EXHIBIT 4.3
--------------------------------------------------------------------------------
AMENDED AND RESTATED
CREDIT AGREEMENT
dated as of January 29, 2001
among
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, INC.
(formerly known as FRENCH FRAGRANCES, INC.),
the BANKS listed on the signature pages hereof,
FLEET NATIONAL BANK,
as Administrative Agent, Issuing Bank, and Swingline Lender
CREDIT SUISSE FIRST BOSTON, as Syndication Agent,
and
FLEET SECURITIES, INC.
CREDIT SUISSE FIRST BOSTON,
as Joint Lead Arrangers and Joint Book Managers
--------------------------------------------------------------------------------
Table of Contents
-----------------
Page
ARTICLE I DEFINITIONS............................................................................................1
SECTION 1.01. DEFINITIONS.....................................................................................1
SECTION 1.02. ACCOUNTING TERMS AND DETERMINATIONS............................................................25
SECTION 1.03. TYPES OF BORROWINGS............................................................................25
ARTICLE II THE CREDITS..........................................................................................25
SECTION 2.01. COMMITMENTS TO LEND............................................................................25
SECTION 2.02. NOTICE OF BORROWINGS...........................................................................26
SECTION 2.03. SWINGLINE LOANS................................................................................26
SECTION 2.04. NOTICE TO BANKS; FUNDING OF LOANS..............................................................28
SECTION 2.05. NOTES..........................................................................................29
SECTION 2.06. INTEREST RATE ELECTIONS........................................................................29
SECTION 2.07. INTEREST RATES.................................................................................31
SECTION 2.08. FEES...........................................................................................31
SECTION 2.09. VOLUNTARY REDUCTION OR TERMINATION OF COMMITMENTS..............................................32
SECTION 2.10. MATURITY OF LOANS..............................................................................32
SECTION 2.12. PREPAYMENTS....................................................................................32
SECTION 2.12. GENERAL PROVISIONS AS TO PAYMENTS..............................................................33
SECTION 2.13. FUNDING LOSSES.................................................................................33
SECTION 2.14. COMPUTATION OF INTEREST AND FEES...............................................................34
SECTION 2.15. LETTERS OF CREDIT..............................................................................34
SECTION 2.16. APPLICATION OF PAYMENTS........................................................................38
ARTICLE III CONDITIONS..........................................................................................39
SECTION 3.01. EFFECTIVENESS..................................................................................39
SECTION 3.02. EACH CREDIT EVENT..............................................................................42
ARTICLE IV REPRESENTATIONS AND WARRANTIES.......................................................................43
SECTION 4.01. CORPORATE EXISTENCE AND POWER..................................................................43
SECTION 4.02. CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO CONTRAVENTION.....................................43
SECTION 4.03. BINDING EFFECT.................................................................................43
SECTION 4.04. FINANCIAL INFORMATION..........................................................................44
SECTION 4.05. LITIGATION.....................................................................................44
SECTION 4.06. COMPLIANCE WITH ERISA..........................................................................44
SECTION 4.07. ENVIRONMENTAL MATTERS..........................................................................45
SECTION 4.08. TAXES..........................................................................................45
SECTION 4.09. SUBSIDIARIES...................................................................................45
SECTION 4.10. NOT AN INVESTMENT COMPANY......................................................................45
SECTION 4.11. FULL DISCLOSURE................................................................................46
SECTION 4.12. COMPLIANCE WITH LAWS AND AGREEMENTS............................................................46
SECTION 4.13. GOVERNMENTAL APPROVALS.........................................................................46
SECTION 4.14. LOCATIONS......................................................................................46
SECTION 4.15. LICENSES; TRADEMARKS; DISTRIBUTION AGREEMENTS..................................................46
SECTION 4.16. INVENTORY......................................................................................47
SECTION 4.17. ARDEN ACQUISITION..............................................................................48
SECTION 4.18. SECURITY.......................................................................................48
SECTION 4.19. QUALITY OF INVENTORY........................................................................48
ARTICLE V COVENANTS.............................................................................................48
SECTION 5.01. INFORMATION....................................................................................48
SECTION 5.02. PAYMENT OF OBLIGATIONS.........................................................................51
SECTION 5.03. MAINTENANCE OF PROPERTY; INSURANCE.............................................................51
SECTION 5.04. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE...............................................51
SECTION 5.05. COMPLIANCE WITH LAWS...........................................................................51
SECTION 5.06. INSPECTION OF PROPERTY, BOOKS AND RECORDS......................................................51
SECTION 5.07. ADDITIONAL GUARANTORS..........................................................................52
SECTION 5.08. AMENDMENT OF CERTAIN DOCUMENTS.................................................................52
SECTION 5.09. INVESTMENTS....................................................................................52
SECTION 5.10. NEGATIVE PLEDGE................................................................................53
SECTION 5.11. CONSOLIDATIONS, MERGERS AND SALES OF ASSETS...................................................54
SECTION 5.12. USE OF PROCEEDS AND LETTERS OF CREDIT..........................................................54
SECTION 5.13. TRANSACTIONS WITH AFFILIATES...................................................................55
SECTION 5.14. RESTRICTED PAYMENTS............................................................................55
SECTION 5.15. BORROWER OR SUBSIDIARY DEBT....................................................................55
SECTION 5.16. CONSOLIDATED TOTAL DEBT/EBITDA RATIO...........................................................56
SECTION 5.17. INTEREST COVERAGE RATIO........................................................................56
SECTION 5.18. SHAREHOLDERS' EQUITY BASE......................................................................57
SECTION 5.19. SALE AND LEASE BACK TRANSACTION................................................................57
SECTION 5.20. PRINCIPAL DEPOSITORY; LOCK BOX.................................................................57
SECTION 5.21. BORROWING BASE CERTIFICATE..................................................................57
SECTION 5.22. CAPITAL EXPENDITURES........................................................................57
SECTION 5.23. NAME CHANGES................................................................................57
SECTION 5.24. FOREIGN JURISDICTIONS.......................................................................57
ARTICLE VI DEFAULTS.............................................................................................58
SECTION 6.01. EVENTS OF DEFAULT.................................................................................58
SECTION 6.02. DEFAULT........................................................................................60
SECTION 6.03. MANAGEMENT; COLLECTION OF ACCOUNTS.............................................................60
SECTION 6.04. STATUS OF ACCOUNTS.............................................................................62
SECTION 6.05. COLLATERAL CUSTODIAN...........................................................................64
ARTICLE VII THE AGENT...........................................................................................64
SECTION 7.01. APPOINTMENT AND AUTHORIZATION..................................................................64
SECTION 7.02. AGENT AND AFFILIATES...........................................................................64
SECTION 7.03. ACTION BY AGENT...............................................................................64
SECTION 7.04. CONSULTATION WITH EXPERTS......................................................................65
SECTION 7.05. LIABILITY OF AGENT.............................................................................65
SECTION 7.06. INDEMNIFICATION................................................................................65
SECTION 7.07. CREDIT DECISION................................................................................65
SECTION 7.08. SUCCESSOR AGENT...............................................................................65
SECTION 7.09. AGENT'S FEES...................................................................................66
SECTION 7.10. SUB-AGENT; ISSUING BANKS; SWINGLINE LENDER.....................................................66
ARTICLE VIII CHANGE IN CIRCUMSTANCES............................................................................66
SECTION 8.01. BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR.......................................66
SECTION 8.02. ILLEGALITY.....................................................................................66
SECTION 8.03. INCREASED COST AND REDUCED RETURN..............................................................67
SECTION 8.04. TAXES..........................................................................................68
SECTION 8.05. BASE RATE LOANS SUBSTITUTED FOR AFFECTED LIBOR LOANS...........................................70
SECTION 8.06. SUBSTITUTION OF BANK...........................................................................71
ARTICLE IX MISCELLANEOUS........................................................................................71
SECTION 9.01. NOTICES........................................................................................71
SECTION 9.02. NO WAIVERS.....................................................................................71
-ii-
SECTION 9.03. EXPENSES; INDEMNIFICATION......................................................................72
SECTION 9.04. SETOFFS........................................................................................72
SECTION 9.05. AMENDMENTS AND WAIVERS.........................................................................73
SECTION 9.06. SUCCESSORS AND ASSIGNS.........................................................................73
SECTION 9.07. GOVERNING LAW; SUBMISSION TO JURISDICTION......................................................75
SECTION 9.08. COUNTERPARTS; INTEGRATION......................................................................75
SECTION 9.9. WAIVER OF JURY TRIAL...........................................................................75
SECTION 9.10. CONFIDENTIALITY...................................................................................75
SECTION 9.12. REPLACEMENT NOTE..................................................................................76
SECTION 9.13. USURY.............................................................................................76
Exhibits:
--------
A Form of Promissory Note
B Form of Guarantee Agreement
C Form of Security Agreement
D Form of Opinion of Weil, Gotshal & ▇▇▇▇▇▇, LLP, counsel for the
Borrower and the Guarantors
E Form of Borrowing Base Certificate
F Form of Inventory Location Report
G Form of Issuing Bank Agreement
H Form of Consent and Subordination Agreement
I Form of Intercreditor Agreement
Schedules:
---------
4.05 Litigation
4.14 Locations
4.15 Licenses, Trademarks and Distribution Agreements
5.09 Permitted Investments
5.10 Liens
-iii-
AMENDED AND RESTATED
CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT is dated as of January 29,
2001 among ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, INC. (formerly known as FRENCH FRAGRANCES, INC), a
Florida corporation (the "Borrower"), the BANKS listed on the signature pages
hereof, FLEET NATIONAL BANK, as Administrative Agent, Issuing Bank and Swingline
Lender, CREDIT SUISSE FIRST BOSTON, as Syndication Agent and FLEET SECURITIES,
INC. and CREDIT SUISSE FIRST BOSTON, as Joint Lead Arrangers and Joint Book
Managers.
WHEREAS, the Borrower, certain of the Banks listed on the signature
page, the Agent, the Arrangers, the Issuing Bank and the Swingline Lender are
parties to a certain Credit Agreement dated as of January 23, 2001 (the
"Original Credit Agreement").
WHEREAS, the parties thereto desire to amend the Original Credit
Agreement to properly reflect the Banks and their Total Commitments and to make
certain other amendments to the Original Credit Agreement.
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE I
Definitions
-----------
SECTION 1.01. Definitions. The following terms, as used herein, have
the following meanings:
"Acquisition" means the purchase or acquisition of all or substantially
all of the assets of any Person, the purchase of a controlling equity interest
in any Person, or the merger or consolidation of any Person with any other
Person, in any transaction or group of transactions which are part of a common
plan.
"Arden Acquisition" means the Acquisition of the Purchased Assets by
the Borrower from Seller pursuant to the terms of the Acquisition Agreement.
"Acquisition Agreement" means that certain Purchase Agreement dated as
of October 30, 2000 by and between the Borrower and the Seller, as amended by
Amendment No. 1 to Purchase Agreement dated December 11, 2000 and as further
amended by Amendment No. 2 to Purchase Agreement dated January 23, 2001.
"Accounts" means all accounts (as such term is defined in the Uniform
Commercial Code in effect in the State of New York (as the same may be amended
or modified from time to time), whether now owned or hereafter acquired by the
Borrower or any Subsidiary.
"Active Excess Inventory" means inventory on hand that is in excess of
the Seller's (or following the consummation of the Arden Acquisition, the
Borrower's) projected sales for the next twelve months.
"Active No Requirement Inventory" means inventory on hand for which
Seller (and following the consummation of the Arden Acquisition, the Borrower)
does not have forecasted sales.
"Administrative Questionnaire" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Agent and submitted to
the Agent (with a copy to the Borrower) duly completed by such Bank.
"Advances" shall have the meaning assigned in Section 2.01 of this
Agreement.
"Affiliate" means any Person directly or indirectly controlling,
controlled by or under common control with the Borrower. As used in this
definition, the term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise, but not including Seller or its Affiliates.
"Agent" means Fleet National Bank in its capacity as administrative
agent for itself and the other Banks as appointed pursuant to the provisions of
Article VII of this Agreement hereunder, and its successors in such capacity.
"Agreement" shall mean this Credit Agreement, as the same may be
amended, supplemented, extended and modified from time to time.
"Allowance Accounts" means accounts consisting of, but not limited to,
the returns reserve, salary support, WalMart/RiteAid sales allowance and co-op
advertising.
"Applicable Letter of Credit Fee" means, with respect to each Letter of
Credit, a fee equal to the Applicable Margin for LIBOR Loans times the face
amount of the Letter of Credit.
"Applicable Lending Office" means, with respect to any Bank, (i) in the
case of its Base Rate Loans, its Domestic Lending Office and, (ii) in the case
of its LIBOR Loans, its LIBOR Lending Office.
"Applicable Margin" means the applicable margins based on the
applicable Consolidated Total Debt/ EBITDA Ratio (as determined quarterly) as
shown below (in basis points):
-2-
CONSOLIDATED
------------
TIER TOTAL DEBT/EBITDA LIBOR LOANS BASE RATE LOANS
---- ----------------- ----------- ---------------
I Greater than or equal to 3.0:1.0 300 175
II Less than 3.0:1.0 but greater than 275 150
or equal to 2.5:1.0
III Less than 2.5:1.0 but greater than 250 125
or equal to 2.0:1.0
IV Less than 2.0:1.0 225 100
The Applicable Margins shall be determined by reference to Tier I for
the first six months following the Effective Date. Any change in an Applicable
Margin shall be effective commencing on the first business day of the month
following the due date of the compliance certificate required by Section 5.1(c)
hereof and provided, however, if any compliance certificate is not received by
the due date required by Section 5.1(c), the Applicable Margin shall revert back
to Tier I until delivery of the next compliance certificate.
"Applicable Percentage" of any Bank means the percentage of the
aggregate Commitments represented by such Bank's Total Commitment.
"Approved Location" means (i) any location owned or leased by the
Borrower and as set forth in Schedule 4.14 attached hereto and as updated from
time to time by providing to Agent a written notice and for which approval has
been received from the Agent, and (ii) any other location owned by any Person,
provided, however, that (a) Uniform Commercial Code financing statements have
been filed in such location naming the Agent as secured party on behalf of the
Banks, and (b) with respect to (ii) above, the Agent has received a fully
executed Consent and Subordination Agreement from such Person on terms and
conditions reasonably satisfactory to Agent.
"Arden Accounting System" means the computer accounting systems used to
track the Purchased Assets which the Borrower shall continue to use following
the Arden Acquisition.
"Arrangers" mean collectively, Fleet Securities, Inc. and Credit Suisse
First Boston, in their capacity as Joint Lead Arrangers so long as each of them,
or one of their Affiliates, is a Bank hereunder.
"Assignee" has the meaning set forth in Section 9.06(c).
"Bank" means each bank or financial institution listed on the signature
pages hereof, each Assignee, which becomes a Bank pursuant to Section 9.06(c),
and their respective successors. References herein to a Bank or Banks may
include the Issuing Banks or the Swingline Lender or both, as the context
requires.
-3-
"Base Rate" means, for any day, a rate per annum equal to the higher of
(i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal
Funds Rate for such day. The Base Rate is not necessarily the lowest rate
charged by the Agent to its customers.
"Base Rate Borrowing" means any Loan or portion thereof subject to a
Base Rate.
"Base Rate Loan" means at any time a Committed Loan outstanding
hereunder which bears interest at such time at a rate based on the Base Rate
pursuant to a Notice of Borrowing or Notice of Interest Rate Election or
pursuant to Article VIII.
"Benefit Arrangement" means at any time an employee benefit plan within
the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan
and which is maintained or otherwise contributed to by any member of the ERISA
Group.
"Borrowed Money" shall mean, with respect to any Person, all
Indebtedness of such Person representing borrowed money, including, without
limitation, (i) any Indebtedness evidenced by notes, bonds, debentures or
similar obligations, (ii) any Indebtedness representing any obligation for the
deferred purchase price of property or services or an obligation under a
conditional sale or other title retention agreement, (iii) any Indebtedness
representing Capitalized Lease Obligations and (iv) any Indebtedness
representing a reimbursement obligation for any letter of credit or with respect
to any performance bond.
"Borrower" means ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Inc. and immediately preceding the
closing of the Arden Acquisition French Fragrances, Inc., a Florida corporation.
"Borrowing" has the meaning set forth in Section 1.03.
"Borrowing Base" shall mean, as of any date, the sum of, without
duplication, (a) eighty percent (80%) of the value of all Eligible Accounts
Receivable and the Eligible Arden Accounts Receivable, determined as of such
date, plus (b) sixty percent (60%) of the value of all Eligible Finished Goods
Inventory and Eligible Arden Finished Goods Inventory, determined as of such
date, plus (c) twenty-five percent (25%) of the value of all Eligible Raw
Materials Inventory and Eligible Arden Raw Materials Inventory, determined as of
such date, provided, however, that the aggregate amount of availability
represented by all Eligible Inventory shall not exceed Eighty-Seven Million Five
Hundred Thousand Dollars ($87,500,000). The Agent shall be entitled to reduce
the foregoing percentages in its reasonable and sole discretion.
"Borrowing Base Certificate" means a certificate of the principal
financial officer of the Borrower, in the form attached hereto as Exhibit E
having the blanks therein appropriately completed, setting forth in reasonable
detail the Eligible Inventory and the Eligible Accounts Receivable as of the
last day of the preceding month.
-4-
"Calculation Period" means a period of four consecutive fiscal quarters
of the Borrower for which financial statements have been delivered to the Agent
pursuant to Section 5.01(a) or (b), commencing with the fiscal quarter ending
April 30, 2001.
"Capital Expenditures" shall mean, with respect to any Person, all
expenditures of such Person for assets which are or should be capitalized, and
the fair value of any Capitalized Lease.
"Capitalized Lease" shall mean any lease which is or should be
capitalized on the balance sheet of the lessee thereunder in conformity with the
GAAP.
"Capital Stock" shall mean any and all shares, interests, rights to
purchase, participations or other equivalents of or interest in (however
designated) corporate stock.
"Capitalized Lease Obligations" shall mean, with respect to any Person,
the amount of the liability under all Capitalized Leases of such Person as at
any date, determined in accordance with GAAP.
"Change of Control" shall mean the occurrence of any of the following:
(i) the sale, lease, transfer, conveyance or other disposition (other than by
way of merger or consolidation), in one or a series of related transactions, of
all or substantially all of the assets of the Borrower and its Subsidiaries
taken as a whole to any "person" (as such term is used in Section 13(d) (3) of
the Exchange Act) other than the Principals or their Related Parties, (as such
terms are defined in the Indenture), (ii) the adoption of a plan relating to the
liquidation or dissolution of the Borrower, (iii) the consummation of any
transaction or series of transactions (including, without limitation, any merger
or consolidation) the result of which is that any "person" (as defined above)
(other than the Principals and their Related Parties) becomes the "beneficial
owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange
Act), directly or indirectly, of (a) 35% or more of the voting Capital Interests
(as such term is defined in the Indenture) of the Borrower and (b) more of the
voting Capital Interests of the Borrower than are, in the aggregate,
beneficially owned by the Principals and their Related Parties at the time of
such consummation, or (iv) the first day on which a majority of the members of
the Board of Directors of the Borrower are not Continuing Directors (as such
term is defined in the Indenture). For purposes of this definition, any transfer
of an equity interest of an entity that was formed for the purpose of acquiring
voting Capital Interests of the Borrower shall be deemed to be a transfer of
such portion of such voting Capital Interests as corresponds to the portion of
the equity of such entity that has been transferred.
"Collateral" shall have the meaning as set forth in the Security
Agreement.
"Commitment Fee Rate" means the commitment fee payable by Borrower
based on the applicable Consolidated Total Debt/EBITDA Ratio as shown below (in
basis points):
-5-
TIER CONSOLIDATED TOTAL DEBT/EBITDA COMMITMENT FEE RATE
I Greater than or equal to 2.0:1.0 50.0
II Less than 2.0:1.0 37.5
The Commitment Fee shall be determined by reference to Tier 1 for the first six
months following the Effective Date. Any change in a Commitment Fee Rate shall
be effective commencing on the first business day of the month following the due
date of the compliance certificate required by Section 5.1(c) hereof and
provided, however, if any compliance certificate is not received by the due date
required by Section 5.1(c), the Commitment Fee Rate shall revert back to Tier I
until delivery of the next compliance certificate.
"Commitment" means, with respect to each Bank, the respective amount of
its Revolving Commitment set forth opposite the name of such Bank on Schedule 1
hereto (or, in the case of an Assignee, in its Assignment and Assumption
Agreement), as such amount may be reduced from time to time pursuant to Section
2.09 and adjusted to reflect assignments pursuant to Section 9.06(c).
"Committed Borrowing" means a Borrowing consisting of Committed Loans;
provided that if the Loans constituting any such Borrowing or Borrowings (or
portions thereof) are combined or subdivided pursuant to a Notice of Interest
Rate Election, the term "Committed Borrowing" shall refer to all of the
Committed Loans to the Borrower of the same Type and having the same Interest
Period that result from such combination or subdivision as the case may be.
"Committed Exposure" means, with respect to any Bank at any time, the
sum of the aggregate principal amount of such Bank's Committed Loans outstanding
at such time and its Letter of Credit Exposure and Swingline Exposure at such
time.
"Committed Loan" means a loan made by a Bank pursuant to Article 2;
provided that, if any such loan or loans (or portions thereof) are combined or
subdivided pursuant to a Notice of Interest Rate Election, the term "Committed
Loan" shall refer to the combined principal amount resulting from such
combination or to each of the separate principal amounts resulting from such
subdivision, as the case may be.
"Consent and Subordination Agreement" means a consent and subordination
agreement substantially in the form of Exhibit H hereto.
"Consolidated EBITDA" means, with respect to any Person for any period,
Consolidated Net Income for such period, plus (i) the sum of (a) Consolidated
Net Interest Expense, (b) depreciation, amortization and other non-cash charges,
(c) losses on asset sales, exchanges, transfers or other dispositions, and (d)
extraordinary or other non-recurring losses or charges, (e) plus income tax
expense, less (ii) the sum of (a) gains on asset sales, exchanges, transfers or
-6-
other dispositions, (b) extraordinary or other non-recurring gains or credits,
and (c) income attributable to non-cash items or other non-cash credits, in each
case to the extent included in arriving at such net income (or loss) for such
period and determined in accordance with GAAP, provided, however, that for the
purposes of this definition, Consolidated EBITDA of the Purchased Assets was a
loss of $2,300,000 for the fiscal quarter ended April 30, 2000; $4,300,000 for
the fiscal quarter ended July 31, 2000; $51,000,000 for the fiscal quarter ended
October 31, 2000 and $31,700,000 for the fiscal quarter ended January 31, 2001.
"Consolidated Net Income" means, for any period, the consolidated net
income (or loss) of the Borrower and its Consolidated Subsidiaries for such
period.
"Consolidated Net Interest Expense" means, with respect to any Person,
for any fiscal period, the cash interest expense of such Person and its
Subsidiaries for such fiscal period, determined on a consolidated basis in
accordance with GAAP; provided, however, the calculation will be performed on an
annualized basis for the first three fiscal quarters of fiscal year 2002, as
follows: for the three month period ended April 30, 2001, Consolidated Net
Interest Expense for such fiscal period shall be multiplied by four; for the six
month period ended July 31, 2001, Consolidated Net Interest Expense for such
fiscal period shall be multiplied by two; and for the nine month period ended
October 31, 2001, Consolidated Net Interest Expense for such fiscal period shall
be multiplied by the fraction 4/3.
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which would be consolidated with those of the Borrower in
its consolidated financial statements if such statements were prepared as of
such date.
"Consolidated Total Debt" means at any date, the Debt of the Borrower
and its Consolidated Subsidiaries, determined on a consolidated basis at such
date.
"Consolidated Total Debt/EBITDA Ratio" means the ratio of Consolidated
Total Debt (less cash in excess of $5,000,000) to Consolidated EBITDA, as
determined quarterly.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for Borrowed Money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee under Capitalized
Leases, (v) all obligations of such Person relating to Sale Lease-Back
Transactions and securitization transactions, (vi) all Debt secured by a Lien on
any asset of such Person, whether or not such Debt is otherwise an obligation of
such Person, and (vii) all Debt of others Guaranteed by such Person.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
-7-
"Distribution Agreements" means those Distribution Agreements set forth
in Schedule 4.15 attached hereto.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York, New York are authorized or
required by law to close.
"Domestic Lending Office" means, as to each Bank, its office located at
its address set forth in its Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Bank may hereafter designate as its Domestic Lending Office by
notice to the Borrower and the Agent.
"Effective Date" means the date this Agreement becomes effective in
accordance with Section 3.01.
"Election Date" has the meaning set forth in Section 2.06(b).
"Eligible Accounts Receivable" means the face amount of any of
Borrower's trade accounts receivable for goods sold and/or services rendered by
Borrower in the ordinary course of its business invoiced on the FFI Accounting
System which satisfy each of the following requirements (unless waived by all
the Banks):
(i) the subject goods have been shipped or delivered to an
account debtor (a) on an absolute sale basis and not on consignment,
approval or a sale-or-return basis or subject to any other repurchase
or return agreement, or (b) on an open account basis, in either case
with no part of the subject goods having been returned, rejected, lost
or damaged;
(ii) the account is not evidenced by chattel paper or an
instrument of any kind;
(iii) the account debtor is not insolvent or the subject of
any bankruptcy or insolvency proceeding of any kind;
(iv) the account debtor is located in the United States;
(v) the account is a valid, legally enforceable obligation of
the account debtor thereunder and is not subject to any offset (other
than discount for prompt payment consistent with past practices of
Borrower or other defense on the part of such account) or other defense
on the part of such account debtor, any contra account or to any claim
on the part of such account debtor denying liability thereunder;
(vi) the account is subject to no Lien, except for the
security interest in favor of the Agent, for the ratable interest of
the Banks, under the Loan Documents;
-8-
(vii) the invoice evidencing such account has not remained
unpaid for a period exceeding sixty (60) days after the due date or one
hundred twenty (120) days past the date of invoice and provided such
account has been adjusted for aged credits;
(viii) to the extent the obligation is with an account debtor
that is the federal government or a political subdivision thereof,
Borrower has complied with the Federal Assignment of Claim Acts of
1940, and any amendment thereto, with respect to such obligation;
(ix) the account does not arise out of a transaction with any
Affiliate of Borrower or any related person (excluding Seller and its
Affiliates);
(x) no more than fifty percent (50%) of the aggregate accounts
receivable for the same account debtor shall have remained unpaid for a
period exceeding sixty (60) days after the due date; and
(xi) the account is not otherwise determined by the Agent to
be difficult to collect, uncollectible or otherwise unacceptable for
any reasons, irrespective of how many days past due, as reasonably
determined by the Agent, which determination shall be final and
binding.
Furthermore, there shall be a reserve against Eligible
Accounts Receivable equal to one hundred percent (100%) of the
Unreconciled Reserve Category. In addition, there shall be a reserve
against Eligible Accounts Receivable equal to fifty percent (50%) of
the Allowance Accounts.
"Eligible Arden Accounts Receivable" means the face amount of any of
Borrower's trade accounts receivable for goods sold or services rendered by
Borrower in the ordinary course of business and invoiced on the Arden Accounting
System which satisfy each of the following requirements (unless waived by all
the Banks):
(i) the subject goods have been shipped or delivered to an
account debtor (a) on an absolute sale basis and not on consignment,
approval or a sale-or-return basis or subject to any other repurchase
or return agreement, or (b) on an open account basis, in either case
with no part of the subject goods having been returned, rejected, lost
or damaged;
(ii) the account is not evidenced by chattel paper or an
instrument of any kind;
(iii) the account debtor is not insolvent or the subject of
any bankruptcy or insolvency proceeding of any kind;
(iv) the account debtor is located in the United States;
-9-
(v) the account is a valid, legally enforceable obligation of
the account debtor thereunder and is not subject to any offset (other
than discount for prompt payment consistent with past practices of
Borrower) or other defense on the part of such account debtor, any
contra account or to any claim on the part of such account debtor
denying liability thereunder;
(vi) the account is subject to no Lien, except for the
security interest in favor of the Agent, for the ratable benefit of the
Banks, under the Loan Documents;
(vii) the invoice evidencing each account has not remained
unpaid for a period exceeding sixty (60) days after the due date or one
hundred twenty (120) days past the date of invoice and provided such
account has been adjusted for aged credits;
(viii) to the extent the obligation is with an account debtor
that is the federal government or a political subdivision thereof,
Borrower has complied with the Federal Assignment of Claim Acts of
1940, and any amendment thereto, with respect to such obligation;
(ix) the account does not arise out of a transaction with any
affiliate of Borrower or any related person;
(x) no more than fifty percent (50%) of the aggregate accounts
receivable for the same account debtor shall have remained unpaid for a
period exceeding sixty (60) days after the due date; and
(xi) the account is not otherwise determined by the Agent to
be difficult to collect, uncollectible or otherwise unacceptable for
any reasons, irrespective of how many days past due, as reasonably
determined by the Agent, which determination shall be final and
binding.
"Eligible Arden Finished Goods Inventory" means any of Borrower's
finished goods that constitute part of the Eligible Inventory purchased in
connection with the Arden Acquisition and inventory purchased on an on-going
basis that is tracked on the Arden Accounting System which satisfy each of the
following requirements (unless waived by all the Banks):
(i) the inventory is located at Borrower's principal place of
business or at an Approved Location;
(ii) the inventory does not constitute promotional merchandise
that will not be sold in the ordinary course of Borrower's business;
(iii) the inventory does not constitute items that will be
used as a gift included with purchased merchandise in the ordinary
course of Borrower's business;
-10-
(iv) the inventory is not damaged or subject to any Lien,
except for the security interest in favor of the Agent, for the ratable
benefit of the Banks, under the Loan Documents;
(v) the inventory does not include samples, displays or
testers; and
(vi) such inventory is not subject to a licensing agreement or
a distribution agreement with Borrower or any of its Subsidiaries that
prohibits or restricts the Agent's right to liquidate such inventory or
to have the inventory repurchased by the licensor other than in the
same manner that Borrower may be entitled to under the terms of such
licensing or distribution agreement.
Furthermore, if such inventory meets all of the requirements
set forth in subsections (i) through (vi) but constitutes Slow Moving
Inventory, then only seventy-five percent (75%) of such inventory shall
be deemed Eligible Arden Finished Goods Inventory.
"Eligible Arden Raw Materials Inventory" means any of Borrower's raw
materials and work in process that constitute a part of Eligible Inventory
purchased in connection with the Arden Acquisition or raw materials and
work-in-process purchased on an on-going basis and is tracked on the Arden
Accounting System which satisfy each of the following requirements (unless
waived by all Banks):
(i) the inventory is located at Borrower's principal place of
business or at an Approved Location;
(ii) such inventory is not subject to a licensing agreement or
a distribution agreement with Borrower or any of its Subsidiaries that
prohibits or restricts the Agent's right to liquidate such inventory or
to have the inventory repurchased by the licensor other than in the
same manner that Borrower may be entitled to under the terms of such
licensing or distribution agreement;
(iii) the inventory is not damaged or subject to any Lien
other than the security interest in favor of the Agent, for the ratable
benefit of the Banks, under the Loan Documents; and
(iv) the inventory is not obsolete and is readily marketable;
and
(v) the inventory is not included on the Arden Accounting
System as any of (a) chemical or compounds in the process of being
mixed or any other items classified as Category I (as classified on the
Arden Accounting System) or (b) bulk formulations of creams or any
other items classified as Category B (as classified as such on the
Arden Accounting System).
-11-
Furthermore, if such inventory meets the requirements of
subsections (i)-(v) but constitutes Slow Moving Inventory, then only
seventy-five percent (75%) of such inventory shall be deemed Eligible
Arden Raw Materials Inventory.
"Eligible Finished Goods Inventory" means any of Borrower's finished
goods that constitute Eligible Inventory, which satisfy each of the following
requirements (unless waived by all the Banks):
(i) the inventory is located at Borrower's principal place of
business or at an Approved Location;
(ii) the inventory does not constitute promotional merchandise
that will not be sold in the ordinary course of Borrower's business;
(iii) the inventory does not constitute items that will be
used as a gift and accompanying purchased merchandise;
(iv) the inventory is not damaged or subject to any Lien
except for the security interest in favor of the Agent for the ratable
benefit of the Banks, under the Loan Documents;
(v) the inventory is not obsolete and is readily marketable;
and
(vi) such inventory is not subject to a license agreement or a
distribution agreement with Borrower or any of its Subsidiaries that
prohibits or restricts the Agent's right to liquidate such inventory or
to have the inventory repurchased by the licensor other than in the
same manner that Borrower may be entitled to under the terms of such
licensing or distribution agreement.
Furthermore, if such inventory meets all of the requirements
set forth in subsections (i) through (vi) but constitutes Slow Moving
Inventory, then only seventy-five percent (75%) of such inventory shall
be deemed Eligible Finished Goods Inventory.
"Eligible Inventory" shall mean the lower of fair market value or cost
of Borrower's inventory of raw materials, work-in-process and finished goods
determined on a consolidated FIFO basis in accordance with GAAP which, as of the
day preceding any calculation of the Committed Exposure availability, is in good
condition, meets all standards imposed by any governmental agency or department
or division thereof having regulatory authority over such goods, their use,
manufacture and/or sale, is currently usable or currently saleable in the normal
course of the Borrower's business, is not on consignment to or from any person
and is not otherwise deemed by the Agent in its reasonable discretion to be
ineligible.
"Eligible Raw Materials Inventory" shall mean any of Borrower's raw
materials and work in process that constitute a part of Eligible Inventory which
satisfy each of the following requirements (unless waived by all the Banks):
-12-
(i) the inventory is located at Borrower's principal place of
business or at an Approved Location; and
(ii) such inventory is not subject to a licensing or
distribution agreement with Borrower or any of its Subsidiaries that
prohibits or restricts the Agent's right to liquidate inventory or to
have the inventory repurchased by the licensor other than in the same
manner that Borrower may be entitled to under the terms of such
licensing or distribution agreement.
Furthermore, if such inventory meets both of the requirements
set forth in subsection (i) and (ii) but constitutes Slow Moving
Inventory, then only seventy-five percent (75%) of such inventory shall
be deemed Eligible Raw Materials Inventory.
"Environmental Laws" means any and all Federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements with
Governmental Authorities or other governmental restrictions binding upon the
Borrower or any of the Subsidiaries, as applicable, relating to the environment
or to emissions, discharges or releases of pollutants, contaminants, petroleum
or petroleum products, chemicals or industrial, toxic or hazardous substances or
wastes into the environment including, without limitation, ambient air, surface
water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, petroleum or petroleum products, chemicals
or industrial, toxic or hazardous substances or wastes or the clean-up or other
remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974 and
the rules and regulations promulgated thereunder, as the same may from time to
time be amended and remain in effect.
"ERISA Group" means the Borrower, any Subsidiary and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Existing Indebtedness" means the indebtedness of the Borrower to Fleet
National Bank pursuant to the terms of that certain Credit Agreement dated as of
May 13, 1997, as amended and any and all documentation executed in connection
therewith and all amendments thereto.
"Event of Default" shall have the meaning as set forth in Section 6.01.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
-13-
next succeeding such day, provided that (i) if such day is not a Domestic
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day as so published on the
next succeeding Domestic Business Day, and (ii) if no such rate is so published
on such next succeeding Domestic Business Day, the Federal Funds Rate for such
day shall be the average rate quoted to Fleet National Bank on such day on such
transactions as determined by the Agent.
"FFI Accounting System" means the existing computer accounting systems
used by the Borrower before and after the Arden Acquisition.
"FIFO" means on a first in, first out basis as determined in accordance
with GAAP.
"Financing Transactions" means the execution and delivery of the Loan
Documents and the performance of the transactions contemplated by the Loan
Documents, including the borrowing of the Loans and the issuance of Letters of
Credit.
"Foreign Subsidiary" means any Subsidiary of the Borrower formed under
the laws of any jurisdiction other than the United States, its territories or
any political subdivision thereof substantially all of the assets of which are
located outside the United States or that conducts substantially all of its
business outside of the United States.
"GAAP" means generally accepted accounting principles consistently
applied.
"Governmental Authority" means any federal, state, local or foreign
government or political subdivision or any court or governmental agency,
authority, instrumentality or regulatory body.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring in any
other manner the obligee of such Debt or other obligation of the payment thereof
or to protect such obligee against loss in respect thereof (in whole or in
part), provided that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Guarantee Agreement" means a Guarantee Agreement among the Agent and
the Guarantors substantially in the form of Exhibit B.
"Guarantor" means each Person that is or becomes party to the Guarantee
Agreement as a Guarantor and their respective successors.
-14-
"Historical Inventory" means inventory on hand for which Seller (and
following the consummation of the Arden Acquisition, the Borrower) has indicated
no planned usage, which includes, without limitation, old promotional items and
discontinued items.
"Indebtedness" shall mean, with respect to any Person, all items which
in accordance with GAAP should be included as liabilities on the balance sheet
of such Person as at the date as of which Indebtedness is to be determined, and,
in any event, shall include the following, without limitation or duplication:
(a) all Borrowed Money of such Person (b) all obligations secured by any
mortgage, pledge, lien or conditional sale or other title retention agreement to
which any property or asset owned or held by such Person is subject, whether or
not the obligations secured thereby shall have been assumed, (c) all obligations
of others which such Person has directly or indirectly guaranteed, endorsed
(otherwise than for collection or deposit in the ordinary course of business),
discounted or sold with recourse or agreed (contingently or otherwise) to
purchase or repurchase or otherwise acquire, or in respect of which such Person
has agreed to supply or advance funds (whether by way of loan, stock purchase,
capital contribution or otherwise) or otherwise to become directly or indirectly
liable, and (d) all obligations with respect to any letters of credit issued on
behalf of such Person to any beneficiary or with respect to which such Person
has any reimbursement obligations.
"Indenture" shall mean collectively, the Indenture, dated as of May 13,
1997, between the Borrower and Marine Midland Bank, as Trustee, relating to the
10 3/8% Senior Notes due 2007 and the Indenture dated April 27, 1998, between
the Borrower and Marine Midland Bank, as Trustee, relating to the 10 3/8% Senior
Notes due 2007.
"Intercreditor Agreement" means that certain Intercreditor Agreement
among Agent, the Borrower and HSBC Bank USA, as trustee for the holders of the
Senior Secured Notes substantially in the form of Exhibit I.
"Interest Coverage Ratio" means, for any period, the ratio of (i)
Consolidated EBITDA for such period to (ii) Consolidated Net Interest Expense
for such period.
"Interest Period" means with respect to each LIBOR Loan, the period
commencing on the date specified in the applicable Notice of Borrowing or Notice
of Interest Rate Election and ending one, two, three or six months thereafter
(or nine or twelve months, if acceptable to all Banks), as the Borrower may
elect in such Notice of Borrowing or Notice of Interest Rate Election; provided
that:
(a) any Interest Period which would otherwise end on a day
which is not a LIBOR Business Day shall be extended to the next
succeeding LIBOR Business Day unless such LIBOR Business Day falls in
another calendar month, in which case such Interest Period shall end on
the next preceding LIBOR Business Day;
(b) any Interest Period which begins on the last LIBOR
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
-15-
Interest Period) shall, subject to clause (c) below, end on the last
LIBOR Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"Inventory" means all inventory (as such term is defined in the Uniform
Commercial Code in effect in the State of New York (as the same may be amended
or modified from time to time)), whether now owned or hereafter acquired by the
Borrower or any domestic Subsidiary.
"Inventory Location Report" means the certificate of the principal
financial officer of the Borrower, in the form attached hereto as Exhibit F
having the blanks therein appropriately completed, setting forth in reasonable
detail the location of the inventory of the Borrower as of the last day of the
month.
"Investment" means any investment in any Person, whether by means of
share or other equity interest purchase, capital contribution, loan, advance,
time deposit or otherwise.
"Issuing Bank" means (i) Fleet National Bank and (ii) any other Bank
that shall enter into an Issuing Bank Agreement as provided in Section 2.15(m),
in each case in their respective capacities as the issuers of Letters of Credit,
and their respective successors in such capacity.
"Issuing Bank Agreement" has the meaning set forth in Section 2.15(m).
"Letter of Credit" means any letter of credit issued pursuant to
Section 2.15. Each letter of credit that is, as of the Effective Date, a "Letter
of Credit" as defined in, and is outstanding under, the Existing Credit
Agreement shall be deemed for all purposes of the Loan Documents to have been
issued and outstanding pursuant to Section 2.15 on the Effective Date and to
constitute a Letter of Credit.
"Letter of Credit Disbursement" means a payment or disbursement made by
an Issuing Bank pursuant to a Letter of Credit.
"Letter of Credit Documents" shall mean the Letter of Credit
application, any issued Letter of Credit and any other application or agreement
in the form customarily used by Agent or the Issuing Bank for or in connection
with the issuance of commercial letters of credit.
"Letter of Credit Exposure" means at any time the sum of (i) the
aggregate undrawn amount of all outstanding Letters of Credit plus (ii) the
aggregate amount of all Letter of Credit Disbursements not yet reimbursed by the
Borrower as provided in Section 2.15. The Letter of Credit Exposure shall be
expressed in Dollars; provided, however, the aggregate of subsection (i) and
(ii) shall not be permitted to exceed Twenty-Five Million Dollars ($25,000,000).
-16-
The Letter of Credit Exposure of any Bank at any time shall mean its Applicable
Percentage of the aggregate Letter of Credit Exposure at such time.
"LIBOR Base Rate" means with respect to each Interest Period for a
LIBOR Loan, that rate per annum (rounded upward, if necessary, to the nearest
1/32nd of one percent) which represents the offered rate for deposits in U.S.
Dollars, for a period of time comparable to such Interest Period, which appears
on the Telerate page 3750 as of 11:00 a.m. (London time) on that day that is two
LIBOR Business Days preceding the first day of such Interest Period; provided,
however, that if the rate described above does not appear on the Telerate System
on any applicable interest determination date, the LIBOR Rate for such Interest
Period shall be the rate (rounded upwards as described above, if necessary) for
deposits in dollars for a period substantially equal to such Interest Period
shown on the Reuters Page "LIBO" (or such other page as may replace the LIBO
Page on that service for the purpose of displaying such rates), as of 11:00 a.m.
(London Time) on that day that is two LIBOR Business Days prior to the beginning
of such Interest Period. If both the Telerate and Reuters systems are
unavailable, then the LIBOR Rate for any Interest Period will be determined on
the basis of the offered rates for deposits in U.S. Dollars for a period of time
comparable to such Interest Period which are offered by four major banks in the
London interbank market at approximately 11:00 a.m. (London time) on that day
that is two LIBOR Business Days preceding the first day of such Interest Period,
as selected by the Agent. The principal London office of each of four major
London banks will be requested to provide a quotation of its Dollar deposit
offered rate. If at least two such quotations are provided, the rate for that
date will be the arithmetic mean of the quotations. If fewer than two quotations
are provided as requested, the rate for that date will be determined on the
basis of the rates quoted for loans in Dollars to leading European banks for a
period of time comparable to such Interest Period offered by major banks in New
York City at approximately 11:00 a.m. (New York City) time on that day that is
two LIBOR Business Days preceding the first day of such Interest Period. In the
event that the Agent is unable to obtain any such quotation as provided above,
it will be deemed that the LIBOR Rate for the proposed Interest Period cannot be
determined. The Agent shall give notice to the Borrower of the LIBOR Rate as
determined for each LIBOR Loan and such notice shall be conclusive and binding,
absent manifest error.
"LIBOR Borrowing" means any Loan or portion thereof subject to a LIBOR
Base Rate.
"LIBOR Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
Dollar deposits) in London.
"LIBOR Lending Office" means, as to each Bank, its office, branch or
affiliate located at its address set forth in its Administrative Questionnaire
(or identified in its Administrative Questionnaire as its LIBOR Lending Office)
or such other office, branch or affiliate of such Bank as it may hereafter
designate as its LIBOR Lending Office by notice to the Borrower and the Agent.
"LIBOR Loan" means at any time a Committed Loan outstanding hereunder
which bears interest at such time at a rate based on the LIBOR Rate pursuant to
a Notice of Borrowing or Notice of Interest Rate Election.
-17-
"LIBOR Margin" means the Applicable Margin for any LIBOR Loan.
"LIBOR Rate" means with respect to each day during each Interest Period
pertaining to a LIBOR Loan, a rate per annum determined for such day in
accordance with the following formula (rounded upward, if necessary, to the
nearest 1/32nd of 1%):
LIBOR Base Rate
---------------
1.00 - LIBOR Reserve Requirements
"LIBOR Reserve Requirements" means, for any day as applied to a LIBOR
Loan, the aggregate (without duplication) of the maximum rates (expressed as a
decimal fraction) of reserve requirements in effect on such day (including
basic, supplemental, marginal and emergency reserves under any regulations of
the Board of Governors of the Federal Reserve System or other Governmental
Authority having jurisdiction with respect thereto) dealing with reserve
requirements prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of such Board) maintained by a member
bank of the Federal Reserve System" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
LIBOR Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any bank to United
States residents).
"License Agreements" means those license agreements, trademarks and
copyrights identified in Schedule 4.15 attached hereto which Schedule shall be
amended from time to time to reflect new licensing agreements.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, or any other type of
preferential arrangement that has the practical effect of a security interest,
in respect of such asset. For the purposes of this Agreement, the Borrower or
any Subsidiary shall be deemed to own subject to a Lien any asset which it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such asset.
"Loan" means a Base Rate Loan, a LIBOR Loan, or a Swingline Loan and
"Loans" means any combination of the foregoing.
"Loan Documents" means this Agreement, the Guarantee Agreement, the
Security Agreement, the Notes, the Intercreditor Agreement and any Issuing Bank
Agreement.
"Margin Stock" has the meaning given to such term under Regulation U.
"Material Adverse Effect" means (i) a materially adverse effect on the
business, operations or financial condition of the Borrower and its Subsidiaries
considered as a whole, (ii) material impairment of the ability of the Borrower
or any Subsidiary to perform any of its obligations under any Loan Document to
which it is or will be a party, or (iii) material impairment of the rights of or
-18-
benefits available to the Agent or the Banks under any Loan Document.
"Material Debt" means Debt (other than the Notes) of the Borrower
and/or one or more of its Subsidiaries, arising in one or more related or
unrelated transactions, in an aggregate principal amount equal to or exceeding
$5,000,000.
"Material Subsidiary" means a Subsidiary of the Borrower that, as of
the time of determination of whether such Subsidiary is a "Material Subsidiary",
accounted on a consolidated basis for five percent (5%) or more of the total
sales of the Borrower and its Consolidated Subsidiaries for the most recent
Calculation Period or accounted on a consolidated basis for five percent (5%) or
more of the total assets of the Borrower and its Consolidated Subsidiaries as of
the most recent date for which a consolidated balance sheet of the Borrower has
been delivered to the Agent pursuant to Section 5.01(a) or (b).
"Mortgage Notes" means those certain Mortgage Notes dated as of June 5,
1996 issued by the Borrower in favor of Westmark Mortgage Corp. No. 2 in the
original principal amount of $5,500,000, with respect to the real property
located at ▇▇▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
"Multiemployer Plan" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA Group during such
five year period.
"Net Proceeds" means gross proceeds received by the Borrower less
customary fees and expenses associated with the transactions, including
reasonable banking, legal and accounting fees and less income taxes payable by
the Borrower as a result of such transaction.
"Note" means a promissory note of the Borrower substantially in the
form of Exhibit A hereto, evidencing the obligation of the Borrower to repay
Loans made to it, and "Notes" means any or all of such promissory notes issued
hereunder.
"Notice of Borrowing" has the meaning set forth in Section 2.02.
"Notice of Interest Rate Election" has the meaning set forth in Section
2.06.
"Obligations" has the meaning set forth in the Guarantee Agreement.
"Parent" means, with respect to any Bank, any Person controlling such
Bank.
"Participant" has the meaning set forth in Section 9.06(b).
-19-
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Acquisition" means an Acquisition in which each of the
following conditions are satisfied:
(i) No Default or Event of Default then exists or would arise
from the consummation of such Acquisition.
(ii) Such Acquisition shall have been approved by the Board of
Directors of the Person (or similar governing body if such
Person is not a corporation) which is the subject of such
Acquisition and such Person shall not have announced that it
will oppose such Acquisition or shall not have commenced any
action which alleges that such Acquisition will violate
applicable law.
(iii) The Borrower shall have furnished the Agent prior notice
of such intended Acquisition immediately following approval by
its Board of Directors and shall have furnished the Agent with
such information regarding the proposed acquisition as the
Agent reasonably requested so long as such information is
readily available.
(iv) Any assets acquired shall be utilized in, and if the
Acquisition involves a merger, consolidation or stock
acquisition, the Person which is the subject of such
Acquisition shall be engaged in the same general type of
business as now conducted by the Borrower or its Subsidiaries.
(v) The total consideration paid for all such Acquisitions
after the Closing Date shall not exceed for any one
Acquisition, $15,000,000 or in the aggregate for all
Acquisitions consummated after the Closing Date, $25,000,000.
(vi) After giving effect to the Acquisition, the Borrower
shall be in compliance on a pro forma basis with the covenants
contained in Sections 5.16 and 5.17 determined as if such
Acquisition was consummated on the first day of the four
consecutive quarters immediately prior to the Acquisition.
"Permitted Indebtedness" means (i) any Borrowings made hereunder, (ii)
the Senior Notes, (iii) the Mortgage Notes, (iv) up to $15,000,000 of other
subordinated indebtedness or preferred stock existing as of the Effective Date,
(v) the Seller Preferred, (vi) the Senior Secured Notes and any guarantees
thereunder, (vii) no more than $10,000,000 of Purchase-Money Indebtedness,
(viii) up to $35,000,000 (in the aggregate)) of Indebtedness of Subsidiaries
which are Foreign Subsidiaries which, if secured, is secured only by accounts
receivable and inventory of such Subsidiaries, (ix) any other unsecured
indebtedness in an aggregate amount of no more than $15,000,000, which shall be
on such terms and conditions as are satisfactory to the Agent in all respects,
(x) any refinancings of any of the above, which shall be on such terms and
conditions as are satisfactory to the Agent in all respects, or (xi)
intercompany Indebtedness between or among the Borrower or the Guarantors, as
lenders, and any Foreign Subsidiary, as a borrower, which when aggregated with
amounts committed under clause (viii) above and the amount of any Permitted
Investment made pursuant to Section 5.09(j) shall not exceed $50,000,000 in the
-20-
aggregate, provided, that, after giving effect to such intercompany
Indebtedness, the Borrower shall have excess borrowing availability under this
Agreement of at least $10,000,000 and provided, further, any committed or
outstanding amounts of Indebtedness under clause (viii) above shall permanently
reduce dollar-for-dollar the amount of intercompany Indebtedness permitted under
this clause (xi).
"Permitted Refinancing" means Indebtedness incurred in any refinancing
of any existing Indebtedness (other than the Borrowings hereunder); provided
that such refinancing Indebtedness has, as compared to such existing
Indebtedness, (a) an equal or greater weighted-average life, (b) final maturity
date that is the same or later, (c) a right of payment that is subordinate to or
pari passu with such existing Indebtedness, (d) terms and conditions (including
those described in clauses (a) through (c)), taken as a whole, no less favorable
to the Banks and (e) the security, if any, for the refinancing Indebtedness
shall cover assets other than those constituting security for the existing
Indebtedness.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
Governmental Authority.
"Plan" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"Primary Licensing Agreements" means collectively, (i) the Distribution
Agreement dated August 1, 2000 by and between Nautica Apparel, Inc., Unilever
Cosmetics, International and the Borrower as amended by a First Amendment dated
October 27, 2000; (ii) the Distribution Agreement dated November 25, 1999 by and
between ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Co. and the Borrower, as amended by a First Amendment
dated October 27, 2000 and (iii) the Licensing Agreement between The ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ Cosmetics Company and ▇▇▇▇▇▇▇▇▇▇▇ Ponds, Inc. dated February 14, 1986, as
amended January 26, 1989, March 20, 1990, June 28, 1990, August 3, 1999 and
October 26, 2000.
"Prime Rate" means the variable per annum rate of interest so
designated from time to time by Fleet National Bank as its prime rate. The Prime
Rate is a reference rate and does not necessarily represent the lowest or best
rate being charged to any customer. Changes in the rate of interest resulting
from changes in the Prime Rate shall take place immediately without notice or
demand of any kind.
"Projections" means those certain financial projection models of the
Borrower dated as of October, 2000, delivered by the Borrower to the Agent.
-21-
"Purchase-Money Indebtedness" means, with respect to any Person,
Indebtedness of such Person incurred to acquire assets in the ordinary course of
such Person's business, which Indebtedness is secured by purchase-money liens or
other liens of a conditional vendor; provided, however, that the Indebtedness
secured thereby shall not exceed the cost thereof and provided further that such
Indebtedness shall not otherwise be prohibited by the terms of this Agreement.
"Purchased Assets" has the meaning ascribed to it in the Acquisition
Agreement.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Required Banks" means at any time Banks having more than fifty percent
(50%) of the Commitments or, if the Commitments shall have been terminated,
Banks with Committed Exposure of more than fifty percent (50%) of the sum of the
Committed Exposure.
"Restricted Payment" means (i) any dividend or other distribution on
any shares of the capital stock of the Borrower or any Subsidiary (except
dividends payable solely in shares of its capital stock) or (ii) any payment on
account of the purchase, redemption, retirement or acquisition of (a) any shares
of the capital stock of the Borrower or any Subsidiary or (b) any option,
warrant or other right to acquire shares of the capital stock of the Borrower or
any Subsidiary.
"Revolving Commitment" means the obligation of the Banks to make
Advances under the Revolving Credit Loans in the aggregate principal or face
amount at any time outstanding not to exceed the amount set forth opposite each
Bank's name under the column titled "Revolving Commitment" on Schedule 1 hereto,
as the same may be reduced or modified at any time or from time to time pursuant
to the terms hereof.
"Revolving Credit Period" means the period from and including the
Effective Date to, but excluding, the Termination Date.
"Sale and Lease-Back Transaction" means any arrangement, entered into
by the Borrower or a Subsidiary, directly or indirectly, with any Person whereby
it shall sell or transfer any asset, real or personal, whether now owned or
hereafter acquired, and thereafter rent or lease such asset.
"Security Agreement" means a Security Agreement between the Agent and
the Borrower, or between the Agent and a Guarantor substantially in the form as
Exhibit C.
"Seller" means Conopco, Inc., a New York corporation.
"Seller Preferred" means the preferred stock having a $50,000,000
aggregate liquidation/preference value issued on the Closing Date to the Seller
by the Borrower pursuant to the terms of the Acquisition Agreement.
-22-
"Senior Notes" means those certain Senior 10 3/8% Notes issued pursuant
to the Indenture in the amount of $155 million, and which mature on May 15,
2007.
"Senior Secured Notes" means those certain 11 3/4% senior secured notes
due 2010 issued by the Borrower in the amount of $160,000,000.
"Settlement" means the making of, or receiving of payments, in
immediately available funds, by the Banks to the extent necessary to cause each
Bank's actual share of the outstanding amount of Revolving Credit Loans (after
giving effect to any Request for Advance) to be equal to each Bank's Applicable
Percentage of the outstanding amount of such Revolving Credit Loans (after
giving effect to any Request for Advance), in any case where, prior to such
event or action, the actual share is not so equal.
"Settlement Amount" shall have the meaning assigned by Section 2.03.
"Settlement Date" means (a) Friday of each week with respect to all
Advances made during such week, (b) the business day immediately following the
Agent becoming aware of the existence of an Event of Default or (c) the business
day immediately following any business day on which the aggregate amount of all
Advances under the Revolving Credit Commitment increases or decreases by more
than $15,000,000 as compared to the previous Settlement Date.
"Settling Bank" shall have the meaning assigned by Section 2.03(c).
"Shareholders' Equity Base" means, with respect to any Person, as at
any date, the stockholders equity of such Person as of such date as determined
in accordance with GAAP, which shall include for the purposes of this
calculation, the liquidation preference of the Seller Preferred.
"Slow Moving Inventory" means (i) as to inventory tracked on the Arden
Accounting System, Historical Inventory, Active No Requirement Inventory and
Active Excess Inventory, and (ii) as to inventory tracked on the FFI Accounting
System, inventory on hand that is in excess of Borrower's projected sales for
the next twelve months.
"Subsidiary" means any corporation or other entity now existing or
hereafter formed of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors or other
persons performing similar functions are at the time directly or indirectly
owned by the Borrower.
"Sublicense Agreement" means any and all Sublicense Agreements executed
by the Borrower or its Subsidiaries (as applicable) in favor of the Agent,
pursuant to which the Borrower assigns and sublicenses to the Agent, for the
benefit of the Banks, any and all rights of the Borrower in and to the License
Agreements.
"Swingline Expiry Date" means the Settlement Date immediately prior to
the Termination Date.
-23-
"Swingline Exposure" means at any time the aggregate principal amount
of all Swingline Loans outstanding at such time. The Swingline Exposure of any
Swingline Lender at any time shall mean its Applicable Percentage of the
Swingline Exposure at such time.
"Swingline Lender" means Fleet National Bank, in its capacity as lender
of Swingline Loans hereunder, and its successors in such capacity or any
Swingline Lender that for purposes of Section 2.03, is a Swingline Lender.
"Swingline Limit" means $15,000,000 or such other amount as may be
established from time to time by the Swingline Lender.
"Swingline Loan" means a Committed Loan made by the Swingline Lender or
any other Bank that makes a Swingline Loan pursuant to Section 2.03.
"Termination Date" means the fifth anniversary of the Effective Date,
or, if such day is not a LIBOR Business Day, the next succeeding LIBOR Business
Day, unless such LIBOR Business Day falls in another calendar month, in which
case the Termination Date shall be the next preceding LIBOR Business Day.
"Total Availability" has the meaning set forth in Section 2.01(c).
"Total Commitments" means the aggregate maximum principal amount of the
Commitments of the Banks to make Committed Loans to the Borrower from time to
time as set forth in Section 2.01 hereof, as such maximum principal amount is
adjusted from time to time in accordance with Section 2.01 hereof.
"Transactions" means, collectively, the Arden Acquisition, the
termination of the Existing Indebtedness, the Financing Transactions, the
issuance by the Borrower of the Seller Preferred and the issuance by the
Borrower of the Senior Secured Notes.
"Type" has the meaning set forth in Section 1.03.
"Unreconciled Reserve Category" means the category consisting of the
dollar difference between the Borrower's Summary A/R Report (as so titled) and
Borrower's Detailed A/R Aging Report (as so titled).
"Unfunded Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
-24-
"United States" means the United States of America, including the
States and the District of Columbia, but excluding its territories and
possessions.
SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with United
States generally accepted accounting principles as in effect from time to time,
applied on a basis consistent (except for changes concurred in by the Borrower's
independent public accountants) with the most recent audited consolidated
financial statements of the Borrower and its Consolidated Subsidiaries delivered
to the Banks.
SECTION 1.03. Types of Borrowings. Borrowings and Loans hereunder are
distinguished by "Type". The Type of a Loan refers to whether such Loan is a
Base Rate Loan, a LIBOR Loan or a Swingline Loan. The term "Borrowing" denotes
the aggregation of Loans of one or more Banks to be made to the Borrower
pursuant to Article II on a single date and for a single Interest Period (if
applicable). Borrowings are classified for purposes of this Agreement either by
reference to the pricing of Loans comprising such Borrowing (e.g., a "LIBOR
Borrowing") or by reference to the provisions of Article II under which
participation therein is determined (i.e., a "Committed Borrowing" is a
Borrowing under Section 2.01 in which all Banks participate in proportion to
their Commitments).
ARTICLE II
The Credits
-----------
SECTION 2.01. Commitments to Lend. (a) Committed Loans. During the
Revolving Credit Period each Bank severally agrees, on the terms and conditions
set forth in this Agreement, to lend to the Borrower Committed Loans from time
to time in amounts (each, an "Advance") that will not result in (i) such Bank's
Committed Exposure at any time exceeding its Commitment, or (ii) the sum of the
Letter of Credit Exposure and the aggregate principal amount of all outstanding
Loans at any time exceeding the Total Availability. Within the foregoing limits,
a Borrower may borrow under this subsection, repay (subject to the limitations
of Section 2.13), or to the extent permitted by Section 2.11, prepay (subject to
prepayment penalties, if applicable) Committed Loans and reborrow at any time
during the Revolving Credit Period under this subsection (a). All Committed
Loans shall be made in Dollars.
(b) Borrowings Ratable. Each Borrowing under this Section 2.01 shall be
made from the Banks in proportion to their respective Commitments except, if
applicable, Swingline Loans.
(c) Total Availability. (i) The Total Availability shall be equal to
the lesser of:
(x) the Borrowing Base as in effect from time to time, or
(y) One Hundred Seventy Five Million Dollars ($175,000,000).
-25-
(ii) The Borrowing Base shall be adjusted upon Agent's review and
acceptance of (i) each monthly Borrowing Base Certificate submitted by
the Borrower or (ii) any additional information obtained by the Agent
(including any Notice of Borrowing or updated Borrowing Base
Certificates) relating to the determination of Eligible Accounts
Receivable and Eligible Inventory.
SECTION 2.02. Notice of Borrowings. Borrower shall give the Agent
telephone notice followed by written confirmation ("Notice of Borrowing") not
later than 11:00 A.M. (New York, New York time) on (a) the date of any Base Rate
Borrowing (other than a Swingline Loan which is governed by Section 2.03 hereof)
or (b) three (3) LIBOR Business Days before any LIBOR Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Base Rate Borrowing or a LIBOR Business
Day in the case of a LIBOR Borrowing;
(ii) the aggregate amount of such Borrowing, which shall be
$1,000,000 or a larger multiple of $500,000 (except that any Committed
Borrowing may be in an aggregate amount equal to the excess of the
Total Availability over the sum of the aggregate principal amount of
all outstanding Loans and the Letter of Credit Exposure);
(iii) whether the Loans comprising such Borrowing are to be
Base Rate Loans or LIBOR Loans; and
(iv) in the case of a LIBOR Borrowing, the duration of the
Interest Period applicable thereto, subject to the provisions of the
definition of Interest Period.
SECTION 2.03. Swingline Loans.
(a) At any time prior to the Swingline Expiry Date and provided there
exists no Event of Default, the Swingline Lender, on the terms and conditions
set forth in this Agreement, agrees to make Swingline Loans up to the Swingline
Limit consisting only of Base Rate Loans. All Swingline Loans shall be made in
Dollars.
(b) In order to request a Swingline Loan, the Borrower shall notify the
Agent by telephone of such request not later than 1:00 P.M. (New York City time)
on the day of a proposed Swingline Loan, specifying the proposed date (which
shall be a Domestic Business Day) and amount of the requested Swingline Loan.
The Agent will promptly advise the Swingline Lender of any such notice received
from a Borrower. The Swingline Lender shall make each Swingline Loan available
to the Borrower by means of a credit to the general deposit account of the
Borrower with the Swingline Lender.
(c) On each Settlement Date, the Agent shall, not later than 10:00
a.m. (Providence, Rhode Island time), give telephonic or facsimile notice (i) to
the Banks and Borrower of the respective outstanding amount of Advances made by
-26-
the Agent on behalf of the Banks from the immediately preceding Settlement Date
through the close of business on the prior day and the amount of any LIBOR Rate
Loans to be made on such date pursuant to a Loan Request and (ii) to the Banks
of the amount (a "Settlement Amount") that each Bank (the "Settling Bank") shall
pay to effect a Settlement of any Advances. A statement of the Agent submitted
to the Banks and Borrower or to the Banks with respect to any amounts owing
under this Section 2.03 shall be prima facie evidence of the amount due and
owing. The Settling Bank shall, not later than 4:00 p.m. (Providence, Rhode
Island time) on such Settlement Date, affect a wire transfer of immediately
available funds to the Agent in the amount of the Settlement Amount. All funds
advanced by any Bank as a Settling Bank pursuant to this Section 2.03 shall for
all purposes be treated as an Advance made by such Settling Bank to Borrower and
all funds received by any Bank pursuant to this Section 2.03 shall for all
purposes be treated as repayment of amounts owed with respect to Advances made
by such Bank. In the event that any bankruptcy, reorganization, liquidation,
receivership or similar cases or proceedings in which Borrower is a debtor
prevents a Settling Bank from making any Advance to effect a Settlement as
contemplated hereby, such Settling Bank will make such disposition and
arrangements with the other Banks with respect to such Advance, either by way of
purchase of participations, distribution, pro tanto assignment of claims,
subrogation or otherwise as shall result in each Bank's share of the outstanding
Advances being equal, as nearly as may be, to such Bank's Applicable Percentage
of the outstanding amount of Advances.
(ii) The Agent may, unless notified to the contrary by any
Bank prior to a Settlement Date, assume that such Bank has made or will make
available to the Agent on such Settlement Date the amount of such Bank's
Settlement Amount, and the Agent may (but it shall not be required to), in
reliance upon such assumption, make available to Borrower a corresponding
amount. If any Bank makes available to the Agent such amount on a date after
such Settlement Date, such Bank shall pay to the Agent on demand an amount equal
to the product of (i) the average computed for the period referred to in clause
(iii) below, of the weighted average interest rate paid by the Agent for federal
funds acquired by the Agent during each day included in such period, times (ii)
the amount of such Settlement Amount, times (iii) a fraction, the numerator of
which is the number of days that elapse from and including such Settlement Date
to the date on which the amount of such Settlement Amount shall become
immediately available to the Agent, and the denominator of which is 360. A
statement of the Agent submitted to such Bank with respect to any amounts owing
under this paragraph shall be prima facie evidence of the amount due and owing
to the Agent by such Bank. If such Bank's Settlement Amount is not made
available to the Agent by such Bank within three (3) Business Days following
such Settlement Date, the Agent shall be entitled to recover such amount from
Borrower on demand, with interest thereon at the rate per annum applicable to
the Base Rate Loans as of such Settlement Date.
(iii) The failure or refusal of any Bank to make available to
the Agent at the aforesaid time and place on any Settlement Date the amount of
its Settlement Amount (i) shall not relieve any other Bank from its several
obligations hereunder to make available to the Agent the amount of such other
Bank's Settlement Amount and (ii) shall not impose upon such other Bank any
-27-
liability with respect to such failure or refusal or otherwise increase the
Revolving Commitment of such other Bank.
SECTION 2.04. Notice to Banks; Funding of Loans.
(a) Upon receipt of a Notice of Borrowing, the Agent shall promptly
notify each Bank of the contents thereof and of such Bank's Applicable
Percentage (if any) of such Borrowing and such Notice of Borrowing shall not
thereafter be revocable by the Borrower.
(b) Not later than 1:00 p.m. (New York City time) on the date of each
Borrowing, each Bank participating therein shall make available its share of
such Borrowing, in Federal or other funds immediately available in New York
City, to the Agent at its address specified in or pursuant to Section 9.01 to
the account of the Agent at such place as shall have been notified by the Agent
to the Banks by not less than five Domestic Business Days' notice. Unless the
Agent determines that any applicable condition specified in Article III has not
been satisfied, the Agent will make the funds so received from the Banks
available to the Borrower at the Agent's aforesaid address.
(c) If an Issuing Bank has not received from the Borrower a payment
required by Section 2.15(g) to be made to such Issuing Bank by 1:00 P.M. (New
York City time) on the date on which such payment is due, as provided in Section
2.15(g), such Issuing Bank shall promptly notify the Agent thereof and, promptly
following receipt of such notice, the Agent will notify each Bank of the Letter
of Credit Disbursement and such Bank's Applicable Percentage of such Letter of
Credit Disbursement. Not later than 4:00 P.M. (New York City time) on such date,
each Bank shall make available such Bank's Applicable Percentage of such Letter
of Credit Disbursement, in Federal or other funds immediately available in New
York City, to the Agent at its address specified in or pursuant to Section 9.01,
and the Agent will promptly make such funds available to such Issuing Bank.
Thereafter, any payments made by the Borrower in respect of such Letter of
Credit Disbursement shall be paid to the Agent in Dollars (and such Issuing Bank
shall promptly remit such payments to the Agent if received by such Issuing
Bank) and the Agent will promptly remit to each Bank that shall have made such
funds available its Applicable Percentage of any amounts subsequently received
by the Agent from such Issuing Bank or the Borrower in respect of such Letter of
Credit Disbursement (excluding interest for the account of such Issuing Bank for
the period prior to the date that such Bank shall have made such funds
available).
(d) Unless the Agent shall have received written notice from a Bank
prior to the date of any Borrowing, or prior to the time of any required payment
by such Bank in respect of a Letter of Credit Disbursement, that such Bank will
not make available (which can only be refused if there exists an Event of
Default identified by such Bank) to the Agent such Bank's share of such
Borrowing or payment, the Agent may assume that such Bank has made such share
available to the Agent on the date of such Borrowing or payment in accordance
with subsection (b) or (c), as applicable, of this Section 2.04 and the Agent
may, in reliance upon such assumption, make available to the applicable Borrower
or the applicable Issuing Bank, as the case may be, on such date a corresponding
amount. If and to the extent that such Bank shall not have so made such share
-28-
available to the Agent, such Bank and the Borrower severally agree to repay to
the Agent forthwith on demand such corresponding amount together with interest
thereon, for each day from the date such amount is made available by the Agent
until the date such amount is repaid to the Agent, at (i) in the case of the
Borrower, a rate per annum equal to the higher of the Federal Funds Rate and the
interest rate applicable thereto pursuant to Section 2.07 or Section 2.15(g), as
applicable, and (ii) in the case of such Bank, the Federal Funds Rate. In the
case of a Borrowing, if such Bank shall repay to the Agent such corresponding
amount, such amount so repaid shall constitute such Bank's Loan included in such
Borrowing for purposes of this Agreement.
SECTION 2.05. Notes.
(a) The Loans of each Bank to the Borrower shall be evidenced by a
single Note of the Borrower payable to the order of such Bank for the account of
its Applicable Lending Office.
(b) Upon receipt of each Bank's Note pursuant to Section 3.01(b) or
3.03(a), the Agent shall forward such Note to such Bank. Each Bank shall record
the date, amount, Type and maturity of each Loan made by it to the Borrower and
the date and amount of each payment of principal made by the Borrower with
respect thereto and may, in connection with any transfer of any of its Notes,
endorse on the schedule forming a part thereof appropriate notations to evidence
the foregoing information with respect to each such Loan of the Borrower then
outstanding; provided that (and the Borrower understands and agrees that) the
failure of any Bank to make any such recordation or endorsement shall not affect
the obligations of the Borrower hereunder or under the Notes. Each Bank is
hereby irrevocably authorized by the Borrower so to endorse its Note and to
attach to and make a part of its Note a continuation of any such schedule as and
when required.
SECTION 2.06. Interest Rate Elections. (a) The initial Type of Loans
comprising each Committed Borrowing, and the duration of the initial Interest
Period applicable thereto if they are initially LIBOR Loans, shall be as
specified in the applicable Notice of Borrowing. Thereafter, the Borrower may
from time to time elect to change or continue the Type of, or the duration of
the Interest Period applicable to, the Loans (other than Swingline Loans)
included in any Committed Borrowing (excluding overdue Loans and subject in each
case to the provisions of the definition of Interest Period and Article VIII),
as follows:
(i) if such Loans are Base Rate Loans (other than a Swingline
Loan), the Borrower may elect to designate such Loans as LIBOR Loans,
may elect to continue such Loans as Base Rate Loans or may elect to
designate such Loans as any combination of Base Rate Loans and LIBOR
Loans; and
(ii) if such Loans are LIBOR Loans, the Borrower may elect to
designate such Loans as Base Rate Loans, may elect to continue such
Loans as LIBOR Loans for an additional Interest Period, or may elect to
designate such Loans as any combination of Base Rate Loans and LIBOR
Loans.
-29-
Notwithstanding the foregoing, the Borrower may not elect an Interest Period for
LIBOR Loans unless the aggregate outstanding principal amount of LIBOR Loans
(including any such LIBOR Loans made pursuant to Section 2.01 on the date that
such Interest Period is to begin) to which such Interest Period will apply is
$1,000,000 or any larger multiple of $500,000 provided, however, at no time
shall there be more than six (6) different Interest Periods outstanding.
(b) Any election permitted by subsection (a) of this Section may become
effective on any LIBOR Business Day specified by the Borrower (the "Election
Date"); provided that, with respect to any outstanding LIBOR Loan, the Borrower
may not specify an Election Date that is other than the last day of the Interest
Period therefor. Each such election shall be made by the Borrower by delivering
a notice (a "Notice of Interest Rate Election") to the Agent not later than
11:00 A.M. (New York City time) on (x) the Election Date, if all the resulting
Loans will be Base Rate Loans and (y) the date three (3) LIBOR Business Days
before the Election Date, if the resulting Loans will include LIBOR Loans. Each
Notice of Interest Rate Election shall specify with respect to the outstanding
Loans to which such notice applies:
(i) the Election Date;
(ii) if the Type of Loan is to be changed, the new Type of
Loan and, if such new Type is a LIBOR Loan, the duration of the new
Interest Period applicable thereto;
(iii) if such Loans are LIBOR Loans and the Type of such Loans
is to be continued for an additional or different Interest Period, the
duration of such additional or different Interest Period; and
(iv) if such Loans are to be designated as a combination of
Base Rate Loans, or LIBOR Loans, the information specified in clauses
(i) through (iii) above as to each resulting Borrowing and the
aggregate amount of each such Borrowing.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period and the last
sentence of subsection (a) of this Section.
(c) Upon receipt of a Notice of Interest Rate Election, the Agent shall
promptly notify each Bank of the contents thereof and of such Bank's share of
such Borrowing and such notice shall not thereafter be revocable by the
applicable Borrower.
(d) If a Borrower (i) fails to deliver a timely Notice of Interest Rate
Election to the Agent electing to continue or change the Type of, or the
duration of the Interest Period applicable to, the Loans included in any
Committed Borrowing as provided in this Section and (ii) has not theretofore
delivered a notice of prepayment relating to such Committed Loans, then such
Borrower shall be deemed to have given the Agent a Notice of Interest Rate
Election electing to change the Type of such Loans to (or continue the Type
thereof as) Base Rate Loans, commencing on the last day of the then current
Interest Period.
-30-
SECTION 2.07. Interest Rates. (a) Each Base Rate Loan shall bear
interest on the outstanding principal amount thereof, for each day from the date
such Loan is made until it becomes due or is converted to a Loan of another
Type, at a rate per annum equal to the Base Rate for such day plus the
Applicable Margin. Such interest shall be payable monthly in arrears on the
first Domestic Business Day of each month and, with respect to the principal
amount of any Base Rate Loan converted to a LIBOR Loan, on the date such Base
Rate Loan is so converted.
(b) Each LIBOR Loan shall bear interest on the outstanding principal
amount thereof, for each day during each Interest Period applicable thereto, at
a rate per annum equal to the sum of the LIBOR Rate plus the Applicable Margin.
Such interest shall be payable for each Interest Period on the last day thereof
and, if such Interest Period is longer than three months, at intervals of three
months after the first day thereof.
(c) Each Swingline Loan shall bear interest on the outstanding
principal amount thereof, for each day each Swingline Loan is outstanding, at
such rate per annum equal to the Base Rate plus the Applicable Margin for such
day. Such interest shall be payable on the earlier of (i) repayment of the
Swingline Loan or (ii) the applicable Settlement Date.
(d) The Agent shall determine each interest rate applicable to the
Loans hereunder pursuant to the terms hereof. The Agent shall give prompt notice
to the applicable Borrower and the Banks of each rate of interest so determined,
and its determination thereof shall be conclusive in the absence of manifest
error.
(e) Upon the occurrence and continuation of an Event of Default, all
Loans shall bear interest at a rate per annum equal to the sum of 2% plus the
Base Rate plus the Applicable Margin for such day.
SECTION 2.08. Fees. (a) Commitment Fee. The Borrower shall pay to the
Agent for the account of the Banks based on their Applicable Percentage a
commitment fee at the applicable per annum Commitment Fee Rate. Such commitment
fee shall accrue from and including the Effective Date to, but excluding, the
date on which the Commitments expire or terminate, on the daily average unused
portion of the Total Commitments. The Agent shall determine the Commitment Fee
Rate applicable from time to time hereunder.
(b) Payments. Accrued fees under this Section shall be payable
quarterly in arrears on (i) the last day of March, June, September and December
in each year, commencing on the first such date that occurs after the Effective
Date and (ii) the date on which the Commitments expire or terminate. The Agent
shall determine the amount of accrued fees payable hereunder on each payment
date and notify the Borrower thereof.
(c) For purposes of determining the applicable Commitment Fee payable
to the Swingline Lender, the aggregate outstanding principal amount of Swingline
Loans shall be considered outstanding for purposes of the Borrower and the
Swingline Lender.
-31-
SECTION 2.09. Voluntary Reduction or Termination of Commitments. (a) On
and after the first anniversary of the Effective Date, or, if such day is not a
Domestic Business Day, the next succeeding Domestic Business Day, the Borrower
may, upon at least five Domestic Business Days' notice to the Agent, terminate
the Total Commitment at any time, or proportionately reduce from time to time
each Bank's Commitment by an aggregate amount of $10,000,000 or any larger
multiple of $1,000,000, the aggregate amount of the Commitments in excess of the
sum of the Letter of Credit Exposure and the aggregate outstanding principal
amount of the Loans, provided, however that any reduction in the aggregate
amount of the Commitments shall be expressly conditioned upon the Borrower
demonstrating projected excess availability (acceptable to the Agent) for the
next twelve (12) months of at least $35,000,000.
(b) The Commitments shall terminate on the Termination Date.
SECTION 2.10. Maturity of Loans. (a) The Committed Loans of each Bank
shall mature, and the principal amount thereof shall be due and payable,
together with accrued interest thereon, on the Termination Date.
(b) Each Swingline Loan shall mature on the earlier of (i) its
respective Settlement Date or (ii) the Swingline Expiry Date.
SECTION 2.11. Prepayments. (a) Voluntary Prepayments. Subject to
Section 2.13, the Borrower may, upon at least one Business Day's notice (or, if
such prepayment is made prior to noon, on the same day or in the case of a
Committed Borrowing of LIBOR Loans, two LIBOR Business Days' notice) to the
Agent, prepay any Committed Borrowing of the Borrower in whole at any time, or
from time to time in part in amounts aggregating $2,000,000 or any larger
multiple of $1,000,000, by paying the principal amount to be prepaid together
with accrued interest thereon to the date of prepayment. Each such optional
prepayment shall be applied to prepay ratably the Loans of the several Banks
included in such Borrowing.
(b) Mandatory Prepayments.
(i) If at any time the outstanding principal amount of the
Loans exceeds the Total Availability, the Borrower shall immediately
upon notice from the Agent: (i) repay, by payment to the Agent for the
account of the Banks, to be applied to the Loans, the amount of such
excess, and/or (ii) furnish Collateral and/or repay the Swingline Loan
and/or Letter of Credit Exposure, in an amount equal to such excess;
(ii) The Borrower shall make a prepayment/repayment of the
Loans in the amount of 100 % of Net Proceeds from the issuance of
equity or debt (excluding the issuance of the Seller Preferred); and
(iii) The Borrower shall make a prepayment of the Loans in the
amount of 100% of the Net Proceeds from the sale of assets permitted
under Section 5.11(b).
-32-
The mandatory repayments set forth in this Section 2.11 shall be
applied first to reduce all outstanding principal, interest and fees on
Swingline Loans, second to reduce all outstanding principal, interest and fees
on Committed Loans and third to cash collateralize the principal amount and any
fees of the Letter of Credit Exposure.
(c) Swingline Prepayments. The Borrower may, upon notice to the Agent
prior to 12:00 Noon (New York City time) on the date of prepayment (which shall
be a Domestic Business Day), prepay any Swingline Loan of the Borrower in whole
at any time, or from time to time in part, by paying the principal amount to be
prepaid together with accrued interest thereon to the date of prepayment.
(d) Notice of Prepayments. Upon receipt of a notice of prepayment
pursuant to this Section, the Agent shall promptly notify each Bank (or, in the
case of a Swingline Loan, the Swingline Lender) of the contents thereof and of
such Bank's ratable share of such prepayment and such notice shall not
thereafter be revocable by the Borrower.
SECTION 2.12. General Provisions as to Payments. (a) Except as
otherwise expressly provided herein, all payments to be made by the Borrower
hereunder or under the Notes shall be made not later than 1:00 P.M. (New York
City time) on the date when due, in Federal or other funds immediately available
in New York City, to the Agent at its address referred to in Section 9.01. The
Agent will promptly distribute to each Bank its ratable share of each such
payment received by the Agent for the account of the Banks.
(b) Whenever any payment of principal of, or interest on, the Base Rate
Loans or of fees shall be due on a day which is not a Domestic Business Day, the
date for payment thereof shall be extended to the next succeeding Domestic
Business Day. Whenever any payment of principal of, or interest on the LIBOR
Loans shall be due on a day which is not a LIBOR Business Day, the date for
payment thereof shall be extended to the next succeeding LIBOR Business Day,
unless such LIBOR Business Day falls in another calendar month, in which case
the date for payment thereof shall be the next preceding LIBOR Business Day. If
the date for any payment of principal is extended by operation of law or
otherwise, interest thereon shall be payable for such extended time.
(c) Unless the Agent shall have received notice from the Borrower prior
to the date on which any payment is due to the Banks hereunder that the Borrower
will not make such payment in full, the Agent may assume that the Borrower has
made such payment in full to the Agent on such date and the Agent may, in
reliance upon such assumption, cause to be distributed to each Bank on such due
date an amount equal to the amount then due such Bank. If and to the extent that
the Borrower shall not have so made such payment, each Bank shall repay to the
Agent forthwith on demand such amount distributed to such Bank, together with
interest thereon, for each day from the date such amount is distributed to such
Bank until the date such Bank repays such amount to the Agent, at the Federal
Funds Rate.
SECTION 2.13. Funding Losses. If the Borrower makes any payment of
principal with respect to any LIBOR Rate Loan (pursuant to Article II or
otherwise) on any day other than the last day of the Interest Period applicable
-33-
thereto, or the end of any applicable period fixed pursuant to the terms hereto,
or if the Borrower fails to borrow any LIBOR Loans after notice has been given
to any Bank in accordance with Section 2.04(a) or to change or continue the Type
of, or the duration of the Interest Period applicable to, any LIBOR Loans after
notice has been given to any Bank in accordance with Section 2.06(c), the
Borrower shall reimburse each Bank within fifteen (15) days after demand for any
resulting loss or expense incurred by it (or by an existing or prospective
Participant in the related Loan) including (without limitation) any loss
incurred in obtaining, liquidating or employing deposits from third parties, but
excluding loss of margin for the period after any such payment or failure to
borrow; provided that such Bank shall have delivered to the Borrower a
certificate as to the amount of such loss or expense, which certificate shall be
conclusive in the absence of manifest error.
SECTION 2.14. Computation of Interest and Fees. Interest based on the
Base Rate hereunder shall be computed on the basis of a year of 360 days and
paid for the actual number of days elapsed (including the first day but
excluding the last day). All other interest and fees shall be computed on the
basis of a year of 360 days and paid for the actual number of days elapsed
(including the first day but excluding the last day).
SECTION 2.15. Letters of Credit. (a) The Borrower may request the
issuance of Letters of Credit by any Issuing Bank, in a form reasonably
acceptable to the Agent and such Issuing Bank, appropriately completed, for the
account of the Borrower, at any time and from time to time during the Revolving
Credit Period; provided that any Letter of Credit shall be issued only if, and
each request by the Borrower for the issuance of any Letter of Credit shall be
deemed a representation and warranty of the Borrower that, immediately following
the issuance of any such Letter of Credit the sum of the Letter of Credit
Exposure and the aggregate principal amount of all outstanding Loans shall not
exceed the Total Commitments and shall not exceed the amount of Total
Availability.
(b) Each issuance of any Letter of Credit shall be made on such prior
notice from the Borrower to the applicable Issuing Bank as shall be acceptable
to such Issuing Bank specifying the date of issuance, the date on which such
Letter of Credit is to expire (which shall not be later than the earlier of (i)
the date that is one Domestic Business Day prior to the Termination Date, and
(ii) subject to renewal, the date one year after the date of such Letter of
Credit, or, if such Letter of Credit is issued to a beneficiary outside the
United States, the date that is five Domestic Business Days prior to the
Termination Date), the amount and currency of such Letter of Credit, the name
and address of the beneficiary of such Letter of Credit, whether such Letter of
Credit is a documentary or stand-by Letter of Credit, the purpose of such Letter
of Credit, and such other information as may be necessary or desirable to
complete such Letter of Credit. Each Issuing Bank will give the Agent prompt
notice of the issuance and amount of each Letter of Credit issued by it, the
currency thereof and the expiration of such Letter of Credit. Each Issuing Bank
will give the Agent and the Borrower daily notice of the aggregate amount
available to be drawn under all outstanding Letters of Credit issued by it a
quarterly summary indicating, on a daily basis during such quarter, the issuance
of any Letter of Credit issued by it and the amount thereof, the expiration of
any such Letter of Credit and any payment on drafts presented under such Letters
of Credit.
-34-
(c) Each Issuing Bank that issues a Letter of Credit, by the issuance
of such Letter of Credit and without any further action on the part of such
Issuing Bank or the Banks in respect thereof, hereby grants to each Bank, and
each Bank hereby acquires from such Issuing Bank, a participation in such Letter
of Credit equal to such Bank's Applicable Percentage of the aggregate amount
available to be drawn under such Letter of Credit, effective upon the issuance
of such Letter of Credit. In consideration and in furtherance of the foregoing,
each Bank hereby absolutely and unconditionally agrees to pay to the Agent, on
behalf of such Issuing Bank, in accordance with Section 2.04(b), such Bank's
Applicable Percentage of each Letter of Credit Disbursement made by such Issuing
Bank and not reimbursed by the Borrower when due in accordance with subsection
(f) of this Section; provided that the Banks shall not be obligated to make any
such payment with respect to any wrongful Letter of Credit Disbursement made as
a result of the gross negligence or willful misconduct of such Issuing Bank.
(d) Each Bank acknowledges and agrees that its obligation to acquire
participations pursuant to subsection (c) above in respect of Letters of Credit
is absolute and unconditional and shall not be affected by any circumstance
whatsoever, including the occurrence and continuance of a Default, and that each
such payment shall be made without any offset, abatement, withholding or
reduction whatsoever (subject only to the proviso in subsection (c) above).
(e) Upon each issuance of a Letter of Credit, Borrower agrees to pay
the Applicable Letter of Credit Fee to the Banks, and a fronting fee to be
determined by the Issuing Bank. Fees under this subsection shall be calculated
by the applicable Issuing Bank and shall be payable quarterly in advance on the
last day of March, June, September and December in each year and on the
Termination Date (or any earlier date on which the Commitments are terminated).
The applicable Issuing Bank will notify the Borrower of the amount of accrued
fees payable hereunder on each payment date. In addition to the foregoing, the
Borrower shall pay directly to each Issuing Bank, for its account, such Issuing
Bank's customary processing and documentation fees in connection with the
issuance or amendment of or payment on any Letter of Credit, payable within
fifteen (15) days after demand therefor by such Issuing Bank.
(f) If an Issuing Bank shall pay any draft presented under a Letter of
Credit, the Borrower shall pay directly to such Issuing Bank an amount equal to
the amount of such draft before 2:00 P.M. (New York City time), on the day on
which such Issuing Bank shall have notified the Borrower (as provided in
subsection (j) below) that payment of such draft will be made; provided that, if
the Borrower shall not have received notice of such draft before 10:00 A.M. (New
York City time) on the date that payment of such draft is made, then such
payment may be made by the Borrower to such Issuing Bank on the Domestic
Business Day immediately following the date of receipt by the Borrower of notice
of such payment, together with interest (at a rate per annum equal to the sum of
the LIBOR Margin at the time plus the rate determined by such Issuing Bank to be
equal to the rate per annum at which deposits in the same currency as such draft
are then being offered to such Issuing Bank in the London interbank market for a
period of one month) on the amount of such draft from and including the date
such draft was paid by such Issuing Bank to but excluding such next Domestic
Business Day. If the Borrower shall fail to pay any amount required to be paid
by it under this subsection when due, such unpaid amount shall bear interest,
-35-
for each day from and including the due date to but excluding the date of
payment, at a rate per annum equal to the interest rate applicable to overdue
Base Rate Loans.
(g) The Borrower's obligation to reimburse Letter of Credit
Disbursements as provided in subsection (f) above shall be absolute,
unconditional and irrevocable and shall be performed strictly in accordance with
the terms of this Agreement under any and all circumstances whatsoever, and
irrespective of:
(i) any lack of validity or enforceability of any Letter of
Credit or any Loan Document;
(ii) the existence of any claim, setoff, defense or other
right which the Borrower, any Subsidiary or any other Person may at any
time have against the beneficiary under any Letter of Credit, any
Issuing Bank, the Agent or any Bank or any other Person in connection
with this Agreement, any other Loan Document or any other related or
unrelated agreement or transaction;
(iii) any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect;
(iv) payment by any Issuing Bank under a Letter of Credit
against presentation of a draft or other document which does not comply
with the terms of such Letter of Credit, subject to subsection (i)
below; and
(v) any other act or omission or delay of any kind or any
other circumstance or event whatsoever, whether or not similar to any
of the foregoing and whether or not foreseeable, that might, but for
the provisions of this subsection (g), constitute a legal or equitable
discharge of the Borrower's obligations hereunder.
(h) None of the Banks (including any Issuing Bank) nor the Agent nor
any of their officers or directors or employees or agent shall be liable or
responsible by reason of or in connection with (and the Borrower shall indemnify
and hold harmless each of the Banks, the Issuing Banks, the Agent and their
officers, directors, employees and agent from and against any and all
liabilities, losses, damages, costs and expenses, including, without limitation,
reasonable fees and disbursements of counsel, arising by reason of or in
connection with) the execution and delivery or transfer of or payment or failure
to pay under any Letter of Credit, including without limitation any of the
circumstances enumerated in subsection (g) above, as well as (i) any error,
omission, interruption or delay in transmission or delivery of any messages, by
mail, cable, telegraph, telex or otherwise, (ii) any error in interpretation of
technical terms, (iii) any loss or delay in the transmission of any document
required in order to make a drawing under a Letter of Credit, or (iv) any
consequences arising from causes beyond the control of any Issuing Bank,
including, without limitation, any government acts, or any other circumstances
whatsoever in making or failing to make payment under any Letter of Credit;
provided that the Borrower shall not be required to indemnify any Issuing Bank
for any claims, damages, losses, liabilities, costs or expenses, and the
-36-
Borrower shall have a claim for direct (but not consequential) damage suffered
by it, to the extent found by a court of competent jurisdiction to have been
caused by (x) the willful misconduct or gross negligence of an Issuing Bank in
determining whether a request presented under any Letter of Credit issued by it
complied with the terms of such Letter of Credit or (y) an Issuing Bank's
failure to pay under any Letter of Credit issued by it after the presentation to
it of a request strictly complying with the terms and conditions of such Letter
of Credit. Nothing in this subsection (h) is intended to limit the obligations
of the Borrower under any other provision of this Agreement. To the extent the
Borrower does not indemnify an Issuing Bank as required by this subsection, the
Banks agree to do so in accordance with their Applicable Percentage. It is
expressly understood and agreed that, for purposes of determining whether a
wrongful payment under a Letter of Credit resulted from an Issuing Bank's gross
negligence or willful misconduct, such Issuing Bank may accept documents that
appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary and, in
making any payment under any Letter of Credit (A) an Issuing Bank's exclusive
reliance on the documents presented to it under such Letter of Credit as to any
and all matters set forth therein, including reliance on the amount of any draft
presented under such Letter of Credit, whether or not the amount due to the
beneficiary thereunder equals the amount of such draft and whether or not any
document presented pursuant to such Letter of Credit proves to be insufficient
in any material respect, if such document on its face appears to be in order,
and whether or not any other statement or any other document presented pursuant
to such Letter of Credit proves to be forged or invalid or any statement therein
proves to be inaccurate or untrue in any respect whatsoever and (B) any
noncompliance in any immaterial respect of the documents presented under such
Letter of Credit with the terms thereof shall, in each case, be deemed not to
constitute willful misconduct or gross negligence of such Issuing Bank.
(i) Each Issuing Bank shall, promptly following its receipt thereof,
examine all documents purporting to represent a demand for payment under a
Letter of Credit issued by such Issuing Bank. Such Issuing Bank shall as
promptly as possible give telephonic notification, confirmed by telex or
telecopy, to the Agent, the Borrower of such demand for payment and whether such
Issuing Bank has made or will make a Letter of Credit Disbursement thereunder,
provided that the failure to give such notice shall not relieve the Borrower of
its obligation to reimburse any such Letter of Credit Disbursement in accordance
with this Section. The Agent shall promptly give each Bank notice thereof.
(j) If at any time, as a result of an adjustment to the dollar amount
of any outstanding Letter of Credit Exposure, the sum of the Letter of Credit
Exposure and the aggregate principal amount of all outstanding Loans exceeds the
Total Availability, then the Borrower shall provide cash collateral in respect
of the Letter of Credit Exposure as provided below in an amount equal to such
excess; provided that, solely for purposes of determining whether the Borrower
is in compliance with the foregoing requirements of this subsection (j), the
Total Availability shall be deemed to be increased by the amount of any cash
collateral then held by the Agent pursuant to this subsection (j). In the event
that the Borrower is required pursuant to the terms of this Agreement to provide
cash collateral in respect of the Letter of Credit Exposure, the Borrower shall
deposit in an account with the Agent, for the benefit of the Banks (including
the Issuing Banks), an amount in cash equal to (x) in the case of a deposit
-37-
required pursuant to the first sentence of this subsection (j), the amount
specified therein, or (y) in the case of a deposit required as a result of an
Event of Default, the entire Letter of Credit Exposure. Such deposit shall be
held by the Agent as collateral for the payment and performance of the
Obligations. The Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account. If the Borrower is required to
provide an amount of cash collateral hereunder pursuant to the first sentence of
this subsection (j), the Agent shall return such amount (to the extent not
applied as aforesaid) to the Borrower, from time to time, to the extent that
doing so would not give rise to an obligation on the part of the Borrower to
provide additional cash collateral pursuant to such sentence. If the Borrower is
required to provide an amount of cash collateral hereunder as a result of an
Event of Default, such amount (to the extent not applied as aforesaid) shall be
returned to the Borrower within three Domestic Business days after all Events of
Default have been cured or waived, and if prior to such return the amount of the
Letter of Credit Exposure is reduced, any excess of the amount deposited (to the
extent not applied as aforesaid and disregarding interest or profits on
investments) over the reduced amount of the Letter of Credit Exposure shall be
returned to the Borrower promptly after such reduction gives rise to such
excess. Notwithstanding the foregoing, if any Obligation payable by the Borrower
hereunder is due and payable but remains unpaid at the time that the Agent would
otherwise be required to return any amount of cash collateral to the Borrower
hereunder, the Agent may retain such cash collateral and apply the amounts
retained to the payment of such unpaid Obligation.
(k) The Borrower, the Agent and any Bank that is willing to be an
Issuing Bank hereunder may agree that such Bank shall be an Issuing Bank by the
execution and delivery of an agreement substantially in the form of Exhibit G
(an "Issuing Bank Agreement"). The Agent shall notify the Banks of the identity
of any Issuing Bank appointed pursuant to this subsection (k). The Borrower also
may terminate the status of any Issuing Bank as an Issuing Bank hereunder at any
time by at least three Domestic Business Days' prior notice to such Issuing Bank
and the Agent, and the Agent shall thereupon notify the Banks of such
termination; provided that such termination shall operate only to relieve such
Issuing Bank of its obligation to issue Letters of Credit hereunder and shall
not affect such Issuing Bank's status as an Issuing Bank or its rights and
obligations hereunder with respect to any Letters of Credit previously issued by
it.
SECTION 2.16. Application of Payments. Subject to the
provisions of Section 2.11, all amounts received in the blocked accounts from
any source shall be applied, on the day immediately following receipt, in the
following order: first to repay outstanding Swingline Loans; second, to repay
other outstanding Loans that are Base Rate Loans and all outstanding
reimbursement obligations under Letters of Credit; third, to repay outstanding
Loans that are LIBOR Loans and all breakage costs due in respect of such
repayment or, at the Borrower's option (if no Event of Default has occurred and
is then continuing), to fund a cash collateral deposit to a cash collateral
account at Fleet National Bank (the "Cash Collateral Account") with direction to
pay, all or a portion of any such outstanding LIBOR Loans on the last day of the
next ending Interest Period therefor; fourth, if any Event of Default has
occurred and is continuing, to fund a cash collateral deposit in the Cash
Collateral Account in an amount equal to 101% of all Letter of Credit
Outstandings; fifth, to pay interest due and payable on the Obligations and to
-38-
pay fees and expense reimbursements and indemnification then due and payable to
the Agent and the Issuing Bank and sixth, to pay all other Obligations that are
then outstanding and payable.
Any amounts received in the blocked accounts at any time when all of
the Obligations have been and remain fully repaid shall be remitted to the
Borrower, if and as the Borrower may request.
All credits against the Obligations shall be conditioned upon final
payment to the Agent of the items giving rise to such credits and shall be
subject to fully available funds. If any item deposited to the blocked account
is dishonored or returned unpaid for any reason, whether or not such return is
rightful or timely, the Agent shall have the right to reverse such credit and
charge the amount of such item to the Borrower, who shall indemnify the Agent,
the Issuing Bank and the Lenders against all claims and losses resulting from
such dishonor or return.
ARTICLE III
Conditions
SECTION 3.01. Effectiveness. The obligation of the Banks to make Loans
and of the Issuing Banks to issue Letters of Credit under this Agreement shall
become effective on the date that each of the following conditions shall have
been satisfied (or waived in accordance with Section 9.05):
(a) receipt by the Agent and the Arrangers of counterparts hereof
signed by each of the parties hereto (or, in the case of any party as to which
an executed counterpart shall not have been received, receipt by the Agent and
the Arrangers in form satisfactory to them of telegraphic, telex or other
written confirmation from such party of execution of a counterpart hereof by
such party);
(b) receipt by the Agent and the Arrangers for the account of each Bank
of a duly executed Note of the Borrower dated on or before the Effective Date
complying with the provisions of Section 2.06;
(c) receipt by the Agent and the Arrangers of (i) the Guarantee
Agreement, duly executed by the Guarantors, (ii) the Security Agreement, duly
executed by the Borrower and the Guarantors; and (iii) each of the Loan
Documents, duly executed by the Borrower;
(d) receipt by the Agent and the Arrangers of a certificate signed by
an executive officer of the Borrower, dated the Effective Date, to the effect
that (i) no Default has occurred and is continuing as of the Effective Date, and
(ii) the representations and warranties of the Borrower set forth in Article IV
hereof are true in all material respects on, and as of, the Effective Date;
(e) receipt by the Agent and the Arrangers of all fees and other
compensation payable to the Agent or the Arrangers and/or the Banks on or prior
to the Effective Date pursuant to their agreements with the Borrower, including
-39-
reimbursement of all reasonable out-of-pocket expenses of the Agent and the
Arrangers, including, without limitation, legal fees, field exams fees and
syndication fees payable by the Borrower in accordance with this Agreement for
which invoices have been presented;
(f) receipt by the Agent and the Arrangers of an opinion of Weil,
Gotshal & ▇▇▇▇▇▇ LLP, counsel for the Borrower and Guarantors, substantially in
the form of Exhibit D hereto, and covering such additional matters relating to
the Financing Transactions as Agent and its counsel may reasonably request;
(g) receipt by the Agent and the Arrangers of all documents and
certificates they may reasonably request relating to the existence of the
Borrower and the Guarantors and the corporate authority for and the validity of
this Agreement and the other Loan Documents, the accuracy of the representations
and warranties contained in this Agreement and the other Loan Documents on the
Effective Date, the Financing Transactions, the Arden Acquisition and any other
matters relevant hereto or thereto, all in form and substance satisfactory to
the Agent;
(h) the Existing Indebtedness and all commitments and documentation
thereunder shall have been terminated, all amounts outstanding or accrued
thereunder shall have been paid in full and the Agent and the Arrangers shall
have received evidence reasonably satisfactory to them of such termination and
payment;
(i) the Borrower shall have consummated the Arden Acquisition of the
Purchased Assets in accordance with the provisions of the Acquisition Agreement;
(j) the Agent and the Arrangers shall have received evidence that the
Senior Secured Notes have been issued;
(k) receipt by the Agent and the Arrangers of the proforma consolidated
balance sheet of the Borrower as of October 31, 2000, after giving effect
thereto, and after giving effect to the Arden Acquisition and the Loans to be
made on the Effective Date and the payment of closing costs in connection
therewith, all in form and substance satisfactory to the Agent and the
Arrangers;
(l) the Agent and the Arrangers shall have received insurance
certificates satisfying the requirements of the Loan Documents;
(m) the Agent and the Arrangers shall have received a certificate from
an executive officer of the Borrower in form and substance reasonably
satisfactory to the Agent and the Arrangers with respect to the solvency (on a
consolidated basis) of the Borrower and each of its Subsidiaries immediately
after the consummation of the Transactions to occur on or before the Effective
Date;
(n) receipt by the Agent and the Arrangers of reasonably satisfactory
written evidence that all requisite governmental authorities and third parties
required to approve or consent to the Transactions shall have approved or
-40-
consented thereto to the extent required (without the imposition of any
materially burdensome condition or qualification in the reasonable judgment of
the Agent and the Arrangers) and all such approvals or consents shall be in full
force and effect, all applicable appeal periods shall have expired and there
shall be no governmental or judicial action, actual or threatened, that has or
could have a reasonable likelihood of restraining, preventing or imposing
materially burdensome conditions on any of the Transactions;
(o) the Agent and the Arrangers shall have received a list, certified
by an executive officer of the Borrower, of all filings required to be made with
any Governmental Authority in connection with the Transactions;
(p) the Transactions shall have been consummated in accordance with
their respective terms and any material related documentation, all of which must
be satisfactory in form and substance to the Agent and the Arrangers, and there
shall not have been any amendment, modification or waiver of any of the material
terms and conditions of any of the documentation evidencing the Transactions
without the prior written consent of the Agent and the Arrangers, which consent
shall not be unreasonably withheld;
(q) all liens, if any, with respect to any Existing Indebtedness shall
have been released and the Agent and the Arrangers shall have received evidence
thereof satisfactory to the Agent and the Arrangers and a "pay-off" letter or
letters reasonably satisfactory to the Agent and the Arrangers with respect to
the Existing Indebtedness and the Banks shall have been granted (as of the
Effective Date) first priority perfected liens and guarantees (as applicable) to
the extent required and described herein;
(r) the Agent and the Arrangers shall be satisfied that no action,
suit, investigation, litigation or other legal proceeding, tax or accounting
matter, ERISA matter, environmental matter or other matter is pending or
threatened against the Borrower, any Subsidiary or any Guarantor in any court or
before any arbitrator or governmental instrumentality that purports to affect
the Transactions or any of the transaction contemplated herein, which could have
a Material Adverse Effect on the Transactions or any of the transactions
contemplated herein or that could have a Material Adverse Effect on the
business, assets, conditions (financial or otherwise), operations, performance,
properties or Projections of the Borrower;
(s) the Borrower shall have no indebtedness and no preferred stock of
the Borrower shall be outstanding other than the Permitted Indebtedness;
(t) the Agent and the Arrangers shall be satisfied that no material
adverse change or any condition or event, which with the passage of time would
result in a material adverse change shall have occurred or become known with
respect to the business, assets, condition (financial or otherwise), operations,
performance, properties or Projections of the Borrower, the Subsidiaries or any
Guarantor since the end of the most recently ended fiscal year for which audited
statements have been provided to the Agent and the Arrangers or in the facts or
information as represented by the Borrower to the Agent and the Arrangers to
date;
-41-
(u) the Agent shall have received in form and substance satisfactory to
the Agent in all respects, a Borrowing Base Certificate of the Borrower dated as
of the Effective Date evidencing excess availability of at least $20,000,000;
(v) the Agent, the Banks, the Borrower and HSBC Bank USA, as trustee
for the holders of the Senior Secured Notes shall have entered into the
Intercreditor Agreement pertaining to the relative rights of the Banks and the
holders of the Senior Secured Notes with respect to the selected intangible
assets acquired by the Borrower pursuant to the Arden Acquisition to be pledged
as security for the Senior Secured Notes;
(w) the Agent and the Arrangers shall have received the Sublicense
Agreement(s) with respect to all trademarks owned by the Borrower, FD
Management, Inc. and DF Enterprises, Inc. as of the date of the closing of the
Arden Acquisition, which each Sublicense Agreement (i) shall permit the Agent,
on behalf of the Banks, to utilize such trademark in connection with any
liquidation of the inventory constituting collateral for the Loans, and (ii)
shall be upon such terms and conditions as are satisfactory to the Agent and the
Arrangers;
(x) the Agent and the Arrangers shall have received evidence,
satisfactory to the Agent and the Arrangers in all respects, that there are no
competing issues of debt or equity securities or credit facilities of the
Borrower or any of its Subsidiaries except for the Permitted Indebtedness;
(y) the Agent and the Arrangers shall have received evidence,
satisfactory to the Agent and the Arrangers in their sole discretion, that (i)
the Borrower has established a lock box in the name of the Borrower with the
Agent in Providence, Rhode Island, and (ii) the Borrower has established a
non-interest bearing cash holding account with the Agent; and
provided that this Agreement shall not become effective or be binding
on any party hereto unless all of the foregoing conditions are satisfied not
later than January 31, 2001. The Agent shall promptly notify the Borrower and
the Banks of the Effective Date, and such notice shall be conclusive and binding
on all parties hereto.
SECTION 3.02. Each Credit Event. The obligation of any Bank to make a
Loan on the occasion of any Borrowing and of any Issuing Bank to issue any
Letter of Credit is subject to the satisfaction of the following conditions:
(a) receipt by the Agent of a Notice of Borrowing as required by
Section 2.02, receipt by the Swingline Lender of a notice requesting a Swingline
Loan as required by Section 2.03 or receipt by the applicable Issuing Bank of a
notice requesting issuance of a Letter of Credit as required by Section 2.15(a),
as applicable;
(b) the fact that, immediately after such Borrowing or the issuance of
such Letter of Credit, the sum of the aggregate principal amount of all
outstanding Loans and the Letter of Credit Exposure shall not exceed the lesser
of (i) the Borrowing Base or (ii) the Total Commitments;
-42-
(c) the fact that, immediately before and after such Borrowing or the
issuance of such Letter of Credit, no Default shall have occurred and be
continuing; and
(d) the fact that the representations and warranties of the Borrower
contained in this Agreement and the other Loan Documents shall be true in all
material respects (which materiality exception will not apply to representations
and warranties qualified by materiality standards) on and as of the date of such
Borrowing or issuance of such Letter of Credit; and
(e) evidence of sufficient availability under the most recent Borrowing
Base Certificate delivered to the Agent.
Each Borrowing hereunder and the issuance of each Letter of Credit hereunder
shall be deemed to be a representation and warranty by the Borrower on the date
of such Borrowing or issuance as to the facts specified in clauses (b), (c) (d),
and (e) of this Section.
ARTICLE IV
Representations and Warranties
------------------------------
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The Borrower is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Florida, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted.
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Borrower and the
Guarantors of each Loan Document to which it is or is to be a party and the
Financing Transactions is within its corporate powers, has been duly authorized
by all necessary corporate action, require no action by or in respect of, or
filing with, any Governmental Authority or official thereof (other than such as
have been duly taken or made) and do not contravene, or constitute a default
under, any provision of applicable law or regulation or of the charter or
by-laws of the Borrower or any Guarantor or of any indenture, agreement,
judgment, injunction, order, decree or other instrument binding upon the
Borrower or any Guarantor or result in the creation or imposition of any Lien
(other than Liens created by the Loan Documents) on any asset of the Borrower or
any Subsidiary, except for any contraventions or defaults under such indentures,
agreements, judgments, injunctions, orders, decrees or other instruments or the
creation or imposition of any such Liens that, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect.
SECTION 4.03. Binding Effect. This Agreement constitutes a valid and
binding agreement of the Borrower, and the other Loan Documents to which the
Borrower or any of the Guarantors is a party, when executed and delivered in
accordance with this Agreement, will constitute valid and binding agreements and
-43-
obligations of each of the Borrower and the Guarantors that is a party thereto,
in each case enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally
and equitable principles of general applicability.
SECTION 4.04. Financial Information. (a) The consolidated audited
balance sheet of the Borrower as of January 31, 2000 and the related
consolidated statements of operations, shareholders' equity and cash flows for
the fiscal year then ended, reported on by Deloitte & Touche LLP, a copy of
which has been delivered to each of the Banks, fairly present in all material
respects, in conformity with generally accepted accounting principles, the
financial position of the Borrower as of such date and its results of operations
and cash flows for such fiscal year.
(b) The unaudited proforma consolidated balance sheet of the Borrower
as of October 31, 2000, and the related consolidated condensed statements of
operations and cash flows for the fiscal period then ended, a copy of which has
been delivered to each of the Banks, fairly present in all material respects,
applied on a basis consistent with the financial statements referred to in
subsection (a) of this Section, the financial position of the Borrower as of
such date and its results of operations and cash flows for such fiscal period
(subject to normal year-end adjustments).
(c) the proforma consolidated balance sheet of the Borrower as of the
effective date of the Arden Acquisition, after giving effect thereto, a copy of
which has been delivered to each of the Banks, fairly presents in all material
respects, applied on a basis consistent with the financial statements referred
to in subsection (a) of this Section, the financial position of the Borrower as
of such date after giving effect to the Arden Acquisition.
(d) Since October 31, 2000, there has been no material adverse change
in the business, operations or financial condition of the Borrower and its
Consolidated Subsidiaries, considered as a whole.
SECTION 4.05. Litigation. Except as disclosed on Schedule 4.05, there
is no (i) injunction, stay, decree or order of any Governmental Authority or
(ii) action, suit or proceeding pending against, or to the knowledge of the
Borrower threatened against or affecting, the Borrower or any Subsidiary before
any Governmental Authority or official thereof in which there is a reasonable
probability of an adverse decision which would reasonably be expected to have a
Material Adverse Effect or which in any manner draws into question the validity
of this Agreement or any other Loan Document.
SECTION 4.06. Compliance with ERISA. Except to the extent that all such
failures to fulfill any such obligations or comply with any such provisions
would not reasonably be expected to have a Material Adverse Effect, each member
of the ERISA Group has fulfilled its obligations under the minimum funding
standards of ERISA and the Internal Revenue Code with respect to each Plan and
is in compliance in all material respects with the presently applicable
provisions of ERISA and the Internal Revenue Code with respect to each Plan.
Except to the extent that all such waivers, failures and liabilities would not
-44-
reasonably be expected to have a Material Adverse Effect, no member of the ERISA
Group has (i) sought a waiver of the minimum funding standard under Section 412
of the Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could result in the imposition of a Lien or the posting of
a bond or other security under ERISA or the Internal Revenue Code or (iii)
incurred any liability under Title IV of ERISA other than a liability to the
PBGC for premiums under Section 4007 of ERISA.
SECTION 4.07. Environmental Matters. The Borrower and its Subsidiaries
have complied in all respects with all Environmental Laws, except to the extent
failure to so comply would not reasonably be expected to have a Material Adverse
Effect. Neither the Borrower nor any Subsidiary has received notice of any
failure so to comply with the Environmental Laws, which alone or together with
any other such failure would reasonably be expected to result in a Material
Adverse Effect. The facilities of the Borrower and its Subsidiaries do not
manage or handle any hazardous wastes, hazardous substances, hazardous
materials, toxic substances or toxic pollutants, as those terms are used in the
applicable Environmental Laws, in violation thereof where such violation would
reasonably be expected to result, individually or together with other
violations, in a Material Adverse Effect.
SECTION 4.08. Taxes. The Borrower and its Subsidiaries have filed or
there has otherwise been filed all United States Federal income tax returns and
all other material tax returns which are required to be filed by them and have
paid or there has otherwise been paid all taxes shown to be due on such returns
or pursuant to any assessment received the Borrower or any Subsidiary, except
where the same is being or will be contested in good faith by appropriate
proceedings. The charges, accruals and reserves on the books of the Borrower and
the Subsidiaries in respect of taxes or other governmental charges are, in the
opinion of the Borrower, adequate.
SECTION 4.09. Subsidiaries. Each of the Guarantors is a corporation
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and, to the extent that the failure to do so
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted. Each of the Borrower's other corporate Subsidiaries is a corporation
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all corporate powers and all governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted, except to the extent that all failures to comply with
the foregoing would not reasonably be expected to have, in the aggregate, a
Material Adverse Effect.
SECTION 4.10. Not an Investment Company. Neither the Borrower nor any
Guarantor is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
-45-
SECTION 4.11. Full Disclosure. All information heretofore furnished in
writing by the Borrower or any Subsidiary to the Agent or any Bank for purposes
of or in connection with this Agreement, any other Loan Document or the
Financing Transactions was, and all such information hereafter furnished in
writing by the Borrower or any Subsidiary to the Agent or any Bank will be, in
each case considered as a whole, true and accurate in all material respects on
the date as of which such information is stated or certified. The Borrower has
disclosed to the Banks in writing any and all facts which materially and
adversely affect or may materially and adversely affect (to the extent that the
Borrower can now reasonably foresee), the business, operations or financial
condition of the Borrower and its Consolidated Subsidiaries, considered as a
whole, or the ability of the Borrower to perform its obligations hereunder or
under any other Loan Document.
SECTION 4.12. Compliance with Laws and Agreements. Neither the Borrower
nor any Subsidiary is in violation of any law, rule or regulation, or in default
with respect to any judgment, writ, injunction or decree applicable to it of any
Governmental Authority, where such violation or default (individually or in the
aggregate) would reasonably be expected to result in a Material Adverse Effect.
Neither the Borrower nor any Subsidiary is in default in any manner under any
provision of any indenture or other agreement or instrument evidencing Debt, or
any other agreement or instrument to which it is a party or by which it or any
of its properties or assets are or may be bound, where such default
(individually or in the aggregate) would reasonably be expected to result in a
Material Adverse Effect.
SECTION 4.13. Governmental Approvals. As of the Effective Date, all
material consents and approvals of, and material filings and registrations with,
and all other material actions in respect of, all Governmental Authorities or
any other Person required in order to consummate the Financing Transactions
shall have been obtained, given, filed or taken and shall be in full force and
effect.
SECTION 4.14. Locations. Schedule 4.14 attached hereto and made a part
hereof sets forth (i) every location in the United States, Puerto Rico or Canada
where Inventory with value of at least $1,000,000 of the Borrower or any
Material Subsidiary is located, (ii) every material location in the United
States where the Borrower or any Material Subsidiary has an office or place of
business, (iii) the address of all material real estate owned in the United
States by Borrower or any Material Subsidiary, (iv) the address of all material
real estate leased in the United States by Borrower or any Material Subsidiary
(including the record owner of such real estate), and (v) each jurisdiction in
the United States in which Borrower or any Material Subsidiary is qualified or
required to be qualified to do business.
SECTION 4.15. Licenses; Trademarks; Distribution Agreements. (a)
Schedule 4.15 attached hereto and made a part hereof sets forth a list of (i)
all material non-governmental License Agreements held by Borrower or any of its
Subsidiaries relating to the operation of its business as now conducted or
presently contemplated (including, as to each such License Agreement, the name
of the licensee and licensor, a description of the subject matter of the License
Agreement, the termination date or notice requirement with respect to
termination and renewal options), (ii) all trademarks, trade names, service
-46-
marks, copyrights, patents and applications for any of the foregoing owned by or
registered in the name of Borrower or any Material Subsidiary, relating to or
used in connection with the operation of its business as now conducted or
presently contemplated, and (iii) all material Distribution Agreements relating
to the operation of its business as now conducted or presently contemplated
(including, as to each such Distribution Agreement, the names of the parties, a
description of the subject matter of such Distribution Agreement, the
termination date or notice requirement with respect to termination and renewal
options).
(b) Except as set forth in Schedule 4.15, all of such License
Agreements and Distribution Agreements are in full force and effect and
constitute legal, valid and binding obligations of Borrower; there have not been
and there currently are not any defaults thereunder by the Borrower or, to the
best of its knowledge, by any other party which could cause such License
Agreement or Distribution Agreement to be canceled, revoked or terminated; and
no event has occurred which (whether with or without notice, lapse of time or
the happening or occurrence of any other event) would constitute such a default
by Borrower or, to the best of its knowledge, by any other party thereunder.
Borrower owns all the trademarks, trade names, service marks, copyrights,
know-how, patents and applications for any of the foregoing listed on Schedule
4.15 and, except as set forth thereon or as permitted herein, pays no royalty
under any of them and has the exclusive right to bring actions for the
infringement thereof. Except as set forth on Schedule 4.15, no product made or
sold by Borrower violates any License Agreement or Distribution Agreement or, to
the best of its knowledge, infringes any trademark, trade name, service ▇▇▇▇,
copyright, know-how, patent or application for any of the foregoing of any other
Person. Except as listed on Schedule 4.15, there is no pending or, to the best
of its knowledge, threatened claim or litigation against Borrower contesting the
right of Borrower to use any of the trademarks, trade names, service marks and
know-how or the validity of any of the License Agreements, Distribution
Agreements, copyrights and patents listed on such Schedule or asserting the
misuse thereof which if adversely determined would have a Material Adverse
Effect.
SECTION 4.16. Inventory. In determining which items of inventory listed
on any schedule of inventory heretofore or hereafter provided by Borrower to
Banks are Eligible Inventory, Banks may rely on all statements or
representations made by Borrower on or with respect to any such schedule;
further, Borrower represents and warrants that:
(a) all inventory is located on premises described in Schedule
4.14 as being premises owned or leased by Borrower, or on such premises
as shall be approved by Agent in writing from time to time (including
the additional locations set forth in Schedule 4.14) as may be updated
from time to time;
(b) no inventory is subject to any lien or security interest
whatsoever, except as permitted by the terms of this Agreement; and
(c) except as specified on such schedules of inventory
submitted to Banks, no inventory is now, or shall at any time or times
hereafter be, stored with a bailee, warehouseman or similar party
unless (i) such bailee, warehouseman or similar party has signed a
Consent and Subordination Agreement or (ii) Agent gives its prior
-47-
written consent and, if Agent gives such consent, Borrower will upon
the request of Agent cause any such bailee, warehouseman or similar
party to issue and deliver to Agent in form and substance acceptable to
Agent, warehouse receipts therefor in Agent's name for the ratable
benefit of Banks.
SECTION 4.17. Arden Acquisition. The Borrower has consummated the Arden
Acquisition substantially in accordance with the terms of the Acquisition
Agreement. The Borrower and the Subsidiaries own or have the lawful right to use
all of the Purchased Assets except where the failure to obtain the lawful right
to use such Purchased Assets will not have a Material Adverse Effect on Borrower
or its business.
SECTION 4.18. Security. The Guarantee Agreement and the Security
Agreement are in full force and effect and the Security Agreement is effective
to create in favor of the Agent, for the benefit of the Banks, a legally valid
and enforceable first priority, perfected security interest in the Collateral.
SECTION 4.19. Quality of Inventory. The Borrower shall (i) only sell
Inventory that is appropriate for the marketplace in which the Inventory is sold
and (ii) not sell Inventory that is counterfeit.
ARTICLE V
Covenants
---------
The Borrower agrees that, so long as any Bank has any Commitment or any
Loan or Letter of Credit Disbursement or accrued interest thereon remains unpaid
or any Letter of Credit remains outstanding:
SECTION 5.01. Information. The Borrower will deliver to each of the
Banks (directly or through the Agent):
(a) as soon as available and in any event within ninety (90) days
after the end of each fiscal year of the Borrower, an audited consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of
such fiscal year and the related consolidated statements of operations,
stockholders' equity and cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous fiscal year, all reported
on in the form of an unqualified audit opinion by Deloitte & Touche LLP or other
independent public accountants of nationally recognized standing;
(b) as soon as available and in any event within forty-five (45) days
after the end of each of the first three quarters of each fiscal year of the
Borrower, a consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of such quarter and the related consolidated
statements of operations, stockholders' equity and cash flows for such quarter
and for the portion of the Borrower's fiscal year ended at the end of such
quarter, setting forth in each case in comparative form the figures for the
-48-
corresponding quarter and the corresponding portion of the Borrower's previous
fiscal year, all certified (subject to normal year-end adjustments) as to
fairness of presentation, generally accepted accounting principles and
consistency by the principal financial officer or principal accounting officer
of the Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of the
principal financial officer or the principal accounting officer of the Borrower
(i) setting forth in reasonable detail the calculations required to establish
whether the Borrower was in compliance with the requirements of Sections 5.16,
5.17 and 5.18 of this Agreement on the date of such financial statements, (ii)
setting forth in reasonable detail the calculations required to establish the
covenants set forth in Sections 5.16, 5.17 and 5.18 for the Calculation Period
ended on the date of the most recent balance sheet included in such financial
statements, (iii) stating whether any Default exists hereunder on the date of
such certificate and, if any Default then exists, setting forth the details
thereof and the action which the Borrower is taking or proposes to take with
respect thereto, (iv) stating whether, since the date of the most recent
financial statements previously delivered pursuant to this Section, there has
been any material change in the generally accepted accounting principles applied
in the preparation of such statements, and, if so, describing such change and
(v) stating whether there is any Material Subsidiary that is required to be a
Guarantor but currently is not a Guarantor;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements as to (i)
whether anything has come to their attention to cause them to believe that any
Default existed on the date of such statements and (ii) confirming the
calculations set forth in the officer's certificate delivered simultaneously
therewith pursuant to clause (c) above; provided that the foregoing shall not be
construed to require that such accountants conduct any investigation outside the
regular course of their audit;
(e) within thirty (30) days after the end of each month in each fiscal
year of Borrower, a consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of the end of such month and the related
consolidated statements of operations, stockholders' equity and cash flows for
such month and for the portion of the Borrower's fiscal year ended at the end of
such month, setting forth in each case in comparative form the figures for the
corresponding month and the corresponding portion of the Borrower's previous
fiscal year, all certified (subject to normal year-end adjustments) as to
fairness of presentation, generally accepted accounting principles and
consistency by the principal financial officer or principal accounting officer
of the Borrower;
(f) within fifteen (15) days after the end of each month in each fiscal
year of Borrower, a Borrowing Base Certificate, together with a schedule setting
forth in reasonable detail Borrower's Inventory and the summary agings of all
accounts receivable of Borrower, certified by Borrower's principal financial
officer as of the end of such month;
-49-
(g) within fifteen (15) days after the end of each month in each fiscal
year of Borrower, an Inventory Location Report in the form of Exhibit F attached
hereto, setting forth in reasonable detail the location and dollar amount of the
Borrower's Inventory, certified by Borrower's principal financial officer as of
the end of such month;
(h) within thirty (30) days after the end of each fiscal year
(commencing for fiscal year 2002) of the Borrower, projections in reasonable
detail of an annual operating budget (detailed on a quarterly basis) and cash
flow of the Borrower and its Subsidiaries, prepared by Borrower, and also
containing a certification by its principal financial officer to the effect that
such projections have been prepared on a sound financial planning basis and that
the assumptions upon which such projections are based are reasonable;
(i) within five (5) days after the principal executive officer,
president or any financial officer of the Borrower obtains knowledge of any
Default, if such Default is then continuing, a certificate of the principal
financial officer or the principal accounting officer of the Borrower setting
forth the details thereof and the action which the Borrower is taking or
proposes to take with respect thereto;
(j) promptly upon the mailing thereof to the shareholders of the
Borrower generally, copies of all financial statements, reports and proxy
statements so mailed;
(k) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their
equivalents) which the Borrower shall have filed with the Securities and
Exchange Commission;
(l) if and when any member of the ERISA Group (i) gives or is required
to give notice to the PBGC of any "reportable event" (as defined in Section 4043
of ERISA) with respect to any Plan which might constitute grounds for a
termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event given or
required to be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any Multiemployer
Plan is in reorganization, is insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent
to terminate, impose liability (other than for premiums under Section 4007 of
ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of
such notice; (iv) applies for a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code, a copy of such application; (v) gives
notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of
such notice and other information filed with the PBGC; (vi) gives notice of
withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such
notice; or (vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which has resulted or could
reasonably be expected to result in the imposition of a Lien or the posting of a
bond or other security, a certificate of the principal financial officer or the
principal accounting officer of the Borrower setting forth details as to such
-50-
occurrence and action, if any, which the Borrower or applicable member of the
ERISA Group is required or proposes to take; and
(m) from time to time such additional information regarding the
financial position or business of the Borrower and the Subsidiaries as the
Agents and Arrangers (or either of them), at the request of any Bank, may
reasonably request.
SECTION 5.02. Payment of Obligations. The Borrower will pay and
discharge, and will cause each of its Subsidiaries to pay and discharge, at or
before maturity, all their respective material obligations and liabilities,
including, without limitation, tax liabilities, except where the same may be
contested in good faith by appropriate proceedings, and will maintain, and will
cause each Subsidiary to maintain, in accordance with generally accepted
accounting principles, appropriate reserves for the accrual of any of the same.
SECTION 5.03. Maintenance of Property; Insurance. (a) The Borrower will
keep, and will cause each of its Subsidiaries to keep, all property necessary in
its business in good working order and condition, ordinary wear and tear
expected.
(b) The Borrower will maintain, and will cause each of its Subsidiaries
to maintain, insurance in such amounts and against such risks as is customary
for companies in the same or similar businesses, in each case with financially
sound and reputable insurers. Agent shall be named as loss payee on all property
loss policies for inventory and all Banks shall be named as additional insureds
on all liability policies.
SECTION 5.04. Conduct of Business and Maintenance of Existence. The
Borrower will continue, and will cause each of its Subsidiaries to continue, to
engage in business of the same general type as now conducted by the Borrower and
its Subsidiaries, and will preserve, renew and keep in full force and effect,
and will cause each of its Subsidiaries to preserve, renew and keep in full
force and effect, their respective corporate existence and their respective
rights, privileges and franchises necessary or desirable in the normal conduct
of business; provided that nothing in this Section 5.04 shall prohibit (i) any
merger of any Subsidiary of the Borrower permitted by Section 5.11(a) or (ii)
the termination of the corporate existence of any Subsidiary if the Borrower in
good faith determines that such termination is in the best interest of the
Borrower and is not materially disadvantageous to the Banks.
SECTION 5.05. Compliance with Laws. The Borrower will comply, and cause
each of its Subsidiaries to comply, in all material respects with all applicable
laws, ordinances, rules, regulations, and requirements of any Governmental
Authority (including, without limitation, Environmental Laws and ERISA and the
rules and regulations thereunder) except where the necessity of compliance
therewith is contested in good faith by appropriate proceedings or where
noncompliance would not have a Material Adverse Effect.
SECTION 5.06. Inspection of Property, Books and Records. The Borrower
will keep, and will cause each of its Subsidiaries to keep, proper books of
record and account in which full, true and correct entries shall be made of all
dealings and transactions in relation to its business and activities. The
-51-
Borrower will permit, and will cause each of its Subsidiaries to permit,
representatives of the Agent, at Borrower's expense to visit and inspect any of
their respective properties, to examine and make abstracts from any of their
respective books and records and to discuss their respective affairs, finances
and accounts with their respective officers and independent public accountants
as follows: (a) unless an Event of Default shall have occurred hereunder, the
Agent may exercise such option no more than three (3) times in any calendar
year; and (b) the exercise by the Agent of its rights under this sentence shall
require reasonable prior notice to the Borrower and shall be conducted during
normal business hours in a reasonable manner so as not to disrupt the normal
conduct of the Borrower's business. Notwithstanding anything contained to the
contrary herein or in any of the Loan Documents, upon the occurrence of an Event
of Default, the Agent may visit and inspect the Borrower, any of its
Subsidiaries and any of their respective properties, in order to examine and
make abstracts from any of their respective books and records and to discuss
their respective affairs, finances and accounts with their respective officers
and independent public accountants as often as may reasonably be desired. In
addition, Agent has the right at any time to conduct an inventory appraisal at
the Agent's expense, provided, however, upon the occurrence of an Event of
Default, any such inventory appraisal shall be at Borrower's expense.
SECTION 5.07. Additional Guarantors. If at any time after the Effective
Date any Subsidiary (other than (a) a Guarantor or (b) any Foreign Subsidiary
that does not Guarantee any Obligations of the Borrower) is or becomes a
Material Subsidiary, the Borrower, within thirty (30) days of such Subsidiary
becoming a Material Subsidiary, will cause such Subsidiary to become a Guarantor
pursuant to the Guarantee Agreement.
SECTION 5.08. Amendment of Certain Documents. Neither the Borrower nor
any of its Subsidiaries shall, without the prior written consent of the Agent
and the Arrangers, amend or modify any of the Primary Licensing Agreements where
such amendment or modification would have a Material Adverse Effect on rights of
the Banks thereunder. Borrowers shall, within fifteen (15) days of termination
of any material licensing or distribution agreement, provide Agent with notice
of such termination.
SECTION 5.09. Investments. Neither the Borrower nor any of its
Subsidiaries will make or acquire any Investment in any Person other than:
(a) Existing investments by the Borrower, as more specifically
identified on Schedule 5.09;
(b) Investments made on the Closing Date in connection with the Arden
Acquisition;
(c) Investments by the Borrower or any Guarantor in the Borrower or any
Guarantor provided, however investments in a Subsidiary that is not a Guarantor
shall be limited to $5,000,000 in the aggregate;
(d) Advances to employees for business expenses or for personal needs
not to exceed Five Hundred Thousand Dollars ($500,000) in the case of any one
(1) employee and not to exceed Two Million Five Hundred Thousand Dollars
-52-
($2,500,000) in the aggregate to all such employees of Borrower outstanding at
any one time;
(e) investments in short-term obligations of the United States of
America;
(f) demand deposits, certificates of deposit, bankers' acceptances and
time deposits of United States banks having total assets in excess of
$250,000,000;
(g) securities commonly known as "commercial paper" issued by a
corporation organized and existing under the laws of the United States of
America or any state thereof which at the time of purchase have been rated and
the ratings for which are not less than "P-1" if rated by ▇▇▇▇▇'▇ Investors
Services, Inc., and not less than "A-1" if rated by Standard & Poor's;
(h) any other investments made by Borrower, the aggregate amount of
which at no time exceed $5,000,000;
(i) investments in money market funds, liquid assets funds and other
similar funds purchasing, investing in or otherwise acquiring or holding only
investments otherwise permitted by paragraphs (c) through (f) of this Section
5.09;
(j) investments by the Borrower or any Subsidiaries in any of the
Foreign Subsidiaries who are not Guarantors, for working capital or general
corporate purposes, which when aggregated with amounts committed under clause
(viii) of the definition of Permitted Indebtedness and outstanding Indebtedness
under clause (xi) thereof shall not exceed $50,000,000 in the aggregate;
provided, that after giving effect to any such investments, the Borrower shall
have excess borrowing availability under this Agreement of at least $10,000,000
and provided, further, any committed or outstanding amounts of Indebtedness
under clause (viii) of the definition of Permitted Indebtedness shall
permanently reduce dollar-for-dollar the amount of investments permitted under
this Section 5.9(j);
(k) investments as a result of a Permitted Acquisition.
SECTION 5.10. Negative Pledge. Neither the Borrower nor any of its
Subsidiaries will create, assume or suffer to exist any Lien on any asset now
owned or hereafter acquired by it, except the following:
(a) Liens securing Permitted Indebtedness to the extent expressly
permitted;
(b) Liens existing on the date of this Agreement identified on Schedule
5.10 securing only the obligations identified on such Schedule;
(c) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by any Lien permitted by any of the foregoing
clauses of this Section; provided that such Debt is not increased (except for
the capitalization of interest) and is not secured by any additional assets;
-53-
(d) Liens for taxes not delinquent or being contested in good faith and
by appropriate proceedings;
(e) deposits or pledges to secure obligations under workers'
compensation, social security or similar laws, or under unemployment insurance
or to secure the performance of bids, tenders, contracts (other than for the
repayment of borrowed money) or leases, or to secure statutory obligations or
surety or appeal bonds, or to secure indemnity, performance or other similar
bonds in the ordinary course of business;
(f) mechanics', workers', materialmen's, warehousemen's, lessor's or
other like Liens arising in the ordinary course of business with respect to
obligations which are not due or which are being contested in good faith; or
(g) Liens arising in the ordinary course of its business which (i) do
not secure Debt or any monetary obligation and (ii) do not in the aggregate
materially detract from the value of its assets or materially impair the use
thereof in the operation of its business; provided, however, in any case such
Lien shall not secure obligations in excess of $2,000,000 in the aggregate.
SECTION 5.11. Consolidations, Mergers and Sales of Assets. (a) Neither
the Borrower nor any of its Subsidiaries will consolidate or merge with or into
any other Person, except that if, after giving effect thereto, no Default shall
have occurred and be continuing, (i) any Subsidiary of the Borrower may be
merged into the Borrower if the Borrower is the surviving corporation, (ii) any
Subsidiary of the Borrower may merge with any other corporation (other than the
Borrower) if such Subsidiary is the surviving corporation; provided, that if a
Guarantor is a party to any such merger, such Guarantor shall be the surviving
corporation and (iii) Permitted Acquisitions and asset dispositions permitted
pursuant to Subsection (b) of this Section may be consummated in the form of a
merger, as long as, in the event of a Permitted Acquisition, the Borrower or a
Subsidiary is the surviving Person, provided that any such merger involving a
Person that is not a wholly owned Subsidiary immediately prior to such merger
shall not be permitted unless also permitted by Section 5.09 and provided
further that any such merger involving a Person that is a Guarantor shall not be
permitted unless such Guarantor is the surviving Person.
(b) Neither the Borrower nor any of its Subsidiaries will sell, lease
or otherwise transfer any asset, except (i) in the ordinary course of its
business (which ordinary course shall include the sale or other disposition of
obsolete or excess inventory or intellectual property, fixtures or equipment to
the extent ordinary and consistent with past practice), (ii) sale of assets, not
in the ordinary course of business, which from and after the Closing Date do not
in the aggregate exceed $25,000,000, or (iii) transfers made as Investments
permitted by Section 5.09 or Restricted Payments permitted by Section 5.14.
SECTION 5.12. Use of Proceeds and Letters of Credit. The proceeds of
the Loans (including Letters of Credit) will be used to (a) pay off outstanding
Debt under the Existing Indebtedness, (b) for on-going working capital
requirements of the Borrower and its Subsidiaries and (c) to fund the
-54-
Acquisition of the Purchased Assets, constituting accounts receivable and
inventory. Letters of Credit will be issued only as (a) documentary Letters of
Credit used only to support obligations of the Borrower or any Subsidiary (other
than a Foreign Subsidiary) related to the purchase of Inventory in the ordinary
course of business or (b) standby Letters of Credit used to support other
obligations of the Borrower or any Subsidiary. None of such proceeds of the
Loans will be used, directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of buying or carrying any Margin Stock.
SECTION 5.13. Transactions with Affiliates. The Borrower will not, nor
will it permit any of its Subsidiaries to, directly or indirectly, enter into
any transaction, including any purchase, sale, lease or exchange of property or
rendering of services, with or for the benefit of any Affiliate, other than (a)
any such transaction expressly permitted by this Agreement (including any
Investment in an Affiliate expressly permitted under Section 5.09), (b) any such
transactions where each of the parties thereto is either the Borrower or a
Guarantor or (c) any transaction entered into by the Borrower or any Subsidiary
which is (i) not otherwise prohibited under this Agreement, (ii) in the ordinary
course of business of such entity's business and (iii) upon fair and reasonable
terms no less favorable to such entity than it would obtain in a comparable
arm's-length transaction with a Person not an Affiliate.
SECTION 5.14. Restricted Payments. The Borrower will not, nor will it
permit any subsidiary to make any Restricted Payments except:
(a) a dividend paid by a wholly-owned Subsidiary to the Borrower;
(b) up to Four Million Dollars ($4,000,000) in payments pursuant to the
existing Stock Repurchase Plan authorized by the Board of Directors of the
Borrower by written consent on January 20, 2000;
(c) redemption of the Seller Preferred with the proceeds of an equity
issuance; or
(d) as long as no Event of Default exists and is continuing, any other
payments in the aggregate amount which shall not exceed One Million Dollars
($1,000,000).
SECTION 5.15. Borrower or Guarantor Debt. The Borrower will not, nor
will it permit any Subsidiary to, create, assume or otherwise be or become
liable with respect to any Debt except:
(a) Debt of the Borrower in respect of the Loans and the Letters of
Credit;
(b) Debt of the Guarantors in respect of the Guarantees under the
Guarantee Agreement;
(c) Debt owed by any Guarantor to the Borrower or any Subsidiary or
debt owed by the Borrower to any Subsidiary; or
-55-
(d) The Permitted Indebtedness.
SECTION 5.16. Consolidated Total Debt/EBITDA Ratio. The Consolidated
Total Debt/EBITDA Ratio will not exceed the following levels for each respective
Calculation Period;
Ratio Calculation Period:
----- -------------------
3.25:1.00 for the fiscal quarter ending April 30,2001;
3.50:1.00 for the fiscal quarter ending July 31, 2001;
3.75:1.00 for the fiscal quarter ending October 31, 2001;
3.00:1.00 for the fiscal quarter ending January 31, 2002;
2.75:1.00 for the fiscal quarter ending April 30, 2002;
3.25:1.00 for the fiscal quarter ending July 31, 2002;
3.50:1.00 for the fiscal quarter ending October 31, 2002;
2.75:1.00 for the fiscal quarter ending January 31, 2003;
2.50:1.00 for the fiscal quarter ending April 30, 2003 and
each April 30 quarter end thereafter;
3.00:1.00 for the fiscal quarter ending July 31, 2003 and
each July 31 quarter end thereafter;
3.25:1.00 for the fiscal quarter ending October 31, 2003 and
each October 31 quarter end thereafter; and
2.50:1.00 for the quarter ending January 31, 2004 and each
January 31 quarter end thereafter.
SECTION 5.17. Interest Coverage Ratio. The Interest Coverage Ratio will
not be less than the following levels for each fiscal quarter ended in each of
the following Calculation Periods:
Interest Coverage Ratio Calculation Period
----------------------- ------------------
2.50:1.0 Fiscal Year 2002;
2.75:1.0 Fiscal Year 2003; and
-56-
3.00:1.00 Fiscal Year 2004 and thereafter.
SECTION 5.18. Shareholders' Equity Base. The Borrower will maintain
Shareholders' Equity Base of at least equal to $100,000,000 ("Minimum Amount")
from the Effective Date through April 30, 2001; provided, however, the Minimum
Amount shall be increased quarterly thereafter on a cumulative quarterly basis
by an amount equal to 50% of the positive Consolidated Net Income for the prior
fiscal quarter.
SECTION 5.19. Sale and Lease Back Transaction. The Borrower will not,
nor will it permit any Subsidiary to, enter into any Sale and Lease Back
Transaction.
SECTION 5.20. Principal Depository; Lock Box. The Borrower shall use
the Agent as the principal depository of its corporate funds and shall deposit,
as received, into the lock box and the blocked account established with the
Agent in Providence, Rhode Island, all now existing or hereafter arising cash,
checks, instruments and remittances constituting customer receivables, and all
proceeds of the Accounts received by the Borrower or any of its Subsidiaries.
The parties agree that the lockbox and the blocked account shall be established
within six months of the Effective Date and in the meantime Borrower will
maintain and/or establish blocked accounts with Agent. In connection with the
Lock Box, Borrower shall pay a floating fee pursuant to the terms of the Agent's
standard lock box documentation.
SECTION 5.21. Borrowing Base Certificate. The Borrower shall not modify
or change in any manner the categories listed on the Borrowing Base Certificate
delivered on the Effective Date, without the prior written consent of the Agent.
SECTION 5.22. Capital Expenditures. The Borrower shall not make Capital
Expenditures during any fiscal year in excess of $25,000,000 ("Capital
Expenditure Allotment") plus an amount equal to no more than Five Million
Dollars which represents all or a portion of the Capital Expenditure Allotment
not used for Capital Expenditures during the prior year.
SECTION 5.23. Name Changes. The Borrower shall, as soon as practicable,
it changes its name, file the necessary documentation to reflect its name change
in all domestic locations where it is presently qualified to do business.
SECTION 5.24. Foreign Jurisdictions. Borrower will inform Agent upon
qualifying (or causing its Material Subsidiaries to qualify) to do business in
any United States jurisdictions where it is not presently qualified to do
business.
-57-
ARTICLE VI
Defaults
--------
SECTION 6.01. Events of Default. If one or more of the following events
("Events of Default") shall have occurred and be continuing:
(a) (i) the Borrower shall fail to pay when due any principal on any
Loan or any reimbursement obligation in respect of a Letter of Credit
Disbursement or (ii) the Borrower shall fail to pay interest on any Loan, any
fees or any other amount payable hereunder or under any other Loan Document
within five (5) days of the time such amount is due;
(b) the Borrower shall fail to observe or perform any covenant
contained in Section 5.01 or any of Sections 5.08 to 5.22, inclusive;
(c) the Borrower shall fail to observe or perform any covenant or
agreement contained in any Loan Document (other than those covered by clause (a)
or (b) above) for thirty (30) days after written notice thereof has been given
to the Borrower by the Agent;
(d) any representation, warranty, certification or statement made by
the Borrower in this Agreement or any other Loan Document or in any certificate,
financial statement or other document delivered pursuant to this Agreement or
any other Loan Document shall prove to have been incorrect in any material
respect when made (or deemed made);
(e) the Borrower or any Subsidiary shall fail to make any payment in
respect of any Material Debt or Permitted Indebtedness when due or within any
applicable grace period;
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt or Permitted Indebtedness or
enables (or, with the giving of notice or lapse of time or both, would enable)
the holder of such Material Debt or Permitted Indebtedness any Person acting on
such holder's behalf to accelerate the maturity thereof or, under circumstances
in the nature of a default, to require the prepayment or repurchase thereof
prior to the maturity thereof;
(g) the Borrower or any Subsidiary shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing;
-58-
(h) an involuntary case or other proceeding shall be commenced against
the Borrower or any Subsidiary seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of sixty (60) days; or an
order for relief shall be entered against the Borrower or any Subsidiary under
the federal bankruptcy laws as now or hereafter in effect;
(i) one or more judgments or orders for the payment of money in an
aggregate amount in excess of $5,000,000 shall be rendered against the Borrower
or any Subsidiary or a combination thereof and shall continue unsatisfied and
unstayed for a period of 60 days, or any action shall be legally taken by a
judgment creditor to levy upon assets or properties of the Borrower or any
Subsidiary to enforce any such judgment;
(j) a Change of Control shall occur;
(k) the Guarantee of any Guarantor under the Guarantee Agreement shall
cease to be, or shall be asserted by such Guarantor not to be, a valid and
binding obligation of such Guarantor, except as expressly contemplated by the
Guarantee Agreement;
(l) a contribution required to be made with respect to any defined
contribution plan has not been timely made, the Borrower or any Guarantor has
incurred or is likely to incur any liability to or on account of any defined
contribution plan under Section 409, 502(i) or 502(1) of ERISA or Section 4975
of the Code or on account of a group health plan (as defined in Section 607(1)
of ERISA or Section 4980B(g)(2) of the Code) under Section 4980B of the Code, or
the Borrower or any other Credit Party has incurred or is likely to incur
liabilities pursuant to one or more employee welfare benefit plans (as defined
in Section 3(1) of ERISA) that provide benefits to retired employees or other
former employees (other than as required by Section 601 of ERISA) or the
Borrower or any Guarantor has incurred or is likely to incur liabilities
pursuant to one or more Defined Contribution Plans; and such liability,
individually, and/or in the aggregate, has had, or is reasonably likely to have,
a Material Adverse Effect;
then, and in every such event, the Agent shall (i) if requested by the
Required Banks, by notice to the Borrower terminate the Commitments and they
shall thereupon terminate, (ii) if requested by the Required Banks holding Notes
evidencing more than 50% in aggregate principal amount of the Loans, by notice
to the Borrower declare the Notes of the Borrower (together with accrued
interest thereon) to be, and the Notes (together with accrued interest thereon)
shall thereupon become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrower, or, (iii) if requested by the Required Banks, do any combination of
the foregoing; provided that in the case of any of the Events of Default
specified in clause (g) or (h) above with respect to the Borrower, without any
notice to the Borrower or any other act by the Agent or the Banks, (i) the
Commitments shall thereupon terminate, (ii) the Notes of the Borrower (together
with accrued interest thereon) shall become immediately due and payable without
-59-
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower and (iii) the Borrower shall be required to
provide, immediately, cash collateral as contemplated by Section 2.15(j) in an
amount equal to the Letter of Credit Exposure.
SECTION 6.02. Default. The Agent shall give notice to the Borrower
under Section 6.01(c) promptly upon being requested to do so by any Bank and
shall thereupon notify all the Banks thereof.
SECTION 6.03. Management; Collection of Accounts. (a) Upon the
occurrence of an Event of Default, upon request of the Required Banks, Borrower
shall arrange for all payments due to Borrower from any Person, including, but
not limited to, customers or account debtors of Borrower, to be made directly to
lock-boxes owned or designated by Agent to which Agent or its designee shall
have exclusive access for the purpose of collecting and processing payments on
Accounts, or in such other manner as the Required Banks may reasonably direct.
Agent shall credit all payments made with respect to Accounts of Borrower to
Borrower's account, conditioned upon final collection. All items of payment
received (subject to dishonor) upon the collection of any Account shall be
applied (conditioned upon final collection) by Agent to outstanding Committed
Loans on the Domestic Business Day that payment is received by Agent in
immediately available funds at its office in Providence, Rhode Island. Any such
payment which is not received in such form or prior to 1:00 Noon (New York, New
York time) shall be deemed received for all purposes of this Agreement on the
next succeeding Domestic Business Day on which such funds become immediately
available prior to such time.
(b) In the event the Borrower (or any Affiliate of the Borrower or any
Person acting for or in concert with the Borrower) shall, notwithstanding the
existence of any lock-box arrangement referred to in subsection (a) of this
Section, receive any monies, checks, drafts or other similar negotiable items of
payments made with respect to Accounts of the Borrower, the Borrower or such
Persons shall receive the same in trust and shall deliver to Agent (or to a
depository designated by Agent) in original form and on the date of receipt
thereof, all checks, drafts, notes, money orders, acceptances, cash and other
evidences of Debt.
(c) Upon the occurrence of an Event of Default, the Borrower will, at
the Required Banks' request, at the Borrower's cost and expense, collect and
otherwise enforce as Banks' property and in trust for Agent for the ratable
benefit of the Banks all amounts payable on or otherwise receivable with respect
to the Accounts and Inventory of the Borrower. In such event, as to all moneys
so collected and all other proceeds of Accounts and Inventory received by the
Borrower, the Borrower shall receive in trust and shall deliver to Agent (or to
a lock-box designated by Agent pursuant to Section 5.21 hereof) in original form
and on the date of receipt thereof, all checks, drafts, notes, money orders,
acceptances, cash and other evidences of Debt. Upon any termination of the
Borrower's authority to collect and enforce the Accounts and amounts payable
with respect to Inventory of the Borrower (which Agent may do at any time after
the occurrence of an Event of Default, or the occurrence of any event which,
with the passage of time or giving of a Default notice or both, would constitute
an Event of Default), Agent may send a notice of assignment and/or notice of
Banks' security interest to any and all customers or any third party otherwise
concerned with any of the Accounts or such Inventory, and thereafter Agent shall
-60-
have the sole right to collect and receive and/or take possession of the
Accounts and such other amounts and the books and records relating thereto.
(d) (i) the Borrower hereby constitutes Agent or its designee
on behalf of the Banks as the Borrower's attorney-in-fact with power: to
receive, endorse, assign and/or deliver in its name or the name of the Borrower
any notes, acceptances, checks, drafts, money orders or other evidences of
payment or account that may come into its possession and the Borrower hereby
waives notice of presentment, protest and non-payment of any instrument so
endorsed; to sign the Borrower's name on any invoice or ▇▇▇▇ of lading relating
to any of the Accounts; and to send verifications of Accounts; to do all other
acts and things necessary to carry out this Agreement and, upon the occurrence
of an Event of Default, to notify postal service authorities to change the
address for delivery of mail addressed to the Borrower to such address as Agent
may designate. All acts of said attorney or designee are hereby ratified and
approved, and said attorney or designee shall not be liable for any acts of
omission or commission, for any error of judgment or for any mistake of fact or
law, provided that Agent or its designee shall not be relieved of liability to
the extent it is determined by a final judicial decision that its act, error or
mistake constituted gross negligence or willful misconduct. This power of
attorney, being coupled with an interest, is irrevocable until all of the
obligations of the Borrower to Agent under this Agreement and the Notes are paid
in full and the Commitment is terminated.
(ii) Agent, on behalf of the Banks, without notice to or
consent of the Borrower, upon the occurrence of an Event of Default, (A) may
make demand on, ▇▇▇ upon or otherwise collect, extend the time of payment of, or
compromise or settle for cash, credit or otherwise upon such terms as shall be
determined by Agent in its sole discretion, any of the Accounts or any
securities, instruments or insurance applicable thereto and/or release the
obligor thereon; and (B) is authorized and empowered to accept the return of the
goods represented by any of the Accounts.
(e) Nothing herein contained shall be construed to constitute
the Borrower as agent of Agent for any purpose whatsoever, and Agent shall not
be responsible or liable for any shortage, discrepancy, damage, loss or
destruction of any part of the Collateral wherever the same may be located and
regardless of the cause thereof (except for Agent's obligations, if any, under
the Uniform Commercial Code with respect thereto or to the extent it is
determined by a final judicial decision that Agent's act or omission constituted
gross negligence or willful misconduct). Agent shall not, under any
circumstances or in any event whatsoever, have any liability for any error or
omission or delay of any kind occurring in the settlement, collection or payment
of any of the Accounts or any instrument received in payment thereof or for any
damage resulting therefrom (except to the extent it is determined by a final
judicial decision that Agent's error, omission or delay constituted gross
negligence or willful misconduct). Agent, by anything herein or in any
assignment or otherwise, does not assume any of the Borrower's obligations under
any contract or agreement assigned to Agent, and Agent shall not be responsible
in any way for the performance by Borrower of any of the terms and conditions
thereof.
-61-
(f) If any of the Accounts include a charge for any tax
payable to any governmental tax authority, Agent is hereby authorized (but in no
event obligated) to pay the amount thereof to the proper taxing authority for
the Borrower's account and to charge Borrower's account therefor. The Borrower
shall notify Agent if any Accounts include any tax due to any such taxing
authority and, in the absence of such notice, Agent shall have the right to
retain the full proceeds of such Accounts and shall not be liable for any taxes
that may be due from the Borrower by reason of the sale and delivery creating
such Accounts.
SECTION 6.04. Status of Accounts.
(a) With respect to Eligible Accounts Receivable of the Borrower in
existence on the date hereof and at the time any future Eligible Accounts
Receivable are included in any Borrowing Base Certificate, the Borrower
represents and warrants that:
(i) the Borrower is the sole owner of the Account and is fully
authorized to sell, transfer, pledge and/or grant a security interest
in each and every Account, free and clear of all liens except in favor
of Agent for the ratable benefit of Banks or otherwise permitted
hereunder;
(ii) each Account is a good and valid account representing a
bona fide transaction completed in accordance with the terms and
provisions contained in any documents related thereto;
(iii) the amount of the face value shown on any schedule of
Accounts provided to Agent and/or all invoices and statements delivered
to Agent with respect to any Account, are actually and absolutely owing
to the Borrower for delivery of goods or services and are not
contingent for any reason;
(iv) to the best of the Borrower's knowledge, there are no
setoffs, counterclaims or disputes existing or asserted with respect
thereto, the Account is not a contra account, and the Borrower not has
made any agreement with any account debtor thereunder for any deduction
therefrom, except a discount or allowance allowed by the Borrower in
the ordinary course of its business for prompt payment consistent with
past practices of the Borrower, all of which discounts or allowances
are reflected in the calculation of the face value of each respective
invoice related thereto;
(v) none of the transactions underlying or giving rise to any
Account shall violate in any material respect any applicable state or
federal laws or regulations, and all documents relating to any Account
shall be legally sufficient under such laws or regulations and shall be
legally enforceable in accordance with their terms;
(vi) to the best of the Borrower's knowledge, all signatures
and endorsements that appear on all documents and agreements relating
to Accounts are genuine and each account debtor, guarantor or endorser
thereunder (i) had the capacity, power and authority to contract at the
time any such document or agreement giving rise to the Account was
-62-
executed and (ii) is solvent and will continue to be fully able to pay
all Accounts on which it is obligated in full when due;
(vii) all documents and agreements relating to Accounts are
true and correct and in all respects what they purport to be and are
not evidenced by a judgment;
(viii) to the best of the Borrower's knowledge, there are no
facts, events or occurrences which in any way impair the validity or
enforcement thereof or tend to reduce the amount payable or collectible
thereunder from the amount of the invoice face value shown on any
schedule of Accounts, and on all contracts, invoices and statements
delivered to Agent with respect thereto;
(ix) the goods giving rise thereto are not, and were not at
the time of the sale thereof, subject to any lien, claim, encumbrance
or security interest, except the lien of the Borrower as vendor thereof
pursuant to the Uniform Commercial Code, the security interest of Banks
pursuant to the Loan Documents and the security interests permitted by,
the Permitted Indebtedness;
(x) to the best of the Borrower's knowledge, there are no
proceedings or actions which are threatened or pending against any
account debtor thereunder which might result in any material adverse
change in the financial condition of such account debtor; and
(xi) they have not been pledged to any other Person except as
permitted by, and subject to, Article V of this Agreement.
(b) the Borrower covenants that, from and after the date hereof:
(i) the Borrower shall maintain books and records pertaining
to said Collateral in such detail, form and scope as Banks shall
reasonably require;
(ii) the Borrower will, promptly upon learning thereof, report
to Agent any matters materially adversely affecting the value,
enforceability or collectibility of any of the Accounts;
(iii) if any amount payable under or in connection with any
Account is evidenced by a promissory note or other instrument, as such
terms are defined in the Uniform Commercial Code, such promissory note
or instrument shall be immediately pledged, endorsed, assigned and
delivered to Agent for the ratable benefit of Banks as additional
collateral;
(iv) other than in the ordinary course of business, the
Borrower shall not re-date any invoice or sale, or make sales on
extended terms dating beyond that customary in the industry;
-63-
(v) The Borrower shall conduct a physical count of its
inventory at such intervals as the Agent may reasonably request, and
promptly supply Agent with a copy of such counts accompanied by a
report of the value (based on the lower of average cost basis and
market value) of such inventory;
(vi) The Borrower shall not, without the Agent's prior written
consent, grant any extension of the time of payment of any Eligible
Account Receivable, compromise or settle any Eligible Account
Receivable for less than the full amount thereof, release in whole or
in part, any Person or property liable for the payment thereof, or
allow any credit or discount whatsoever thereon (other than discounts
in the ordinary course of business for prompt payment consistent with
past practices); provided, that, the Borrower may without the Agent's
prior written consent grant extensions of time of payment for Accounts
which are not Eligible Accounts Receivable, or compromise or settle any
such Accounts for less than the full amount thereof or allow a credit
or discount on any such Account, so long as such extension, compromise,
settlement, credit or discount is in the ordinary course of the
Borrower's business consistent with past practices and on such terms as
may be customary in the industry.
SECTION 6.05. Collateral Custodian. Upon the occurrence of an Event of
Default, Agent may at any time and from time to time employ and maintain in the
premises of the Borrower a custodian selected by Agent who shall have full
authority to do all acts necessary to protect Banks' interests and to report to
Agent thereon. The Borrower hereby agrees to cooperate with any such custodian
and to do whatever Agent may reasonably request to preserve the collateral. All
costs and expenses incurred by Agent by reason of the employment of the
custodian shall be charged to the Borrower's account and added to the amounts
due and owing under this Agreement and the Notes.
ARTICLE VII
The Agent
---------
SECTION 7.01. Appointment and Authorization. Each Bank irrevocably
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement and the other Loan Documents as are
delegated to the Agent by the terms hereof or thereof, together with all such
powers as are reasonably incidental thereto.
SECTION 7.02. Agent and Affiliates. Fleet National Bank shall have the
same rights and powers under this Agreement as any other Bank and may exercise
or refrain from exercising the same as though it were not the Agent, and Fleet
National Bank and its affiliates may accept deposits from, lend money to, and
generally engage in any kind of business with the Borrower or any Subsidiary or
Affiliate of the Borrower as if it were not the Agent hereunder.
SECTION 7.03. Action by Agent. The obligations of the Agent under this
Agreement or any other Loan Documents are only those expressly set forth herein
or therein. Without limiting the generality of the foregoing, the Agent shall
-64-
not be required to take any action with respect to any Default, except as
expressly provided in Article VI.
SECTION 7.04. Consultation with Experts. The Agent may consult with
legal counsel (who may be counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
SECTION 7.05. Liability of Agent. Neither the Agent nor any of its
directors, officers, agent, or employees shall be liable for any action taken or
not taken by it in connection herewith (i) with the consent or at the request of
the Required Banks or (ii) in the absence of its own gross negligence or willful
misconduct. Neither the Agent nor any of its directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire into
or verify (i) any statement, warranty or representation made in connection with
this Agreement or any other Loan Document or any Borrowing hereunder; (ii) the
performance or observance of any of the covenants or agreements of the Borrower;
(iii) the satisfaction of any condition specified in Article III, except receipt
of items required to be delivered to the Agent; or (iv) the validity,
effectiveness or genuineness of this Agreement, the other Loan Documents or any
other instrument or writing furnished in connection herewith or therewith unless
specifically requested to do so by a Bank. The Agent shall not incur any
liability by acting in reliance upon any notice, consent, certificate,
statement, or other writing (which may be a bank wire, telex or similar writing)
believed by it in good faith to be genuine or to be signed by the proper party
or parties.
SECTION 7.06. Indemnification. Each Bank shall, in accordance with its
Applicable Percentage, indemnify the Agent (to the extent not reimbursed by the
Borrower) against any cost, expense (including counsel fees and disbursements),
claim, demand, action, loss or liability (except such as result from the Agent's
gross negligence or willful misconduct) that the Agent may suffer or incur in
connection with this Agreement or any other Loan Document or any action taken or
omitted by the Agent hereunder or thereunder. If a Bank makes any
indemnification payment to the Agent pursuant to this Section and thereafter the
Agent receives payment from any Borrower in respect of the same indemnified
amount, the Agent shall reimburse such Bank to the extent of its ratable share
of such payment received by the Agent.
SECTION 7.07. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement.
SECTION 7.08. Successor Agent. The Agent may resign at any time by
giving at least 15 days prior written notice thereof to the Banks and the
Borrower. Upon any such resignation, the Required Banks shall have the right to
appoint a successor Agent approved by the Borrower (such approval not to be
unreasonably withheld); provided that no approval of the Borrower shall be
-65-
necessary if an Event of Default has occurred and is continuing. If no successor
Agent shall have been so appointed by the Required Banks and, if required,
approved by the Borrower and shall have accepted such appointment, within 30
days after the retiring Agent gives notice of resignation, then the retiring
Agent may, on behalf of the Banks, appoint a successor Agent, which shall be a
commercial bank organized or licensed under the laws of the United States of
America or of any State thereof and having a combined capital and surplus of at
least $50,000,000. Upon the acceptance of its appointment as Agent by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Article shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent.
SECTION 7.09. Agent's Fees. The Borrower shall pay to the Agent for its
own account fees in the amounts and at the times previously agreed upon between
the Borrower and the Agent.
SECTION 7.10. Sub-Agent; Issuing Banks; Swingline Lender. The Agent may
perform any of its obligations and exercise any of its rights under the Loan
Documents by or through sub-agent. The provisions of this Article VII shall
inure to the benefit of any sub-agent of the Agent, each Issuing Bank and the
Swingline Lender in the same manner and to the same extent as they inure to the
benefit of the Agent.
ARTICLE VIII
Change in Circumstances
-----------------------
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair.
If on or prior to the first day of any Interest Period for any LIBOR Rate
Borrowing Required Banks advise the Agent that the LIBOR Rate, as determined by
the Agent will not adequately and fairly reflect the cost to such Banks of
funding their LIBOR Loans for such Interest Period, the Agent shall forthwith
give notice thereof to the Borrower and the Banks, whereupon until the Agent
notifies the Borrower that the circumstances giving rise to such suspension no
longer exist, (i) the obligations of the Banks to make LIBOR Loans or to convert
outstanding Committed Loans into LIBOR Loans shall be suspended, (ii) each
outstanding Committed LIBOR Loan shall be converted into a Base Rate Loan on the
last day of the then current Interest Period applicable thereto, and (iii)
unless the Borrower notifies the Agent at least two Domestic Business Days
before the date of any LIBOR Rate Borrowing for which a Notice of Borrowing has
previously been given that it elects not to borrow on such date shall instead be
made as a Base Rate Borrowing.
SECTION 8.02. Illegality. If, on or after the date of this Agreement,
the adoption of any applicable law, rule or regulation, or any change therein,
or any change 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 Bank (or its
LIBOR Lending Office) with any request or directive (whether or not having the
force of law) of any such authority, central bank or comparable agency shall
-66-
make it unlawful or impossible for any Bank (or its LIBOR Lending Office) to
make, maintain or fund its LIBOR Loans and such Bank shall so notify the Agent,
the Agent shall forthwith give notice thereof to the other Banks and the
Borrower, whereupon until such Bank notifies the Borrower and the Agent that the
circumstances giving rise to such suspension no longer exist, the obligation of
such Bank to make LIBOR Loans to the Borrower shall be suspended. Before giving
any notice to the Agent pursuant to this Section, such Bank shall designate a
different LIBOR Lending Office if such designation will avoid the need for
giving such notice and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. If such Bank shall determine that it may not
lawfully continue to maintain and fund any of its outstanding LIBOR Loans to the
Borrower to maturity and shall so specify in such notice, the Borrower shall
immediately prepay in full the then outstanding principal amount of each such
LIBOR Loan, together with accrued interest thereon. Concurrently with prepaying
each such LIBOR Loan, the Borrower shall borrow a Base Rate Loan in an equal
principal amount from such Bank (on which interest and principal shall be
payable contemporaneously with the related LIBOR Loans of the other Banks), and
such Bank shall make such a Base Rate Loan.
SECTION 8.03. Increased Cost and Reduced Return. (a) If on or after the
date hereof, in the case of any Committed Loan or any obligation to make
Committed Loans, the adoption of any applicable law, rule or regulation, or any
change in any applicable law, rule or regulation, or any change 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 Bank (or its Applicable Lending Office) with any
request or directive (whether or not having the force of law) of any such
governmental authority, central bank or comparable agency shall impose, modify
or deem applicable any reserve, special deposit, insurance assessment or similar
requirement (including, without limitation, any such requirement imposed by the
Board of Governors of the Federal Reserve System, against assets of, deposits
with or for the account of, or credit extended by, any Bank (or its Applicable
Lending Office) or shall impose on any Bank (or its Applicable Lending Office)
or on the United States market for certificates of deposit or the London
interbank market any other condition affecting its LIBOR Loans or its obligation
to make such LIBOR Loans and the result of any of the foregoing is to increase
the cost to such Bank (or its Applicable Lending Office) of making or
maintaining any LIBOR Loan to the Borrower, or to reduce the amount of any sum
received or receivable by such Bank (or its Applicable Lending Office) under
this Agreement or under its Notes with respect thereto, by an amount reasonably
deemed by such Bank to be material, then, within 15 days after demand by such
Bank setting forth the circumstances giving rise to such demand and a
calculation of the amount or amounts demanded (with a copy to the Agent), the
Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank for such increased cost or reduction.
(b) If any Bank shall have determined that, after the date hereof, the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
-67-
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on capital of such Bank (or its Parent) as a
consequence of such Bank's obligations hereunder to a level below that which
such Bank (or its Parent) could have achieved but for such adoption, change,
request or directive (taking into consideration its policies with respect to
capital adequacy) by an amount deemed by such Bank to be material, then from
time to time, within 15 days after demand by such Bank (with a copy to the
Agent), the Borrower shall pay to such Bank such additional amount or amounts as
will compensate such Bank (or its Parent) for such reduction.
(c) Each Bank will promptly notify the Borrower and the Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section and will designate a
different Applicable Lending Office if such designation will avoid the need for,
or reduce the amount of, such compensation and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank
claiming compensation under this Section and setting forth the additional amount
or amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, such Bank may use any reasonable
averaging and attribution methods.
(d) Failure or delay on the part of a Bank or an Issuing Bank to demand
compensation pursuant to this Section shall not constitute a waiver of such
Bank's or such Issuing Bank's, as the case may be, right to demand such
compensation; provided that the Borrower shall not be required to compensate a
Bank or an Issuing Bank pursuant to this Section for any increased costs or
reduced returns incurred more than 270 days prior to the date such Bank or such
Issuing Bank, as the case may be, notifies the Borrower thereof and of such
Bank's or such Issuing Bank's intention to claim compensation therefor; provided
further that, if the change in law or in the application of law giving rise to
such increased costs or reduced returns is retroactive, than the 270-day period
referred to above shall be extended to include the period of retroactive effect
thereof.
(e) The provisions of this Section also shall inure to the benefit of
each Issuing Bank in its capacity as such.
SECTION 8.04. Taxes. (a) For purposes of this Section 8.04(a), the
following terms have the following meanings:
"Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings with respect to any
payment by the Borrower pursuant to this Agreement or under any Note,
and all liabilities with respect thereto, including any taxes, duties,
levies, imposts, deductions, charges or withholdings with respect to
any payment by the Borrower other than the Borrower that would not have
been imposed on a payment by the Borrower, but excluding (i) in the
case of each Bank, each Issuing Bank and the Agent, taxes imposed on
its income, and franchise or similar taxes imposed on it, by a
jurisdiction under the laws of which such Bank, such Issuing Bank or
the Agent (as the case may be), is organized or in which its principal
executive office is located or, in the case of each Bank, in which its
Applicable Lending Office is located, (ii) in the case of each Bank,
-68-
each Issuing Bank and the Agent, taxes imposed solely by reason of such
Bank, such Issuing Bank or the Agent (as the case may be) doing
business in the jurisdiction imposing such tax, other than as a result
of this Agreement or any Note or any transaction contemplated hereby
(including the negotiation of any of the foregoing) and (iii) in the
case of each Bank, any withholding tax imposed on such payments but
only at a rate equal to the United States withholding tax that such
Bank is (or would be) subject to on such payments by the Borrower at
the time such Bank first becomes a party to this Agreement.
"Other Taxes" means any present or future stamp or documentary taxes
and any other excise or property taxes, or similar charges or levies,
which arise from any payment made pursuant to this Agreement or under
any Notes or from the execution or delivery of, or otherwise with
respect to, this Agreement or any Note.
(b) Any and all payments by the Borrower to or for the account of any
Bank, any Issuing Bank or the Agent hereunder or under any Note shall be made
without deduction for any Taxes or Other Taxes; provided that, if the Borrower
shall be required by law to deduct any Taxes or Other Taxes from any such
payments, (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section) the Bank, such Issuing Bank or the Agent (as
the case may be) receives an amount equal to the sum it would have received had
no such deductions been made, (ii) the Borrower shall make such deductions,
(iii) the Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law and (iv) the
Borrower shall furnish to the Agent, at its address referred to in Section 9.01,
the original or a certified copy of a receipt evidencing payment thereof.
(c) The Borrower agrees to indemnify each Bank, each Issuing Bank and
the Agent for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed or asserted on amounts payable
under this Section) paid by such Bank, such Issuing Bank or the Agent (as the
case may be) and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto. This indemnification shall be paid
within 15 days after such Bank, such Issuing Bank or the Agent (as the case may
be) makes demand therefor. After any Bank, any Issuing Bank or the Agent (as the
case may be) learns of the imposition of Taxes or Other Taxes, such Bank,
Issuing Bank and the Agent (as the case may be) will act in good faith promptly
to notify the relevant Borrower of its obligations hereunder.
(d) Each Bank organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank listed on the signature pages hereof and on
or prior to the date on which it becomes a Bank in the case of each other Bank,
and from time to time thereafter if requested in writing by the Borrower (but
only so long as such Bank remains lawfully able to do so), shall provide the
Borrower and the Agent with the appropriate form or forms (including any forms
required to replace forms previously provided because of a change in a Bank's
place of organization, principal office or Applicable Lending Office, or in the
event that any forms are no longer valid because of their expiration or a change
in law or regulations, other appropriate evidence of exemption or reduction as
-69-
reasonably requested by the Borrower), certifying that such Bank is entitled to
benefits under an income tax treaty to which the United States is a party which
exempts the Bank from withholding tax imposed by the United States or reduces
the rate of withholding tax (if any) on payments of interest for the account of
such Bank or certifying that the income receivable pursuant to this Agreement is
otherwise not subject to such withholding tax.
(e) For any period with respect to which a Bank has failed to provide
the Borrower or the Agent with the appropriate form as required by Section
8.04(d) (unless such failure is due to a change in treaty, law or regulation
occurring subsequent to the date on which such form originally was required to
be provided), such Bank shall not be entitled to indemnification under Section
8.04(b) or (c) with respect to the withholding taxes that would not have been
imposed if such form had been provided; provided that if a Bank, which is
otherwise exempt from or subject to a reduced rate of withholding tax, becomes
subject to Taxes because of its failure to deliver a form required hereunder,
the Borrower shall take such steps as such Bank shall reasonably request to
assist such Bank to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for the
account of any Bank pursuant to this Section, then such Bank will change the
jurisdiction of its Applicable Lending Office if such change (i) will eliminate
or reduce any such additional payment which may thereafter accrue and (ii) in
the judgment of such Bank, is not otherwise disadvantageous to such Bank.
(g) If a Bank, an Issuing Bank or the Agent shall receive a refund
(including any offset or credit) from a taxation authority (as a result of any
error in the imposition of Taxes or Other Taxes by such taxation authority) of
any Taxes or Other Taxes paid by the Borrower pursuant to Section 8.04(b) or
(c), such Bank, Issuing Bank or the Agent (as the case may be) shall promptly
pay to the Borrower the amount so received, with interest received from the
taxation authority with respect to such refund.
SECTION 8.05. Base Rate Loans Substituted for Affected LIBOR Loans. If
(i) the obligation of any Bank to make LIBOR Loans to the Borrower has been
suspended pursuant to Section 8.02 or (ii) any Bank has demanded compensation
from the Borrower under Section 8.03 or 8.04 with respect to its LIBOR Loans and
the Borrower shall, by at least five LIBOR Business Days' prior notice to such
Bank through the Agent, have elected that the provisions of this Section shall
apply to such Bank, then, unless and until such Bank notifies the Borrower that
the circumstances giving rise to such suspension or demand for compensation no
longer apply:
(a) all Loans which would otherwise be made by such Bank as LIBOR Loans
shall be made instead as Base Rate Loans (on which interest and principal shall
be payable contemporaneously with the related LIBOR Loans of the other Banks),
and
(b) after each of its LIBOR Loans has been repaid, all payments of
principal which would otherwise be applied to repay such LIBOR Loans shall be
applied to repay its Base Rate Loans instead.
-70-
SECTION 8.06. Substitution of Bank. If (i) the obligation of any Bank
to make or maintain LIBOR Loans has been suspended pursuant to Section 8.02 or
(ii) any Bank has demanded compensation under Section 8.03 or is receiving
increased payments or indemnification payments under Section 8.04, the Borrower
shall have the right to seek a bank or banks ("Substitute Banks"), which may be
one or more of the Banks or one or more other banks satisfactory to the Agent,
to purchase all (but not less than all) the Notes and the participations in the
Letter of Credit Exposure of such Bank (the "Affected Bank") and, if the
Borrower locates a Substitute Bank, the Affected Bank shall, upon payment to it
of the purchase price agreed between it and the Substitute Bank (or, failing
such agreement, a purchase price in the amount of the outstanding principal
amount of its Loans and accrued interest thereon to the date of payment plus the
Affected Bank's Applicable Percentage of all unreimbursed Letter of Credit
Disbursements) plus any amount (other than principal and interest) then due to
it or accrued for its account hereunder, assign all its rights and obligations
under this Agreement and the Notes to the Substitute Bank, and the Substitute
Bank shall assume such rights and obligations, whereupon the Substitute Bank
shall be a Bank party to this Agreement and shall have all the rights and
obligations of a Bank. Any assignment by an Affected Bank pursuant to this
Section shall be treated as a prepayment of the Affected Bank's LIBOR Loans for
purposes of Section 2.12.
ARTICLE IX
Miscellaneous
-------------
SECTION 9.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including bank wire, telex,
facsimile transmission or similar writing) and shall be given to such party: (x)
in the case of the Borrower, any Issuing Bank, the Swingline Lender or the
Agent, at its address or its telecopy or telex number set forth on the signature
pages hereof or, in the case of any Issuing Bank, in its Issuing Bank
Agreement), (y) in the case of any Bank, at its address or its telecopy or telex
number set forth in its Administrative Questionnaire, or (z) in the case of any
party, such other address or other telecopy or telex number as such party may
hereafter specify for the purpose by notice to the Agent and the Borrower. Each
such notice, request or other communication shall be effective (i) if given by
telecopy or telex, when such telecopy or telex is transmitted to the telecopy or
telex number specified in this Section and the appropriate confirmation of
receipt or answerback is received, (ii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iii) if given by any other means, when delivered at
the address specified in this Section; provided that notices to the Agent under
Article II or Article VIII shall not be effective until received.
SECTION 9.02. No Waivers. No failure or delay by the Agent, any Issuing
Bank or any Bank in exercising any right, power or privilege hereunder or under
any other Loan Document shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
-71-
SECTION 9.03. Expenses; Indemnification. (a) The Borrower shall pay (i)
all reasonable out-of-pocket expenses of the Agent and the Arranger and (in the
case of expenses relating to any Letter of Credit) each Issuing Bank, including
fees and disbursements of special counsel for the Agent, in connection with the
preparation and administration of this Agreement and the other Loan Documents,
any waiver or consent hereunder or thereunder or any amendment hereof or thereof
or any Default or alleged Default hereunder and field exams (if payment is
required by the Borrower) and (ii) if an Event of Default occurs, all reasonable
out-of-pocket expenses incurred by the Agent, each Issuing Bank and each Bank,
including reasonable fees and disbursements of counsel, in connection with such
Event of Default and collection, bankruptcy, insolvency and other enforcement
proceedings resulting therefrom.
(b) The Borrower agrees to indemnify the Agent, each Issuing Bank and
each Bank, their respective affiliates and the respective directors, officers,
agent and employees of the foregoing (each an "Indemnitee") and hold each such
Indemnitee harmless from and against any and all liabilities, losses, damages,
costs and expenses of any kind (including any of the foregoing with respect to
Environmental Laws applicable to the Borrower or any Subsidiary), including,
without limitation, the reasonable fees and disbursements of counsel, which may
be actually incurred by such Indemnitee in connection with any investigative,
administrative or judicial proceeding (whether or not such Indemnitee shall be
designated a party thereto) brought or threatened relating to or arising out of
the Loan Documents or any actual or proposed use of proceeds of Loans or Letters
of Credit hereunder; provided that no Indemnitee shall have the right to be
indemnified hereunder for its own gross negligence or willful misconduct as
determined by a final nonappealable judgment of a court of competent
jurisdiction.
SECTION 9.04. Setoffs. (a) Each Bank agrees that if it shall, by
exercising any right of setoff or counterclaim or otherwise, receive payment of
a proportion of the aggregate amount of its claims in respect of Letter of
Credit Disbursements and principal and interest due with respect to any Note
held by it which is greater than the proportion received by any other Bank in
respect of the aggregate amount of claims in respect of Letter of Credit
Disbursements and principal and interest due with respect to any Note held by
such other Bank, the Bank receiving such proportionately greater payment shall
purchase such participations in the claims in respect of Letter of Credit
Disbursements and Notes held by the other Banks, and such other adjustments
shall be made, as may be required so that all such payments of claims in respect
of Letter of Credit Disbursements and of principal and interest with respect to
the Notes held by the Banks shall be shared by the Banks pro rata; provided that
nothing in this Section shall impair the right of any Bank to exercise any right
of setoff or counterclaim it may have and to apply the amount subject to such
exercise to the payment of indebtedness of a Borrower other than its
indebtedness under the Loan Documents. The Borrower agrees, to the fullest
extent it may effectively do so under applicable law, that any holder of a
participation in a claim in respect of a Letter of Credit Disbursement or in a
Note, whether or not acquired pursuant to the foregoing arrangements, may
exercise rights of setoff or counterclaim and other rights with respect to such
participation as fully as if such holder of a participation were a direct
creditor of the Borrower in the amount of such participation.
-72-
(b) In addition to any rights and remedies of the Banks provided by
law, each Bank shall have the right, without prior notice the Borrower or any of
its Subsidiaries, any such notice being expressly waived to the extent permitted
by applicable law, upon any amount becoming due and payable by the Borrower or
any of its Subsidiaries hereunder (whether at the stated maturity, by
acceleration or otherwise) our under any of the other Loan Documents, to set off
and appropriate and apply against such amount any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Bank or any branch or agency thereof to or for the credit or the
account of the Borrower or any of its Subsidiaries, as the case may be, and
whether or not such Bank is otherwise fully secured. Each Bank agrees promptly
to notify the Borrower and the Agent after any such setoff and application made
by such Bank, provided, that the failure to give such notice shall not affect
the validity of such setoff and application. ANY AND ALL RIGHTS TO REQUIRE THE
AGENT TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL
WHICH SECURES ANY OF THE OBLIGATIONS PRIOR TO THE EXERCISE BY THE BANKS OF THEIR
RIGHT OF SET-OFF UNDER THIS SECTION ARE HEREBY KNOWINGLY, VOLUNTARILY AND
IRREVOCABLY WAIVED.
SECTION 9.05. Amendments and Waivers. Any provision of this Agreement
or any other Loan Document may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by, or approved in writing by,
the Borrower and the Required Banks (and, if the rights or duties of the Agent,
any Issuing Bank or the Swingline Lender are affected thereby, by the Agent or
such Issuing Bank or the Swingline Lender, as the case may be); provided that no
such amendment or waiver shall, unless signed by, or approved in writing by, all
the Banks affected thereby (i) increase or decrease the Total Commitment from
that in effect on the Closing Date or the Commitment of any Bank (except for a
ratable decrease in the Commitments of all Banks) or subject any Bank to any
additional obligation, (ii) reduce the principal of or rate or amount of
interest on any Loan or any claim for reimbursement of a Letter of Credit
Disbursement or any fees hereunder, (iii) postpone the date fixed for any
payment of principal (but not a mandatory prepayment) of or interest on any Loan
or for any reimbursement of a Letter of Credit Disbursement or for payment of
any fees hereunder or for any reduction or termination of any Commitment, (iv)
change the respective Applicable Commitments or the aggregate unpaid principal
amount of the Notes, or the number of Banks, which shall be required for the
Banks or any of them to take any action under this Section or any other
provision of this Agreement, (v) change the ratable treatment of the Banks under
any provision of this Agreement that provides for such ratable treatment, (vi)
release any Guarantor that is a Material Subsidiary from its Guarantee under the
Guarantee Agreements, (vii) increase the advance rates under the Borrowing Base,
(viii) release any portion of the Collateral greater than five percent (5%) of
the aggregate amount of the Collateral or (ix) release or discharge any of the
obligations of the Borrower under the Loan Documents.
SECTION 9.06. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto,
and their respective successors and assigns, except that the Borrower may not
-73-
assign or otherwise transfer any of its rights under this Agreement without the
prior written consent of the Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Commitment or
any or all of its Loans or its participations in Letters of Credit. In the event
of any such grant by a Bank of a participating interest to a Participant,
whether or not upon notice to the Borrower and the Agent, such Bank shall remain
responsible for the performance of its obligations hereunder, and the Borrower
and the Agent shall continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations under this Agreement. Any
agreement pursuant to which any Bank may grant such a participating interest
shall provide that such Bank shall retain the sole right and responsibility to
enforce the obligations of the Borrower hereunder including, without limitation,
the right to approve any amendment, modification or waiver of any provision of
this Agreement or any other Loan Document; provided that such participation
agreement may provide that such Bank will not agree to any modification,
amendment or waiver described in clause (i), (ii), (iii) or (iv) (but, in the
case of clause (iv), only to the extent such modification, amendment or waiver
would affect any requirement of approval by all Banks of the matters referred to
in such clauses (i), (ii) and (iii)) of Section 9.05 without the consent of the
Participant. The Borrower agrees that each Participant shall, to the extent
provided in its participation agreement, be entitled to the benefits of Article
VIII with respect to its participating interest. An assignment or other transfer
which is not permitted by subsection (c) or (d) below shall be given effect for
purposes of this Agreement only to the extent of a participating interest
granted in accordance with this subsection (b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part of all, of its
rights and obligations under this Agreement and the Notes, and such Assignee
shall assume such rights and obligations, pursuant to an instrument executed by
such Assignee and such transferor Bank, with (and subject to) the subscribed
consent of the Borrower (provided, however, no such consent shall be required if
there exists an Event of Default), the Agent, each Issuing Bank and the
Swingline Lender (which, in the case of the Agent, each Issuing Bank and the
Swingline Lender and the Borrower, consents shall not be unreasonably withheld
or delayed); provided that if an Assignee is another Bank or an affiliate of any
Bank, no such consent shall be required; provided further that each assignment
shall be in a minimum amount of $5,000,000 or, if less, the balance of the
transferor Bank's Commitment and provided further that (i) the Agent shall
notify the Arrangers of any such changes and (ii) the Arrangers can at any time
request a listing of the Banks, their commitments and each Bank's exposure. Upon
execution and delivery of such instrument (including by the Borrower, the Agent,
each Issuing Bank and the Swingline Lender, if their consent is required as
provided above) and payment by such Assignee to such transferor Bank of an
amount equal to the purchase price agreed between such transferor Bank and such
Assignee, such Assignee shall be a Bank party to this Agreement and shall have
all the rights and obligations of a Bank with a Commitment as set forth in such
instrument of assumption, and the transferor Bank shall be released from its
obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any assignment
pursuant to this subsection (c), the transferor Bank, the Agent and the Borrower
shall make appropriate arrangements so that, if required, a new Note for the
-74-
Borrower is issued to the Assignee. In connection with any such assignment, the
transferor Bank shall pay to the Agent an administrative fee for processing such
assignment in the amount of $3,500. If the Assignee is not incorporated under
the laws of the United States of America or a state thereof, it shall, prior to
the first date on which interest or fees are payable hereunder for its account,
deliver to the Borrower and the Agent certification as to exemption from
deduction or withholding of any United States federal income taxes in accordance
with Section 8.04.
(d) Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Note to a Federal Reserve Bank. No such assignment
shall release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Bank's rights
shall be entitled to receive any greater payment under Section 8.03 or 8.04 than
such Bank would have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Borrower's prior written
consent or by reason of the provisions of Section 8.02, 8.03 or 8.04 requiring
such Bank to designate a different Applicable Lending Office under certain
circumstances or at a time when the circumstances giving rise to such greater
payment did not exist.
SECTION 9.07. Governing Law; Submission to Jurisdiction. This Agreement
and each Note shall be governed by and construed in accordance with the laws of
the State of New York. The Borrower hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and of any New York State court sitting in New York City for purposes
of all legal proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby. The Borrower irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been brought
in an inconvenient forum.
SECTION 9.08. Counterparts; Integration. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement constitutes the entire agreement and understanding among the
parties hereto and supersedes any and all prior agreements and understandings,
oral or written, relating to the subject matter hereof.
SECTION 9.9. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT, THE ISSUING
BANKS AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 9.10. Confidentiality. Each of the Agent, the Issuing Banks and
the Banks agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and its Affiliates'
directors, officers, employees and agent, including accountants, legal counsel
-75-
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential) for purposes of evaluating
Loans, (b) to the extent requested by any regulatory authority, (c) to the
extent otherwise required by applicable laws and regulations or by any subpoena
or similar legal process, (d) to any other party to this Agreement, (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or the enforcement of rights hereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section, to any Assignee of or Participant in, or any prospective
Assignee of or Participant in, any of its rights or obligations under this
Agreement, (g) with the consent of the Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) becomes available to the Agent, any Issuing Bank or any
Bank on a nonconfidential basis from a source other than the Borrower or any
Subsidiary. For the purposes of this Section, "Information" means all
information received in writing from the Borrower or any Subsidiary relating to
the Borrower or any Subsidiary or their businesses, other than any such
information that is available to the Agent, any Issuing Bank or any Bank on a
nonconfidential basis prior to disclosure by the Borrower or any Subsidiary;
provided that, in the case of non-financial information received from the
Borrower or any Subsidiary after the date hereof, such information is clearly
identified at the time of delivery as confidential. Any Person required to
maintain the confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
SECTION 9.12. Replacement Note. Upon receipt of an appropriate and
reasonably acceptable affidavit of an officer of the affected Bank as to the
loss, theft, destruction or mutilation of any Note or of any other Loan Document
which is not of public record and, in the case of any such mutilation, upon
surrender and cancellation of such Note or other Loan Document, the Borrower
will issue, in lieu thereof, a replacement Note or other Loan Document in the
same principal amount (as to any Note) and in any event of like tenor.
SECTION 9.13. Usury. All agreements between the Borrower (on the one
hand) and the Agent or any of the Banks (on the other hand) relating to the
Financing Transactions are hereby expressly limited so that in no contingency or
event whatsoever, whether by reason of acceleration of maturity of the Notes or
otherwise, shall the amount paid or agreed to be paid for the use or the
forbearance of the Debt represented by any Note exceed the maximum permissible
under applicable law. In this regard, it is expressly agreed that it is the
intent of the Borrower, the Agent and the Banks, in the execution, delivery and
acceptance of the Notes, to contract in strict compliance with the laws of the
State of New York. If, under any circumstances whatsoever, performance or
fulfillment of any provision of any of the Notes or any of the other Loan
Documents at the time such provision is to be performed or fulfilled shall
involve exceeding the limit of validity prescribed by applicable law, then the
obligation so to be performed or fulfilled shall be reduced automatically to the
limits of such validity, and if under any circumstances whatsoever the Agent or
any Bank should ever receive as interest an amount which would exceed the
highest lawful rate, such amount which would be excessive interest shall be
applied to the reduction of the principal balance evidenced by the Notes and not
-76-
to the payment of interest. The provisions of this Section 9.13 shall control
every other provision of this Agreement and of each Note.
(The Next Page is the Signature Page)
-77-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, INC.
By: /s/ ▇▇▇▇▇ ▇. Marina
--------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
FLEET NATIONAL BANK,
as Administrative Agent, Issuing Bank,
Swingline Lender and a Bank
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President
CREDIT SUISSE FIRST BOSTON
as Syndication Agent, Joint Lead Arranger,
Joint Book Manager and a Bank
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Managing Director
By: /s/ ▇▇▇▇▇ ▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Managing Director
FLEET SECURITIES, INC.
as Joint Lead Arranger and Joint Book Manager
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
DEBIS FINANCIAL SERVICES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President of Asset-Based Lending
FIRST UNION NATIONAL BANK
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
▇▇▇▇▇▇ FINANCIAL, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Assistant Vice President
LASALLE BUSINESS CREDIT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President
THE PROVIDENT BANK
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
SIEMENS FINANCIAL SERVICES, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President - Credit
TRANSAMERICA BUSINESS CREDIT CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Senior Vice President
FIRSTAR BANK, N.A.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
Schedule I
----------
Name of Bank Revolving Commitment (in dollars)
------------ ---------------------------------
Credit Suisse First Boston $29,750,000
Debis Financial Services, Inc. $11,250,000
First Union National Bank $15,000,000
Fleet National Bank $40,000,000
▇▇▇▇▇▇ Financial, Inc. $18,500,000
LaSalle Business Credit, Inc. $18,500,000
The Provident Bank $10,000,000
Siemens Financial Services, Inc. $11,250,000
Transamerica Business Credit Corporation $11,250,000
Firstar Bank, N.A. $9,500,000
-2-