to maintain, a
system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP. Borrower will deliver to Administrative Agent and Lenders:
(i) Monthly Financials: as soon as available and in any event within
30 days after the end of each month ending after the Closing Date, (a) the
consolidated and consolidating balance sheets of Parent and its
Subsidiaries as at the end of such month and the related consolidated and
consolidating statements of income, stockholders' equity and cash flows of
Parent and its Subsidiaries for such month and for the period from the
beginning of the then current Fiscal Year to the end of such month,
setting forth in each case in comparative form the corresponding figures
for the corresponding periods of the previous Fiscal Year and the
corresponding figures from the Financial Plan for the current Fiscal Year,
to the extent prepared on a monthly basis, all in reasonable detail and
certified by the chief financial officer of Parent and Borrower that they
fairly present, in all material respects, the financial condition of
Parent and its Subsidiaries as at the dates indicated and the results of
their operations and their cash flows for the periods indicated, subject
to changes resulting from audit and normal year-end adjustments, (b) a
narrative report describing the operations of Parent and its Subsidiaries
in the form prepared for presentation to senior management for such month
and for the period from the beginning of the then current Fiscal Year to
the end of such month and (c) reports on the meat spread and production
quantity for such month for each of the Operating Subsidiaries;
(ii) Quarterly Financials: as soon as available and in any event
within 45 days after the end of each Fiscal Quarter, (a) the consolidated
and consolidating balance sheets of Parent and its Subsidiaries as at the
end of such Fiscal Quarter and the related consolidated and consolidating
statements of income, stockholders' equity and cash flows of Parent and
its Subsidiaries for such Fiscal Quarter and for the period from the
beginning of the then current Fiscal Year to the end of such Fiscal
Quarter, setting forth in each case in comparative form the corresponding
figures for the corresponding periods of the previous Fiscal Year and the
corresponding figures from the Financial Plan for the current Fiscal Year,
all in reasonable detail and certified by the chief financial officer of
Parent and Borrower that they fairly present, in all material respects,
the financial
104
condition of Parent and its Subsidiaries as at the dates indicated and the
results of their operations and their cash flows for the periods
indicated, subject to changes resulting from audit and normal year-end
adjustments, and (b) a narrative report describing the operations of
Parent and its Subsidiaries in the form prepared for presentation to
senior management for such Fiscal Quarter and for the period from the
beginning of the then current Fiscal Year to the end of such Fiscal
Quarter;
(iii) Year-End Financials: as soon as available and in any event
within 90 days after the end of each Fiscal Year, (a) the consolidated and
consolidating balance sheets of Parent and its Subsidiaries as at the end
of such Fiscal Year and the related consolidated and consolidating
statements of income, stockholders' equity and cash flows of Parent and
its Subsidiaries for such Fiscal Year, setting forth in each case in
comparative form the corresponding figures for the previous Fiscal Year
and the corresponding figures from the Financial Plan for the Fiscal Year
covered by such financial statements, all in reasonable detail and
certified by the chief financial officer of Parent and Borrower that they
fairly present, in all material respects, the financial condition of
Parent and its Subsidiaries as at the dates indicated and the results of
their operations and their cash flows for the periods indicated, (b) a
narrative report describing the operations of Parent and its Subsidiaries
in the form prepared for presentation to senior management for such Fiscal
Year, and (c) in the case of such consolidated financial statements, a
report thereon of Deloitte & Touche LLP or other independent certified
public accountants of recognized national standing selected by Parent and
satisfactory to Administrative Agent, which report shall be unqualified,
shall express no doubts about the ability of Parent and its Subsidiaries
to continue as a going concern, and shall state that such consolidated
financial statements fairly present, in all material respects, the
consolidated financial position of Parent and its Subsidiaries as at the
dates indicated and the results of their operations and their cash flows
for the periods indicated in conformity with GAAP applied on a basis
consistent with prior years (except as otherwise disclosed in such
financial statements) and that the examination by such accountants in
connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards;
(iv) Officers' and Compliance Certificates: together with each
delivery of financial statements of Parent and its Subsidiaries pursuant
to subdivisions (i), (ii) and (iii) above, (a) an Officers' Certificate of
Parent and Borrower stating that the signers have reviewed the terms of
this Agreement and have made, or caused to be made under their
supervision, a review in reasonable detail of the transactions and
condition of Parent and its Subsidiaries during the accounting period
covered by such financial statements and that such review has not
disclosed the existence during or at the end of such accounting period,
and that the signers do not have knowledge of the existence as at the date
of such Officers' Certificate, of any condition or event that constitutes
an Event of Default or Potential Event of Default, or, if any such
condition or event existed or exists, specifying the nature and period of
existence thereof and what action each of Parent and Borrower has taken,
is taking and proposes to take with respect thereto; and (b) a Compliance
Certificate demonstrating in reasonable detail compliance during and at
the end of the
105
applicable accounting periods with the restrictions contained in Section
7, in each case to the extent compliance with such restrictions is
required to be tested at the end of the applicable accounting period;
(v) Reconciliation Statements: if, as a result of any change in
accounting principles and policies from those used in the preparation of
the audited financial statements referred to in subsection 5.3, the
consolidated financial statements of Parent and its Subsidiaries delivered
pursuant to subdivisions (i), (ii), (iii) or (xiii) of this subsection 6.1
will differ in any material respect from the consolidated financial
statements that would have been delivered pursuant to such subdivisions
had no such change in accounting principles and policies been made, then
(a) together with the first delivery of financial statements pursuant to
subdivision (i), (ii), (iii) or (xiii) of this subsection 6.1 following
such change, consolidated financial statements of Parent and its
Subsidiaries for (y) the current Fiscal Year to the effective date of such
change and (z) the two full Fiscal Years immediately preceding the Fiscal
Year in which such change is made, in each case prepared on a pro forma
basis as if such change had been in effect during such periods, and (b)
together with each delivery of financial statements pursuant to
subdivision (i), (ii), (iii) or (xiii) of this subsection 6.1 following
such change, a written statement of the chief accounting officer or chief
financial officer of Parent and Borrower setting forth the differences
(including without limitation any differences that would affect any
calculations relating to the financial covenants set forth in subsection
7.6) which would have resulted if such financial statements had been
prepared without giving effect to such change;
(vi) Accountants' Certification: together with each delivery of
consolidated financial statements of Parent and its Subsidiaries pursuant
to subdivision (iii) above, a written statement by the independent
certified public accountants giving the report thereon (a) stating that
their audit examination has included a review of the relevant terms of
this Agreement and the other Loan Documents as they relate to accounting
matters and (b) stating whether, in connection with their audit
examination, anything came to their attention that caused them to believe
that Parent of Borrower failed to comply with the terms, covenants,
provisions or conditions of this Agreement insofar as they relate to
financial and accounting matters, although their audit was not directed
primarily toward obtaining knowledge of such noncompliance; provided that
such accountants shall not be liable by reason of any failure to obtain
knowledge of any failure to comply that would not be disclosed in the
course of their audit examination;
(vii) Accountants' Reports: promptly upon receipt thereof (unless
restricted by applicable professional standards), copies of all reports
submitted to Parent or Borrower by independent certified public
accountants in connection with each annual, interim or special audit of
the financial statements of Parent and its Subsidiaries made by such
accountants, including, without limitation, any comment letter submitted
by such accountants to management in connection with their annual audit;
106
(viii) SEC Filings and Press Releases: promptly upon their becoming
available, copies of (a) all financial statements, reports, notices and
proxy statements sent or made available generally by Parent to its
security holders or by any Subsidiary of Parent to its security holders
other than Parent or another Subsidiary of Parent, (b) all regular and
periodic reports and all registration statements (other than on Form S-8
or a similar form) and prospectuses, if any, filed by Parent or any of its
Subsidiaries with any securities exchange or with the Securities and
Exchange Commission or any governmental or private regulatory authority,
and (c) all press releases and other statements made available generally
by Parent or any of its Subsidiaries to the public concerning material
developments in the business of Parent or any of its Subsidiaries;
(ix) Events of Default, etc.: promptly upon, and in any event two
days after, any officer of Parent or Borrower obtaining knowledge (a) of
any condition or event that constitutes an Event of Default or Potential
Event of Default, or becoming aware that any Lender has given any notice
(other than to Administrative Agent) or taken any other action with
respect to a claimed Event of Default or Potential Event of Default, (b)
that any Person has given any notice to Parent or any of its Subsidiaries
or taken any other action with respect to a claimed default or event or
condition of the type referred to in subsection 8.2, (c) of any condition
or event that would be required to be disclosed in a current report filed
by Parent or Borrower with the Securities and Exchange Commission on Form
8-K (Items 1, 2, 4, 5 and 6 of such Form as in effect on the date hereof)
if Parent or Borrower were required to file such reports under the
Exchange Act, or (d) of the occurrence of any event or change that has
caused or evidences, either in any case or in the aggregate, a Material
Adverse Effect, an Officers' Certificate specifying the nature and period
of existence of such condition, event or change, or specifying the notice
given or action taken by any such Person and the nature of such claimed
Event of Default, Potential Event of Default, default, event or condition,
and what action each of Parent and Borrower has taken, is taking and
proposes to take with respect thereto;
(x) Litigation or Other Proceedings: promptly upon, and in any event
within two days after, any officer of Parent or Borrower obtaining
knowledge of (X) the institution of any action, suit, proceeding (whether
administrative, judicial or otherwise), governmental investigation or
arbitration against or affecting Parent or any of its Subsidiaries or any
property of Parent or any of its Subsidiaries (collectively,
"Proceedings") not previously disclosed in writing by Parent or Borrower
to Lenders or (Y) any material development in any Proceeding that, in any
case:
(1) if adversely determined, has a reasonable possibility of
giving rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the consummation of,
or to recover any damages or obtain relief as a result of, the
transactions contemplated hereby;
107
written notice thereof together with such other information as may be
reasonably available to Parent or Borrower to enable Lenders and their
counsel to evaluate such matters;
(xi) ERISA Events: promptly upon becoming aware of the occurrence of
or forthcoming occurrence of any ERISA Event, a written notice specifying
the nature thereof, what action Parent, any of its Subsidiaries or any of
their respective ERISA Affiliates has taken, is taking or proposes to take
with respect thereto and, when known, any action taken or threatened by
the Internal Revenue Service, the Department of Labor or the PBGC with
respect thereto, and, on the date any records, documents or other
information must be furnished to the PBGC with respect to any Pension Plan
pursuant to Section 4010 of ERISA, a copy of such records, documents and
information;
(xii) ERISA Notices: promptly and in any event within two Business
Days after receipt thereof by Parent or any ERISA Affiliate, copies of
each notice from the PBGC stating its intention to terminate any Pension
Plan or to have a trustee appointed to administer any Pension Plan;
promptly upon receipt thereof by Parent or any ERISA Affiliate, a copy of
the annual actuarial valuation report for each Plan the funded current
liability percentage (as defined in Section 302(d)(8) of ERISA) of which
is less than 90% or the unfunded current liability of which exceeds
$250,000; promptly and in any event within five Business Days after
receipt thereof by Parent or any ERISA Affiliate from the sponsor of a
Multiemployer Plan, copies of each notice concerning (1) the imposition of
Withdrawal Liability by any such Multi-employer Plan, (2) the
reorganization or termination, within the meaning of Title IV of ERISA, of
any such Multiemployer Plan or (3) the amount of liability incurred, or
that may be incurred, by Parent or any ERISA Affiliate in connection with
any event described in clause (1) or (2);
(xiii) Financial Plans: as soon as practicable and in any event no
later than 45 days after the beginning of each Fiscal Year, a consolidated
and consolidating plan and financial forecast for such Fiscal Year and the
next two Fiscal Years thereafter (the "Financial Plan" for such Fiscal
Years), including without limitation (a) forecasted consolidated and
consolidating balance sheets and forecasted consolidated and consolidating
statements of income and cash flows of Parent and its Subsidiaries for
each such Fiscal Year, together with pro forma Compliance Certificates for
each such Fiscal Year and an explanation of the assumptions on which such
forecasts are based, (b) forecasted consolidated and consolidating
statements of income and cash flows of Parent and its Subsidiaries for
each month of the first such Fiscal Year, together with an explanation of
the assumptions on which such forecasts are based, (c) the amount of
forecasted unallocated overhead for each such Fiscal Year, and (d) such
other information and projections as any Lender may reasonably request;
(xiv) Insurance: as soon as practicable and in any event by the last
day of each Fiscal Year, a report in form and substance satisfactory to
Administrative Agent outlining all material insurance coverage maintained
as of the date of such report by Parent and its Subsidiaries and all
material insurance coverage planned to be maintained by Parent and its
Subsidiaries in the immediately succeeding Fiscal Year;
108
(xv) Board of Directors: with reasonable promptness, written notice
of any change in the Board of Directors of Parent;
(xvi) New Subsidiaries: promptly upon any Person becoming a
Subsidiary of Parent, a written notice setting forth with respect to such
Person (a) the date on which such Person became a Subsidiary of Parent and
(b) all of the data required to be set forth in Schedule 5.1 annexed
hereto with respect to all Subsidiaries of Parent (it being understood
that such written notice shall be deemed to supplement Schedule 5.1
annexed hereto for all purposes of this Agreement;
(xvii) UCC Search Report: As promptly as practicable after the date
of delivery to Administrative Agent of any UCC financing statement
executed by any Loan Party pursuant to subsection 4.1I(iv) or 6.8A, copies
of completed UCC searches evidencing the proper filing, recording and
indexing of all such UCC financing statement and listing all other
effective financing statements that name such Loan Party as debtor,
together with copies of all such other financing statements not previously
delivered to Administrative Agent by or on behalf of Parent or such Loan
Party;
(xviii) Borrowing Base Certificate: (a) within fifteen days after
the last day of any fiscal month and, in addition, as often as Parent may
elect, a Borrowing Base Certificate demonstrating the Borrowing Base as of
the last day of such fiscal month and certified by the chief financial
officer of Borrower and (b) upon written reasonable request of
Administrative Agent or at the option of Borrower, a Borrowing Base
Certificate certified by the chief financial officer or controller of
Borrower and calculated as of the date requested by Administrative Agent
in such request or selected by Borrower, as the case may be;
(xix) Creditor Reports: promptly after the furnishing thereof,
copies of any statement or report furnished to any other holder of the
Securities of Parent or of any of its Subsidiaries pursuant to the terms
of any indenture, loan or credit or similar agreement and not otherwise
required to be furnished to the Lenders pursuant to any other clause of
this subsection 6.1;
(xx) Agreement Notices: promptly upon receipt thereof, copies of all
notices, requests and other documents received by Parent or any of its
Subsidiaries under or pursuant to any Related Agreement or any notice of a
breach, default or termination of a Material Contract or indenture, loan
or credit or similar agreement and, from time to time upon request by
Administrative Agent, such information and reports regarding the Related
Documents and the Material Contracts as Administrative Agent may
reasonably request;
(xxi) Revenue Agent Reports: within 10 days after receipt, copies of
all Revenue Agent Reports (Internal Revenue Service Form 886), or other
written proposals of the Internal Revenue Service, that propose, determine
or otherwise set forth positive adjustments to the federal income tax
liability of the affiliated group (within the meaning
109
of Section 1504(a)(1) of the Internal Revenue Code) of which Parent or
Borrower is a member aggregating $500,000 or more;
(xxii) Environmental Conditions: promptly after the assertion or
occurrence thereof, notice of any Environmental Claim against or of any
noncompliance by Parent or any of its Subsidiaries with any Environmental
Law that could reasonably be expected to have a Material Adverse Effect;
and
(xxiii) Other Information: with reasonable promptness, such other
information and data with respect to Parent or any of its Subsidiaries
as from time to time may be reasonably requested by any Lender.
6.2 Corporate Existence, etc.
Parent will, and will cause each of its Subsidiaries to, at all times
preserve and keep in full force and effect its corporate existence and all
rights, permits, licenses, approvals, privileges and franchises material to its
business; provided, however that neither Parent nor any of its Subsidiaries
shall be required to preserve any such right, permit, license, approval,
privilege or franchise if the Board of Directors of Parent or such Subsidiary
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of Parent or such Subsidiary, as the case may be, and
that the loss thereof is not disadvantageous in any material respect to Parent,
such Subsidiary or Lenders; provided further, that Parent and its Subsidiaries
may consummate any merger of consolidation permitted under subsection 7.7.
6.3 Payment of Taxes and Claims; Tax Consolidation.
A. Parent will, and will cause each of its Subsidiaries to, pay all taxes,
assessments and other governmental charges imposed upon it or any of its
properties or assets or in respect of any of its income, businesses or
franchises before any penalty accrues thereon, and all claims (including,
without limitation, claims for labor, services, materials and supplies) for sums
that have become due and payable and that by law have or may become a Lien upon
any of its properties or assets, prior to the time when any penalty or fine
shall be incurred with respect thereto; provided that no such charge or claim
need be paid if it is being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted, so long as (1) such reserve or
other appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made therefor and (2) in the case of a charge or claim
which has or may become a Lien against any of the Collateral, such contest
proceedings conclusively operate to stay the sale of any portion of the
Collateral to satisfy such charge or claim.
B. Parent will not, nor will it permit any of its Subsidiaries to, file or
consent to the filing of any consolidated income tax return with any Person
(other than Parent or any of its Subsidiaries).
110
6.4 Maintenance of Properties; Insurance; Application of Net Insurance/
Condemnation Proceeds.
A. Maintenance of Properties. Parent will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained in good repair, working
order and condition, ordinary wear and tear excepted, all material properties
used or useful in the business of Parent and its Subsidiaries (including,
without limitation, all Intellectual Property) and from time to time will make
or cause to be made all appropriate repairs, renewals and replacements thereof.
B. Insurance. Borrower will maintain or cause to be maintained, with
financially sound and reputable insurers, such public liability insurance, third
party property damage insurance, business interruption insurance and casualty
insurance with respect to liabilities, losses or damage in respect of the
assets, properties and businesses of Borrower and its Subsidiaries in accordance
with past practices, with such deductibles, covering such risks and otherwise on
such terms and conditions as shall be customary for corporations similarly
situated in the industry. Without limiting the generality of the foregoing,
Borrower will maintain or cause to be maintained (i) flood insurance with
respect to each Flood Hazard Property that is located in a community that
participates in the National Flood Insurance Program, in each case in compliance
with any applicable regulations of the Board of Governors of the Federal Reserve
System, and (ii) replacement value casualty insurance on the Collateral under
such policies of insurance, and (iii) key man life insurance covering, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ and, within 60 days after the Closing Date key man life insurance
covering ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇, in each case with such insurance
companies, in such amounts, with such deductibles, and covering such terms and
risks as are at all times satisfactory to Administrative Agent in its
commercially reasonable judgment. Each such policy of insurance shall (a) name
Administrative Agent for the benefit of Lenders as an additional insured
thereunder as its interests may appear and (b) in the case of each business
interruption and casualty insurance policy, contain a loss payable clause or
endorsement, satisfactory in form and substance to Administrative Agent, that
names Administrative Agent for the benefit of Lenders as the loss payee
thereunder for any covered loss in excess of $50,000 and provides for at least
30 days prior written notice to Administrative Agent of any modification or
cancellation of such policy.
C. Application of Net Insurance/Condemnation Proceeds.
(i) Business Interruption Insurance. Upon receipt by Borrower or any
of its Subsidiaries of any business interruption insurance proceeds
constituting Net Insurance/Condemnation Proceeds, (a) so long as no Event
of Default or Potential Event of Default shall have occurred and be
continuing, Borrower or such Subsidiary may retain and apply such Net
Insurance/Condemnation Proceeds for working capital purposes, and (b) if
an Event of Default or Potential Event of Default shall have occurred and
be continuing, Borrower shall apply an amount equal to such Net
Insurance/Condemnation Proceeds to prepay the Loans as provided in
subsection 2.4B(iii)(b);
(ii) Casualty Insurance/Condemnation Proceeds. Upon receipt by
Borrower or any of its Subsidiaries of any Net Insurance/Condemnation
Proceeds other than from
111
business interruption insurance, (a) so long as no Event of Default or
Potential Event of Default shall have occurred and be continuing, Borrower
shall, or shall cause one or more of its Subsidiaries to, promptly and
diligently apply such Net Insurance/Condemnation Proceeds to pay or
reimburse the costs of repairing, restoring or replacing the assets in
respect of which such Net Insurance/Condemnation Proceeds were received
or, to the extent not so applied, to prepay the Loans (and/or the
Revolving Loan Commitments shall be reduced) as provided in subsection
2.4B(iii)(b), and (b) if an Event of Default or Potential Event of Default
shall have occurred and be continuing, Borrower shall apply an amount
equal to such Net Insurance/Condemnation Proceeds to prepay the Loans as
provided in subsection 2.4B(iii)(b).
(iii) Net Insurance/Condemnation Proceeds Received by Administrative
Agent. Upon receipt by Administrative Agent of any Net
Insurance/Condemnation Proceeds as loss payee, (a) if the aggregate amount
of Net Insurance/Condemnation Proceeds received (and reasonably expected
to be received) by Administrative Agent in respect of any covered loss
exceeds $1,500,000, or if and to the extent Borrower would have been
required to apply such Net Insurance/Condemnation Proceeds (if it had
received them directly) to prepay the Loans and/or reduce the Revolving
Loan Commitments, Administrative Agent shall, and Borrower hereby
authorizes Administrative Agent to, apply such Net Insurance/Condemnation
Proceeds to prepay the Loans as provided in subsection 2.4B(iii)(b), and
(b) to the extent the foregoing clause (a) does not apply and (1) the
aggregate amount of such Net Insurance/Condemnation Proceeds received (and
reasonably expected to be received) by Administrative Agent in respect of
any covered loss does not exceed $500,000, Administrative Agent shall
deliver such Net Insurance/Condemnation Proceeds to Borrower, and Borrower
shall, or shall cause one or more of its Subsidiaries to, promptly apply
such Net Insurance/Condemnation Proceeds to the costs of repairing,
restoring, or replacing the assets in respect of which such Net
Insurance/Condemnation Proceeds were received, and (2) if the aggregate
amount of Net Insurance/Condemnation Proceeds received (and reasonably
expected to be received) by Administrative Agent in respect of any covered
loss exceeds $500,000, Administrative Agent shall hold such Net
Insurance/Condemnation Proceeds pursuant to the terms of the Collateral
Account Agreement and, so long as Borrower or any of its Subsidiaries
proceeds diligently to repair, restore or replace the assets of Borrower
or such Subsidiary in respect of which such Net Insur-ance/Condemnation
Proceeds were received, Administrative Agent shall from time to time
disburse to Borrower or such Subsidiary from the Collateral Account, to
the extent of any such Net Insurance/Condemnation Proceeds remaining
therein in respect of the applicable covered loss, amounts necessary to
pay the cost of such repair, restoration or replacement after the receipt
by Administrative Agent of invoices or other documentation reasonably
satisfactory to Administrative Agent relating to the amount of costs so
incurred and the work performed (including, if required by Administrative
Agent, lien releases and architects' certificates); provided, however that
if at any time Administrative Agent reasonably determines (A) that
Borrower or such Subsidiary is not proceeding diligently with such repair,
restoration or replacement or (B) that such repair, restoration or
replacement cannot be completed with the Net Insurance/Condemnation
Proceeds then held by Administrative Agent for such purpose,
112
together with funds otherwise available to Borrower for such purpose,
Administrative Agent shall, and Borrower hereby authorizes Administrative
Agent to, apply such Net Insurance/ Condemnation Proceeds to prepay the
Loans as provided in subsection 2.4B(iii)(b).
6.5 Inspection Rights; Audits of Inventory and Accounts Receivable; Lender
Meeting.
A. Inspection Rights. Parent shall, and shall cause each of its
Subsidiaries to, permit any authorized representatives designated by any Lender
to visit and inspect any of the properties of Parent or of any of its
Subsidiaries, to inspect, copy and take extracts from its and their financial
and accounting books and records, and to discuss its and their affairs, finances
and accounts with its and their officers and independent public accountants
(provided that Parent may, if it so chooses, be present at or participate in any
such discussion), all upon reasonable notice and at such reasonable times during
normal business hours and as often as may reasonably be requested.
B. Audits of Inventory and Accounts Receivable. Parent shall, and shall
cause each of its Subsidiaries to, permit any authorized representatives
designated by Administrative Agent to conduct one audit of all Inventory and
Accounts Receivable of Loan Parties during each twelve-month period after the
Closing Date and such additional audits as Administrative Agent or Requisite
Lenders may reasonably request, each such audit to be substantially similar in
scope and substance to the audit of Inventory and accounts receivable referred
to in subsection 6.17, all upon reasonable notice and at such reasonable times
during normal business hours as may reasonably be requested.
C. Lender Meeting. Borrower will, upon the request of Administrative Agent
or Requisite Lenders, participate in a meeting of Administrative Agent and
Lenders once during each Fiscal Year to be held at Borrower's corporate offices
(or at such other location as may be agreed to by Borrower and Administrative
Agent) at such time as may be agreed to by Borrower and Administrative Agent.
6.6 Compliance with Laws, etc.
Parent shall comply, and shall cause each of its Subsidiaries and all
other Persons on or occupying any Facilities to comply, in all material
respects, with the requirements of all applicable laws, rules, regulations and
orders of any governmental authority (including all ERISA and Environmental
Laws).
6.7 Environmental Review and Investigation, Disclosure, Etc.; Parent's and
Borrower's Actions Regarding Hazardous Materials Activities, Environmental
Claims and Violations of Environmental Laws.
A. Environmental Review and Investigation. Parent and Borrower each agrees
that Administrative Agent may, from time to time and in its reasonable
discretion, (i) retain, at Borrower's expense, an independent professional
consultant to review any environmental audits,
113
investigations, analyses and reports relating to Hazardous Materials prepared by
or for Borrower and (ii) in the event (a) Administrative Agent reasonably
believes that Parent or Borrower has breached any representation, warranty or
covenant contained in subsection 5.6, 5.13, 6.6 or 6.7 or that there has been a
material violation of Environmental Laws at any Facility or by Parent or any of
its Subsidiaries at any other location or (b) an Event of Default has occurred
and is continuing, conduct its own investigation of any Facility. For purposes
of conducting such a review and/or investigation, each of Parent and Borrower
hereby grants to Administrative Agent and its agents, employees, consultants and
contractors the right to enter into or onto any Facilities currently owned,
leased, operated or used by Parent or any of its Subsidiaries and to perform
such tests on such property (including taking samples of soil, groundwater and
suspected asbestos-containing materials) as are reasonably necessary in
connection therewith. Any such investigation of any Facility shall be conducted,
unless otherwise agreed to by Borrower and Administrative Agent, during normal
business hours and, to the extent reasonably practicable, shall be conducted so
as not to interfere with the ongoing operations at such Facility or to cause any
damage or loss to any property at such Facility. Parent, Borrower and
Administrative Agent hereby acknowledge and agree that any report of any
investigation conducted at the request of Administrative Agent pursuant to this
subsection 6.7A will be obtained and shall be used by Administrative Agent and
Lenders for the purposes of Lenders' internal credit decisions, to monitor and
police the Loans and to protect Lenders' security interests, if any, created by
the Loan Documents. Administrative Agent agrees to deliver a copy of any such
report to Borrower with the understanding that each of Parent and Borrower
acknowledges and agrees that neither Administrative Agent nor any Lender makes
any representation or warranty with respect to such report and by delivering
such report to Borrower, neither Administrative Agent nor any Lender is
requiring or recommending the implementation of any suggestions or
recommendations contained in such report.
B. Environmental Disclosure. Borrower will deliver to Administrative Agent
and Lenders:
(i) Environmental Audits and Reports. As soon as practicable
following receipt thereof, copies of all environmental audits,
investigations, analyses and reports of any kind or character, whether
prepared by personnel of Parent or any of its Subsidiaries or by
independent consultants, governmental authorities or any other Persons,
with respect to significant environmental matters at any Facility which,
individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect or with respect to any Environmental Claims
which, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect;
(ii) Notice of Certain Releases, Remedial Actions, Etc. Promptly
upon the occurrence thereof, written notice describing in reasonable
detail (a) any Release required to be reported to any federal, state or
local governmental or regulatory agency under any applicable Environmental
Laws, (b) any remedial action taken by Borrower or any other Person in
response to (1) any Hazardous Materials Activities the existence of which
has a reasonable possibility of resulting in one or more Environmental
Claims having, individually or in the aggregate, a Material Adverse
Effect, or (2) any Environmental Claims that, individually or in the
aggregate, have a reasonable possibility of resulting in
114
a Material Adverse Effect, and (c) Parent's discovery of any occurrence or
condition on any real property adjoining or in the vicinity of any
Facility that could cause such Facility or any part thereof to be subject
to any material restrictions on the ownership, occupancy, transferability
or use thereof under any Environmental Laws.
(iii) Written Communications Regarding Environmental Claims,
Releases, Etc. As soon as practicable following the sending or receipt
thereof by Parent or any of its Subsidiaries, a copy of any and all
written communications with respect to (a) any Environmental Claims that,
individually or in the aggregate, have a reasonable possibility of giving
rise to a Material Adverse Effect, (b) any Release required to be reported
to any federal, state or local governmental or regulatory agency, and (c)
any request for information from any governmental agency that suggests
such agency is investigating whether Parent or any of its Subsidiaries may
be potentially responsible for any Hazardous Materials Activity.
(iv) Notice of Certain Proposed Actions Having Environmental Impact.
Prompt written notice describing in reasonable detail (a) any proposed
acquisition of stock, assets, or property by Parent or any of its
Subsidiaries that could reasonably be expected to (1) expose Parent or any
of its Subsidiaries to, or result in, Environmental Claims that could
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect or (2) affect the ability of Parent or any of its
Subsidiaries to maintain in full force and effect all material
Governmental Authorizations required under any Environmental Laws for
their respective operations and (b) any proposed action to be taken by
Parent or any of its Subsidiaries to modify current operations in a manner
that could reasonably be expected to subject Parent or any of its
Subsidiaries to any additional obligations or requirements under any
Environmental Laws that could reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.
(v) Other Information. With reasonable promptness, such other
documents and information as from time to time may be reasonably requested
by Administrative Agent in relation to any matters disclosed pursuant to
this subsection 6.7.
C. Parent's and Borrower's Actions Regarding Hazardous Materials
Activities, Environmental Claims and Violations of Environmental Laws.
(i) Remedial Actions Relating to Hazardous Materials Activities.
Parent shall promptly undertake, and shall cause each of its Subsidiaries
promptly to undertake, any and all investigations, studies, sampling,
testing, abatement, cleanup, removal, remediation or other response
actions necessary to remove, remediate, clean up or ▇▇▇▇▇ any Hazardous
Materials Activity on, under or about any Facility that is in violation of
any Environmental Laws or that presents a material risk of giving rise to
an Environmental Claim. In the event Parent or any of its Subsidiaries
undertakes any such action with respect to any Hazardous Materials, Parent
or such Subsidiary shall conduct and complete such action in compliance
with all applicable Environmental Laws and in accordance with the
policies, orders and directives of all federal, state and local
governmental authorities
115
except when, and only to the extent that, Parent's or such Subsidiary's
liability with respect to such Hazardous Materials Activity is being
contested in good faith by Parent or such Subsidiary.
(ii) Actions with Respect to Environmental Claims and Violations of
Environmental Laws. Parent shall promptly take, and shall cause each of
its Subsidiaries promptly to take, any and all actions necessary to (i)
cure any violation of applicable Environmental Laws by Parent or its
Subsidiaries and (ii) make an appropriate response to any Environmental
Claim against Parent or any of its Subsidiaries and discharge any
obligations it may have to any Person thereunder.
6.8 Execution of Subsidiary Guaranty and Personal Property Collateral
Documents by Certain Subsidiaries and Future Subsidiaries.
A. Execution of Subsidiary Guaranty and Personal Property Collateral
Documents. In the event that any Person becomes a Subsidiary of Borrower after
the date hereof, Borrower will promptly notify Administrative Agent of that fact
and cause such Subsidiary to execute and deliver to Administrative Agent a
counterpart of the Subsidiary Guaranty and a Subsidiary Pledge Agreement, a
Subsidiary Security Agreement, a Subsidiary Trademark Security Agreement and a
Subsidiary Patent Security Agreement and to take all such further actions and
execute all such further documents and instruments (including actions, documents
and instruments comparable to those described in subsection 4.1I) as may be
necessary or, in the opinion of Administrative Agent, desirable to create in
favor of Administrative Agent, for the benefit of Lenders, a valid and perfected
First Priority Lien on all of the personal and mixed property assets of such
Subsidiary described in the applicable forms of Collateral Documents.
B. Subsidiary Charter Documents, Legal Opinions, Etc. Borrower shall
deliver to Administrative Agent, together with such Loan Documents, (i)
certified copies of such Subsidiary's Certificate or Articles of Incorporation,
together with a good standing certificate from the Secretary of State of the
jurisdiction of its incorporation and each other state in which such Person is
qualified as a foreign corporation to do business and, to the extent generally
available, a certificate or other evidence of good standing as to payment of any
applicable franchise or similar taxes from the appropriate taxing authority of
each of such jurisdictions, each to be dated a recent date prior to their
delivery to Administrative Agent, (ii) a copy of such Subsidiary's Bylaws,
certified by its corporate secretary or an assistant secretary as of a recent
date prior to their delivery to Administrative Agent, (iii) a certificate
executed by the secretary or an assistant secretary of such Subsidiary as to (a)
the fact that the attached resolutions of the Board of Directors of such
Subsidiary approving and authorizing the execution, delivery and performance of
such Loan Documents are in full force and effect and have not been modified or
amended and (b) the incumbency and signatures of the officers of such Subsidiary
executing such Loan Documents, and (iv) a favorable opinion of counsel to such
Subsidiary, in form and substance satisfactory to Administrative Agent and its
counsel, as to (a) the due organization and good standing of such Subsidiary,
(b) the due authorization, execution and delivery by such Subsidiary of such
Loan Documents, (c) the enforceability of such Loan Documents against such
116
Subsidiary, (d) such other matters (including matters relating to the creation
and perfection of Liens in any Collateral pursuant to such Loan Documents) as
Administrative Agent may reasonably request, all of the foregoing to be
satisfactory in form and substance to Administrative Agent and its counsel.
6.9 Conforming Leasehold Interests; Matters Relating to Additional Real
Property Collateral.
A. Conforming Leasehold Interests. If Borrower or any of its Subsidiaries
acquires any Leasehold Property, Borrower shall, or shall cause such Subsidiary
to, use its best efforts (without requiring Borrower or such Subsidiary to
relinquish any material rights or incur any material obligations or to expend
more than a nominal amount of money over and above the reimbursement, if
required, of the landlord's out-of-pocket costs, including attorneys fees) to
cause such Leasehold Property to be a Conforming Leasehold Interest.
B. Additional Mortgages, Etc. From and after the Closing Date, in the
event that (i) Borrower or any Subsidiary Guarantor acquires any fee interest in
real property or any Material Leasehold Property, or Administrative Agent
determines in its sole discretion to place a Mortgage on any Real Property Asset
owned on the Closing Date by Parent or any of its Subsidiaries if a Mortgage was
not placed in any such Real Property Asset as of the Closing Date, or (ii) at
the time any Person becomes a Subsidiary Guarantor, such Person owns or holds
any fee interest in real property or any Material Leasehold Property, in either
case excluding any such Real Property Asset the encumbrancing of which requires
the consent of any applicable lessor or (in the case of clause (ii) above)
then-existing senior lienholder, where Borrower and its Subsidiaries are unable
to obtain such lessor's or senior lienholder's consent (any such non-excluded
Real Property Asset described in the foregoing clause (i) or (ii) being an
"Additional Mortgaged Property"), Borrower or such Subsidiary Guarantor shall
deliver to Administrative Agent, as soon as practicable after such Person
acquires such Additional Mortgaged Property the following:
(i) Additional Mortgage. A fully executed and notarized Mortgage (an
"Additional Mortgage"), in proper form for recording in all appropriate
places in all applicable jurisdictions, encumbering the interest of such
Loan Party in such Additional Mortgaged Property;
(ii) Opinions of Counsel. (a) A favorable opinion of counsel to such
Loan Party, in form and substance satisfactory to Administrative Agent and
its counsel, as to the due authorization, execution and delivery by such
Loan Party of such Additional Mortgage and such other matters as
Administrative Agent may reasonably request, and (b) if required by
Administrative Agent, an opinion of counsel (which counsel shall be
reasonably satisfactory to Administrative Agent) in the state in which
such Additional Mortgaged Property is located with respect to the
enforceability of the form of Additional Mortgage to be recorded in such
state and such other matters (including without limitation any matters
governed by the laws of such state regarding personal property security
117
interests in respect of any Collateral) as Administrative Agent may
reasonably request, in each case in form and substance reasonably
satisfactory to Administrative Agent;
(iii) Landlord Consent and Estoppel; Recorded Leasehold Interest. In
the case of any Additional Mortgaged Property consisting of a Leasehold
Property, (a) a Landlord Consent and Estoppel and (b) evidence that such
Leasehold Property is a Recorded Leasehold Interest;
(iv) Title Insurance. (a) If required by Administrative Agent, an
ALTA mortgagee title insurance policy or an unconditional commitment
therefor (an "Additional Mortgage Policy") issued by the Title Company
with respect to such Additional Mortgaged Property, in an amount
satisfactory to Administrative Agent, insuring fee simple title to, or a
valid leasehold interest in, such Additional Mortgaged Property vested in
such Loan Party and assuring Administrative Agent that such Additional
Mortgage creates a valid and enforceable First Priority mortgage Lien on
such Additional Mortgaged Property, subject only to a standard survey
exception, which Additional Mortgage Policy (1) shall include an
endorsement for mechanics' liens, for future advances under this Agreement
and for any other matters reasonably requested by Administrative Agent and
(2) shall provide for affirmative insurance and such reinsurance as
Administrative Agent may reasonably request, all of the foregoing in form
and substance reasonably satisfactory to Administrative Agent; and (b)
evidence satisfactory to Administrative Agent that such Loan Party
has (i) delivered to the Title Company all certificates and affidavits
required by the Title Company in connection with the issuance of the
Additional Mortgage Policy and (ii) paid to the Title Company or to the
appropriate governmental authorities all expenses and premiums of the
Title Company in connection with the issuance of the Additional Mortgage
Policy and all recording and stamp taxes (including mortgage recording and
intangible taxes) payable in connection with recording the Additional
Mortgage in the appropriate real estate records;
(v) Title Report. If no Additional Mortgage Policy is required with
respect to such Additional Mortgaged Property, a title report issued by
the Title Company with respect thereto, dated not more than 30 days prior
to the date such Additional Mortgage is to be recorded and satisfactory in
form and substance to Administrative Agent;
(vi) Copies of Documents Relating to Title Exceptions. Copies of all
recorded documents listed as exceptions to title or otherwise referred to
in the Additional Mortgage Policy or title report delivered pursuant to
clause (v) or (vi) above;
(vii) Matters Relating to Flood Hazard Properties. (a) Evidence,
which may be in the form of a letter from an insurance broker or a
municipal engineer, as to (1) whether such Additional Mortgaged Property
is a Flood Hazard Property and (2) if so, whether the community in which
such Flood Hazard Property is located is participating in the National
Flood Insurance Program, (b) if such Additional Mortgaged Property is a
Flood Hazard Property, such Loan Party's written acknowledgement of
receipt of written notification from Administrative Agent (1) that such
Additional Mortgaged Property is a
118
Flood Hazard Property and (2) as to whether the community in which such
Flood Hazard Property is located is participating in the National Flood
Insurance Program, and (c) in the event such Additional Mortgaged Property
is a Flood Hazard Property that is located in a community that
participates in the National Flood Insurance Program, evidence that
Borrower has obtained flood insurance in respect of such Flood Hazard
Property to the extent required under the applicable regulations of the
Board of Governors of the Federal Reserve System; and
(viii) Environmental Audit. If required by Administrative Agent,
reports and other information, in form, scope and substance satisfactory
to Administrative Agent and prepared by environmental consultants
satisfactory to Administrative Agent, concerning any environmental hazards
or liabilities to which Parent or any of its Subsidiaries may be subject
with respect to such Additional Mortgaged Property.
C. Real Estate Appraisals. Parent shall, and shall cause each of its
Subsidiaries to, permit an independent real estate appraiser satisfactory to
Administrative Agent, upon reasonable notice, to visit and inspect any
Additional Mortgaged Property for the purpose of preparing an appraisal of such
Additional Mortgaged Property satisfying the requirements of any applicable laws
and regulations (in each case to the extent required under such laws and
regulations as determined by Administrative Agent in its discretion).
6.10 Interest Rate Protection.
Unless and until the Permitted Securities Issuance Prepayment Date, at all
times after the date which is 60 days after the Closing Date, Borrower shall
maintain in effect one or more Interest Rate Agreements with respect to the
Loans, in an aggregate notional principal amount of not less than 50% of the
aggregate principal amount of the Term Loans then outstanding, which Interest
Rate Agreements shall have the effect of establishing a maximum interest rate of
not more than 3.00% above the Adjusted Eurodollar Rate at the time such Interest
Rate Agreement is entered into with respect to such notional principal amount,
each such Interest Rate Agreement to be in form and substance satisfactory to
Administrative Agent and with a term of not less than three years.
6.11 Deposit Accounts.
At any time there are Revolving Loans outstanding, Parent shall not permit
the aggregate amount on deposit in all Deposit Accounts of Parent and its
Subsidiaries (other than Deposit Accounts maintained with Administrative Agent)
at any time to exceed $3,000,000.
6.12 Determination of Borrowing Base.
A. Borrower shall deliver a Borrowing Base Certificate to Administrative
Agent sufficiently in advance of the Closing Date to permit Administrative Agent
to determine the Borrowing Base to be in effect on the Closing Date and
thereafter, shall deliver Borrowing Base Certificates on a monthly basis
pursuant to subsection 6.1(xviii); each such Borrowing Base
119
Certificate to be dated as of the last day of the applicable reporting period.
Promptly following its receipt of each such Borrowing Base Certificate,
Administrative Agent shall determine, or, as the case may be, redetermine the
Borrowing Base in accordance with the definition thereof, using the information
contained in such Borrowing Base Certificate, and shall notify Borrower of the
Borrowing Base so determined or so redetermined. Each such Borrowing Base so
determined or redetermined by Administrative Agent shall remain in effect until
notice of a redetermined Borrowing Base shall have been given by Administrative
Agent in accordance with the provisions of this subsection 6.12.
B. Each of the Accounts Receivable shown on each Borrowing Base
Certificate shall conform to the requirements set forth in the definition of
Eligible Receivables.
C. All Inventory shown on each Borrowing Base Certificate shall conform to
the requirements of the definition of Eligible Inventory, shall be the Operating
Subsidiaries' exclusive property and shall be valued at the lower of cost or
market value.
D. Borrower agrees to furnish to Administrative Agent any information
which it may reasonably request regarding the determination and calculation of
the Borrowing Base including, without limitation, correct and complete copies of
any material invoices, underlying agreements, instruments or other documents and
the identity of all obligors.
E. The Administrative Agent may, at any time that it in good faith
believes that the Total Utilization of the Revolving Loan Commitments exceeds
the Borrowing Base reflected in the most recent Borrowing Base Certificate
delivered by Borrower, require Borrower to, and Borrower may at any time elect
to, submit an updated Borrowing Base Certificate and/or reevaluate the value of
any item included in the Borrowing Base in accordance with the definition of
such item as set forth in subsection 1.1, including, without limitation, the
creditworthiness of any obligor relating to any item included in the Borrowing
Base. The Administrative Agent may determine, as a result of any such
reevaluation, to reduce the amount which such item contributes to the Borrowing
Base or exclude such item from the Borrowing Base, which determination shall,
absent manifest error, be final, binding and conclusive upon all parties hereto.
If the Administrative Agent determines that the Borrowing Base shall be reduced
pursuant to this subsection 6.12, the Administrative Agent shall give written
notice to Borrower and Lenders which states the amount of such reduction and the
nature of the action taken by the Administrative Agent, which reduction shall be
effective on the third Business Day following receipt of such notice by
Borrower.
F. Borrower shall promptly notify the Administrative Agent in writing of
any material information which Borrower receives or otherwise gain knowledge of
relating to any item included in the Borrowing Base which materially and
adversely affects the value of such item or would cause such item to be excluded
in whole or in part from the Borrowing Base.
120
6.13 Keeping of Books.
Parent shall keep, and cause each of its Subsidiaries to keep, proper
books of record and account, in which full and correct entries shall be made of
all financial transactions and the assets and business of Parent and each such
Subsidiary in accordance with GAAP in effect from time to time.
6.14 Compliance with Terms of Leaseholds.
Borrower shall make all payments and otherwise perform all obligations in
respect of all leases of real property to which Borrower or any of its
Subsidiaries is a party, keep such leases in full force and effect and not allow
such leases to lapse or be terminated or any rights to renew such leases to be
forfeited or cancelled, notify Administrative Agent of any default by any party
with respect to such leases and cooperate with Administrative Agent in all
respects to cure any such default, and cause each of its Subsidiaries to do so
except, in any case, where the failure to do so, either individually or in the
aggregate, could not be reasonably likely to have a Material Adverse Effect.
6.15 Performance of Related Agreements.
Borrower shall perform and observe all of the material terms and
provisions of each Related Agreement to be performed or observed by it, maintain
each such Related Agreement in full force and effect, enforce such Related
Agreement in accordance with its terms, take all such action to such end as may
be from time to time reasonably requested by Requisite Lenders and, upon request
of Requisite Lenders, make to each other party to each such Related Agreement
such demands and requests for information and reports or for action as Borrower
is entitled to make under such Related Agreement, and cause each of its
Subsidiaries to do so.
6.16 Performance of Material Contracts.
Borrower shall perform and observe all the material terms and provisions
of each Material Contract to be performed or observed by it, maintain each such
Material Contract in full force and effect, enforce each such Material Contract
in accordance with its terms, take all such action to such end as may be from
time to time reasonably requested by Requisite Lenders and, upon request of
Requisite Lenders, make to each other party to each such Material Contract such
demands and requests for information and reports or for action as Borrower is
entitled to make under such Material Contract, and cause each of its
Subsidiaries to do so except, in any case, where the failure to do so, either
individually or in the aggregate, could not be reasonably likely to have a
Material Adverse Effect.
6.17 Audit of Inventory and Accounts Receivable.
Borrower shall assist Administrative Agent (or an independent auditor
satisfactory to Administrative Agent) in completing audits of the Inventory,
accounts receivable and payables of Borrower and its Subsidiaries during the
30-day period after the Closing Date, which audits
121
will be provided to each Lender. Borrower will negotiate in good faith with
Administrative Agent (and Administrative Agent shall consult with Lenders with
respect thereto) to revise the definitions of "Eligible Accounts Receivable" and
"Eligible Inventory" to reflect the results of such audits.
Section 7. NEGATIVE COVENANTS
Parent and Borrower, jointly and severally, covenant and agree that, so
long as any of the Commitments hereunder shall remain in effect and until
payment in full of all of the Loans and other Obligations and the cancellation
or expiration of all Letters of Credit and the termination of the IRB
Reimbursement Agreement, unless Requisite Lenders shall otherwise give prior
written consent, each of Parent and Borrower shall perform, and shall cause each
of its Subsidiaries to perform, all covenants in this Section 7.
7.1 Indebtedness.
Parent shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume, guaranty, or suffer to exist or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(i) Borrower may become and remain liable with respect to the
Obligations;
(ii) Borrower and its Subsidiaries may become and remain liable with
respect to Contingent Obligations permitted by subsection 7.4 and, upon
any matured obligations actually arising pursuant thereto, the
Indebtedness corresponding to the Contingent Obligations so extinguished;
(iii) Borrower and its Subsidiaries may become and remain liable
with respect to Indebtedness in respect of Capital Leases in an aggregate
principal amount not to exceed $2,000,000;
(iv) Borrower may become and remain liable with respect to
Indebtedness to any of its Subsidiaries, and any Subsidiary of Borrower
may become and remain liable with respect to Indebtedness to Borrower or
any other Subsidiary of Borrower; provided that (a) all such intercompany
Indebtedness shall be evidenced by promissory notes and pledged to
Administrative Agent pursuant to the Borrower Pledge Agreement or the
applicable Subsidiary Pledge Agreement, as the case may be, (b) all such
intercompany Indebtedness owed by Borrower to any of its Subsidiaries
shall be subordinated on terms acceptable to Requisite Lenders in right of
payment to the payment in full of the Obligations pursuant to the terms of
the applicable promissory notes or an intercompany subordination
agreement, and (c) any payment by any Subsidiary of Borrower under any
guaranty of the Obligations shall result in a pro tanto reduction of the
amount of any intercompany Indebtedness owed by such Subsidiary to
Borrower or to any of its Subsidiaries for whose benefit such payment is
made;
122
(v) Borrower and its Subsidiaries, as applicable, may remain liable
with respect to Indebtedness existing on the date hereof and described in
Schedule 7.1 annexed hereto;
(vi) Borrower and its Subsidiaries may remain liable with respect to
the IRB Debt pursuant to the IRB Trust Indenture in an aggregate principal
amount not to exceed $4,400,000;
(vii) Borrower may become and remain liable with respect to
Indebtedness incurred pursuant to any Permitted Securities Issuance;
provided that (1) Administrative Agent shall have received a fully
executed or conformed copy of each material agreement entered into in
connection therewith, and each such agreement shall be in full force and
effect, (2) that all Net Securities Proceeds from the issuance of any
Permitted Securities Issuance shall be applied in such manner as set forth
in subsection 2.4B(iii)(e);
(viii) after the earlier of the Permitted Securities Issuance
Prepayment Date and six months following the Closing Date, Borrower and
its Subsidiaries may become and remain liable with respect to other
unsecured Indebtedness in an aggregate principal amount not to exceed
$2,000,000 at any time outstanding;
(ix) QF Acquisition may become and remain liable with respect to the
PIDA Loan and PIDC Loan in an aggregate principal amount not to exceed, in
each case, $1,750,000 at any time outstanding;
(x) Borrower and its Subsidiaries may become and remain liable with
respect to secured purchase money or other similar Indebtedness in an
aggregate amount not to exceed $2,000,000 at any time; provided that at
least 80% of the purchase price of such assets was provided by the
proceeds of such purchase money Indebtedness;
(xi) Borrower may become and remain liable with respect to
Indebtedness evidenced by the Bridge Financing Documents and the Seller
Notes; and
(xii) Borrower and its Subsidiaries may become and remain liable
after the Permitted Securities Issuance Prepayment Date with respect to
Additional Subordinated Notes in an aggregate principal amount not to
exceed $10,000,000.
7.2 Liens and Related Matters.
A. Prohibition on Liens. Parent shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of Parent or any of its Subsidiaries, whether now owned or hereafter
acquired, or any income or profits therefrom, or sign or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the Uniform Commercial Code of any State or under any similar
recording or notice statute, or sign or permit to exist any security
123
agreement authorizing any secured party thereunder to file such financing
statement or similar notice, except:
(i) Permitted Encumbrances;
(ii) Liens granted pursuant to the Collateral Documents;
(iii) Liens existing on the date hereof described in Schedule 7.2
annexed hereto; and
(iv) purchase money Liens upon or in real property or equipment
acquired or held by Borrower or any of its Subsidiaries in the ordinary
course of business to secure the purchase price of such property or
equipment or to secure Indebtedness incurred solely for the purpose of
financing the acquisition, construction or improvement of any such
property or equipment to be subject to such Liens, or Liens existing on
any such property or equipment at the time of acquisition (other than any
such Liens created in contemplation of such acquisition that do not secure
the purchase price), or extensions, renewals or replacements of any of the
foregoing for the same or a lesser amount; provided, however, that no such
Lien shall extend to or cover any property other than the property or
equipment being acquired, constructed or improved, and no such extension,
renewal or replacement shall extend to or cover any property not
theretofore subject to the Lien being extended, renewed or replaced; and
provided further that the aggregate principal amount of the Indebtedness
secured by Liens permitted by this clause (iv) shall not exceed the amount
permitted under subsection 7.1(x) at any time outstanding;
(v) Liens arising in connection with Capitalized Leases permitted
under subsection 7.1(iii), provided that no such Lien shall extend to or
cover any assets other than the assets subject to such Capitalized Leases;
(vi) the replacement, extension or renewal of any Lien permitted by
clauses (i), (iii), (v) and (vii) of this subsection 7.2A upon or in the
same property theretofore subject thereto or the replacement, extension or
renewal (without increase in the amount or change in any direct or
contingent obligor) of the Indebtedness secured thereby; and
(vii) Liens arising in connection with PIDA Loans permitted under
subsection 7.1(ix), provided that such Liens shall be (1) subordinated to
all Obligations hereunder in respect of any IRB Reimbursement Advance, (2)
limited to the extent set forth in the PIDA Commitment Letter annexed
hereto as Schedule 7.2(vii), and (3) otherwise be in form and substance
reasonably satisfactory to Requisite Lenders.
B. Equitable Lien in Favor of Lenders. If Parent or any of its
Subsidiaries shall create or assume any Lien upon any of its properties or
assets, whether now owned or hereafter acquired, other than Liens excepted by
the provisions of subsection 7.2A, it shall make or cause to be made effective
provision whereby the Obligations will be secured by such Lien equally and
ratably with any and all other Indebtedness secured thereby as long as any such
Indebtedness
124
shall be so secured; provided that, notwithstanding the foregoing, this covenant
shall not be construed as a consent by Requisite Lenders to the creation or
assumption of any such Lien not permitted by the provisions of subsection 7.2A.
C. No Further Negative Pledges. Except with respect to specific property
encumbered to secure payment of particular Indebtedness or to be sold pursuant
to an executed agreement with respect to an Asset Sale, neither Parent nor any
of its Subsidiaries shall enter into any agreement (other than the Senior
Guaranteed Note Documents, the Subordinated Note Documents or the Bridge
Financing Documents) prohibiting the creation or assumption of any Lien upon any
of its properties or assets, whether now owned or hereafter acquired.
D. No Restrictions on Subsidiary Distributions to Borrower or Other
Subsidiaries. Except as provided herein, or in any Senior Guaranteed Note
Document, Subordinated Note Document or Bridge Financing Document, Parent will
not, and will not permit any of its Subsidiaries to, create or otherwise cause
or suffer to exist or become effective any consensual encumbrance or restriction
of any kind on the ability of any Subsidiary of Borrower to (i) pay dividends or
make any other distributions on any of such Subsidiary's capital stock owned by
Borrower or any other Subsidiary of Borrower, (ii) repay or prepay any
Indebtedness owed by such Subsidiary to Borrower or any other Subsidiary of
Borrower, (iii) make loans or advances to Borrower or any other Subsidiary of
Borrower, or (iv) transfer any of its property or assets to Borrower or any
other Subsidiary of Borrower, other than encumbrances and restrictions arising
under (i) applicable law, (ii) customary provisions restricting subletting or
assignment of any lease governing a leasehold interest of Borrower or any of its
Subsidiaries, and (iii) customary restrictions on dispositions of real property
interests found in reciprocal easement agreements of Borrower or any of its
Subsidiaries.
7.3 Investments; Joint Ventures.
Parent shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, make or own any Investment in any Person, including any
Joint Venture, except:
(i) Subject to subsection 8.15, Parent and its Subsidiaries may make
and own Investments in Cash Equivalents;
(ii) Borrower and its Subsidiaries may own and make equity
Investments in any Subsidiary of Borrower;
(iii) Borrower and its Subsidiaries may make intercompany loans to
the extent permitted under subsection 7.1(iv);
(iv) Borrower and its Subsidiaries may make Consolidated Capital
Expenditures permitted by subsection 7.8;
(v) Borrower and its Subsidiaries may continue to own the
Investments owned by them as of the Closing Date and described in Schedule
7.3 annexed hereto;
125
(vi) Borrower may consummate the Acquisition;
(vii) Borrower and its Subsidiaries may make loans and advances to
employees in the ordinary course of the business of Borrower and its
Subsidiaries as presently conducted in an aggregate principal amount not
to exceed $500,000 at any time outstanding; provided that any such loans
shall be evidenced by a promissory note and pledged to Administrative
Agent pursuant to the Borrower Pledge Agreement or applicable Subsidiary
Pledge Agreement, as the case may be;
(viii) Borrower may make loans to employees for the purpose of
selling equity securities of Borrower to such employees in an aggregate
principal amount not to exceed $500,000 at anytime outstanding; provided
that such loans shall be evidenced by a promissory note and pledged to
Administrative Agent pursuant to the Borrower Pledge Agreement;
(ix) Borrower and its Subsidiaries may make Investments consisting
of Contingent Obligations to the extent permitted under subsection 7.4;
(x) Borrower and its Subsidiaries may make and own other Investments
to the extent permitted under subsection 7.7; and
(xi) Parent may make Investments consisting of repurchases of equity
Securities of Parent to the extent permitted under subsection 7.5.
7.4 Contingent Obligations.
Parent shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or become or remain liable with respect to any
Contingent Obligation, except:
(i) Borrower's Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of the Subsidiary Guaranty;
(ii) Borrower may become and remain liable with respect to
Contingent Obligations in respect of the Acquisition Letter of Credit and
the IRB Reimbursement Agreement, and Borrower and its Subsidiaries may
become and remain liable with respect to Contingent Obligations in respect
of Revolving Letters of Credit in an aggregate amount not to exceed at any
time $3,000,000;
(iii) Borrower may become and remain liable with respect to
Contingent Obligations under Hedge Agreements required under subsection
6.10;
(iv) Borrower and its Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of customary indemnification
and purchase price adjustment obligations incurred pursuant to the
Acquisition Agreement or in connection with Asset Sales or other sales of
assets;
126
(v) Borrower may become and remain liable with respect to Contingent
Obligations under guarantees in the ordinary course of business of the
obligations of suppliers, customers, franchisees and licensees of Borrower
and its Subsidiaries;
(vi) Borrower and its Subsidiaries, as applicable, may remain liable
with respect to Contingent Obligations existing on the Closing Date and
described in Schedule 7.4 annexed hereto;
(vii) Subsidiary Guarantors may become and remain liable with
respect to Contingent Obligations arising under (a) guaranties of the
Senior Guaranteed Notes as set forth in the Senior Guaranteed Note
Documents, (b) subordinated guaranties of the Subordinated Notes as set
forth in the Subordinated Note Documents, (c) subordinated guaranties of
the Bridge Notes as set forth in the Bridge Financing Documents and (d)
subordinated guaranties of any Additional Subordinated Notes as set forth
in any Additional Subordinated Note Documents; and
(viii) Borrower and its Subsidiaries may become and remain liable
with respect to other Contingent Obligations that are expressly
subordinated by their terms to the Obligations; provided that the maximum
aggregate liability, contingent or otherwise, of Borrower in respect of
all such Contingent Obligations shall at no time exceed $2,000,000.
7.5 Restricted Junior Payments.
Parent shall not, and shall not permit Borrower or any of its other
Subsidiaries to, directly or indirectly, declare, order, pay, make or set apart
any sum for any Restricted Junior Payment; provided that (i) Borrower may make
Restricted Junior Payments to make cash interest payments to the holders of the
Senior Guaranteed Notes and Subordinated Notes, in accordance with the terms of,
and only to the extent required by, the Senior Guaranteed Note Documents or the
Subordinated Note Documents, (ii) Borrower may make regularly scheduled payments
of principal and interest in respect of the Bridge Financing in accordance with
the terms of and subject to the subordination provisions contained in, the
Bridge Financing Documents, and Borrower may prepay all Indebtedness evidenced
by the Bridge Notes with Net Securities Proceeds from a Permitted Securities
Issuance, (iii) Parent may consummate the Distribution Transaction to the extent
permitted under subsection 2.4B(iii)(e); provided that in no event shall the
amount of the Distribution Transaction made in accordance with this clause
(iii), together with the amount of the liquidation preference of any Preferred
Distribution Stock issued in accordance with clause (vii) of this subsection
7.5, exceed $16,000,000; (iv) if proceeds of the PIDA Loan are actually received
by Borrower, Borrower may at any time on or prior to June 30, 1997 consummate
the Preferred Stock Redemption for an aggregate amount not to exceed the lesser
of (x) $1,225,000 and (y) the gross proceeds of the PIDA Loan plus $225,000 less
the face amount of any Letter of Credit supporting the PIDA Loan, (v) so long as
no Event of Default or Potential Event of Default shall have occurred and be
continuing or shall be caused thereby, Borrower may make Restricted Junior
Payments to Parent to enable Parent to make Restricted Junior Payments to First
Atlantic Capital, Ltd. pursuant to the terms of the Management
127
Consulting Agreement in effect on the Closing Date in an aggregate amount not to
exceed $600,000 plus reasonable out of pocket expenses in any Fiscal Year,
provided that notwithstanding any Event of Default or Potential Event of
Default, fees otherwise payable under the Management Consulting Agreement may
accrue but shall not be payable until such time as such Potential Event of
Default or Event of Default is cured or is waived, at which time all such
accrued fees shall be payable, and (vi) so long as no Event of Default or
Potential Event of Default has occurred and is continuing or shall be caused
thereby, Borrower may make Restricted Junior Payments to Parent to enable Parent
to repurchase equity investments of management investors pursuant to the
Stockholders Agreement; provided that the amount of Restricted Junior Payments
pursuant to this clause (vi) shall not exceed (x) prior to the Permitted
Securities Issuance Prepayment Date, $500,000 during any Fiscal Year and (y)
after the Permitted Securities Issuance Prepayment Date, in any Fiscal Year, an
amount equal to that portion of Consolidated Excess Cash Flow for the
immediately preceding Fiscal Year not required to prepay Loans pursuant to
subsection 2.4B(iii)(f) so long as, immediately after giving effect to any such
Restricted Junior Payment, Borrower shall have not less than $5,000,000 of
availability under the Revolving Loan Commitments (giving effect to the
Borrowing Base as of the date of determination), and (vii) so long as no Event
of Default or Potential Event of Default has occurred or is continuing or shall
be caused thereby, Parent may declare and make a distribution on the Class A
(Voting and Nonvoting) Common Stock of the Preferred Distribution Stock;
provided that in no event shall the amount of liquidation preference of any
Preferred Distribution Stock issued in accordance with this clause (vii),
together with the amount of the Distribution Transaction made in accordance with
clause (iii) of this subsection 7.5, exceed $16,000,000.
7.6 Financial Covenants.
A. Minimum Interest Coverage Ratio. Parent shall not permit the ratio of
(i) Consolidated Adjusted EBITDA to (ii) Consolidated Interest Expense for any
four-Fiscal Quarter period ending on or about any of the dates set forth below
(or in the case of any period prior to December 31, 1997, the period from
January 1, 1997 through such date) to be less than the correlative ratio
indicated (either prior to the Permitted Securities Issuance Prepayment Date or
after the Permitted Securities Issuance Prepayment Date):
====================================================================
Prior to Permitted After Permitted
Securities Issuance Securities Issuance
Approximate Date Prepayment Date Prepayment Date
====================================================================
March 31, 1997 1.45:1.00 1.15:1.00
--------------------------------------------------------------------
June 30, 1997 1.85:100 1.40:1.00
--------------------------------------------------------------------
September 30, 1997 2.00:1.00 1.55:1.00
--------------------------------------------------------------------
December 31, 1997 2.00:1.00 1.55:1.00
--------------------------------------------------------------------
March 31, 1998 2.00:1.00 1.55:1.00
--------------------------------------------------------------------
128
====================================================================
Prior to Permitted After Permitted
Securities Issuance Securities Issuance
Approximate Date Prepayment Date Prepayment Date
====================================================================
June 30, 1998 2.00:1.00 1.55:1.00
--------------------------------------------------------------------
September 30, 1998 2.00:1.00 1.55:1.00
--------------------------------------------------------------------
December 31, 1998 2.25:1.00 1.70:1.00
--------------------------------------------------------------------
March 31, 1999 2.25:1.00 1.70:1.00
--------------------------------------------------------------------
June 30, 1999 2.25:1.00 1.70:1.00
--------------------------------------------------------------------
September 30, 1999 2.25:1.00 1.70:1.00
--------------------------------------------------------------------
December 31, 1999 2.60:1.00 1.90:1.00
--------------------------------------------------------------------
March 31, 2000 2.60:1.00 1.90:1.00
--------------------------------------------------------------------
June 30, 2000 2.60:1.00 1.90:1.00
--------------------------------------------------------------------
September 30, 2000 2.60:1.00 1.90:1.00
--------------------------------------------------------------------
December 31, 2000 3.00:1.00 2.00:1.00
--------------------------------------------------------------------
March 31, 2001 3.00:1.00 2.00:1.00
--------------------------------------------------------------------
June 30, 2001 3.00:1.00 2.00:1.00
--------------------------------------------------------------------
September 30, 2001 3.00:1.00 2.00:1.00
--------------------------------------------------------------------
December 31, 2001
and each Fiscal Quar-
ter's end thereafter 3.50:1.00 2.00:1.00
====================================================================
B. Minimum Fixed Charge Coverage Ratio. Parent shall not permit the ratio
of (i) Consolidated Adjusted EBITDA minus Consolidated Capital Expenditures to
(ii) Consolidated Fixed Charges for any four-Fiscal Quarter period ending on or
about any of the dates set forth below (or, in the case of any period ending
prior to December 31, 1997, the period from January 1, 1997 through such date)
to be less than the correlative ratio indicated (either prior to the Permitted
Securities Issuance Prepayment Date or after the Permitted Securities Issuance
Prepayment Date):
129
====================================================================
Prior to Permitted After Permitted
Securities Issuance Securities Issuance
Approximate Date Prepayment Date Prepayment Date
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇, ▇▇▇▇ ▇/▇ ▇/▇
--------------------------------------------------------------------
June 30, 1997 1.00:100 1.00:1.00
--------------------------------------------------------------------
September 30, 1997 1.05:1.00 1.05:1.00
--------------------------------------------------------------------
December 31, 1997 1.05:1.00 1.10:1.00
--------------------------------------------------------------------
March 31, 1998 1.05:1.00 1.10:1.00
--------------------------------------------------------------------
June 30, 1998 1.05:1.00 1.10:1.00
--------------------------------------------------------------------
September 30, 1998 1.05:1.00 1.10:1.00
--------------------------------------------------------------------
December 31, 1998 1.10:1.00 1.20:1.00
--------------------------------------------------------------------
March 31, 1999 1.10:1.00 1.20:1.00
--------------------------------------------------------------------
June 30, 1999 1.10:1.00 1.20:1.00
--------------------------------------------------------------------
September 30, 1999 1.10:1.00 1.20:1.00
--------------------------------------------------------------------
December 31, 1999 1.10:1.00 1.30:1.00
--------------------------------------------------------------------
March 31, 2000 1.10:1.00 1.30:1.00
--------------------------------------------------------------------
June 30, 2000 1.10:1.00 1.30:1.00
--------------------------------------------------------------------
September 30, 2000 1.10:1.00 1.30:1.00
--------------------------------------------------------------------
December 31, 2000 1.10:1.00 1.40:1.00
--------------------------------------------------------------------
March 31, 2001 1.10:1.00 1.40:1.00
--------------------------------------------------------------------
June 30, 2001 1.10:1.00 1.40:1.00
--------------------------------------------------------------------
September 30, 2001 1.10:1.00 1.40:1.00
--------------------------------------------------------------------
December 31, 2001
and each Fiscal Quar- 1.10:1.00 1.40:1.00
ter's end thereafter
====================================================================
C. Maximum Leverage Ratio. Parent shall not permit the ratio of (i)
Consolidated Total Debt as of the last day of any Fiscal Quarter ending on or
about any of the dates set forth below to (ii) Consolidated Adjusted EBITDA for
the four Fiscal Quarter period ending on such date (the "Leverage Ratio") to
exceed the correlative ratio indicated (either prior to the Permitted Securities
Issuance Prepayment Date or after the Permitted Securities Issuance Prepayment
Date):
130
====================================================================
Prior to Permitted After Permitted
Securities Issuance Securities Issuance
Approximate Date Prepayment Date Prepayment Date
====================================================================
December 31, 1997 4.625:1.00 5.75:1.00
--------------------------------------------------------------------
March 31, 1998 4.625:1.00 5.75:1.00
--------------------------------------------------------------------
June 30, 1998 4.625:1.00 5.75:1.00
--------------------------------------------------------------------
September 30, 1998 4.625:1.00 5.75:1.00
--------------------------------------------------------------------
December 31, 1998 4.10:1.00 5.00:1.00
--------------------------------------------------------------------
March 31, 1999 4.10:1.00 5.00:1.00
--------------------------------------------------------------------
June 30, 1999 4.10:1.00 5.00:1.00
--------------------------------------------------------------------
September 30, 1999 4.10:1.00 5.00:1.00
--------------------------------------------------------------------
December 31, 1999 3.30:1.00 4.25:1.00
--------------------------------------------------------------------
March 31, 2000 3.30:1.00 4.25:1.00
--------------------------------------------------------------------
June 30, 2000 3.30:1.00 4.25:1.00
--------------------------------------------------------------------
September 30, 2000 3.30:1.00 4.25:1.00
--------------------------------------------------------------------
December 31, 2000 3.00:1.00 3.50:1.00
--------------------------------------------------------------------
March 31, 2001 3.00:1.00 3.50:1.00
--------------------------------------------------------------------
June 30, 2001 3.00:1.00 3.50:1.00
--------------------------------------------------------------------
September 30, 2001 3.00:1.00 3.50:1.00
--------------------------------------------------------------------
December 31, 2001
and each Fiscal Quar- 3.00:1.00 3.00:1.00
ter's end thereafter
====================================================================
D. Minimum Consolidated Adjusted EBITDA. Parent shall not permit
Consolidated Adjusted EBITDA for any period commencing on January 1, 1997 and
ending at the end of the Fiscal Quarter ending on or about the date set forth
below to be less than the correlative amount indicated:
131
=========================================================
Minimum Consolidated
Approximate Date Adjusted EBITDA
=========================================================
March 31, 1997 $ 4,300,000
---------------------------------------------------------
June 30, 1997 $10,000,000
---------------------------------------------------------
September 30, 1997 $18,600,000
=========================================================
E. Minimum Consolidated Adjusted Net Worth. Parent shall not permit
Consolidated Adjusted Net Worth at the end of any Fiscal Quarter to be less than
the sum of (x) the Consolidated Net Worth at the Closing Date plus (y) 50% of
the Consolidated Adjusted Net Income for the period commencing on the Closing
Date and ending on the last day of such Fiscal Quarter minus (z) the aggregate
amount of Restricted Junior Payments actually made pursuant to clause (iii),
(iv) and (vii) of subsection 7.5.
For purposes of this subsection 7.6 the covenant measurement dates have been
determined based on the assumption that the Borrower's Fiscal Quarters end on
March 31, June 30, September 30 and December 31 of each year. In the event that
the Fiscal Quarters end on other dates, the foregoing covenant measurement dates
shall be adjusted, so that any change in the ratios shall occur as of the last
day of the applicable Fiscal Quarter.
7.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions.
Parent shall not, and shall not permit any of its Subsidiaries to, alter
the corporate, capital or legal structure of Parent or any of its Subsidiaries,
or enter into any transaction of merger or consolidation, or liquidate, wind-up
or dissolve itself (or suffer any liquidation or dissolution), or convey, sell,
lease or sub-lease (as lessor or sublessor), transfer or otherwise dispose of,
in one transaction or a series of transactions, all or any part of its business,
property or assets, whether now owned or hereafter acquired, or acquire by
purchase or otherwise all or substantially all the business, property or fixed
assets of, or stock or other evidence of beneficial ownership of, any Person or
any division or line of business of any Person, except:
(i) Borrower may be merged into Parent and any Subsidiary of
Borrower may be merged with or into any Subsidiary Guarantor, or be
liquidated, wound up or dissolved, or all or any part of its business,
property or assets may be conveyed, sold, leased, transferred or otherwise
disposed of, in one transaction or a series of transactions, to any
Subsidiary Guarantor; provided that, in the case of such a merger, such
Subsidiary Guarantor shall be the continuing or surviving corporation;
(ii) Borrower and its Subsidiaries may make Consolidated Capital
Expenditures permitted under subsection 7.8;
(iii) Borrower and its Subsidiaries may dispose of obsolete, worn
out or surplus property in the ordinary course of business;
132
(iv) Borrower and its Subsidiaries may sell or otherwise dispose of
assets for cash in transactions that do not constitute Asset Sales;
provided that the consideration received for such assets shall be in an
amount at least equal to the fair market value thereof;
(v) subject to subsection 7.11 Borrower and its Subsidiaries may
make Asset Sales of assets having a fair market value not in excess of
$2,000,000; provided that (x) the consideration received for such assets
shall be in an amount at least equal to the fair market value thereof; (y)
the sole consideration received shall be cash; and (z) the proceeds of
such Asset Sales shall be applied as required by subsection 2.4B(iii)(a);
(vi) Borrower and its Subsidiaries may consummate the Acquisition
and the Restructuring; and
(vii) Borrower and its Subsidiaries may make acquisitions in an
aggregate amount not to exceed (x) $10,000,000 if the aggregate principal
amount of Term Loans outstanding equals or exceeds $15,000,000, (y)
$25,000,000 in the aggregate if the aggregate principal amount of Term
Loans outstanding equals or exceeds $5,000,000 but is less than
$15,000,000 and (z) $35,000,000 in the aggregate if the aggregate
principal amount of Term Loans outstanding is, less than $5,000,000;
provided that with respect to acquisitions made pursuant to this
subsection 7.7(vii): (i) any newly acquired or created Subsidiary of
Borrower or any of its Subsidiaries shall be a wholly owned Subsidiary
thereof; (ii) immediately before and after giving effect thereto, no
Potential Event of Default or Event of Default shall have occurred and be
continuing or would result therefrom; (iii) any business acquired or
invested in pursuant to this subsection 7.7(vii) shall be in the same line
of business as the business of Borrower or any of its Subsidiaries; and
(iv) Borrower shall comply with the requirements of subsection 6.8; (v)
after giving effect to such acquisition, Borrower shall be in compliance
on a pro forma basis with all of the covenants set forth in subsection
7.6; (vi) after giving effect to such acquisition, Borrower shall have not
less than $5,000,000 of availability under the Revolving Loan Commitments;
and (vii) no default shall be caused by such acquisition under any
Material Contract of Parent or any of its Subsidiaries.
7.8 Consolidated Capital Expenditures.
Parent shall not permit its Subsidiaries to, make or incur Consolidated
Capital Expenditures (x) prior to the Permitted Securities Issuance Prepayment
Date, in Fiscal Year 1997, in an aggregate amount in excess of $4,000,000, and
in any Fiscal Year thereafter in excess of $3,000,000 and (y) from and after the
Permitted Securities Issuance Prepayment Date, in any Fiscal Year, in an
aggregate amount in excess of $5,000,000; provided that the maximum Consolidated
Capital Expenditures for any Fiscal Year shall be increased by the lesser of (i)
an amount equal to 100% of the excess, if any, of the maximum Consolidated
Capital Expenditures for the previous Fiscal Year (without giving effect to any
adjustments pursuant to this proviso) over the actual amount of Consolidated
Capital Expenditures for such previous Fiscal Year and (ii) for Fiscal Year
1998, $1,500,000 and, for each Fiscal Year thereafter, $1,000,000.
133
7.9 Sale or Discount of Receivables.
Parent shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, sell with recourse, or discount or otherwise sell for
less than the face value thereof, any of its notes or accounts receivable.
7.10 Transactions with Shareholders and Affiliates.
Parent shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any holder of 10% or more of any
class of equity Securities of Parent or with any Affiliate of Parent or of any
such holder, on terms that are less favorable to Parent or that Subsidiary, as
the case may be, than those that would be obtained at that time from Persons who
are not such a holder or Affiliate; provided that the foregoing restriction
shall not apply to (i) any transaction between Borrower and any of its
Subsidiaries or among any of its Subsidiaries, (ii) reasonable and customary
fees paid to members of the Boards of Directors of Parent and its Subsidiaries
or (iii) fees and expenses payable to First Atlantic Capital, Ltd. pursuant to
the Management Consulting Agreement to the extent permitted under subsection
7.5.
7.11 Disposal of Subsidiary Stock.
Parent shall not (except with respect to Liens granted pursuant to the
Loan Documents):
(i) directly or indirectly sell, assign, pledge or otherwise
encumber or dispose of any shares of capital stock or other equity
Securities of any of its Subsidiaries, or permit any of its Subsidiaries
to issue any shares of capital stock or other equity Securities, except
sales or issuances to qualify directors if and only to the extent required
by applicable law; or
(ii) permit any of its Subsidiaries directly or indirectly to sell,
assign, pledge or otherwise encumber or dispose of any shares of capital
stock or other equity Securities of any of its Subsidiaries (including
such Subsidiary), except to Parent, another Subsidiary of Parent, or to
qualify directors if required by applicable law.
7.12 Conduct of Business.
From and after the Closing Date, Parent shall not, and shall not permit
any of its Subsidiaries to, engage in any business other than (i) the businesses
engaged in by Parent and its Subsidiaries on the Closing Date and similar or
related businesses and (ii) such other lines of business as may be consented to
by Requisite Lenders.
134
7.13 Amendments or Waivers of Certain Related Agreements; Amendments of
Documents Relating to Bridge Financing and Permitted Securities Issuance;
Designation of "Designated Senior Indebtedness".
A. Amendments or Waivers of Certain Related Agreements. Neither Parent nor
any of its Subsidiaries will agree to any material amendment to, or waive any of
its material rights under, any Related Agreement which amendment or waiver could
be materially adverse to the Lenders (other than any Related Agreement
evidencing or governing any Bridge Financing or Permitted Securities Issuance,
which shall be subject to subsection 7.13B) after the Closing Date without in
each case obtaining the prior written consent of Requisite Lenders to such
amendment or waiver.
B. Amendments of Documents Relating to Bridge Financing and Permitted
Securities Issuance. Parent shall not, and shall not permit any of its
Subsidiaries to, amend or otherwise change the terms of any Bridge Financing
Documents or any agreements or documents entered into or issued in connection
with any Permitted Securities Issuance in any material respect, or make any
payment consistent with any material amendment thereof or change thereto, if the
effect of such amendment or change is to increase the interest rate on the
Indebtedness evidenced thereby, change (to earlier dates) any dates upon which
payments of principal or interest are due thereon, change in any material
respect any event of default or condition to an event of default with respect
thereto (other than to eliminate any such event of default or increase any grace
period related thereto), change the redemption, prepayment or defeasance
provisions thereof, change the subordination provisions thereof (or of any
guaranty thereof), or change any collateral therefor (other than to release such
collateral), or if the effect of such amendment or change, together with all
other amendments or changes made, is to increase materially the obligations of
the obligor thereunder or to confer any additional rights on the holders of the
Bridge Financing or the Permitted Securities Issuance, as the case may be, (or a
trustee or other representative on their behalf) which could reasonably be
expected to be adverse to Parent, Borrower, any Lenders or Issuing Lender.
C. Designation of "Designated Senior Indebtedness". Neither Parent nor any
Subsidiary thereof shall designate any Indebtedness as "Designated Senior
Indebtedness" (as defined in the Bridge Note Documents or any other document
entered into in connection with any Permitted Securities Issuance) for purposes
of the Bridge Notes or any Permitted Securities Issuance, without the prior
written consent of Requisite Lenders.
7.14 Fiscal Year
Parent and Borrower shall not change its Fiscal Year-end from the date
determined by Borrower as set forth in the definition of Fiscal Year.
7.15 Charter Amendments.
Parent shall not amend, nor permit any of its Subsidiaries to amend, its
certificate of incorporation or bylaws in a manner adverse to the Lenders.
135
7.16 Amendment, Etc. of Material Contracts.
Parent shall not cancel or terminate any Material Contract or consent to
or accept any cancellation or termination thereof, amend or otherwise modify any
Material Contract or give any consent, waiver or approval thereunder, waive any
default under or breach of any Material Contract, agree in any manner to any
other amendment, modification or change of any term or condition of any Material
Contract without the prior written consent of Administrative Agent.
7.17 Partnerships, Etc.
Parent shall not become a general partner in any general or limited
partnership or joint venture, or permit any of its Subsidiaries to do so.
7.18 Speculative Transactions.
Parent shall not engage, or permit any of its Subsidiaries to engage, in
any transaction involving commodity options or futures contracts or any similar
speculative transactions except for Hedge Agreements permitted under Section
7.4(iii).
Section 8. EVENTS OF DEFAULT
If any of the following conditions or events ("Events of Default") shall
occur:
8.1 Failure to Make Payments When Due.
Failure by Borrower to pay any installment of principal of any Loan when
due, whether at stated maturity, by acceleration, by notice of voluntary
prepayment, by mandatory prepayment or otherwise; failure by Borrower to pay
when due any amount payable to Issuing Lender in reimbursement of any drawing
under a Letter of Credit or any IRB Reimbursement Advance; or failure by
Borrower to pay any interest on any Loan or any fee or any other amount due
under this Agreement within three Business Days after the date due; or
8.2 Default in Other Agreements.
(i) Failure of Parent or any of its Subsidiaries to pay when due any
principal of or interest on or any other amount payable in respect of one or
more items of Indebtedness (other than Indebtedness referred to in subsection
8.1) or Contingent Obligations in an individual principal amount of $500,000 or
more or with an aggregate principal amount of $1,000,000 or more, in each case
beyond the end of any grace period provided therefor; or (ii) breach or default
by Parent or any of its Subsidiaries with respect to any other material term of
(a) one or more items of Indebtedness or Contingent Obligations in the
individual or aggregate principal amounts referred to in clause (i) above or (b)
any loan agreement, mortgage, indenture or other agreement relating to such
item(s) of Indebtedness or Contingent Obligation(s), if the effect of such
breach or default is to cause, or to permit the holder or holders of that
Indebtedness or Contingent
136
Obligation(s) (or a trustee on behalf of such holder or holders) to cause, that
Indebtedness or Contingent Obligation(s) to become or be declared due and
payable prior to its stated maturity or the stated maturity of any underlying
obligation, as the case may be (upon the giving or receiving of notice, lapse of
time, both, or otherwise); or
8.3 Breach of Certain Covenants.
Failure of Parent or Borrower to perform or comply with any term or
condition contained in subsection 2.5 or 6.1(ix)(a) or 6.2 or Section 7 of this
Agreement; or
8.4 Breach of Warranty.
Any representation, warranty, certification or other statement made by
Parent or any of its Subsidiaries in any Loan Document or in any statement or
certificate at any time given by Parent or any of its Subsidiaries in writing
pursuant hereto or thereto or in connection herewith or therewith shall be false
in any material respect on the date as of which made or deemed made; or
8.5 Other Defaults Under Loan Documents.
Any Loan Party shall default in the performance of or compliance with any
term contained in this Agreement or any of the other Loan Documents, other than
any such term referred to in any other subsection of this Section 8, and such
default shall not have been remedied or waived within 30 days after the earlier
of (i) a Responsible Officer becomes aware of such default and (ii) receipt by
Borrower and such Loan Party of notice from Administrative Agent or any Lender
of such default; or
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc.
(i) A court having jurisdiction in the premises shall enter a decree or
order for relief in respect of Parent or any of its Material Subsidiaries in an
involuntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, which decree
or order is not stayed; or any other similar relief shall be granted under any
applicable federal or state law; or (ii) an involuntary case shall be commenced
against Parent or any of its Material Subsidiaries under the Bankruptcy Code or
under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect; or a decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over Parent or any of its
Material Subsidiaries, or over all or substantially all of its property, shall
have been entered; or there shall have occurred the involuntary appointment of
an interim receiver, trustee or other custodian of Parent or any of its Material
Subsidiaries for all or substantially all of its property; or a warrant of
attachment, execution or similar process shall have been issued against any
substantial part of the property of Parent or any of its Material Subsidiaries,
and any such event described in this clause (ii) shall continue for 60 days
unless dismissed, bonded or discharged; or
137
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.
(i) Parent or any of its Material Subsidiaries shall have an order for
relief entered with respect to it or commence a voluntary case under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar
law now or hereafter in effect, or shall consent to the entry of an order for
relief in an involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such law, or shall consent to the appointment of or
taking possession by a receiver, trustee or other custodian for all or
substantially of its property; or Parent or any of its Material Subsidiaries
shall make any assignment for the benefit of creditors; or (ii) Parent or any of
its Material Subsidiaries shall be unable, or shall fail generally, or shall
admit in writing its inability, to pay its debts as such debts become due; or
the Board of Directors of Parent or any of its Material Subsidiaries (or any
committee thereof) shall adopt any resolution or otherwise authorize any action
to approve any of the actions referred to in clause (i) above or this clause
(ii); or
8.8 Judgments, Attachments, etc.
Any money judgment, writ or warrant of attachment or similar process
involving (i) in any individual case an amount in excess of $500,000 or (ii) in
the aggregate at any time an amount in excess of $1,000,000 (in either case not
adequately covered by insurance as to which a solvent and unaffiliated insurance
company has acknowledged coverage) shall be entered or filed against Parent or
any of its Subsidiaries or any of their respective assets and shall remain
undischarged, unvacated, unbonded or unstayed for a period of 60 days (or in any
event later than five days prior to the date of any proposed sale thereunder);
or any non-monetary judgment or order shall be rendered against Parent or any of
its Subsidiaries that could be reasonably likely to have a Material Adverse
Effect, and there shall be any period of 10 consecutive days during which a stay
of enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
8.9 Dissolution.
Any order, judgment or decree shall be entered against Parent or any of
its Subsidiaries decreeing the dissolution or split up of Parent or that
Subsidiary and such order shall remain undischarged or unstayed for a period in
excess of 30 days; or
8.10 Employee Benefit Plans.
There shall occur one or more ERISA Events which individually or in the
aggregate results in or might reasonably be expected to result in liability of
Parent, any of its Subsidiaries or any of their respective ERISA Affiliates in
excess of $100,000 during the term of this Agreement; or there shall exist an
amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA), individually or in the aggregate for all Pension Plans (excluding for
purposes of such computation any Pension Plans with respect to which assets
exceed benefit liabilities), which exceeds $100,000; or
138
8.11 Material Adverse Effect.
Any event or change shall occur that has caused or evidences, either in
any case or in the aggregate, a Material Adverse Effect; or
8.12 Change in Control.
There shall occur a Change of Control; or
8.13 Invalidity of Guarantees; Failure of Security; Repudiation of Obligations.
At any time after the execution and delivery thereof, (i) any Guaranty for
any reason, other than the satisfaction in full of all Obligations, shall cease
to be in full force and effect (other than in accordance with its terms) or
shall be declared to be null and void, (ii) any Collateral Document shall cease
to be in full force and effect (other than by reason of a release of Collateral
thereunder in accordance with the terms hereof or thereof, the satisfaction in
full of the Obligations or any other termination of such Collateral Document in
accordance with the terms hereof or thereof) or shall be declared null and void,
or Administrative Agent shall not have or shall cease to have a valid and
perfected First Priority Lien (subject only to Permitted Liens) in any material
Collateral purported to be covered thereby, in each case for any reason other
than the failure of Administrative Agent or any Lender to take any action within
its control, or (iii) any Loan Party shall contest the validity or
enforceability of any Loan Document in writing or deny in writing that it has
any further liability, including without limitation with respect to future
advances by Lenders, under any Loan Document to which it is a party; or
8.14 Action Relating to Certain Indebtedness.
Any event shall occur which, under the terms of the Senior Guaranteed Note
Documents, the Bridge Note Documents, the Subordinated Note Documents, or the
Seller Notes shall require Borrower or any of its Subsidiaries to purchase,
redeem or otherwise acquire, or offer to purchase, redeem or otherwise acquire,
all or any portion of the Senior Guaranteed Notes, the Bridge Note Documents,
the Subordinated Note Documents, or the Seller Notes, or Parent or any of its
Subsidiaries shall for any other reason purchase, redeem or otherwise acquire,
or offer to purchase, redeem or otherwise acquire, or make any other payments in
respect of, all or any portion of the Senior Guaranteed Notes, the Bridge Note
Documents, the Subordinated Note Documents, or the Seller Notes except to the
extent expressly permitted by subsection 7.5; or
8.15 Conduct of Business By Parent and Borrower.
Parent or Borrower shall (i) engage in any business other than (x)
entering into and performing its obligations under and in accordance with the
Loan Documents and Related Agreements to which it is a party or (y) as required
by law, or (ii) own any assets other than (a) the capital stock of its
Subsidiaries and (b) in the case of Parent only, Cash and Cash Equivalents as
may be reasonably necessary for the purpose of paying its general operating
139
expenses; or Parent shall cease to own 100% of the outstanding stock of
Borrower; or Borrower shall cease to own 100% of the outstanding stock of its
Subsidiaries.
8.16 Preferred Distribution Stock.
The Preferred Distribution Stock is sold or otherwise transferred,
directly or indirectly, by holders of the Class A (Voting and Nonvoting) Common
Stock to Persons not consented to in writing by Administrative Agent (after
consultation with Lenders), which consent shall not be unreasonably withheld.
THEN (i) upon the occurrence of any Event of Default described in subsection 8.6
or 8.7, each of (a) the unpaid principal amount of and accrued interest on the
Loans, (b) an amount equal to the maximum amount that may at any time be drawn
under all Letters of Credit then outstanding (whether or not any beneficiary
under any such Letter of Credit shall have presented, or shall be entitled at
such time to present, the drafts or other documents or certificates required to
draw under such Letter of Credit), (c) the Maximum Exposure Under IRB
Reimbursement Agreement and (d) all other Obligations shall automatically become
immediately due and payable, without presentment, demand, protest or other
requirements of any kind, all of which are hereby expressly waived by Borrower,
and the obligation of each Lender to make any Loan, the obligation of Issuing
Lender to issue any Letter of Credit hereunder shall thereupon terminate, and
(ii) upon the occurrence and during the continuation of any other Event of
Default, Administrative Agent shall, upon the written request or with the
written consent of Requisite Lenders, by written notice to Borrower, declare all
or any portion of the amounts described in clauses (a) through (d) above to be,
and the same shall forthwith become, immediately due and payable, and the
obligation of each Lender to make any Loan, the obligation of Issuing Lender to
issue any Letter of Credit hereunder shall thereupon terminate; provided that
the foregoing shall not affect in any way the obligations of Lenders under
subsection 3.3C(i) or the obligations of Lenders to purchase participations in
any unpaid Swing Line Loans as provided in subsection 2.1A(v).
Any amounts described in clause (b) above, when received by Administrative
Agent, shall be held by Administrative Agent pursuant to the terms of the
Collateral Account Agreement and shall be applied as therein provided.
Notwithstanding anything contained in the second preceding paragraph, if
at any time within 60 days after an acceleration of the Loans pursuant to clause
(ii) of such paragraph Borrower shall pay all arrears of interest and all
payments on account of principal which shall have become due otherwise than as a
result of such acceleration (with interest on principal and, to the extent
permitted by law, on overdue interest, at the rates specified in this Agreement)
and all Events of Default and Potential Events of Default (other than
non-payment of the principal of and accrued interest on the Loans, in each case
which is due and payable solely by virtue of acceleration) shall be remedied or
waived pursuant to subsection 10.6, then Requisite Lenders, by written notice to
Borrower, may at their option rescind and annul such acceleration and its
consequences; but such action shall not affect any subsequent Event of Default
or Potential Event of Default or impair any right consequent thereon. The
provisions of this paragraph are intended merely to bind Lenders to a decision
which may be made at the election of Requisite Lenders and
140
are not intended, directly or indirectly, to benefit Borrower, and such
provisions shall not at any time be construed so as to grant Borrower the right
to require Lenders to rescind or annul any acceleration hereunder or to preclude
Administrative Agent or Lenders from exercising any of the rights or remedies
available to them under any of the Loan Documents, even if the conditions set
forth in this paragraph are met.
Section 9. ADMINISTRATIVE AGENT
9.1 Appointment.
A. Appointment of Administrative Agent. NationsBank is hereby appointed
Administrative Agent hereunder and under the other Loan Documents and each
Lender hereby authorizes Administrative Agent to act as its agent in accordance
with the terms of this Agreement and the other Loan Documents. Administrative
Agent agrees to act upon the express conditions contained in this Agreement and
the other Loan Documents, as applicable. The provisions of this Section 9 are
solely for the benefit of Administrative Agent and Lenders and neither Parent
nor Borrower shall have any rights as a third party beneficiary of any of the
provisions thereof. In performing its functions and duties under this Agreement,
Administrative Agent shall act solely as an agent of Lenders and does not assume
and shall not be deemed to have assumed any obligation towards or relationship
of agency or trust with or for Parent or any of its Subsidiaries.
B. Appointment of Supplemental Collateral Administrative Agents. It is the
purpose of this Agreement and the other Loan Documents that there shall be no
violation of any law of any jurisdiction denying or restricting the right of
banking corporations or associations to transact business as agent or trustee in
such jurisdiction. It is recognized that in case of litigation under this
Agreement or any of the other Loan Documents, and in particular in case of the
enforcement of any of the Loan Documents, or in case Administrative Agent deems
that by reason of any present or future law of any jurisdiction it may not
exercise any of the rights, powers or remedies granted herein or in any of the
other Loan Documents or take any other action which may be desirable or
necessary in connection therewith, it may be necessary that Administrative Agent
appoint an additional individual or institution as a separate trustee,
co-trustee, collateral agent or collateral co-agent (any such additional
individual or institution being referred to herein individually as a
"Supplemental Collateral Agent" and collectively as "Supplemental Collateral
Agents").
In the event that Administrative Agent appoints a Supplemental Collateral
Agent with respect to any Collateral, (i) each and every right, power, privilege
or duty expressed or intended by this Agreement or any of the other Loan
Documents to be exercised by or vested in or conveyed to Administrative Agent
with respect to such Collateral shall be exercisable by and vest in such
Supplemental Collateral Agent to the extent, and only to the extent, necessary
to enable such Supplemental Collateral Agent to exercise such rights, powers and
privileges with respect to such Collateral and to perform such duties with
respect to such Collateral, and every covenant and obligation contained in the
Loan Documents and necessary to the exercise or performance
141
thereof by such Supplemental Collateral Agent shall run to and be enforceable by
either Administrative Agent or such Supplemental Collateral Agent, and (ii) the
provisions of this Section 9 and of subsections 10.2 and 10.3 that refer to
Administrative Agent shall inure to the benefit of such Supplemental Collateral
Agent and all references therein to Administrative Agent shall be deemed to be
references to Administrative Agent and/or such Supplemental Collateral Agent, as
the context may require.
Should any instrument in writing from Parent or any other Loan Party be
required by any Supplemental Collateral Agent so appointed by Administrative
Agent for more fully and certainly vesting in and confirming to him or it such
rights, powers, privileges and duties, Parent shall, or shall cause such Loan
Party to, execute, acknowledge and deliver any and all such instruments promptly
upon request by Administrative Agent. In case any Supplemental Collateral Agent,
or a successor thereto, shall die, become incapable of acting, resign or be
removed, all the rights, powers, privileges and duties of such Supplemental
Collateral Agent, to the extent permitted by law, shall vest in and be exercised
by Administrative Agent until the appointment of a new Supplemental Collateral
Agent.
9.2 Powers and Duties; General Immunity.
▇. ▇▇▇▇▇▇; Duties Specified. Each Lender irrevocably authorizes
Administrative Agent to take such action on such Lender's behalf and to exercise
such powers, rights and remedies hereunder and under the other Loan Documents as
are specifically delegated or granted to Administrative Agent by the terms
hereof and thereof, together with such powers, rights and remedies as are
reasonably incidental thereto. Without limiting the foregoing, each Lender
hereby authorizes Administrative Agent to (i) enter into the IRB Reimbursement
Agreement on the Closing Date and (ii) upon expiration of the PNC Letter of
Credit, to issue one or more replacement letters of credit with terms and
conditions substantially similar to the terms of the PNC Letter of Credit
(annexed hereto as Schedule 9.2), so long as such replacement letter of credit
does not have terms that extend beyond the Revolving Loan Commitment Termination
Date. Administrative Agent shall have only those duties and responsibilities
that are expressly specified in this Agreement and the other Loan Documents.
Administrative Agent may exercise such powers, rights and remedies and perform
such duties by or through its agents or employees. Administrative Agent shall
not have, by reason of this Agreement or any of the other Loan Documents, a
fiduciary relationship in respect of any Lender; and nothing in this Agreement
or any of the other Loan Documents, expressed or implied, is intended to or
shall be so construed as to impose upon Administrative Agent any obligations in
respect of this Agreement or any of the other Loan Documents except as expressly
set forth herein or therein.
B. No Responsibility for Certain Matters. Administrative Agent shall not
be responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of this Agreement or
any other Loan Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statements or
in any financial or other statements, instruments, reports or certificates or
any other documents furnished or made by Administrative Agent to Lenders or by
or on behalf of Parent or Borrower to Administrative Agent or any Lender in
connection with the Loan
142
Documents and the transactions contemplated thereby or for the financial
condition or business affairs of Borrower or any other Person liable for the
payment of any Obligations, nor shall Administrative Agent be required to
ascertain or inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained in any of the Loan
Documents or as to the use of the proceeds of the Loans or the use of the
Letters of Credit or as to the existence or possible existence of any Event of
Default or Potential Event of Default. Anything contained in this Agreement to
the contrary notwithstanding, Administrative Agent shall not have any liability
arising from confirmations of the amount of outstanding Loans or the Revolving
Letter of Credit Usage or the component amounts thereof.
C. Exculpatory Provisions. Neither Administrative Agent nor any of its
officers, directors, employees or agents shall be liable to Lenders for any
action taken or omitted by Administrative Agent under or in connection with any
of the Loan Documents except to the extent caused by Administrative Agent's
gross negligence or willful misconduct. Administrative Agent shall be entitled
to refrain from any act or the taking of any action (including the failure to
take an action) in connection with this Agreement or any of the other Loan
Documents or from the exercise of any power, discretion or authority vested in
it hereunder or thereunder unless and until Administrative Agent shall have
received instructions in respect thereof from Requisite Lenders (or such other
Lenders as may be required to give such instructions under subsection 10.6) and,
upon receipt of such instructions from Requisite Lenders (or such other Lenders,
as the case may be), Administrative Agent shall be entitled to act or (where so
instructed) refrain from acting, or to exercise such power, discretion or
authority, in accordance with such instructions. Without prejudice to the
generality of the foregoing, (i) Administrative Agent shall be entitled to rely,
and shall be fully protected in relying, upon any communication, instrument or
document believed by it to be genuine and correct and to have been signed or
sent by the proper person or persons, and shall be entitled to rely and shall be
protected in relying on opinions and judgments of attorneys (who may be
attorneys for Parent and its Subsidiaries), accountants, experts and other
professional advisors selected by it; and (ii) no Lender shall have any right of
action whatsoever against Administrative Agent as a result of Administrative
Agent acting or (where so instructed) refraining from acting under this
Agreement or any of the other Loan Documents in accordance with the instructions
of Requisite Lenders (or such other Lenders as may be required to give such
instructions under subsection 10.6).
D. Agent Entitled to Act as Lender. The agency hereby created shall in no
way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, Administrative Agent in its individual capacity as a Lender
hereunder. With respect to its participation in the Loans and the Letters of
Credit and the IRB Reimbursement Agreement, Administrative Agent shall have the
same rights and powers hereunder as any other Lender and may exercise the same
as though it were not performing the duties and functions delegated to it
hereunder, and the term "Lender" or "Lenders" or any similar term shall, unless
the context clearly otherwise indicates, include Administrative Agent in its
individual capacity. Administrative Agent and its Affiliates may accept deposits
from, lend money to and generally engage in any kind of banking, trust,
financial advisory or other business with Borrower or any of its Affiliates as
if it were not performing the duties specified herein, and may accept fees and
other
143
consideration from Borrower for services in connection with this Agreement
and otherwise without having to account for the same to Lenders.
9.3 Representations and Warranties; No Responsibility For Appraisal of
Creditworthiness.
Each Lender represents and warrants that it has made its own independent
investigation of the financial condition and affairs of Parent and its
Subsidiaries in connection with the making of the Loans and the issuance of
Letters of Credit hereunder and the execution of the IRB Reimbursement Agreement
and that it has made and shall continue to make its own appraisal of the
creditworthiness of Parent and its Subsidiaries. Administrative Agent shall not
have any duty or responsibility, either initially or on a continuing basis, to
make any such investigation or any such appraisal on behalf of Lenders or to
provide any Lender with any credit or other information with respect thereto,
whether coming into its possession before the making of the Loans or at any time
or times thereafter, and Administrative Agent shall not have any responsibility
with respect to the accuracy of or the completeness of any information provided
to Lenders.
9.4 Right to Indemnity.
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify Administrative Agent, to the extent that Administrative Agent shall
not have been reimbursed by Borrower or Parent, for and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including counsel fees and disbursements) or disbursements of
any kind or nature whatsoever which may be imposed on, incurred by or asserted
against Administrative Agent in exercising its powers, rights and remedies or
performing its duties hereunder or under the other Loan Documents or otherwise
in its capacity as Administrative Agent in any way relating to or arising out of
this Agreement or the other Loan Documents; provided that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from Administrative Agent's gross negligence or willful misconduct. If any
indemnity furnished to Administrative Agent for any purpose shall, in the
opinion of Administrative Agent, be insufficient or become impaired,
Administrative Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional indemnity is
furnished.
9.5 Successor Agent and Swing Line Lender.
A. Successor Agent. Administrative Agent may resign at any time by giving
30 days' prior written notice thereof to Lenders and Borrower, and
Administrative Agent may be removed at any time with or without cause by an
instrument or concurrent instruments in writing delivered to Borrower and
Administrative Agent and signed by Requisite Lenders. Upon any such notice of
resignation or any such removal, Requisite Lenders shall have the right, upon
five Business Days' notice to Borrower, to appoint a successor Administrative
Agent. Upon the acceptance of any appointment as Administrative Agent hereunder
by a successor Administrative Agent, that successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring or removed Administrative Agent and
144
the retiring or removed Administrative Agent shall be discharged from its duties
and obligations under this Agreement. After any retiring or removed
Administrative Agent's resignation or removal hereunder as Administrative Agent,
the provisions of this Section 9 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Administrative Agent under this
Agreement.
B. Successor Swing Line Lender. Any resignation or removal of
Administrative Agent pursuant to subsection 9.5A shall also constitute the
resignation or removal of NationsBank or its successor as Swing Line Lender, and
any successor Administrative Agent appointed pursuant to subsection 9.5A shall,
upon its acceptance of such appointment, become the successor Swing Line Lender
for all purposes hereunder. In such event (i) Borrower shall prepay any
outstanding Swing Line Loans made by the retiring or removed Administrative
Agent in its capacity as Swing Line Lender, (ii) upon such prepayment, the
retiring or removed Administrative Agent and Swing Line Lender shall surrender
the Swing Line Note held by it to Borrower for cancellation, and (iii) Borrower
shall issue a new Swing Line Note to the successor Administrative Agent and
Swing Line Lender substantially in the form of Exhibit VIII annexed hereto, in
the principal amount of the Swing Line Loan Commitment then in effect and with
other appropriate insertions.
9.6 Collateral Documents and Guaranties.
Each Lender hereby further authorizes Administrative Agent, on behalf of
and for the benefit of Lenders, to enter into each Collateral Document
(including, without limitation, the MELF Intercreditor Agreement) as secured
party and to be the agent for and representative of Lenders under each Guaranty,
and each Lender agrees to be bound by the terms of each Collateral Document and
Guaranty; provided that Administrative Agent shall not (i) enter into or consent
to any material amendment, modification, termination or waiver of any provision
contained in any Collateral Document or Guaranty or (ii) release any Collateral
(except as otherwise expressly permitted or required pursuant to the terms of
this Agreement or the applicable Collateral Document), in each case without the
prior consent of Requisite Lenders (or, if required pursuant to subsection 10.6,
all Lenders); provided further, however, that, without further written consent
or authorization from Lenders, Administrative Agent may execute any documents or
instruments necessary to (a) release any Lien encumbering any item of Collateral
that is the subject of a sale or other disposition of assets permitted by this
Agreement or to which Requisite Lenders have otherwise consented or (b) release
any Subsidiary Guarantor from the Subsidiary Guaranty if all of the capital
stock of such Subsidiary Guarantor is sold to any Person (other than an
Affiliate of Borrower) pursuant to a sale or other disposition permitted
hereunder or to which Requisite Lenders have otherwise consented. Anything
contained in any of the Loan Documents to the contrary notwithstanding, Parent,
Borrower, Administrative Agent and each Lender hereby agree that (X) no Lender
shall have any right individually to realize upon any of the Collateral under
any Collateral Document or to enforce any Guaranty, it being understood and
agreed that all powers, rights and remedies under the Collateral Documents and
the Guaranties may be exercised solely by Administrative Agent for the benefit
of Lenders in accordance with the terms thereof, and (Y) in the event of a
foreclosure by Administrative Agent on any of the Collateral pursuant to a
public or private sale, Administrative Agent or any Lender may be the
145
purchaser of any or all of such Collateral at any such sale and Administrative
Agent, as agent for and representative of Lenders (but not any Lender or Lenders
in its or their respective individual capacities unless Requisite Lenders shall
otherwise agree in writing) shall be entitled, for the purpose of bidding and
making settlement or payment of the purchase price for all or any portion of the
Collateral sold at any such public sale, to use and apply any of the Obligations
as a credit on account of the purchase price for any collateral payable by
Administrative Agent at such sale.
9.7 Arranging Agent, Syndication Agent and Documentation Agent.
The rights, privileges and benefits of the foregoing provisions of this
Section 9 shall extend to NCMI in its capacity as Arranging Agent and
Syndication Agent and Fleet National Bank, as Documentation Agent. After the
Closing Date, none of Arranging Agent, Syndication Agent or Documentation Agent
shall have any obligations or duties to any Loan Party, Administrative Agent or
any Lender.
Section 10. MISCELLANEOUS
10.1 Assignments and Participations in Loans, Letters of Credit and IRB
Reimbursement Agreement.
A. General. Subject to subsection 10.1B, each Lender shall have the right
at any time to (i) sell, assign or transfer to any Eligible Assignee, or (ii)
sell participations to any Person in, all or any part of its Commitments or any
Loan or Loans made by it or its Letters of Credit or the IRB Reimbursement
Agreement, or participations therein or any other interest herein or in any
other Obligations owed to it; provided that no such sale, assignment, transfer
or participation shall, without the consent of Borrower, require Borrower to
file a registration statement with the Securities and Exchange Commission or
apply to qualify such sale, assignment, transfer or participation under the
securities laws of any state; provided, further that no such sale, assignment or
transfer described in clause (i) above shall be effective unless and until an
Assignment Agreement effecting such sale, assignment or transfer shall have been
accepted by Administrative Agent and recorded in the Register as provided in
subsection 10.1B(ii); provided, further that no such sale, assignment, transfer
or participation of the Acquisition Letter of Credit or any participation
therein may be made separately from a sale, assignment, transfer or
participation of a corresponding interest in the Term Loans and the Commitments
relating thereto of Administrative Agent by effecting such sale, assignment,
transfer or participation; provided, further that no such sale, assignment,
transfer or participation of any Letter of Credit, the IRB Reimbursement
Agreement or any participation therein may be made separately from a sale,
assignment, transfer or participation of a corresponding interest in the
Revolving Loan Commitment and the Revolving Loans of the Lender effecting such
sale, assignment, transfer or participation; and provided, further that,
anything contained herein to the contrary notwithstanding, the Swing Line Loan
Commitment and the Swing Line Loans of Swing Line Lender may not be sold,
assigned or transferred as described in clause (i) above to any Person other
than a successor Administrative Agent and Swing Line Lender to the extent
contemplated by subsection 9.5. Except as otherwise provided in this subsection
10.1, no Lender shall, as between Borrower
146
and such Lender, be relieved of any of its obligations hereunder as a result of
any sale, assignment or transfer of, or any granting of participations in, all
or any part of its Commitments or the Loans or the Letters of Credit or the IRB
Reimbursement Agreement or participations therein, or the other Obligations owed
to such Lender.
B. Assignments.
(i) Amounts and Terms of Assignments. Each Commitment, Loan, Letter
of Credit, the IRB Reimbursement Agreement or participation therein, or
other Obligation may (a) be assigned in any amount to another Lender, or
to an Affiliate of the assigning Lender or another Lender, with the giving
of notice to Borrower and Administrative Agent or (b) be assigned in an
aggregate amount of not less than $5,000,000 (or such lesser amount as
shall constitute the aggregate amount of the Commitments, Loans, the
Letters of Credit, the IRB Reimbursement Agreement and participations
therein, and other Obligations of the assigning Lender) to any other
Eligible Assignee with the consent of Borrower and Administrative Agent
(which consent of Borrower and Administrative Agent shall not be
unreasonably withheld or delayed and which consent of Borrower shall not
be required at any time that an Event of Default has occurred and is
continuing); provided that any such assignment in accordance with either
clause (a) or (b) above shall effect a pro rata assignment (based on the
respective principal amounts thereof then outstanding or in effect) of
each of (1) the Term Loans A Commitment and/or the Term Loans A of the
assigning Lender, (2) the Tranche A Term Loan Commitment and/or the
Tranche A Term Loan of the assigning Lender and (3) the Revolving Loan
Commitment and the Revolving Loans of the assigning Lender. To the extent
of any such assignment in accordance with either clause (a) or (b) above,
the assigning Lender shall be relieved of its obligations with respect to
its Commitments, Loans, Letters of Credit, the IRB Reimbursement Agreement
or participations therein, or other Obligations or the portion thereof so
assigned. The parties to each such assignment shall execute and deliver to
Administrative Agent, for its acceptance and recording in the Register, an
Assignment Agreement, together with a processing and recordation fee of
$3,500 and such forms, certificates or other evidence, if any, with
respect to United States federal income tax withholding matters as the
assignee under such Assignment Agreement may be required to deliver to
Administrative Agent pursuant to subsection 2.7B(iii)(a). Upon such
execution, delivery, acceptance and recordation, from and after the
effective date specified in such Assignment Agreement, (y) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment
Agreement, shall have the rights and obligations of a Lender hereunder and
(z) the assigning Lender thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment
Agreement, relinquish its rights (other than any rights which survive the
termination of this Agreement under subsection 10.9B) and be released from
its obligations under this Agreement (and, in the case of an Assignment
Agreement covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be
a party hereto; provided that, anything contained in any of the Loan
Documents to the contrary notwithstanding, with respect to any outstanding
Letters of Credit and the IRB
147
Reimbursement Agreement, Issuing Lender shall continue to have all rights
and obligations of an Issuing Lender thereunder until the cancellation or
expiration of such Letters of Credit and the reimbursement of any amounts
drawn thereunder) and the termination of the IRB Reimbursement Agreement
and the reimbursement of any IRB Reimbursement Advances. The Commitments
hereunder shall be modified to reflect the Commitment of such assignee and
any remaining Commitment of such assigning Lender and, if any such
assignment occurs after the issuance of the Notes hereunder, the assigning
Lender shall, upon the effectiveness of such assignment or as promptly
thereafter as practicable, surrender its applicable Notes to
Administrative Agent for cancellation, and thereupon new Notes shall be
issued to the assignee and to the assigning Lender, substantially in the
form of Exhibit V, Exhibit VI or Exhibit VII annexed hereto, as the case
may be, with appropriate insertions, to reflect the new Commitments and/or
outstanding Term Loans A, Tranche A Term Loans and/or Tranche B Term
Loans, as the case may be, of the assignee and the assigning Lender.
(ii) Acceptance by Administrative Agent; Recordation in Register.
Upon its receipt of an Assignment Agreement executed by an assigning
Lender and an assignee representing that it is an Eligible Assignee,
together with the processing and recordation fee referred to in subsection
10.1B(i) and any forms, certificates or other evidence with respect to
United States federal income tax withholding matters that such assignee
may be required to deliver to Administrative Agent pursuant to subsection
2.7B(iii)(a), Administrative Agent shall, if Administrative Agent and
Borrower have consented to the assignment evidenced thereby (in each case
to the extent such consent is required pursuant to subsection 10.1B(i)),
(a) accept such Assignment Agreement by executing a counterpart thereof as
provided therein (which acceptance shall evidence any required consent of
Administrative Agent to such assignment), (b) record the information
contained therein in the Register, and (c) give prompt notice thereof to
Borrower. Administrative Agent shall maintain a copy of each Assignment
Agreement delivered to and accepted by it as provided in this subsection
10.1B(ii).
C. Participations. The holder of any participation, other than an
Affiliate of the Lender granting such participation, shall not be entitled to
require such Lender to take or omit to take any action hereunder except action
directly affecting (i) the extension of the scheduled final maturity date of any
Loan allocated to such participation or (ii) a reduction of the principal amount
of or the rate of interest payable on any Loan allocated to such participation,
and all amounts payable by Borrower hereunder (including without limitation
amounts payable to such Lender pursuant to subsections 2.6D, 2.7 and 3.6) shall
be determined as if such Lender had not sold such participation. Borrower and
each Lender hereby acknowledge and agree that, solely for purposes of
subsections 10.4 and 10.5, (a) any participation will give rise to a direct
obligation of Borrower to the participant and (b) the participant shall be
considered to be a "Lender".
D. Assignments to Federal Reserve Banks. In addition to the assignments
and participations permitted under the foregoing provisions of this subsection
10.1, any Lender may assign and pledge all or any portion of its Loans, the
other Obligations owed to such Lender, and
148
its Notes to any Federal Reserve Bank as collateral security pursuant to
Regulation A of the Board of Governors of the Federal Reserve System and any
operating circular issued by such Federal Reserve Bank; provided that (i) no
Lender shall, as between Borrower and such Lender, be relieved of any of its
obligations hereunder as a result of any such assignment and pledge and (ii) in
no event shall such Federal Reserve Bank be considered to be a "Lender" or be
entitled to require the assigning Lender to take or omit to take any action
hereunder.
E. Information. Each Lender may furnish any information concerning Parent
and its Subsidiaries in the possession of that Lender from time to time to
assignees and participants (including prospective assignees and participants),
subject to subsection 10.19.
F. Representations of Lenders. Each Lender listed on the signature pages
hereof hereby represents and warrants (i) that it is an Eligible Assignee
described in clause (A) of the definition thereof; (ii) that it has experience
and expertise in the making of loans such as the Loans; and (iii) that it will
make its Loans for its own account in the ordinary course of its business and
without a view to distribution of such Loans within the meaning of the
Securities Act or the Exchange Act or other federal securities laws (it being
understood that, subject to the provisions of this subsection 10.1, the
disposition of such Loans or any interests therein shall at all times remain
within its exclusive control). Each Lender that becomes a party hereto pursuant
to an Assignment Agreement shall be deemed to agree that the representations and
warranties of such Lender contained in Section 2(c) of such Assignment Agreement
are incorporated herein by this reference.
10.2 Expenses.
Whether or not the transactions contemplated hereby shall be consummated,
Parent and Borrower, jointly and severally, agree to pay promptly (i) all the
actual and reasonable costs and expenses of preparation of the Loan Documents
and any consents, amendments, waivers or other modifications thereto; (ii) all
the costs of furnishing all opinions by counsel for Parent and Borrower
(including without limitation any opinions requested by Lenders as to any legal
matters arising hereunder) and of Parent's and Borrower's performance of and
compliance with all agreements and conditions on its part to be performed or
complied with under this Agreement and the other Loan Documents including,
without limitation, with respect to confirming compliance with environmental,
insurance and solvency requirements; (iii) the reasonable fees, expenses and
disbursements of counsel to Administrative Agent (including allocated costs of
internal counsel) in connection with the negotiation, preparation, execution and
administration of the Loan Documents and any consents, amendments, waivers or
other modifications thereto and any other documents or matters requested by
Parent or Borrower; (iv) all the actual costs and reasonable expenses of
creating and perfecting Liens in favor of Administrative Agent on behalf of
Lenders pursuant to any Collateral Document, including without limitation filing
and recording fees, expenses and taxes, stamp or documentary taxes, search fees,
title insurance premiums, and reasonable fees, expenses and disbursements of
counsel to Administrative Agent and of counsel providing any opinions that
Administrative Agent or Requisite Lenders may request in respect of the
Collateral Documents or the Liens created pursuant thereto; (v) all the actual
costs and reasonable expenses (including without limitation the reasonable fees,
expenses and disbursements
149
of any auditors, accountants or appraisers and any environmental or other
consultants, advisors and agents employed or retained by Administrative Agent or
its counsel) of obtaining and reviewing any appraisals provided for under
subsection 4.1J or 6.9C, any environmental audits or reports provided for under
subsection 4.1K or 6.9B(ix) and any audits or reports provided for under
subsection 6.5B or 6.17 with respect to Inventory and Accounts Receivable of the
Operating Subsidiaries; (vi) the custody or preservation of any of the
Collateral; (vii) all other actual and reasonable costs and expenses incurred by
Administrative Agent in connection with the syndication of the Commitments and
the negotiation, preparation and execution of the Loan Documents and any
consents, amendments, waivers or other modifications thereto and the
transactions contemplated thereby; and (viii) after the occurrence of an Event
of Default, all costs and expenses, including reasonable attorneys' fees
(including allocated costs of internal counsel) and costs of settlement,
incurred by Administrative Agent and Lenders in enforcing any Obligations of or
in collecting any payments due from any Loan Party hereunder or under the other
Loan Documents by reason of such Event of Default (including, without
limitation, in connection with the sale of, collection from, or other
realization upon any of the Collateral or the enforcement of any Guaranty) or in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a "work-out" or pursuant to any
insolvency or bankruptcy proceedings.
10.3 Indemnity.
In addition to the payment of expenses pursuant to subsection 10.2,
whether or not the transactions contemplated hereby shall be consummated, Parent
and Borrower, jointly and severally, agree to defend (subject to Indemnitees'
selection of counsel), indemnify, pay and hold harmless Administrative Agent and
Lenders, and the officers, directors, employees, agents and affiliates of
Administrative Agent and Lenders (collectively called the "Indemnitees"), from
and against any and all Indemnified Liabilities (as hereinafter defined);
provided that neither Parent nor Borrower shall have any obligation to any
Indemnitee hereunder with respect to any Indemnified Liabilities to the extent
such Indemnified Liabilities arise solely from the gross negligence or willful
misconduct of that Indemnitee as determined by a final judgment of a court of
competent jurisdiction.
As used herein, "Indemnified Liabilities" means, collectively, any and all
liabilities, obligations, losses, damages (including natural resource damages),
penalties, actions, judgments, suits, claims (including Environmental Claims),
costs (including the costs of any investigation, study, sampling, testing,
abatement, cleanup, removal, remediation or other response action necessary to
remove, remediate, clean up or ▇▇▇▇▇ any Hazardous Materials Activity), expenses
and disbursements of any kind or nature whatsoever (including the reasonable
fees and disbursements of counsel for Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened by
any Person, whether or not any such Indemnitee shall be designated as a party or
a potential party thereto, and any fees or expenses incurred by Indemnitees in
enforcing this indemnity), whether direct, indirect or consequential and whether
based on any federal, state or foreign laws, statutes, rules or regulations
(including securities and commercial laws, statutes, rules or regulations and
Environmental Laws), on common law or equitable cause or on contract or
otherwise, that may be imposed on, incurred by, or asserted
150
against any such Indemnitee, in any manner relating to or arising out of (i)
this Agreement or the other Loan Documents or the Related Agreements or the
transactions contemplated hereby or thereby (including Lenders' agreement to
make the Loans hereunder or the use or intended use of the proceeds thereof or
the issuance of Letters of Credit hereunder or the use or intended use of any
thereof, or the execution of the IRB Reimbursement Agreement or the use thereof,
or any enforcement of any of the Loan Documents (including any sale of,
collection from, or other realization upon any of the Collateral or the
enforcement of any Guaranty), (ii) the statements contained in the commitment
letter delivered by any Lender to Borrower with respect thereto, or (iii) any
Environmental Claim or any Hazardous Materials Activity relating to or arising
from, directly or indirectly, any past or present activity, operation, land
ownership, or practice of Parent or any of its Subsidiaries.
To the extent that the undertakings to defend, indemnify, pay and hold
harmless set forth in this subsection 10.3 may be unenforceable in whole or in
part because they are violative of any law or public policy, Parent and Borrower
shall contribute the maximum portion that it is permitted to pay and satisfy
under applicable law to the payment and satisfaction of all Indemnified
Liabilities incurred by Indemnitees or any of them.
10.4 Set-Off; Security Interest in Deposit Accounts.
In addition to any rights now or hereafter granted under applicable law
and not by way of limitation of any such rights, upon the occurrence of any
Event of Default each Lender is hereby authorized by Borrower at any time or
from time to time, without notice to Borrower or to any other Person, any such
notice being hereby expressly waived, to set off and to appropriate and to apply
any and all deposits (general or special, including, but not limited to,
Indebtedness evidenced by certificates of deposit, whether matured or unmatured,
but not including trust accounts) and any other Indebtedness at any time held or
owing by that Lender to or for the credit or the account of Borrower against and
on account of the obligations and liabilities of Borrower to that Lender under
this Agreement, the Letters of Credit and participations therein and the other
Loan Documents, including, but not limited to, all claims of any nature or
description arising out of or connected with this Agreement, the Letters of
Credit and participations therein or any other Loan Document, irrespective of
whether or not (i) that Lender shall have made any demand hereunder or (ii) the
principal of or the interest on the Loans or any amounts in respect of the
Letters of Credit or any other amounts due hereunder shall have become due and
payable pursuant to Section 8 and although said obligations and liabilities, or
any of them, may be contingent or unmatured. Borrower hereby further grants to
Administrative Agent and each Lender a security interest in all deposits and
accounts maintained with Administrative Agent or such Lender as security for the
Obligations.
10.5 Ratable Sharing.
Lenders hereby agree among themselves that if any of them shall, whether
by voluntary payment (other than a voluntary prepayment of Loans made and
applied in accordance with the terms of this Agreement), by realization upon
security, through the exercise of any right of set-off or banker's lien, by
counterclaim or cross action or by the enforcement of any right under the
151
Loan Documents or otherwise, or as adequate protection of a deposit treated as
cash collateral under the Bankruptcy Code, receive payment or reduction of a
proportion of the aggregate amount of principal, interest, amounts payable in
respect of the Letters of Credit and the IRB Reimbursement Agreement, fees and
other amounts then due and owing to that Lender hereunder or under the other
Loan Documents (collectively, the "Aggregate Amounts Due" to such Lender) which
is greater than the proportion received by any other Lender in respect of the
Aggregate Amounts Due to such other Lender, then the Lender receiving such
proportionately greater payment shall (i) notify Administrative Agent and each
other Lender of the receipt of such payment and (ii) apply a portion of such
payment to purchase participations (which it shall be deemed to have purchased
from each seller of a participation simultaneously upon the receipt by such
seller of its portion of such payment) in the Aggregate Amounts Due to the other
Lenders so that all such recoveries of Aggregate Amounts Due shall be shared by
all Lenders in proportion to the Aggregate Amounts Due to them; provided that if
all or part of such proportionately greater payment received by such purchasing
Lender is thereafter recovered from such Lender upon the bankruptcy or
reorganization of Borrower or otherwise, those purchases shall be rescinded and
the purchase prices paid for such participations shall be returned to such
purchasing Lender ratably to the extent of such recovery, but without interest.
Borrower expressly consents to the foregoing arrangement and agrees that any
holder of a participation so purchased may exercise any and all rights of
banker's lien, set-off or counterclaim with respect to any and all monies owing
by Borrower to that holder with respect thereto as fully as if that holder were
owed the amount of the participation held by that holder.
10.6 Amendments and Waivers.
No amendment, modification, termination or waiver of any provision of this
Agreement or of the Notes, and no consent to any departure by Parent or Borrower
therefrom, shall in any event be effective without the written concurrence of
Requisite Lenders; provided that any such amendment, modification, termination,
waiver or consent which: increases the amount of any of the Commitments or
reduces the principal amount of any of the Loans; increases the maximum amount
of Letters of Credit; increases the Maximum Exposure Under IRB Reimbursement
Agreement; changes in any manner the definition of "Class" or the definition of
"Pro Rata Share" or the definition of "Requisite Class Lenders" or the
definition of "Requisite Lenders"; changes in any manner any provision of this
Agreement which, by its terms, expressly requires the approval or concurrence of
all Lenders; postpones the date or reduces the amount of any scheduled payment
(but not prepayment) of principal of any of the Loans; postpones the date on
which any interest or any fees are payable; decreases the interest rate borne by
any of the Loans (other than any waiver of any increase in the interest rate
applicable to any of the Loans pursuant to subsection 2.2E) or the amount of any
fees payable hereunder; increases the maximum duration of Interest Periods
permitted hereunder; reduces the amount or postpones the due date of any amount
payable in respect of, or extends the required expiration date of any Letter of
Credit; changes in any manner the obligations of Lenders relating to the
purchase of participations in Letters of Credit; changes in any manner the
obligations of Lenders relating to the IRB Reimbursement Agreement; releases any
Lien granted in favor of Administrative Agent with respect to all or
substantially all of the Collateral; releases Parent from its obligations under
the Parent Guaranty or releases all or substantially all of the Subsidiary
Guarantors from their
152
obligations under the Subsidiary Guaranty other than in accordance with the
terms of the Loan Documents; or changes in any manner the provisions contained
in subsection 8.1 or this subsection 10.6 shall be effective only if evidenced
by a writing signed by or on behalf of all Lenders. In addition, (i) any
amendment, modification, termination or waiver of any of the provisions
contained in Section 4 shall be effective only if evidenced by a writing signed
by or on behalf of Administrative Agent and Requisite Lenders, (ii) no
amendment, modification, termination or waiver of any provision of any Note
shall be effective without the written concurrence of the Lender which is the
holder of that Note, (iii) no amendment, modification, termination or waiver of
any provision of subsection 2.1A(v) or of any other provision of this Agreement
relating to the Swing Line Loan Commitment or the Swing Line Loans shall be
effective without the written concurrence of Swing Line Lender, (iv) no
amendment, modification, termination or waiver of any provision of Section 9 or
of any other provision of this Agreement which, by its terms, expressly requires
the approval or concurrence of Administrative Agent shall be effective without
the written concurrence of Administrative Agent, and (v) no amendment,
modification, termination or waiver of any provision of subsection 2.4 which has
the effect of changing any interim scheduled payments, voluntary or mandatory
prepayments, or Commitment reductions applicable to either Class (the "Affected
Class") in a manner that disproportionately disadvantages such Class relative to
the other Class shall be effective without the written concurrence of Requisite
Class Lenders of the Affected Class (it being understood and agreed that any
amendment, modification, termination or waiver of any such provision which only
postpones or reduces any interim scheduled payment, voluntary or mandatory
prepayment, or Commitment reduction from those set forth in subsection 2.4 with
respect to one Class but not the other Class shall be deemed to
disproportionately disadvantage such one Class but not to disproportionately
disadvantage such other Class for purposes of this clause (v)). Administrative
Agent may, but shall have no obligation to, with the concurrence of any Lender,
execute amendments, modifications, waivers or consents on behalf of that Lender.
Any waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given. No notice to or demand on Parent or
Borrower in any case shall entitle Parent or Borrower to any other or further
notice or demand in similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this subsection 10.6
shall be binding upon each Lender at the time outstanding, each future Lender
and, if signed by Parent, on Parent and, if signed by Borrower, on Borrower.
If any changes in accounting principles from those used in the preparation
of the Financial Statements referred to in subsection 5.3 occasioned by the
promulgation of rules, regulations, pronouncements and opinions by or required
by the Financial Accounting Standards Board or the Accounting Principles Board
of the American Institute of Certified Public Accountants (or successors thereto
or agencies with similar functions) result in a change in the method of
calculation of financial covenants, standards or terms found in Sections 1, 6
and 7 hereof, the parties hereto agree to enter into negotiations in order to
amend such provisions so as to equitably reflect such changes with the desired
result that the criteria for evaluating Parent and its Subsidiaries' financial
condition shall be the same after such changes as if such changes had not been
made.
153
10.7 Independence of Covenants.
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another covenant shall not avoid the occurrence of an Event
of Default or Potential Event of Default if such action is taken or condition
exists.
10.8 Notices.
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed; provided that notices to Administrative Agent shall not
be effective until received. For the purposes hereof, the address of each party
hereto shall be as set forth under such party's name on the signature pages
hereof or (i) as to Parent, Borrower and Administrative Agent, such other
address as shall be designated by such Person in a written notice delivered to
the other parties hereto and (ii) as to each other party, such other address as
shall be designated by such party in a written notice delivered to
Administrative Agent.
10.9 Survival of Representations, Warranties and Agreements.
A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the Loans
and the issuance of the Letters of Credit hereunder and the execution of the IRB
Reimbursement Agreement.
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Parent and Borrower, as applicable, set forth in
subsections 2.6D, 2.7, 3.5A, 3.6, 10.2, 10.3 and 10.4 and the agreements of
Lenders set forth in subsections 9.2C, 9.4 and 10.5 shall survive the payment of
the Loans, the cancellation or expiration of the Letters of Credit and the
reimbursement of any amounts drawn thereunder, the termination of the IRB
Reimbursement Agreement and the reimbursement of any IRB Reimbursement Amount,
and the termination of this Agreement.
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of Administrative Agent or any Lender in
the exercise of any power, right or privilege hereunder or under any other Loan
Document shall impair such power, right or privilege or be construed to be a
waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege. All rights and
remedies existing under this Agreement and the other Loan Documents are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
154
10.11 Marshalling; Payments Set Aside.
Neither Administrative Agent nor any Lender shall be under any obligation
to marshal any assets in favor of Borrower or any other party or against or in
payment of any or all of the Obligations. To the extent that Borrower makes a
payment or payments to Administrative Agent or Lenders (or to Administrative
Agent for the benefit of Lenders), or Administrative Agent or Lenders enforce
any security interests or exercise their rights of setoff, and such payment or
payments or the proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, any other state or federal law, common law or any equitable
cause, then, to the extent of such recovery, the obligation or part thereof
originally intended to be satisfied, and all Liens, rights and remedies therefor
or related thereto, shall be revived and continued in full force and effect as
if such payment or payments had not been made or such enforcement or setoff had
not occurred.
10.12 Severability.
In case any provision in or obligation under this Agreement or the Notes
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
10.13 Obligations Several; Independent Nature of Lenders' Rights.
The obligations of Lenders hereunder are several and no Lender shall be
responsible for the obligations or Commitments of any other Lender hereunder.
Nothing contained herein or in any other Loan Document, and no action taken by
Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for such purpose.
10.14 Headings.
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
10.15 Applicable Law.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE
155
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES.
10.16 Successors and Assigns.
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of Lenders (it being understood that
Lenders' rights of assignment are subject to subsection 10.1). Neither Parent's
nor Borrower's rights or obligations hereunder nor any interest therein may be
assigned or delegated by Parent or Borrower without the prior written consent of
all Lenders.
10.17 Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST PARENT OR BORROWER ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS
THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇. BY EXECUTING AND
DELIVERING THIS AGREEMENT, EACH OF PARENT AND BORROWER, FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN
ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO PARENT OR BORROWER AT ITS ADDRESS PROVIDED IN ACCORDANCE
WITH SUBSECTION 10.8;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER PARENT AND BORROWER IN ANY
SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST PARENT AND
BORROWER IN THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 10.17 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND
156
ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL
OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.
10.18 Waiver of Jury Trial.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver
is intended to be all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims and all
other common law and statutory claims. Each party hereto acknowledges that this
waiver is a material inducement to enter into a business relationship, that each
has already relied on this waiver in entering into this Agreement, and that each
will continue to rely on this waiver in their related future dealings. Each
party hereto further warrants and represents that it has reviewed this waiver
with its legal counsel and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION
10.18 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In the event of litigation,
this Agreement may be filed as a written consent to a trial by the court.
10.19 Confidentiality.
Each Lender shall hold all non-public information obtained pursuant to the
requirements of this Agreement which has been identified as confidential by
Borrower in accordance with such Lender's customary procedures for handling
confidential information of this nature and in accordance with safe and sound
banking practices, it being understood and agreed by Borrower that in any event
a Lender may make disclosures to Affiliates of such Lender or disclosures
reasonably required by any bona fide assignee, transferee or participant in
connection with the contemplated assignment or transfer by such Lender of any
Loans or any participations therein or disclosures required or requested by any
governmental agency or representative thereof or pursuant to legal process;
provided that, unless specifically prohibited by applicable law or court order,
each Lender shall notify Borrower of any request by any governmental agency or
representative thereof (other than any such request in connection with any
examination of the financial condition of such Lender by such governmental
agency) for disclosure of any such non-public information prior to disclosure of
such information; and provided, further that in no event shall
157
any Lender be obligated or required to return any materials furnished by Parent,
Borrower or any of its Subsidiaries.
10.20 Counterparts; Effectiveness.
This Agreement and any amendments, waivers, consents or supplements hereto
or in connection herewith may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by Borrower and
Administrative Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
10.21 Maximum Amount.
A. It is the intention of Loan Parties and Lenders to conform strictly to
the usury and similar laws relating to interest from time to time in force, and
all agreements between Loan Parties and Lenders, whether now existing or
hereafter arising and whether oral or written, are hereby expressly limited so
that in no contingency or event whatsoever, whether by acceleration of maturity
hereof or otherwise, shall the amount paid or agreed to be paid in the aggregate
to Lenders or to Administrative Agent on behalf of Lenders as interest hereunder
or under the other Loan Documents or in any other security agreement given to
secure the Obligations, or in any other document evidencing, securing or
pertaining to the indebtedness evidenced hereby or thereby, exceed the maximum
amount permissible under applicable usury or such other laws (the "Maximum
Amount"). If under any circumstances whatsoever fulfillment of any provision
hereof, or any of the other Loan Documents, at the time performance of such
provision shall be due, shall involve exceeding the Maximum Amount, then, ipso
facto, the obligation to be fulfilled shall be reduced to the Maximum Amount.
For the purposes of calculating the actual amount of interest paid and/or
payable hereunder, in respect of laws pertaining to usury or such other laws,
all sums paid or agreed to be paid to the holder hereof for the use, forbearance
or detention of the indebtedness of Borrower evidenced hereby, outstanding from
time to time shall, to the extent permitted by applicable law, be amortized,
pro-rated, allocated and spread from the date of disbursement of the proceeds of
the Loans until payment in full of all of such indebtedness, so that the actual
rate of interest on account of such indebtedness is uniform through the
term hereof. The terms and provisions of this subsection shall control and
supersede every other provision of all agreements between Borrower,
Administrative Agent and the Lenders.
B. If under any circumstances Lenders shall ever receive an amount which
would exceed the Maximum Amount, such amount shall be deemed a payment in
reduction of the principal amount of the Loans and shall be treated as a
voluntary prepayment under subsection 2.4B(i), and shall be so applied in
accordance with subsection 2.4B(iv) hereof, or if such excessive interest
exceeds the unpaid balance of the Loans and any other indebtedness of
158
Borrower in favor of Lenders, the excess shall be deemed to have been a payment
made by mistake and shall be refunded to Borrower.
[Remainder of page intentionally left blank]
159
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
BORROWER:
CFP HOLDINGS, INC.
By: ______________________________________
▇▇▇▇ ▇. Ek
Vice President and
Chief Financial Officer
Notice Address:
CFP Holdings, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ Ek
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
PARENT:
CFP GROUP, INC.
By: ______________________________________
▇▇▇▇ ▇. Ek
Vice President and
Chief Financial Officer
Notice Address:
CFP Group, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ Ek
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
S-1
LENDERS:
NATIONSBANK OF TEXAS, N.A.,
individually and as Administrative Agent
By: ______________________________________
▇▇▇▇▇ ▇▇▇▇▇▇
Authorized Signatory
Notice Address:
NationsBank of Texas, N.A.
13th Floor
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
and to:
NationsBank, N.A.
Suite 4100
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
S-2
NATIONSBANC CAPITAL MARKETS INC,
as Arranging Agent and Syndication Agent
By: ______________________________________
▇▇▇▇▇ ▇▇▇▇▇▇
Director
Notice Address:
NationsBanc Capital Markets, Inc.
NationsBank Corporate Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Fax No: ▇▇▇-▇▇▇-▇▇▇▇
S-3
▇▇▇▇▇▇ FINANCIAL, INC.
By: ______________________________________
Name:
Title:
Notice Address:
▇▇▇▇▇▇ Financial, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Portfolio Manager
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
S-4
FLEET NATIONAL BANK,
individually and as Documentation Agent
By: ______________________________________
▇▇▇▇ ▇▇▇▇▇▇▇
Vice President
Notice Address:
Fleet National Bank
One Federal Street
Mail Code: MA OF DO3C
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
S-5
EXECUTION
================================================================================
CREDIT AGREEMENT
DATED AS OF DECEMBER 30, 1996
AMONG
CFP HOLDINGS, INC.,
as Borrower,
CFP GROUP, INC.,
as Parent,
THE LENDERS LISTED HEREIN,
as Lenders,
and
NATIONSBANK OF TEXAS, N.A.,
as Administrative Agent,
and
NATIONSBANC CAPITAL MARKETS, INC.,
as Arranging Agent
and
Syndication Agent,
and
FLEET NATIONAL BANK,
as Documentation Agent
================================================================================
CFP GROUP, INC.
CFP HOLDINGS, INC.
CREDIT AGREEMENT
TABLE OF CONTENTS
Page
----
Section 1. DEFINITIONS.............................................. 2
1.1 Certain Defined Terms.................................... 2
1.2 Accounting Terms; Utilization of GAAP for Purposes of
Calculations Under Agreement.............................. 43
1.3 Other Definitional Provisions and Rules of Construction.. 43
Section 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS............... 43
2.1 Commitments; Making of Loans; the Register; Notes........ 43
2.2 Interest on the Loans.................................... 52
2.3 Fees..................................................... 56
2.4 Repayments, Prepayments and Reductions in Revolving Loan
Commitments; General Provisions Regarding Payments;
Application of Proceeds of Collateral and Payments Under
Subsidiary Guaranty...................................... 57
2.5 Use of Proceeds.......................................... 68
2.6 Special Provisions Governing Eurodollar Rate Loans....... 69
2.7 Increased Costs; Taxes; Capital Adequacy................. 71
2.8 Obligation of Lenders and Issuing Lender to Mitigate..... 76
Section 3. LETTERS OF CREDIT; IRB REIMBURSEMENT AGREEMENT........... 77
3.1 Issuance of Letters of Credit, Execution of IRB
Reimbursement Agreement and Lenders' Purchase of
Participations Therein................................... 77
3.2 Letter of Credit Fees.................................... 80
3.3 Drawings and Reimbursement of Amounts Paid Under Letters
of Credit and the IRB Reimbursement Agreement............ 81
3.4 Obligations Absolute..................................... 84
3.5 Indemnification; Nature of Issuing Lender's Duties....... 85
3.6 Increased Costs and Taxes Relating to Letters of Credit.. 87
Section 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT................ 88
4.1 Conditions to Term Loans, Initial Revolving Loans, Swing
Line Loans and Acquisition Letter of Credit.............. 88
4.2 Conditions to All Loans.................................. 97
4.3 Conditions to Letters of Credit.......................... 98
(i)
Page
----
Section 5. BORROWER'S REPRESENTATIONS AND WARRANTIES................ 99
5.1 Organization, Powers, Qualification, Good Standing,
Business, Subsidiaries and Restructuring................. 99
5.2 Authorization of Borrowing, etc..........................100
5.3 Financial Condition......................................101
5.4 No Material Adverse Change; No Restricted Junior
Payments.................................................101
5.5 Title to Properties; Liens; Real Property................102
5.6 Litigation; Adverse Facts................................102
5.7 Payment of Taxes.........................................103
5.8 Performance of Agreements; Materially Adverse Agreements;
Material Contracts.......................................103
5.9 Governmental Regulation..................................103
5.10 Securities Activities....................................103
5.11 Employee Benefit Plans...................................104
5.12 Certain Fees.............................................104
5.13 Environmental Protection.................................105
5.14 Employee Matters.........................................105
5.15 Solvency.................................................106
5.16 Matters Relating to Collateral...........................106
5.17 Related Agreements.......................................107
5.18 Disclosure...............................................107
Section 6. PARENT'S AND BORROWER'S AFFIRMATIVE COVENANTS............108
6.1 Financial Statements and Other Reports...................108
6.2 Corporate Existence, etc.................................114
6.3 Payment of Taxes and Claims; Tax Consolidation...........114
6.4 Maintenance of Properties; Insurance; Application of Net
Insurance/Condemnation Proceeds..........................115
6.5 Inspection Rights; Audits of Inventory and Accounts
Receivable; Lender Meeting...............................117
6.6 Compliance with Laws, etc................................118
6.7 Environmental Review and Investigation, Disclosure, Etc.;
Parent's and Borrower's Actions Regarding Hazardous
Materials Activities, Environmental Claims and Violations
of Environmental Laws....................................118
6.8 Execution of Subsidiary Guaranty and Personal Property
Collateral Documents by Certain Subsidiaries and Future
Subsidiaries.............................................120
6.9 Conforming Leasehold Interests; Matters Relating to
Additional Real Property Collateral......................121
6.10 Interest Rate Protection.................................124
6.11 Deposit Accounts.........................................124
6.12 Determination of Borrowing Base..........................124
6.13 Keeping of Books.........................................125
6.14 Compliance with Terms of Leaseholds......................125
(ii)
Page
----
6.15 Performance of Related Agreements........................126
6.16 Performance of Material Contracts........................126
6.17 Audit of Inventory and Accounts Receivable...............126
Section 7. NEGATIVE COVENANTS.......................................126
7.1 Indebtedness.............................................127
7.2 Liens and Related Matters................................128
7.3 Investments; Joint Ventures..............................130
7.4 Contingent Obligations...................................131
7.5 Restricted Junior Payments...............................132
7.6 Financial Covenants......................................133
7.7 Restriction on Fundamental Changes; Asset Sales and
Acquisitions.............................................137
7.8 Consolidated Capital Expenditures........................138
7.9 Sale or Discount of Receivables..........................139
7.10 Transactions with Shareholders and Affiliates............139
7.11 Disposal of Subsidiary Stock.............................139
7.12 Conduct of Business......................................140
7.13 Amendments or Waivers of Certain Related Agreements;
Amendments of Documents Relating to Bridge Financing and
Permitted Securities Issuance; Designation of "Designated
Senior Indebtedness".....................................140
7.14 Fiscal Year..............................................141
7.15 Charter Amendments.......................................141
7.16 Amendment, Etc. of Material Contracts....................141
7.17 Partnerships, Etc........................................141
7.18 Speculative Transactions.................................141
Section 8. EVENTS OF DEFAULT........................................141
8.1 Failure to Make Payments When Due........................141
8.2 Default in Other Agreements..............................142
8.3 Breach of Certain Covenants..............................142
8.4 Breach of Warranty.......................................142
8.5 Other Defaults Under Loan Documents......................142
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc.....142
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.......143
8.8 Judgments, Attachments, etc..............................143
8.9 Dissolution..............................................144
8.10 Employee Benefit Plans...................................144
8.11 Material Adverse Effect..................................144
8.12 Change in Control........................................144
8.13 Invalidity of Guarantees; Failure of Security; Repudiation
of Obligations...........................................144
8.14 Action Relating to Certain Indebtedness..................145
8.15 Conduct of Business By Parent and Borrower...............145
8.16 Preferred Distribution Stock.............................145
(iii)
Page
----
Section 9. ADMINISTRATIVE AGENT.....................................146
9.1 Appointment..............................................146
9.2 Powers and Duties; General Immunity......................147
9.3 Representations and Warranties; No Responsibility For
Appraisal of Creditworthiness............................149
9.4 Right to Indemnity.......................................150
9.5 Successor Agent and Swing Line Lender....................150
9.6 Collateral Documents and Guaranties......................151
9.7 Arranging Agent, Syndication Agent and Documentation
Agent....................................................151
Section 10. MISCELLANEOUS............................................152
10.1 Assignments and Participations in Loans, Letters of Credit
and IRB Reimbursement Agreement..........................152
10.2 Expenses.................................................155
10.3 Indemnity................................................156
10.4 Set-Off; Security Interest in Deposit Accounts...........157
10.5 Ratable Sharing..........................................157
10.6 Amendments and Waivers...................................158
10.7 Independence of Covenants................................160
10.8 Notices..................................................160
10.9 Survival of Representations, Warranties and Agreements...160
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative....160
10.11 Marshalling; Payments Set Aside..........................161
10.12 Severability.............................................161
10.13 Obligations Several; Independent Nature of Lenders'
Rights...................................................161
10.14 Headings.................................................161
10.15 Applicable Law...........................................162
10.16 Successors and Assigns...................................162
10.17 Consent to Jurisdiction and Service of Process...........162
10.18 Waiver of Jury Trial.....................................163
10.19 Confidentiality..........................................163
10.20 Counterparts; Effectiveness..............................164
10.21 Maximum Amount...........................................164
Signature pages S-1
(iv)
EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT
IV FORM OF ACQUISITION LETTER OF CREDIT
V-A FORM OF TERM LOAN A NOTE
V-B FORM OF TRANCHE A TERM NOTE
VI FORM OF TRANCHE B TERM NOTE
VII FORM OF REVOLVING NOTE
VIII FORM OF SWING LINE NOTE
IX FORM OF COMPLIANCE CERTIFICATE
X-A FORM OF OPINION OF ▇'▇▇▇▇▇▇▇▇ GRAEV & KARABELL, LLP
X-B FORM OF OPINION OF ▇▇▇▇ & SHARP
XI FORM OF OPINION OF O'MELVENY & ▇▇▇▇▇ LLP
XII FORM OF ASSIGNMENT AGREEMENT
XIII-A FORM OF LANDLORD CONSENT AND ESTOPPEL (CALIFORNIA
AND KENTUCKY)
XIII-B FORM OF LANDLORD CONSENT AND ESTOPPEL (WAREHOUSE)
XIV FORM OF CERTIFICATE RE NON-BANK STATUS
XV FORM OF FINANCIAL CONDITION CERTIFICATE
XVI FORM OF COLLATERAL ACCOUNT AGREEMENT
XVII FORM OF BORROWER PLEDGE AGREEMENT
XVIII FORM OF BORROWER SECURITY AGREEMENT
XIX FORM OF SUBSIDIARY GUARANTY
XX FORM OF SUBSIDIARY PLEDGE AGREEMENT
XXI FORM OF SUBSIDIARY SECURITY AGREEMENT
XXII FORM OF SUBSIDIARY PATENT SECURITY AGREEMENT
XXIII FORM OF SUBSIDIARY TRADEMARK SECURITY AGREEMENT
XXIV FORM OF PARENT GUARANTY
XXV FORM OF PARENT PLEDGE AGREEMENT
XXVI FORM OF PARENT SECURITY AGREEMENT
XXVII FORM OF MORTGAGE
XXVIII FORM OF BORROWING BASE CERTIFICATE
XXIX FORM OF IRB REIMBURSEMENT AGREEMENT
XXX FORM OF MELF INTERCREDITOR AGREEMENT
(v)
SCHEDULES
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
4.1C CORPORATE AND CAPITAL STRUCTURE; OWNERSHIP; MANAGEMENT
4.1E INDEBTEDNESS REPAID AT CLOSING
4.1H CLOSING DATE MORTGAGED PROPERTIES AND CERTAIN LEASEHOLD INTERESTS
4.1K FACILITIES REQUIRING ENVIRONMENTAL REPORTS
5.1 SUBSIDIARIES OF BORROWER
5.2B THIRD PARTY CONSENTS
5.2C GOVERNMENTAL CONSENTS
5.4 CERTAIN RESTRICTED JUNIOR PAYMENTS
5.5 REAL PROPERTY
5.6 LITIGATION
5.8 MATERIAL CONTRACTS
5.11 CERTAIN EMPLOYEE BENEFIT PLANS
5.13 ENVIRONMENTAL MATTERS
5.16C PERMITTED UCC FILINGS
7.1 CERTAIN EXISTING INDEBTEDNESS
7.2 CERTAIN EXISTING LIENS
7.2(vii)PIDA COMMITMENT LETTER
7.3 CERTAIN EXISTING INVESTMENTS
7.4 CERTAIN EXISTING CONTINGENT OBLIGATIONS
9.2 TERMS OF PNC BANK LETTER OF CREDIT
(vi)