1
EXHIBIT 10.24
$50,000,000
CREDIT AGREEMENT
AMONG
STYLING TECHNOLOGY CORPORATION
CERTAIN LENDERS NAMED HEREIN
AND
NATIONSBANK, N.A., AS ADMINISTRATIVE AGENT
AND
BANKBOSTON, N.A., AS DOCUMENTATION AGENT
June 30, 1998
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TABLE OF CONTENTS
Page
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ARTICLE 1
Definitions
Section 1.1 Defined Terms..........................................................................1
Section 1.2 Amendments and Renewals...............................................................26
Section 1.3 Construction..........................................................................26
ARTICLE 2
Advances
Section 2.1 The Advances..........................................................................27
Section 2.2 Manner of Borrowing and Disbursement..................................................27
Section 2.3 Interest..............................................................................29
Section 2.4 Fees..................................................................................31
Section 2.5 Prepayments...........................................................................31
Section 2.6 Reduction of Revolving Credit Commitment..............................................33
Section 2.7 Non-Receipt of Funds by the Administrative Agent......................................33
Section 2.8 Payment of Principal of Advances......................................................33
Section 2.9 Reimbursement.........................................................................34
Section 2.10 Manner of Payment.....................................................................34
Section 2.11 LIBOR Lending Offices.................................................................35
Section 2.12 Sharing of Payments...................................................................35
Section 2.13 Calculation of LIBOR Rate.............................................................36
Section 2.14 Taxes.................................................................................36
Section 2.15 Letters of Credit.....................................................................40
Section 2.16 Booking Loans.........................................................................45
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ARTICLE 3
Conditions Precedent
Section 3.1 Conditions Precedent to the Initial Advances and the Initial Letters of Credit........46
Section 3.2 Conditions Precedent to All Advances and Letters of Credit............................48
Section 3.3 Conditions Precedent to Each Term Loan Advance and Each Revolving
Credit Acquisition Advance............................................................49
Section 3.4 Conditions Precedent to Conversions and Continuations.................................50
ARTICLE 4
Representations and Warranties
Section 4.1 Representations and Warranties........................................................50
Section 4.2 Survival of Representations and Warranties, etc.......................................58
ARTICLE 5
General Covenants
Section 5.1 Preservation of Existence and Similar Matters.........................................59
Section 5.2 Business; Compliance with Applicable Law..............................................59
Section 5.3 Maintenance of Properties.............................................................59
Section 5.4 Accounting Methods and Financial Records..............................................59
Section 5.5 Insurance.............................................................................60
Section 5.6 Payment of Taxes and Claims...........................................................60
Section 5.7 Visits and Inspections................................................................60
Section 5.8 Use of Proceeds.......................................................................61
Section 5.9 Indemnity.............................................................................61
Section 5.10 Environmental Law Compliance..........................................................63
Section 5.11 Further Assurances....................................................................63
Section 5.12 Subsidiaries..........................................................................64
Section 5.13 Year 2000 Compliance..................................................................64
ARTICLE 6
Information Covenants
Section 6.1 Quarterly Financial Statements and Information........................................64
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Section 6.2 Annual Financial Statements and Information; Certificate of No Default................65
Section 6.3 Compliance Certificate................................................................65
Section 6.4 Copies of Other Reports and Notices...................................................66
Section 6.5 Notice of Litigation, Default and Other Matters.......................................66
Section 6.6 ERISA Reporting Requirements..........................................................67
ARTICLE 7
Negative Covenants
Section 7.1 Indebtedness..........................................................................68
Section 7.2 Liens.................................................................................69
Section 7.3 Investments...........................................................................70
Section 7.4 Liquidation, Merger...................................................................71
Section 7.5 Sales of Assets.......................................................................71
Section 7.6 Acquisitions..........................................................................71
Section 7.7 Capital Expenditures..................................................................72
Section 7.8 Restricted Payments...................................................................72
Section 7.9 Affiliate Transactions................................................................73
Section 7.10 Compliance with ERISA.................................................................73
Section 7.11 Maximum Leverage Ratio................................................................73
Section 7.12 Minimum Fixed Charge Coverage Ratio...................................................74
Section 7.13 Minimum Net Worth.....................................................................74
Section 7.14 Sale or Discount of Receivables.......................................................74
Section 7.15 Business..............................................................................74
Section 7.16 Sale and Leaseback....................................................................74
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Section 7.17 Amendment of Organizational Documents.................................................74
Section 7.18 Amendments and Waivers of Subordinated Debt...........................................74
Section 7.19 Indirect Foreign Subsidiaries.........................................................75
Section 7.20 Designated Senior Debt................................................................75
ARTICLE 8
Default
Section 8.1 Events of Default.....................................................................75
Section 8.2 Remedies..............................................................................78
ARTICLE 9
Changes in Circumstances
Section 9.1 LIBOR Basis Determination Inadequate..................................................79
Section 9.2 Illegality............................................................................79
Section 9.3 Increased Costs.......................................................................80
Section 9.4 Effect On Base Rate Advances..........................................................81
Section 9.5 Capital Adequacy......................................................................81
Section 9.6 Replacement Lender....................................................................82
ARTICLE 10
Agreement Among Lenders
Section 10.1 Agreement Among Lenders...............................................................82
Section 10.2 Lender Credit Decision................................................................85
Section 10.3 Benefits of Article...................................................................85
ARTICLE 11
Miscellaneous
Section 11.1 Notices...............................................................................86
Section 11.2 Expenses..............................................................................87
Section 11.3 Waivers...............................................................................87
Section 11.4 Calculation by the Lenders Conclusive and Binding.....................................88
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Section 11.5 Set-Off...............................................................................88
Section 11.6 Assignment............................................................................88
Section 11.7 Counterparts..........................................................................90
Section 11.8 Severability..........................................................................91
Section 11.9 Interest and Charges..................................................................91
Section 11.10 Headings..............................................................................91
Section 11.11 Amendment and Waiver..................................................................91
Section 11.12 Exception to Covenants................................................................92
Section 11.13 No Liability of Issuing Bank..........................................................92
Section 11.14 Confidentiality.......................................................................92
Section 11.15 No Duties of Documentation Agent......................................................93
Section 11.16 Governing Law.........................................................................93
Section 11.17 Waiver of Jury Trial..................................................................94
Section 11.18 Entire Agreement......................................................................94
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Schedules and Exhibits
Schedule 1.1(a): LIBOR Lending Offices
Schedule 1.1(b): Commitments and Specific Percentages
Schedule 1.1(c): Existing Letters of Credit
Schedule 4.1(a): Subsidiaries, Qualifications and Good Standing
Schedule 4.1(h): Existing Litigation
Schedule 4.1(v): Labor Relations
Schedule 7.1(f): Existing Indebtedness
Schedule 7.2: Existing Liens
Schedule 7.3(c): Existing Investments
Exhibit A: Revolving Credit Note
Exhibit B: Term Loan Note
Exhibit C: General Security Agreement
Exhibit D: Intellectual Property Security Agreement and Assignment
Exhibit E: Compliance Certificate
Exhibit F: Assignment Agreement
Exhibit G: Subsidiary Guaranty
Exhibit H: Notice of Borrowing
Exhibit I: Fee Simple Deed of Trust
Exhibit J: Landlord's Waiver
Exhibit K: Notice of Continuation/Conversion
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated as of June 30, 1998, among STYLING
TECHNOLOGY CORPORATION, a Delaware corporation (the "Borrower"), the Lenders
from time to time party hereto, BANKBOSTON, N.A., as documentation agent, and
NATIONSBANK, N.A., as administrative agent for the Lenders.
BACKGROUND
The Lenders have been requested to provide the Borrower funds to
finance the ongoing working capital and general corporate requirements of the
Borrower and its Subsidiaries (as hereinafter defined), including but not
limited to Acquisitions (as hereinafter defined) permitted hereunder. The
Lenders have agreed to provide such financing, subject to the terms and
conditions set forth below.
In consideration of the mutual covenants and agreements contained
herein, and other good and valuable consideration hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1
Definitions
Section 1.1 Defined Terms. For purposes of this Agreement:
"Account" means all of the "accounts" (as that term is defined in
Section 9.106 of the UCC) of the Borrower and its Subsidiaries whether or not
such Account has been earned by performance, whether now existing or existing in
the future, including, without limitation, all (a) accounts receivable,
including, without limitation, all accounts created by or arising from all of
the Borrower's and its Subsidiaries' sales of goods or rendition of services or
licensing or subleasing of any of the Borrower's and its Subsidiaries'
Intellectual Property; (b) unpaid seller's rights (including rescission,
replevin, reclamation and stopping in transit) relating to the foregoing or
arising therefrom; (c) rights to any goods represented by any of the foregoing,
including returned or repossessed goods; (d) reserves and credit balances held
by the Borrower and its Subsidiaries with respect to any such accounts
receivable or any account debtor; (e) guarantees or collateral for any of the
foregoing; and (f) insurance policies or rights relating to any of the
foregoing.
"Acquisition" means any transaction pursuant to which the Borrower or
any of its Subsidiaries, (a) whether by means of a capital contribution or
purchase or other acquisition of stock or other securities or other equity
participation or interest, (i) acquires more than 50% of the equity interest in
any Person pursuant to a solicitation by the Borrower or such Subsidiary of
tenders of
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equity securities of such Person, or through one or more negotiated block,
market, private or other transactions, or a combination of any of the foregoing,
(ii) except as permitted by Section 7.3(g) hereof with respect to a newly-formed
corporation and Section 7.4(b) hereof with respect to an existing Subsidiary of
the Borrower, makes any corporation a Subsidiary of the Borrower or such
Subsidiary, or causes any corporation, other than a Subsidiary of the Borrower
or such Subsidiary, to be merged into the Borrower or such Subsidiary (or agrees
to be merged into any other corporation other than a wholly-owned Subsidiary
(excluding directors' qualifying shares) of the Borrower or such Subsidiary), or
(iii) agrees to purchase all or more than 50% of the assets of any Person,
pursuant to a merger, purchase of assets or other reorganization providing for
the delivery or increase to the holders of such Person's then outstanding
securities or other equity interests, in exchange for such securities, or cash
or securities of the Borrower or such Subsidiary, or any combination thereof, or
(b) purchases in one transaction or a series of related transactions all or more
than 50% of the business or assets of any Person or of any operating division of
any Person.
"Acquisition Consideration" means the consideration given by the
Borrower or any of its Subsidiaries for an Acquisition, including but not
limited to the fair market value of any cash, property (other than Capital Stock
issued in respect of the Acquisition), or services given and the amount of any
Indebtedness and lease expense pursuant to Operating Leases (such lease expense
to be in an amount equal to the product of rental expense for the four fiscal
quarters immediately preceding the date of calculation multiplied by eight)
assumed or incurred by the Borrower or any Subsidiary of the Borrower in
connection with such Acquisition.
"Adjusted EBITDA" means, for any period, EBITDA but adjusted to (i)
include the pro forma EBITDA of any assets acquired during such period as if
acquired at the beginning of such period (and adjusted to take into account any
expenses that will be eliminated under the ownership by the Borrower or any of
its Subsidiaries of such assets as reasonably approved by the Administrative
Agent) and (ii) exclude the EBITDA of any assets disposed of during such period
as if disposed of at the beginning of such period.
"Adjusted LIBOR Rate" means, for any LIBOR Advance for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100th of 1%) determined by the Administrative Agent to be equal to the
quotient obtained by dividing (a) the LIBOR Rate for such LIBOR Advance for such
Interest Period by (b) 1 minus the Reserve Requirement for such LIBOR Advance
for such Interest Period.
"Administrative Agent" means NationsBank, N.A., a national banking
association, as administrative agent for Lenders, or such successor
administrative agent appointed pursuant to Section 10.1(b) hereof.
"Administrative Agent Fee Letter" has the meaning specified in Section
2.4(b) hereof.
"Advance" means any amount advanced by the Lenders to the Borrower
pursuant to Article 2 hereof on the occasion of any borrowing.
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"Affiliate" means, as applied to any Person, any other Person that,
directly or indirectly, through one or more Persons, Controls or is Controlled
By or Under Common Control with, such Person, or in the case of any Lender which
is an investment fund, the investment advisor thereof and any investment fund
having the same investment advisor.
"Agreement" means this Credit Agreement, as amended, modified,
supplemented or restated from time to time.
"Agreement Date" means the date of this Agreement.
"Applicable Base Rate Margin" means the following per annum
percentages, applicable in the following situations:
Applicability
(a) Initial Pricing Period 0.750%
(b) Subsequent Pricing Period
(1) The Leverage Ratio is greater than or equal 1.000%
to 4.50 to 1
(2) The Leverage Ratio is less than 4.50 to 1 0.750%
but greater than or equal to 4.00 to 1
(3) The Leverage Ratio is less than 4.00 to 1 0.500%
but greater than or equal to 3.50 to 1
(4) The Leverage Ratio is less than 3.50 to 1 0.250%
but greater than or equal to 3.00 to 1
(5) The Leverage Ratio is less than 3.00 to 1 0.000%
During the Subsequent Pricing Period, the Applicable Base Rate Margin payable by
the Borrower on the Base Rate Advances outstanding hereunder shall be subject to
reduction or increase, as applicable and as set forth in the table above, on a
quarterly basis according to the performance of the Borrower as tested by using
the Leverage Ratio calculated as of the end of each fiscal quarter; provided,
that each adjustment in the Applicable Base Rate Margin shall be effective on
the date which is two Business Days following the date of receipt of the
financial statements required to be delivered pursuant to Section 6.1 or 6.2
hereof, as applicable, and the related Compliance Certificate. If such financial
statements and Compliance Certificate are not received by the Administrative
Agent by the date required, the Applicable Base Rate Margin shall be determined
as if the Leverage
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Ratio is greater than or equal to 4.50 to 1 until such time as such financial
statements and Compliance Certificate are received.
"Applicable Environmental Laws" means applicable laws pertaining to
health or the environment, including without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986 (as amended from time
to time, "CERCLA"), the Resource Conservation and Recovery Act of 1976, as
amended by the Used Oil Recycling Act of 1980, the Solid Waste Disposal Act
amendments of 1980, and the Hazardous and Solid Waste Amendments of 1984 (as
amended from time to time, "RCRA").
"Applicable Law" means (a) in respect of any Person, all provisions of
constitutions, statutes, rules, regulations and orders of governmental bodies or
regulatory agencies applicable to such Person and its properties, including,
without limiting the foregoing, all orders and decrees of all courts and
arbitrators in proceedings or actions to which the Person in question is a
party, and (b) in respect of contracts relating to interest or finance charges
that are made or performed in the State of Texas, "Applicable Law" shall mean
the laws of the United States of America, including without limitation 12 USC
Sections 85 and 86(a), as amended from time to time, and any other statute
of the United States of America now or at any time hereafter prescribing the
maximum rates of interest on loans and extensions of credit, and the laws of the
State of Texas, including, without limitation, Article 5069-IH, Title 79,
Revised Civil Statutes of Texas, 1925, as amended ("Art. IH"), if applicable,
and if Art. IH is not applicable, Article 5069-ID, Title 79, Revised Civil
Statutes, 1925, as amended ("Art. ID"), and any other statute of the State of
Texas now or at any time hereafter prescribing maximum rates of interest on
loans and extensions of credit; provided that the parties hereto agree that the
provisions of Chapter 346 of the Texas Finance Code, as amended, shall not apply
to Advances, this Agreement, the Notes or any other Loan Documents.
"Applicable LIBOR Rate Margin" means the following per annum
percentages, applicable in the following situations:
Applicability
(a) Initial Pricing Period 2.250%
(b) Subsequent Pricing Period
(1) The Leverage Ratio is greater than or 2.500%
equal to 4.50 to 1
(2) The Leverage Ratio is less than 4.50 to 1 2.250%
but greater than or equal to 4.00 to 1
(3) The Leverage Ratio is less than 4.00 to 1 2.000%
but greater than or equal to 3.50 to 1
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(4) The Leverage Ratio is less than 3.50 to 1 1.750%
but greater than or equal to 3.00 to 1
(5) The Leverage Ratio is less than 3.00 to 1 1.500%
During the Subsequent Pricing Period, the Applicable LIBOR Rate Margin payable
by the Borrower on the LIBOR Advances outstanding hereunder shall be subject to
reduction or increase, as applicable and as set forth in the table above, on a
quarterly basis according to the performance of the Borrower as tested by using
the Leverage Ratio calculated as of the end of each fiscal quarter; provided,
that each adjustment in the Applicable LIBOR Rate Margin shall be effective on
the date which is two Business Days following the date of receipt of the
financial statements required to be delivered pursuant to Section 6.1 or 6.2
hereof, as applicable, and the related Compliance Certificate. If such financial
statements and Compliance Certificate are not received by the Administrative
Agent by the date required, the Applicable LIBOR Rate Margin shall be determined
as if the Leverage Ratio is greater than or equal to 4.50 to 1 until such time
as such financial statements and Compliance Certificate are received.
"Applicable Specified Percentage" means the Revolving Credit Specified
Percentage, the Term Loan Specified Percentage or the Total Specified
Percentage, as applicable in the context used.
"Assignees" means any assignee of a Lender pursuant to an Assignment
Agreement and shall have the meaning ascribed thereto in Section 11.6 hereof.
"Assignment Agreement" has the meaning specified in Section 11.6 hereof
and shall be in substantially the form of Exhibit F hereto.
"Authorized Signatory" means such senior personnel of the Borrower as
may be duly authorized and designated in writing by the Borrower to execute
documents, agreements and instruments on behalf of the Borrower, and to request
Advances and Letters of Credit hereunder.
"Base Rate Advance" means any Advance bearing interest at the Base Rate
Basis.
"Base Rate Basis" means, for any day, a per annum interest rate equal
to the higher of (a) the sum of (i) 0.50% plus (ii) the Federal Funds Rate on
such day plus (iii) the Applicable Base Rate Margin or (b) the sum of (i) the
Prime Rate on such day plus (ii) the Applicable Base Rate Margin. The Base Rate
Basis shall be adjusted automatically without notice as of the opening of
business on the effective date of each change in the Prime Rate or Federal Funds
Rate, as applicable, to account for such change.
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"▇▇▇▇▇ ▇▇▇▇▇▇" means the proposals for risk-based capital framework
described by the Basle Committee on Banking Regulations and Supervisory
Practices in its paper entitled "International Convergence of Capital Management
and Capital Standards" dated July 1988, as amended, modified, and supplemented
and in effect from time to time or any replacement thereof.
"Borrower's Audited Financial Statements" has the meaning specified in
Section 4.1(j)(i) hereto.
"Borrower's Unaudited Financial Statements" has the meaning specified
in Section 4.1(j)(ii) hereto.
"Borrowing Base" means, at the time in question, an amount equal to the
sum of (a) 85% of Eligible Accounts Receivable plus (b) 55% of Eligible
Inventory.
"Business Day" means a day on which commercial banks are open (a) for
the transaction of business in Dallas, Texas, and (b) with respect to any LIBOR
Advance, for the transaction of international business (including dealings in
U.S. Dollar deposits) in London, England.
"Capital Expenditures" means, for any period, expenditures made by the
Borrower and its Subsidiaries to acquire or construct fixed assets, plant and
equipment (including renewals, improvements and replacements during such period
and the aggregate amount of items leased or acquired under Capitalized Lease
Obligations at the cost of the item) computed in accordance with GAAP,
consistently applied.
"Capital Stock" means, as to any Person, the equity interests in such
Person, including, without limitation, the shares of each class of capital stock
in any Person that is a corporation, and each class of partnership interest
(including, without limitation, general, limited and preference units) in any
Person that is a partnership, and each class of member interest in any Person
that is a limited liability company.
"Capitalized Lease Obligations" means that portion of any obligation of
the Borrower or any of its Subsidiaries as lessee under a lease which at the
time would be required to be capitalized on a balance sheet of the Borrower or
such Subsidiary prepared in accordance with GAAP.
"Cash and Cash Equivalents" means with respect to the Borrower and each
of its Subsidiaries (a) cash, (b) securities issued or directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality thereof having maturities of not more than six months from the
date of acquisition, (c) certificates of deposit and eurodollar time deposits
with maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any Lender or with any domestic commercial bank
having capital and surplus in excess of $500,000,000, (d) repurchase obligations
with a term of not more than seven days for underlying securities of the types
described in clauses (b) and (c) entered into with any financial institution
meeting the qualifications specified in
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clause (c) above, (e) commercial paper issued by any Lender or the parent
corporation of any Lender, and commercial paper rated A-1 or the equivalent
thereof by Standard & Poor's Ratings Group, a Division of ▇▇▇▇▇▇-▇▇▇▇, Inc., a
New York corporation, or P-1 or the equivalent thereof by ▇▇▇▇▇'▇ Investors
Service, Inc., and in each case maturing within six months after the date of
acquisition, and (f) a readily redeemable "money market mutual fund" advised by
a bank described in clause (iii) hereof, or an investment advisor registered
under Section 203 of the Investment Advisors Act of 1940, that has and maintains
an investment policy limiting its investments primarily to instruments of the
types described in clauses (a) through (e) hereof and having on the date of such
Investment total assets of at least $200,000,000.00.
"Change of Control" means the occurrence of any of the following events
after the Agreement Date: (a) any Person (other than ▇▇▇ ▇. ▇▇▇▇▇▇▇) or any
Persons acting together which would constitute a "group" (a "Group") for
purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or any successor provision thereto, shall beneficially own
(as defined in Rule 13d-3 of the Securities and Exchange Commission under the
Exchange Act or any successor provision thereto) 50% or more of the aggregate
Voting Power of the Borrower; (b) individuals who constituted the Board of
Directors of the Borrower on the Agreement Date (together with any new directors
whose election by such Board of Directors or whose nomination for election by
the shareholders of the Borrower was approved by a vote of a majority of the
directors of the Borrower then still in office who were either directors on the
Agreement Date or whose election or nomination for election was previously so
approved) shall cease for any reason to constitute a majority of the Board of
Directors of the Borrower then in office; or (c) any "Change of Control",
"Change in Control" or similar event or circumstance, however defined or
designated, under any agreement or document governing any Subordinated Debt.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means any collateral hereafter granted by any Person to
the Administrative Agent to secure the Obligations.
"Collateral Document" means any document under which Collateral is
granted and any document related thereto.
"Commitments" means, collectively, the Revolving Credit Commitment and
the Term Loan Commitment, as reduced from time to time in the case of the
Revolving Credit Commitment pursuant to Section 2.6 hereof.
"Compliance Certificate" means a certificate, signed by an Authorized
Signatory, in substantially the form of Exhibit E, appropriately completed.
"Control" or "Controlled By" or "Under Common Control" means
possession, directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of voting securities, by
contract or otherwise); provided, however, that in any event any
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Person which beneficially owns, directly or indirectly, 10% or more (in number
of votes) of the securities having ordinary voting power for the election of
directors of a corporation shall be conclusively presumed to control such
corporation.
"Controlled Group" means as of the applicable date, as to any Person
not an individual, all members of a controlled group of corporations and all
trades or businesses (whether or not incorporated) which are under common
control with such Person and which, together with such Person, are treated as a
single employer under Section 414(b), (c) or (m) of the Code; provided, however,
that the Subsidiaries of the Borrower shall be deemed to be members of the
Borrower's Controlled Group.
"Credit Agricole Credit Agreement" means that certain Credit Agreement,
dated as of December 10, 1997, among the Borrower, the lending institutions
listed therein, and Credit Agricole Indosuez, New York Branch, as Agent, as
amended, modified or supplemented.
"Debtor Relief Laws" means any applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, insolvency, reorganization or similar
debtor relief Laws affecting the rights of creditors generally from time to time
in effect.
"Deed of Trust" means any fee simple Deed of Trust or Mortgage, as
applicable, relating to the real property and improvements owned by the Borrower
and each Domestic Subsidiary of the Borrower, in substantially the form set
forth in Exhibit I.
"Default" means an Event of Default and/or any of the events specified
in Section 8.1, regardless of whether there shall have occurred any passage of
time or giving of notice that would be necessary in order to constitute such
event an Event of Default.
"Default Rate" means a simple per annum interest rate equal to (a) with
respect to Base Rate Advances the lesser of (i) the Highest Lawful Rate or (ii)
the Base Rate Basis then in effect plus 2.00% or (b) with respect to LIBOR
Advances, the lesser of (i) the Highest Lawful Rate or (ii) the LIBOR Basis then
in effect plus 2.00%.
"Determining Lenders" means, on any date of determination, any
combination of Lenders whose Total Specified Percentages aggregate more than
50%; provided, however, in the event that each of the Commitments have been
terminated, "Determining Lenders" means, on any date of determination, any
combination of Lenders having more than 50% of the Advances then outstanding.
"Dividend" means, as to any Person, (a) any declaration or payment of
any dividend (other than a stock dividend) on, or the making of any distribution
on account of, any Capital Stocks of such Person and (b) any purchase,
redemption, or other acquisition or retirement for value of any Capital Stocks
of such Person.
"Dollar" or "$" means the lawful currency of the United States of
America.
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"Domestic Subsidiary" means any Subsidiary of the Borrower other than a
Foreign Subsidiary.
"EBITDA" means, for any period, determined in accordance with GAAP on a
consolidated basis for the Borrower and its Subsidiaries, the sum of (a) Pretax
Net Income (excluding therefrom, to the extent included in determining Pretax
Net Income, any items of extraordinary gain, including net gains on the sale of
assets other than asset sales in the ordinary course of business, and adding
thereto, to the extent included in determining Pretax Net Income, any items of
extraordinary loss, including net losses on the sale of assets other than asset
sales in the ordinary course of business), plus (b) interest expense (including
interest expense pursuant to Capitalized Lease Obligations), plus (c) to the
extent included in determining Pretax Net Income, depreciation, amortization and
other non-cash charges, plus (d) to the extent included in determining Pretax
Net Income, transaction fees and related expenses incurred in connection with a
business combination accounted for as a pooling of interest transaction for
accounting purposes.
"Eligible Accounts Receivable" means, as at any applicable date of
determination, the aggregate face amount of the Accounts of the Obligors
included in clause (a) of the definition of Account hereunder (excluding any
Accounts set forth in clauses (b) through (f) of such definition), without
duplication, in each case less (without duplication) the aggregate amount of all
reserves, limits and deductions with respect to such Accounts set forth below
and less the aggregate amount of all returns, discounts, claims, rebates,
offsets, credits, charges (including warehouseman's charges) and allowances of
any nature with respect to such Accounts (whether issued, owing, granted or
outstanding). Unless otherwise approved in writing by the Administrative Agent
in its sole discretion, no individual Account shall be deemed to be an Eligible
Account Receivable if:
(a) an Obligor does not have legal and valid title to the
Account; or
(b) the Account is not the valid, binding and legally
enforceable obligation of the account debtor subject, as to
enforceability, only to (i) Debtor Relief Laws and (ii) judicial
discretion in connection with the remedy of specific performance and
other equitable remedies; or
(c) the Account arises out of a sale made by an Obligor to an
Affiliate of such Obligor; or
(d) that portion of any Account that is unpaid more than 90
days after the original invoice date, with respect to Accounts the
invoice for which provides that payment is due in 60 days or less from
the date of such invoice; or
(e) the Account is unpaid more than 30 days after the original
payment due date, with respect to Accounts the invoice for which
provides that payment is due more than 60 days from the date of such
invoice; provided, however, that the aggregate percentage of all
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17
invoices providing for payment more than 60 days from the date of the
invoice that may constitute Eligible Accounts Receivable shall not
exceed 20% at any one time; or
(f) such Account, when aggregated with all other Accounts of
the same account debtor (or any Affiliate thereof), exceeds twenty
percent in face value of all Accounts of the Obligors then outstanding,
to the extent of such excess; or
(g) (i) the account debtor for such Account is also a creditor
of an Obligor, to the extent of the amount owed by such Obligor to the
account debtor, (ii) the Account is subject to any claim on the part of
the account debtor disputing liability under such Account in whole or
in part, to the extent of the amount of such dispute or (iii) the
Account otherwise is or is reasonably likely to become subject to any
right of setoff or any counterclaim, claim or defense by the account
debtor, to the extent of the amount of such setoff or counterclaim,
claim or defense; or
(h) the account debtor for such Account has commenced a
voluntary case under the federal bankruptcy laws, as now constituted or
hereafter amended, or made an assignment for the benefit of creditors
or if a decree or order for relief has been entered by a court having
jurisdiction in the premises in respect of the account debtor in an
involuntary case under the federal bankruptcy laws, as now constituted
or hereafter amended, or if any other petition or other application for
relief under the federal bankruptcy laws has been filed by or against
the account debtor, or if the account debtor has failed, suspended
business, ceased to be solvent, or consented to or suffered a receiver,
trustee, liquidator or custodian to be appointed for it or for all or a
significant portion of its assets or affairs; or
(i) the Administrative Agent does not have a valid and
perfected first priority security interest in such Account (subject
only to a tax lien being contested in good faith and by appropriate
proceedings and permitted by Section 5.6 hereof); or
(j) the sale to the account debtor for such Account is on a
consignment, sale on approval, guaranteed sale or sale-and-return basis
or pursuant to any written agreement requiring repurchase or return; or
(k) such Account is from an account debtor (or any Affiliate
thereof) and fifty percent (50%) or more, in face amount, of other
Accounts from either such account debtor or any Affiliate thereof are
due or unpaid for more than 90 days after the original invoice date; or
(l) fifty percent (50%) or more, in face amount, of other
Accounts from the same account debtor for such Account are not deemed
Eligible Accounts Receivable hereunder; or
(m) the account debtor for such Account is a foreign
government or any agency, department or institution thereof; or
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18
(n) such Account is an Account a security interest in which
would be subject to the Federal Assignment of Claims Act of 1940, as
amended (31 U.S.C. Section 3727 et seq.), unless the Obligor has
assigned the Account to the Administrative Agent in compliance with the
provisions of such Act; or
(o) the account debtor for such Account is outside the United
States or incorporated in or conducting substantially all of its
business in any jurisdiction located outside the United States, unless
(i) the sale is on letter of credit or sight draft, guaranty or
acceptance terms, in each case acceptable to the Administrative Agent
or (ii) such Account is reasonably acceptable to the Administrative
Agent; or
(p) the Administrative Agent determines in good faith in
accordance with its internal credit policies that (i) collection of the
account is insecure or (ii) such Account may not be paid by reason of
the account debtor's financial inability to pay; provided, however,
that any Account referred to in this clause (p) shall not become
ineligible until the Administrative Agent shall have given the Obligor
three Business Days' advance notice of such determination; or
(q) the goods giving rise to such Account have not been
shipped or the services giving rise to such Account have not been
performed by an Obligor or the Account otherwise does not represent a
final sale; or
(r) such Account does not comply in all material respects with
all applicable legal requirements, including, where applicable, the
Federal Consumer Credit Protection Act, the Federal Truth in Lending
Act and Regulation Z of the Board of Governors of the Federal Reserve
System, in each case as amended.
In addition to the foregoing, Eligible Accounts Receivable includes
such Accounts as an Obligor requests and that the Administrative Agent approves
in advance, in writing and in its sole discretion (or if the aggregate face
amount to be approved exceeds $1,000,00 at any one time, the approval of the
Determining Lenders has been obtained in writing).
"Eligible Assignee" means (i) a Lender, (ii) an Affiliate of a Lender,
and (iii) any other Person approved by the Administrative Agent (such approval
not to be unreasonably withheld) and, unless an Event of Default has occurred
and is continuing at the time any assignment is effected in accordance with
Section 11.6(d) hereof, the Borrower, such approval not to be unreasonably
withheld or delayed by the Borrower and such approval to be deemed given by the
Borrower if no objection is received by the assigning Lender and the
Administrative Agent from the Borrower within two Business Days after notice of
such proposed assignment has been provided by the assigning Lender to the
Borrower; provided, however, that neither the Borrower nor an Affiliate of the
Borrower shall qualify as an Eligible Assignee.
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19
"Eligible Inventory" means (A) the gross amount of Inventory of the
Obligors, valued at the lower of cost (on a FIFO basis) or market, which (i) is
owned solely by an Obligor and with respect to which such Obligor has good,
valid and marketable title; (ii) is stored on property that is either (a) owned
or leased by an Obligor, provided that with respect to any leased property, from
and after the sixtieth (60th) day following the Agreement Date the landlord has
executed and delivered a Landlord's Waiver, or (b) owned or leased by a
warehouseman that has contracted (including purchase orders) with an Obligor to
store Inventory on such warehouseman's property (provided that with respect to
Inventory stored on property owned or leased by a warehouseman, from and after
the sixtieth (60th) day following the Agreement Date the warehouseman has
executed and delivered to the Administrative Agent an agreement reasonably
satisfactory to the Administrative Agent where by the warehouseman acknowledges
the priority of the Lien of the Administrative Agent); (iii) is subject to a
valid, enforceable and first priority Lien in favor of the Administrative Agent
subject only to a tax lien being contested in good faith and by appropriate
proceedings and permitted by Section 5.6 hereof; (iv) is located in the United
States or the United Kingdom provided, that any such Inventory located in the
United Kingdom (x) is located in a warehouse leased by the Borrower or its
Subsidiaries, (y) is subject to a valid, enforceable and first priority security
interest reasonably acceptable to counsel for the Administrative Agent and (z)
does not exceed $1,500,000 in value at any one time; and (v) is not, in the
reasonable judgment of the Administrative Agent, obsolete or slow moving in
relation to customary industry practice, and which otherwise conforms to the
requirements for eligibility contained herein; (B) less the amount of any goods
returned or rejected by the Obligors' customers and goods in transit to third
parties (other than to the Obligors' agents or warehousemen that comply with
clause (A)(ii)(b) above); and (C) less the amount of any reserves for special
order goods or otherwise. In addition to the foregoing, Eligible Inventory shall
include such items of the Obligors' Inventory as the Borrower shall request and
that the Administrative Agent approves in advance, in writing and in its sole
discretion (or if the aggregate amount to be approved exceeds $1,000,000 at any
one time, the approval of the Determining Lenders has been obtained).
"Existing Letters of Credit" means those Letters of Credit outstanding
on the Agreement Date, as described on Schedule 1.1(c) hereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any regulation promulgated thereunder.
"ERISA Event" means, with respect to the Borrower and its Subsidiaries,
(a) a Reportable Event (other than a Reportable Event not subject to the
provision for 30-day notice to the PBGC pursuant to regulations issued under
Section 4043 of ERISA), (b) the withdrawal of any such Person or any member of
its Controlled Group from a Plan subject to Title IV of ERISA during a plan year
in which it was a "substantial employer" as defined in Section 4001(a)(2) of
ERISA, (c) the filing of a notice of intent to terminate under Section 4041(c)
of ERISA, (d) the institution of proceedings to terminate a Plan by the PBGC,
(e) the failure to make required contributions which could result in the
imposition of a lien under Section 412 of the Code or Section 302 of ERISA, or
(f) any other event or condition which might reasonably be expected to
constitute grounds under Section 4042
- 12 -
20
of ERISA for the termination of, or the appointment of a trustee to administer,
any Plan or the imposition of any liability under Title IV of ERISA other than
PBGC premiums due but not delinquent under Section 4007 of ERISA.
"European Touch Acquisition" means the acquisition by the Borrower
and/or certain of its Subsidiaries of all of the issued and outstanding Capital
Stock of European Touch, LTD. II, a Wisconsin corporation, European Touch Co.,
Incorporated., a Wisconsin corporation, Beauty Products Inc., a Wisconsin
corporation, and Cosmetics International Inc., a Wisconsin corporation
(collectively, the "European Touch Companies").
"European Touch Companies Audited Financial Statements" has the meaning
specified in Section 4.1(j)(iii) hereto.
"European Touch Companies Unaudited Financial Statements" has the
meaning specified in Section 4.1(j)(iv) hereto.
"European Touch Transaction" means, collectively, (a) the European
Touch Acquisition, (b) the issuance by the Borrower of the Senior Subordinated
Notes, (c) the refinancing of certain existing Indebtedness of the Borrower,
including but limited to all Indebtedness in respect of the Credit Agricole
Credit Agreement.
"European Touch Transaction Documents" means all agreements, documents
and instruments executed in connection with or related to the European Touch
Transaction.
"Event of Default" means any of the events specified in Section 8.1,
provided that any requirement for notice or lapse of time has been satisfied.
"Excluded Matters" has the meaning specified in Section 5.9(a) hereof.
"Federal Funds Rate" means, for any day, the rate per annum 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 Dallas on the Business Day next
succeeding such day, provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average of the quotations for
the day for such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.
"Fixed Charges" means, for any date of calculation, calculated for
Borrower and its Subsidiaries on a consolidated basis, the sum of, without
duplication, (a) scheduled principal payments in respect of Indebtedness, plus
(b) cash interest expense (including interest expense pursuant to Capitalized
Lease Obligations).
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21
"Fixed Charge Coverage Ratio" means the ratio of Pretax Cash Flow to
Fixed Charges, calculated (a) for September 30, 1998, from the day after the
Agreement Date to September 30, 1998, (b) for December 31, 1998, from the day
after the Agreement Date to December 31, 1998, (c) for March 31, 1999, from the
day after the Agreement Date to March 31, 1999, and (d) for each fiscal quarter
thereafter, for the four consecutive fiscal quarters ending on the date of
calculation.
"Foreign Subsidiary" means any Subsidiary of the Borrower which is not
organized under the laws of any state of the United States of America or the
District of Columbia.
"GAAP" means generally accepted accounting principles applied on a
consistent basis, set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants, or
their successors which are applicable in the circumstances as of the date in
question.
"▇▇▇▇ Stock Agreement" means that certain Stock Escrow and Buy-Back
Agreement, dated November 26, 1996 among the Borrower, Arizona Escrow &
Financial Corporation, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, and The ▇▇▇▇▇▇ Family Partnership.
"General Security Agreement" means the security agreement relating to
all personal property assets of the Borrower and its Domestic Subsidiaries,
substantially in the form of Exhibit C hereto, as amended, modified, renewed,
supplemented or restated from time to time.
"Guarantor" means each direct and indirect Subsidiary of the Borrower,
other than any Foreign Subsidiary.
"Guaranty" or "Guaranteed", means (a) as applied to an obligation of
another Person, (i) a guaranty, direct or indirect, in any manner, of any part
or all of such obligation, and (ii) an agreement, direct or indirect, contingent
or otherwise, the practical effect of which is to assure in any way the payment
or performance (or payment of damages in the event of nonperformance) of any
part or all of such obligation, including, without limiting the foregoing, any
reimbursement obligations with respect to amounts which may be drawn by
beneficiaries of outstanding letters of credit and (b) an agreement, direct or
indirect, contingent or otherwise, to maintain the net worth, working capital,
earnings or other financial performance of another Person; provided, however,
Guaranty does not mean (y) the endorsement of instruments for collection or
deposit in the ordinary course of business and (z) customary indemnities given
in connection with asset sales in the ordinary course of business.
"Highest Lawful Rate" means at the particular time in question the
maximum rate of interest which, under Applicable Law, the Lenders are then
permitted to charge on the Obligations. If the maximum rate of interest which,
under Applicable Law, the Lenders are permitted to charge on the Obligations
shall change after the date hereof, the Highest Lawful Rate shall be
automatically
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22
increased or decreased, as the case may be, from time to time as of the
effective time of each change in the Highest Lawful Rate without notice to the
Borrower.
"Indebtedness" means, with respect to any Person, without duplication,
(a) all obligations for borrowed money, (b) all obligations evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations under conditional
sale or other title retention agreements relating to property or assets
purchased by such Person, (d) all obligations issued or assumed as the deferred
purchase price of property or services, (e) all obligations secured by any Lien
on any property or asset owned by such Person, whether or not the obligation
secured thereby shall have been assumed, (f) to the extent not otherwise
included, all Capitalized Lease Obligations of such Person, all obligations in
respect of letters of credit, bankers' acceptances and similar instruments, and
all obligations under Interest Hedge Agreements, (g) the principal portion of
all obligations of such Person under any Synthetic Lease, (h) all preferred
stock issued by such Person and required by the terms thereof to be redeemed, or
for which mandatory sinking fund payments are due, by a fixed date, and (i) any
Guaranty of such Person of any obligation of another Person constituting
obligations of a type set forth above.
"Indemnified Matters" has the meaning specified in Section 5.9(a)
hereof.
"Indemnitees" has the meaning specified in Section 5.9(a) hereof.
"Initial Pricing Period" means the period from and including the
Agreement Date to and including the Rate Adjustment Date.
"Intellectual Property" has the meaning specified in Section 4.1(s)
hereof.
"Intellectual Property Security Agreement" means the security agreement
and assignment relating to all intellectual property of the Borrower and its
Domestic Subsidiaries substantially in the form of Exhibit D hereto, as amended,
modified, renewed, supplemented or restated from time to time.
"Interest Hedge Agreements" means any and all agreements, devices or
arrangements designed to protect at least one of the parties thereto from the
fluctuations of interest rates, exchange rates or forward rates applicable to
such party's assets, liabilities or exchange transactions, including, but not
limited to, dollar-denominated or cross-currency interest rate exchange
agreements, forward currency exchange agreements, interest rate cap, swap or
collar protection agreements, and forward rate currency or interest rate
options, as the same may be amended or modified and in effect from time to time,
and any and all cancellations, buy backs, reversals, terminations or assignments
of any of the foregoing.
"Interest Period" means the period beginning on the day any LIBOR
Advance is made and ending one, two, three or six months thereafter (as the
Borrower shall select); provided, however, that all of the foregoing provisions
are subject to the following:
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23
(i) if any Interest Period would otherwise end on a day which
is not a Business Day, such Interest Period shall be extended to the
next succeeding Business Day, unless, with respect to a LIBOR Advance,
the result of such extension would be to extend such Interest Period
into another calendar month, in which event such Interest Period shall
end on the immediately preceding Business Day;
(ii) any Interest Period with respect to a LIBOR Advance that
begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Business Day
of a calendar month;
(iii) the Borrower may not select any Interest Period which
ends after the date of a scheduled principal payment on the Advances
unless, after giving effect to such selection, the aggregate unpaid
principal amount of the LIBOR Advances for which Interest Periods end
after such scheduled principal payment shall be equal to or less than
the principal amount to which the Term Loan Advances are required to be
reduced after such scheduled principal payment is made;
(iv) the Borrower may not select any Interest Period in
respect of LIBOR Advances having an aggregate amount less than
$1,000,000; and
(v) there shall be outstanding at any one time no more than
eight Interest Periods in the aggregate.
"Investment" means any acquisition of all or substantially all assets
of any Person, or any direct or indirect purchase or other acquisition of, or
beneficial interest in, capital stock or other securities of any other Person,
or any direct or indirect loan, advance (other than loans or advances to
employees for moving and travel expenses, drawing accounts and similar
expenditures in the ordinary course of business) or capital contribution to, or
investment in any other Person, including without limitation the purchase of
accounts receivable of any other Person that are not current assets or do not
arise in the ordinary course of business.
"Issuing Bank" means NationsBank, N.A., a national banking association,
in its capacity as issuer of the Letters of Credit.
"Landlord's Waiver" has the meaning specified in Section 3.1(m) hereof.
"Law" means any statute, law, ordinance, regulation, rule, order, writ,
injunction, or decree of any Tribunal.
"Lender" means each financial institution shown on the signature pages
hereof so long as such financial institution maintains a portion of the
Commitments or is owed any part of the
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24
Obligations (including the Administrative Agent in its individual capacity), and
each Eligible Assignee that hereafter becomes a party hereto pursuant to Section
11.6 hereof, subject to the limitations set forth therein.
"L/C Related Documents" has the meaning specified in Section 2.15(e)
hereof.
"Letters of Credit" has the meaning specified in Section 2.15(a)
hereof, and shall include Existing Letters of Credit.
"Letter of Credit Agreement" has the meaning specified in Section
2.15(b) hereof.
"Letter of Credit Facility" has the meaning specified in Section
2.15(a) hereof.
"Leverage Ratio" means, for any date of calculation, the ratio of (a)
an amount equal to the remainder of (i) Total Debt as of such date minus (ii)
unrestricted cash balances of the Borrower and its Subsidiaries in excess of
$1,000,000 as of such date to (b) Adjusted EBITDA calculated for the four
consecutive fiscal quarters immediately preceding the date of calculation.
"LIBOR Advance" means an Advance which the Borrower requests to be made
as a LIBOR Advance or which is reborrowed as a LIBOR Advance, in accordance with
the provisions of Section 2.2 hereof.
"LIBOR Basis" means a per annum interest rate equal to the lesser of
(a) the Highest Lawful Rate, or (b) the sum of the Adjusted LIBOR Rate plus the
Applicable LIBOR Rate Margin.
"LIBOR Lending Office" means, with respect to a Lender, the office
designated as its LIBOR Lending Office on Schedule 1 attached hereto, and such
other office of the Lender or any of its Affiliates hereafter designated by
notice to the Borrower and the Administrative Agent.
"LIBOR Rate" means, for any LIBOR Advance for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason such
rate is not available, the term "LIBOR Rate" shall mean, for any LIBOR Advance
for any Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as
the London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period; provided, however, if more
than one rate is specified on Reuters Screen LIBO Page, the applicable rate
shall be the arithmetic mean of all such rates (rounded upwards, if necessary,
to the nearest 1/100 of 1%).
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25
"Lien" means, with respect to any property, any mortgage, lien, pledge,
collateral assignment, hypothecation, charge, security interest, title retention
agreement, levy, execution, seizure, attachment, garnishment or other similar
encumbrance of any kind in respect of such property, whether or not ▇▇▇▇▇▇,
vested or perfected.
"Litigation" means any proceeding, claim, lawsuit, arbitration, and/or
investigation by or before any Tribunal, including, without limitation,
proceedings, claims, lawsuits, and/or investigations under or pursuant to any
environmental, occupational, safety and health, antitrust, unfair competition,
securities, Tax or other Law, or under or pursuant to any contract, agreement or
other instrument.
"Loan Documents" means this Agreement, the Notes, the Security
Agreements, the Deeds of Trust, any other Collateral Document, any Subsidiary
Guaranty, the L/C Related Documents, the Underwriting Fee Letter, the
Administrative Agent Fee Letter, any Interest Hedge Agreements entered into with
any Lender or any Affiliate of any Lender, and any other document or agreement
executed or delivered from time to time by the Borrower, any of its Subsidiaries
or any other Person in connection herewith or as security for the Obligations.
"Material Adverse Effect" means any act or circumstance or event that
(a) could reasonably be expected to be material and adverse to the business,
financial condition or results of operations of the Borrower and its
Subsidiaries taken as a whole, or (b) in any manner whatsoever does or could
reasonably be expected to materially and adversely affect (i) the validity or
enforceability of any Loan Document, (ii) the ability of the Borrower and its
Subsidiaries taken as a whole to perform their respective Obligations under the
Loan Documents, or (iii) the rights and remedies of the Lenders or the
Administrative Agent under any of the Loan Documents.
"Multiemployer Plan" means, as to any Person, at any time, a
"multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA and to
which such Person or any member of its Controlled Group is making, or is
obligated to make contributions or has made, or been obligated to make,
contributions.
"NationsBank" means NationsBank, N.A., a national banking association,
in its capacity as a Lender.
"Necessary Authorization" means any right, franchise, license, permit,
consent, approval or authorization from, or any filing or registration with, any
Tribunal or any Person necessary or appropriate to enable the Borrower or any of
its Subsidiaries to maintain and operate its business and properties.
"Net Cash Proceeds" means, with respect to any sale, lease, transfer or
other disposition of any asset by any Person, the amount of cash received by
such Person in connection with such transaction (including cash proceeds of any
property received in consideration of any such sale, lease, transfer or other
disposition) after deducting therefrom the aggregate, without duplication, of
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26
the following amounts to the extent properly attributable to such transaction or
to the asset that is the subject thereof: (i) reasonable brokerage commissions,
legal fees, finder's fees, financial advisory fees, accounting fees,
underwriting fees, investment banking fees and other similar commissions and
fees, and expenses, in each case, to the extent paid or payable by such Person;
(ii) filing, recording or registration fees or charges or similar fees or
charges paid by such Person; (iii) taxes paid or payable by such Person or any
shareholder, partner or member of such Person to governmental taxing authorities
as a result of such sale or other disposition; and (iv) payment of the
outstanding principal amount of, premium or penalty, if any, and interest on any
Indebtedness (other than the Obligations) that is secured by a Lien on the asset
in question and that is required to be repaid under the terms thereof as a
result of such asset sale.
"Net Income" means net earnings (or deficit) after taxes of the
Borrower and its Subsidiaries, on a consolidated basis, determined in accordance
with GAAP.
"Net Worth" means, for the Borrower and its Subsidiaries, on a
consolidated basis, determined in accordance with GAAP, total stockholders'
equity.
"Notes" means, collectively, the Revolving Credit Notes and the Term
Loan Notes.
"Notice of Borrowing" has the meaning specified in Section 2.2(a)
hereof.
"Notice of Continuation/Conversion" has the meaning specified in
Section 2.2(c) hereof.
"Notice of Issuance" has the meaning specified in Section 2.15(b)
hereof.
"Obligations" means (a) all obligations of any nature (whether matured
or unmatured, fixed or contingent, including the Reimbursement Obligations) of
the Borrower or of its Subsidiaries to any Lender, the Administrative Agent or
any Affiliate of any Lender under any of the Loan Documents as they may be
amended from time to time, and (b) all obligations of the Borrower or any of its
Subsidiaries for losses, damages, expenses or any other liabilities of any kind
that any Lender may suffer by reason of a breach by the Borrower or any of its
Subsidiaries of any obligation, covenant or undertaking with respect to any Loan
Document payable by the Borrower or any of its Subsidiaries under any Loan
Document.
"Obligor" means the Borrower and each Guarantor.
"Operating Lease" means any operating lease, as defined in the
Financial Accounting Standard Board Statement of Financial Accounting Standards
No. 13, dated November, 1976 or otherwise in accordance with GAAP.
"Participant" has the meaning specified in Section 11.6(c) hereof.
"Participation" has the meaning specified in Section 11.6(c) hereof.
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27
"Payment Date" means the last day of the Interest Period for any LIBOR
Advance.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Issuance" means (a) the issuance by the Borrower of shares
of its Capital Stock in connection with an Acquisition and (b) the issuance by
the Borrower of shares of its Capital Stock in connection with employee benefit
plans.
"Permitted Liens" means, as applied to any Person:
(a) Any Lien in favor of the Lenders to secure the Obligations
hereunder;
(b) Liens for taxes, assessments, governmental charges, levies or
claims that are not yet delinquent or that are being diligently contested in
good faith by appropriate proceedings in accordance with Section 5.6 hereof and
for which adequate reserves shall have been set aside on such Person's books,
but only so long as no foreclosure, restraint, sale or similar proceedings have
been commenced with respect thereto;
(c) Liens of carriers, warehousemen, mechanics, landlord's, laborers
and materialmen and other similar Liens incurred in the ordinary course of
business for sums not yet due or being contested in good faith, if such reserve
or appropriate provision, if any, as shall be required by GAAP shall have been
made therefor;
(d) Liens (other than any Lien imposed by ERISA) incurred or deposits
made in the ordinary course of business in connection with worker's
compensation, unemployment insurance or similar legislation or to secure the
performance of bids, tenders, leases, trade contracts, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature (other than Indebtedness) incurred in the ordinary course of business;
(e) Easements, right-of-way, restrictions and other similar
encumbrances on the use of real property which do not interfere in any material
respect with the ordinary conduct of the business of such Person and do not
materially impair the value of such real property;
(f) Liens created to secure the purchase price of assets acquired (or
existing on property at the time such property is acquired) by such Person or
created to secure Indebtedness permitted by Section 7.1(c) or 7.1(h) hereof,
which is incurred solely for the purpose of financing the acquisition of such
assets and incurred at the time of acquisition or which exists against such
assets at the time of acquisition thereof, so long as each such Lien shall at
all times be confined solely to the asset or assets so acquired (and proceeds
thereof), and refinancings thereof so long as any such Lien remains solely on
the asset or assets acquired (and the proceeds thereof) and the amount of
Indebtedness related thereto is not increased;
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(g) Any Liens which are described on Schedule 7.2 hereto, and Liens
resulting from the refinancing of the related Indebtedness, provided that the
Indebtedness secured thereby shall not be increased and the Liens shall not
cover additional assets of the Borrower;
(h) Liens arising from filing Uniform Commercial Code financing
statements for precautionary purposes relating solely to true leases of personal
property permitted by this Agreement under which the Borrower or any of its
Subsidiaries is a lessee;
(i) Any zoning or similar law or right reserved to or vested in any
Tribunal to control or regulate the use of any real property;
(j) Any other title or survey exception with respect to real property
assets disclosed by any preliminary title report, title commitment report,
survey or other search of title provided to the Administrative Agent in
accordance with this Agreement unless reasonably disapproved by the
Administrative Agent prior to the Agreement Date;
(k) Any leases or subleases (i) currently in effect, (ii) entered into
in the ordinary course of business or (iii) entered into in compliance with the
Loan Documents;
(l) Any replacements or renewals of Liens (but no increases in the
Indebtedness secured thereby) permitted by clauses (f), (g) and (h) hereof;
(m) Liens in connection with any attachment or judgment (including
judgment or appeal bonds) not in excess of $500,000 individually or in the
aggregate for the Borrower and its Subsidiaries (exclusive of any amount which a
credit-worthy insurance company has acknowledged coverage) unless the judgment
it secures shall within 60 days after the entry thereof, not have been
discharged or execution thereof not stayed pending appeal, or shall not have
been discharged within 30 days after the expiration of such stay; and
(n) Liens granted to State Street Bank and Trust Company of California,
N.A., or any successor trustee, pursuant to Section 7.07 of the Indenture, dated
as of June 23, 1998, by and among the Borrower, the existing Domestic
Subsidiaries of the Borrower, and State Street Bank and Trust Company of
California, N.A.
"Person" means an individual, corporation, partnership, limited
liability company, trust or unincorporated organization, or a government or any
agency or political subdivision thereof.
"Plan" means an employee benefit plan as defined in Section 3(3) of
ERISA (including a Multiemployer Plan) pursuant to which any employees of the
Borrower, its Subsidiaries or any member of their Controlled Group participate.
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"Pretax Cash Flow" means, for any date of calculation, calculated for
the Borrower and its Subsidiaries on a consolidated basis, an amount equal to
the sum of (a) Adjusted EBITDA, minus (b) Capital Expenditures.
"Pretax Net Income" means net profit (or loss) before taxes of the
Borrower and its Subsidiaries, on a consolidated basis, determined in accordance
with GAAP.
"Prime Rate" means, at any time, the prime interest rate announced or
published by the Reference Lender from time to time as its reference rate for
the determination of interest rates for loans of varying maturities in United
States dollars to United States residents of varying degrees of creditworthiness
and being quoted at such time by the Reference Lender as its "prime rate;" it
being understood that such rate may not be the lowest rate of interest charged
by the Reference Lender.
"Quarterly Date" means the last day of each March, June, September and
December, beginning September 30, 1998.
"Rate Adjustment Date" means the date which is two Business Days
following the date that the Lenders receive the financial statements for the
fiscal quarter ending December 31, 1998, required to be delivered pursuant to
Section 6.3 hereof.
"Reference Lender" means NationsBank; provided that if NationsBank's
commitments shall terminate and it shall have no Advances and Letters of Credit
outstanding hereunder, NationsBank shall cease to be the Reference Lender, and
the Administrative Agent (after consultation with the Borrower) shall, with
notice to the Borrower and the Lenders, designate another Lender as the
Reference Lender.
"Reimbursement Obligations" means, in respect of any Letter of Credit
as at any date of determination, the sum of (a) the maximum aggregate amount
which is then available to be drawn under such Letter of Credit plus (b) the
aggregate amount of all drawings under such Letter of Credit not theretofore
reimbursed by the Borrower or converted to an Advance.
"Release Date" means the date on which the Notes have been paid, all
other Obligations due and owing have been paid and performed in full, and the
Commitments have been terminated.
"Reportable Event" has the meaning set forth in Section 4043(c) of
ERISA.
"Reserve Requirement" means, at any time, the maximum rate at which
reserves (including, without limitation, any marginal, special, supplemental or
emergency reserves) are required to be maintained under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) by member banks of the Federal Reserve System against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the effect
of the foregoing, the Reserve Requirement shall reflect any other reserves
required to be maintained by such member banks with respect to (i) any category
of liabilities which includes deposits by reference to which the Adjusted LIBOR
Rate (as the case may be) is to be determined, or (ii) any
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category of extensions of credit or other assets which include LIBOR Advances.
The Adjusted LIBOR Rate shall be adjusted automatically on and as of the
effective date of any change in the Reserve Requirement.
"Responsible Officer" means, of any Person, the President, chief
operating officer, chief executive officer, chief financial officer, treasurer
or any other executive officer of such Person.
"Restricted Payments" means, collectively, (a) Dividends, (b) any
payment or prepayment of principal, premium, penalty or interest on any
Subordinated Debt of the Borrower or any of its Subsidiaries or any defeasance,
redemption, purchase, repurchase or other acquisition or retirement for value,
in whole or in part, of any Subordinated Debt (including, without limitation,
the setting aside of assets or the deposit of funds therefor), (c) any payment
of any executive compensation and related benefits or any management,
consulting, advisory or similar fees to any Affiliate and (d) any payment or
prepayment of any amounts pursuant to the ▇▇▇▇ Stock Agreement.
"Revolving Commitment Fee" has the meaning specified in Section 2.4(a)
hereof.
"Revolving Commitment Maturity Date" means June 30, 2003, or the
earlier date of termination in whole of the Revolving Credit Commitment pursuant
to Section 2.6 or 8.2 hereof.
"Revolving Credit Acquisition Advance" means a Revolving Credit
Advance, all or a portion of the proceeds of which are used to finance an
Acquisition.
"Revolving Credit Advance" means an Advance made pursuant to Section
2.1(a) hereof, including a Revolving Credit Acquisition Advance.
"Revolving Credit Commitment" means $25,000,000, as reduced pursuant to
Section 2.6.
"Revolving Credit Notes" means the promissory notes of Borrower
evidencing Revolving Credit Advances hereunder, substantially in the form of
Exhibit A hereto, together with any extension, renewal, or amendment thereof, or
substitution therefor.
"Revolving Credit Specified Percentage" means, as to any Lender, the
percentage obtained by dividing such Lender's portion of the Revolving Credit
Commitment (or Revolving Credit Advances owing to such Lender after the
Revolving Credit Commitment has terminated) by the Revolving Credit Commitment
(or to the aggregate principal amount of Revolving Credit Advances after the
Revolving Credit Commitment has terminated), which percentage for each Lender
existing on the Agreement Date shall be set forth on Schedule 1.1(b) hereto.
"Rights" means rights, remedies, powers and privileges.
"Security Agreements" mean the General Security Agreement and the
Intellectual Property Security Agreement.
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"Senior Subordinated Notes" means those certain senior subordinated
notes of the Borrower due July 1, 2003 issued by the Borrower in connection with
the European Touch Transaction in the aggregate principal amount of up to
$125,000,000, which shall be subordinated to the Obligations on the terms set
forth in the Indenture dated as of June 23, 1998 by and among the Borrower, the
existing Domestic Subsidiaries of the Borrower and State Street Bank and Trust
Company of California, N.A., as trustee, which notes shall be rated B- or better
by Standard & Poor's Rating Group, a division of ▇▇▇▇▇▇-▇▇▇▇, Inc. and B-3 or
better by ▇▇▇▇▇'▇ Investors Service.
"Solvent" means, with respect to any Person, that as of the date of
determination, (a) the fair saleable value of the assets of such Person is
greater than the total amount of liabilities (including contingent and
unliquidated liabilities) of such Person, (b) such Person is able to pay the
probable liabilities on such Person's then existing debts as they become
absolute and matured considering all financing alternatives and potential asset
sales reasonably available to such Person, and (c) such Person does not have
unreasonably small capital with which to carry on its business. In computing the
amount of contingent or unliquidated liabilities at any time, such liabilities
will be computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability discounted to present value
at rates believed to be reasonable by such Person.
"Special Counsel" means the law firm of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
P.C., or such other legal counsel as the Administrative Agent may select.
"Subordinated Debt" means (a) the Senior Subordinated Notes and (b) any
other Indebtedness of the Borrower or any Subsidiary of the Borrower having
maturities and terms, and which is subordinated to payment of the Obligations in
a manner, approved in writing by the Administrative Agent and the Determining
Lenders, in each case with only such changes or amendments as are not prohibited
by Section 7.18 hereof.
"Subsequent Pricing Period" means the period from and including the
date which is the first day following the end of the Initial Pricing Period to
and including the Release Date.
"Subsidiary" of any Person means any corporation, partnership, limited
liability company, joint venture, trust or estate or other Person of which (or
in which) more than 50% of:
(a) the outstanding capital stock having voting power to elect a
majority of the Board of Directors of such corporation (irrespective of whether
at the time capital stock of any other class or classes of such corporation
shall or might have voting power upon the occurrence of any contingency),
(b) the interest in the capital or profits of such partnership, limited
liability company or joint venture,
(c) the beneficial interest of such trust or estate, or
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(d) the equity interest of such other Person,
is at the time directly or indirectly owned by such Person, by such Person and
one or more of its Subsidiaries or by one or more of such Person's Subsidiaries.
"Subsidiary Guaranty" means a guaranty, substantially in the form of
Exhibit G hereto, executed by each direct and indirect Domestic Subsidiary of
the Borrower, as amended, supplemented, modified, renewed or otherwise restated
from time to time.
"Synthetic Lease" means any synthetic lease, tax retention operating
lease or off-balance sheet financing product where such transaction is
considered borrowed money indebtedness for tax purposes but which is classified
as an Operating Lease pursuant to GAAP.
"Taxes" has the meaning specified in Section 2.14 hereof.
"Term Loan Advance" means an Advance made pursuant to Section 2.1(b)
hereof.
"Term Loan Commitment" means $25,000,000 as terminated pursuant to
Section 2.1(b) hereof.
"Term Loan Commitment Termination Date" means December 31, 1999, or the
earlier date of acceleration of the Term Loan Advances pursuant to Section 8.2
hereof.
"Term Loan Maturity Date" means June 30, 2003, or the earlier date of
acceleration of the Term Loan Advances pursuant to Section 8.2 hereof.
"Term Loan Notes" means the promissory notes of the Borrower evidencing
Term Loan Advances hereunder, substantially in the form of Exhibit B hereto,
together with any extension, renewal or amendment thereof, or substitution
therefor.
"Term Loan Specified Percentage" means, as to any Lender, the
percentage obtained by dividing such Lender's portion of the Term Loan
Commitment (or Term Loan Advances owing to such Lender after the Term Loan
Commitment has terminated) by the Term Loan Commitment (or to the aggregate
principal amount of Term Loan Advances after the Term Loan Commitment has
terminated), which percentage for each Lender existing on the Agreement Date
shall be set forth on Schedule 1.1(b) hereto.
"Total Debt" means, as of any date of determination, determined for the
Borrower and its Subsidiaries on a consolidated basis, to the extent that the
following would appear as a liability upon the consolidated balance sheet of the
Borrower and its Subsidiaries in accordance with GAAP: (i) indebtedness for
borrowed money, (ii) obligations evidenced by bonds, debentures, notes or other
similar instruments, (iii) non-contingent obligations to pay the deferred
purchase price of property
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or services other than trade payables and accrued liabilities incurred in the
ordinary course of business, and (iv) Capitalized Lease Obligations.
"Total Specified Percentage" means, as to any Lender, the percentage
obtained by dividing the sum of such Lender's portion of the Revolving Credit
Commitment and the Term Loan Commitment (or Revolving Credit Advances and Term
Loan Advances owing to such Lender after the Revolving Credit Commitment and the
Term Loan Commitment have been terminated) by the sum of the Revolving Credit
Commitment and the Term Loan Commitment (or to the sum of the aggregate
principal amount of the Revolving Credit Advances and the Term Loan Advances if
the Revolving Credit Commitment and the Term Loan Commitment has been
terminated), which percentage for each Lender existing on the Agreement Date
shall be set forth on Schedule 1.1(b) hereto.
"Tribunal" means any state, commonwealth, federal, foreign,
territorial, or other court or government body, subdivision, agency, department,
commission, board, bureau, or instrumentality of a governmental or other
regulatory or public body or authority.
"UCC" means the Uniform Commercial Code of Texas, as amended from time
to time, and the Uniform Commercial Code applicable in such other states as any
Collateral may be located.
"Underwriting Fee Letter" means that certain letter, dated May 28,
1998, from NationsBank, N.A., NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC, BankBoston,
N.A., and BankBoston Securities, Inc. providing an underwriting fee with respect
to the Commitments.
"Unused Portion" means an amount equal to the result of (i) the
Revolving Credit Commitment minus (ii) the sum of (A) the outstanding Revolving
Credit Advances plus (B) outstanding Reimbursement Obligations in respect of the
Letters of Credit.
"Voting Power" means, with respect to any Person, the power ordinarily
(without the occurrence of a contingency) to elect the members of the board of
directors (or persons performing similar functions).
Section 1.2 Amendments and Renewals. Each definition of an agreement in
this Article 1 shall include such agreement as amended to date, and as amended
or renewed from time to time in accordance with its terms, but only with the
prior written consent of the Determining Lenders or all the Lenders as required
pursuant to Section 11.11 hereof.
Section 1.3 Construction. The terms defined in this Article 1 (except
as otherwise expressly provided in this Agreement) for all purposes shall have
the meanings set forth in Section 1.1 hereof, and the singular shall include the
plural, and vice versa, unless otherwise specifically required by the context.
All accounting terms used in this Agreement which are not otherwise defined
herein shall be construed in accordance with GAAP on a consolidated basis for
the Borrower and its Subsidiaries, unless otherwise expressly stated herein.
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ARTICLE 2
Advances
Section 2.1 The Advances.
(a) Revolving Credit Advances. Each Lender severally agrees, upon the
terms and subject to the conditions of this Agreement, to make Revolving Credit
Advances to the Borrower from time to time up to but not including the Revolving
Commitment Maturity Date in an aggregate amount not to exceed its Revolving
Credit Specified Percentage of the Revolving Credit Commitment less its
Revolving Credit Specified Percentage of the aggregate amount of all
Reimbursement Obligations then outstanding (assuming compliance with all
conditions to drawing), for the purposes set forth in Section 5.8(a) hereof.
Subject to Section 2.9 hereof, Revolving Credit Advances may be repaid and then
reborrowed. Notwithstanding any provision in this Agreement or in any other Loan
Document to the contrary, in no event shall (a) the sum of the principal amount
of all outstanding (i) Revolving Credit Advances and (ii) Reimbursement
Obligations exceed (b) the lesser of (i) the Revolving Credit Commitment and
(ii) the Borrowing Base.
(b) Term Loan Advances. Each Lender severally agrees, upon the terms
and subject to the conditions of this Agreement (including, but not limited to,
Section 3.3 hereof), to make Term Loan Advances to the Borrower from time to
time up to but not including the Term Loan Commitment Termination Date in an
amount not to exceed its Term Loan Specified Percentage of the Term Loan
Commitment for the purposes set forth in Section 5.8(b) hereof. Notwithstanding
any provision in any Loan Document to the contrary, in no event shall the
principal amount of all outstanding Term Loan Advances exceed the Term Loan
Commitment. On the Term Loan Commitment Termination Date, the Term Loan
Commitment shall be automatically terminated. Term Loan Advances may not be
repaid and then reborrowed.
(c) Any Advance shall, at the option of the Borrower as provided in
Section 2.2 hereof (and, in the case of LIBOR Advances, subject to the
provisions of Article 9 hereof), be made as a Base Rate Advance or a LIBOR
Advance; provided that there shall not be outstanding, at any one time, more
than eight LIBOR Advances.
Section 2.2 Manner of Borrowing and Disbursement.
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(a) Base Rate Advances. In the case of Base Rate Advances, the
Borrower, through an Authorized Signatory, shall give the Administrative Agent
prior to 11:00 a.m., Dallas, Texas time, on the date of any proposed Base Rate
Advance, irrevocable written notice, or irrevocable telephonic notice followed
immediately by written notice, in substantially the form of Exhibit H hereto (a
"Notice of Borrowing") (provided, however, that the Borrower's failure to
confirm any telephonic notice in writing shall not invalidate any notice so
given), of its intention to borrow a Base Rate Advance hereunder. Such Notice of
Borrowing shall specify the requested funding date, which shall be a Business
Day, and the amount of the proposed aggregate Base Rate Advances to be made by
the Lenders.
(b) LIBOR Advances. In the case of LIBOR Advances, the Borrower,
through an Authorized Signatory, shall give the Administrative Agent at least
three Business Days' irrevocable written notice, or irrevocable telephonic
notice followed immediately by written notice (provided, however, that the
Borrower's failure to confirm any telephonic notice in writing shall not
invalidate any notice so given) pursuant to a Notice of Borrowing, of its
intention to borrow a LIBOR Advance hereunder. Notice shall be given to the
Administrative Agent prior to 11:00 a.m., Dallas, Texas time, in order for such
Business Day to count toward the minimum number of Business Days required. LIBOR
Advances shall in all cases be subject to Article 9 hereof. For LIBOR Advances,
the Notice of Borrowing shall specify the requested funding date, which shall be
a Business Day, the amount of the proposed aggregate LIBOR Advances to be made
by Lenders and the Interest Period selected by the Borrower, provided that no
such Interest Period shall extend past the Revolving Commitment Maturity Date or
the Term Loan Maturity Date, as appropriate, or prohibit or impair the
Borrower's ability to comply with Section 2.5 or 2.8 hereof.
(c) Continuation/Conversion. Subject to Sections 2.1 and 2.9 hereof,
the Borrower shall have the option (i) to convert at any time all or any part of
the outstanding Base Rate Advances to LIBOR Advances and all or any part of the
outstanding LIBOR Advances to Base Rate Advances or (ii) upon expiration of any
Interest Period applicable to a LIBOR Advance, to continue all or any portion of
such LIBOR Advance equal to $1,000,000 and integral multiples of $100,000 in
excess of that amount as a LIBOR Advance and the succeeding Interest Period(s)
of such continued LIBOR Advance shall commence on the last day of the Interest
Period of the LIBOR Advance to be continued; provided, however, (a) LIBOR
Advances may only be converted into Base Rate Advances on the expiration date of
the Interest Period applicable thereto and (b) notwithstanding anything in this
Agreement to the contrary, no outstanding Advance may be continued as, or
converted into, a LIBOR Advance when any Default or Event of Default has
occurred and is continuing. Not later than 11:00 a.m., Dallas, Texas time at
least one Business Day prior to the proposed continuation of or a conversion to
a Base Rate Advance and not later than 11:00 a.m., Dallas, Texas time, at least
three Business Days prior to a proposed continuation of or conversion to a LIBOR
Advance, the Borrower, through an Authorized Signatory, shall give the
Administrative Agent irrevocable written notice, or irrevocable telephonic
notice followed immediately by written notice, in substantially the form of
Exhibit K hereto (a "Notice of Continuation/Conversion") (provided, however,
that the Borrower's failure to confirm any telephonic notice in writing shall
not invalidate any notice so given), stating (i) the proposed
conversion/continuation date (which shall
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be a Business Day), (ii) the amount of the Advance to be converted/continued,
(iii) in the case of a conversion to, or a continuation of, a LIBOR Advance, the
requested Interest Period, and (iv) in the case of a conversion of a Base Rate
Advance to a LIBOR Advance or continuation of a LIBOR Advance, stating that no
Default or Event of Default has occurred and is continuing. If the Borrower
shall fail to give any notice in accordance with this Section 2.2(c), the
Borrower shall be deemed irrevocably to have requested that such LIBOR Advance
be converted to a Base Rate Advance in the same principal amount.
(d) Minimum Amount. The aggregate amount of Base Rate Advances to be
made by the Lenders on any day shall be in a principal amount which is at least
$500,000 and which is an integral multiple of $100,000; provided, however, that
such amount may equal the unused amount of the applicable Commitment. The
aggregate amount of LIBOR Advances having the same Interest Period and to be
made by the Lenders on any day shall be in a principal amount which is at least
$1,000,000 and which is an integral multiple of $100,000.
(e) Notice and Disbursement. The Administrative Agent shall promptly
notify the Lenders of each notice received from the Borrower pursuant to this
Section. Each Lender shall, not later than 2:00 p.m., Dallas, Texas time, on the
date of any Advance, deliver to the Administrative Agent, at its address set
forth herein, such Lender's Applicable Specified Percentage of such Advance in
immediately available funds in accordance with the Administrative Agent's
instructions. Prior to 2:30 p.m., Dallas, Texas time, on the date of any Advance
hereunder, the Administrative Agent shall, subject to satisfaction of the
conditions set forth in Article 3, disburse the amounts made available to the
Administrative Agent by the Lenders by (i) transferring such amounts by wire
transfer pursuant to the Borrower's instructions, or (ii) in the absence of such
instructions, crediting such amounts to the account of the Borrower maintained
with the Administrative Agent. All Revolving Credit Advances shall be made by
each Lender according to its Revolving Credit Specified Percentage. All Term
Loan Advances shall be made by each Lender in accordance with its Term Loan
Specified Percentage.
Section 2.3 Interest.
(a) On Base Rate Advances.
(i) The Borrower shall pay interest on the outstanding unpaid
principal amount of the Base Rate Advances outstanding from time to
time, until such Base Rate Advances are due (whether at maturity, by
reason of acceleration, by scheduled reduction, or otherwise) and
repaid at a simple interest rate per annum equal to the Base Rate Basis
for the Base Rate Advances as in effect from time to time. If at any
time the Base Rate Basis would exceed the Highest Lawful Rate, interest
payable on the Base Rate Advances shall be limited to the Highest
Lawful Rate, but the Base Rate Basis shall not thereafter be reduced
below the Highest Lawful Rate until the total amount of interest
accrued on the Base Rate Advances equals the amount of interest that
would have accrued if the Base Rate Basis had been in effect at all
times.
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(ii) Interest on the Base Rate Advances shall be computed on
the basis of a year of 365 or 366 days, as appropriate, for the actual
number of days elapsed, and shall be payable in arrears on each
Quarterly Date and on the Revolving Commitment Maturity Date or the
Term Loan Maturity Date, as appropriate.
(b) On LIBOR Advances.
(i) The Borrower shall pay interest on the unpaid principal
amount of each LIBOR Advance, from the date such Advance is made until
it is due (whether at maturity, by reason of acceleration, by scheduled
reduction, or otherwise) and repaid, at a rate per annum equal to the
LIBOR Basis for such LIBOR Advance. The Administrative Agent, whose
determination shall be controlling in the absence of demonstrable
error, shall determine the LIBOR Basis on the second Business Day prior
to the applicable funding, conversion or continuation date and shall
notify the Borrower and the Lenders of such LIBOR Basis.
(ii) Subject to Section 11.9 hereof, interest on each LIBOR
Advance shall be computed on the basis of a 360-day year for the actual
number of days elapsed, and shall be payable in arrears on the
applicable Payment Date and on the Revolving Commitment Maturity Date
or the Term Loan Maturity Date, as appropriate; provided, however, that
if the Interest Period for such LIBOR Advance exceeds three months,
interest shall also be due and payable in arrears on each three-month
anniversary of the commencement of such Interest Period during such
Interest Period.
(c) Interest After an Event of Default. (i) After an Event of Default
(other than an Event of Default specified in Section 8.1(f) or (g) hereof) and
during any continuance thereof, at the option of the Determining Lenders, and
(ii) after an Event of Default specified in Section 8.1(f) or (g) hereof and
during any continuance thereof, automatically and without any action by the
Administrative Agent or any Lender, the Obligations shall bear interest at a
rate per annum equal to the Default Rate. Such interest shall be payable on the
earlier of demand or the Revolving Commitment Maturity Date or the Term Loan
Maturity Date, as appropriate, and shall accrue until the earlier of (i) waiver
or cure of the applicable Event of Default, (ii) agreement by the Determining
Lenders to rescind the charging of interest at the Default Rate, or (iii)
payment in full of the Obligations. The Lenders shall not be required to
accelerate the maturity of the Advances, to exercise any other rights or
remedies under the Loan Documents, or to give notice to the Borrower of the
decision to charge interest at the Default Rate.
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Section 2.4 Fees.
(a) Revolving Commitment Fee. Subject to Section 11.9 hereof, the
Borrower agrees to pay to the Administrative Agent, for the account of the
Lenders according to their Revolving Credit Specified Percentages, a commitment
fee of 0.50% per annum (or 0.375% per annum during any period during the
Subsequent Pricing Period that the Applicable Base Rate Margin is 0.250% or
below) on the daily average Unused Portion during the period commencing on the
Agreement Date and ending on the Revolving Commitment Maturity Date. Such fee
shall be (i) payable in arrears on each Quarterly Date and on the Revolving
Commitment Maturity Date, (ii) fully earned when due and, subject to Section
11.9 hereof, nonrefundable when paid and (iii) subject to Section 11.9 hereof,
computed on the basis of a 360-day year for the actual number of days elapsed.
(b) Other Fees. Subject to Section 11.9 hereof, the Borrower agrees to
pay to the Administrative Agent, for the account of (i) the Administrative
Agent, the fees on the dates and in the amounts specified in the letter
agreement (the "Administrative Agent Fee Letter"), dated as of the Agreement
Date, between the Borrower and the Administrative Agent, and (ii) NationsBanc
▇▇▇▇▇▇▇▇▇▇ Securities LLC and BankBoston Securities, Inc. the fees specified in
the Underwriting Letter on the Agreement Date.
Section 2.5 Prepayments.
(a) Voluntary LIBOR Advance Prepayments. Upon three Business Days'
prior telephonic notice (to be promptly followed by written notice) by an
Authorized Signatory to the Administrative Agent, LIBOR Advances may be
voluntarily prepaid but only so long as the Borrower concurrently reimburses the
Lenders in accordance with Section 2.9 hereof; provided, however, the Lenders
acknowledge and agree that no other penalties or premiums shall be paid in
connection with such prepayment. Any notice of prepayment shall be irrevocable.
(b) Mandatory Prepayment. On or before the date of any reduction of the
Revolving Credit Commitment, the Borrower shall prepay applicable outstanding
Revolving Credit Advances in an amount necessary to reduce the sum of
outstanding Revolving Credit Advances and Reimbursement Obligations to an amount
less than or equal to the lesser of (i) the Revolving Credit Commitment as so
reduced and (ii) the Borrowing Base. To the extent required by the immediately
preceding sentence, the Borrower shall first prepay all Base Rate Advances and
shall thereafter prepay LIBOR Advances. To the extent that any prepayment
requires that a LIBOR Advance be repaid on a date other than the last day of its
Interest Period, the Borrower shall reimburse each Lender in accordance with
Section 2.9 hereof; provided, however, the Lenders acknowledge and agree that no
other penalties or premiums shall be paid in connection with such prepayment. To
the extent that at any time the aggregate principal amount of Revolving Credit
Advances and Reimbursement Obligations outstanding hereunder exceed the lesser
of (i) the Revolving Credit Commitment and (ii) the Borrowing Base, the Borrower
shall immediately repay Revolving Credit Advances in an amount equal to such
excess.
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(c) Prepayments from Sales of Assets. Concurrently with the receipt of
Net Cash Proceeds from the sale or disposition by the Borrower or any of its
Subsidiaries of any assets, including any Capital Stocks of any such Subsidiary
(other than sales or dispositions of assets (i) expressly permitted pursuant to
clauses (a) through (d) of Section 7.5 hereof or (ii) the aggregate amount of
Net Cash Proceeds of which during any fiscal year do not exceed $500,000), the
Borrower shall prepay Term Loan Advances in an amount equal to 100% of such Net
Cash Proceeds. Each such prepayment shall be applied as provided in Section
2.5(f) hereof.
(d) Prepayment from Sales of Capital Stock. Concurrently with receipt
of Net Cash Proceeds from the sale or disposition by the Borrower to any Person
of any Capital Stock after the Agreement Date (other than a Permitted Issuance),
the Borrower shall prepay Term Loan Advances in an amount equal to 33% of such
Net Cash Proceeds. Each such prepayment shall be applied as provided in Section
2.5(f) hereof.
(e) Prepayment from Issuance of Subordinated Debt. Concurrently with
the receipt of Net Cash Proceeds from the issuance of any Subordinated Debt by
the Borrower or any of its Subsidiaries, the Borrower shall prepay the Term Loan
Advances in an amount equal to 100% of such Net Cash Proceeds. Each such
prepayment shall be applied as provided in Section 2.5(f) hereof.
(f) Payments, Generally. Any prepayment of any Advance shall be
accompanied by interest accrued on the principal amount being prepaid. Any
voluntary partial payment of a Base Rate Advance shall be in a principal amount
which is at least $500,000 and which is an integral multiple of $100,000. Any
voluntary partial payment of a LIBOR Advance shall be in a principal amount
which is at least $1,000,000 and which is an integral multiple of $100,000, and
to the extent that any prepayment of a LIBOR Advance is made on a date other
than the last day of its Interest Period, the Borrower shall reimburse each
Lender in accordance with Section 2.9 hereof. Any voluntary or mandatory
prepayment of any Term Loan Advance shall be applied pro rata to all of the
unpaid scheduled installment payments of the Term Loan Advances, first to the
Base Rate Advances, if any, and then to LIBOR Advances. Any prepayment required
to be made pursuant to Sections 2.5(c), (d), or (e) hereof shall not be subject
to the notice and minimum payment provisions of this Section 2.5; provided,
however, the Borrower shall be required to reimburse each Lender for any loss,
cost or expense incurred by such Lender in connection with any such prepayment
as set forth in Section 2.9 hereof if any prepayment results in a LIBOR Advance
being paid on a day other than the last day of an Interest Period for such LIBOR
Advance. Notwithstanding any other provision in this Agreement or any of the
other Loan Documents to the contrary, the Borrower shall not be required to pay
any premium or penalty in connection with any prepayment required or permitted
by this Agreement, other than the reimbursements of amounts set forth in Section
2.9 hereof, to the extent applicable to such prepayment.
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Section 2.6 Reduction of Revolving Credit Commitment.
(a) Voluntary Reduction. The Borrower shall have the right, upon not
less than 5 Business Days' notice by an Authorized Signatory to the
Administrative Agent (if telephonic, to be confirmed by telex or in writing on
or before the date of reduction or termination), which shall promptly notify the
Lenders, to terminate or reduce the Revolving Credit Commitment. Each partial
termination shall be in an aggregate amount which is at least $1,000,000 and
which is an integral multiple thereof, and no voluntary reduction in the
Revolving Credit Commitment shall cause any LIBOR Advance to be repaid prior to
the last day of its Interest Period unless the Borrower shall reimburse each
Lender in accordance with Section 2.9 hereof.
(b) Mandatory Reduction. On the Revolving Commitment Maturity Date, the
Revolving Credit Commitment shall be automatically reduced to zero. On the Term
Loan Commitment Termination Date, the Term Loan Commitment shall be
automatically reduced to zero.
(c) General Requirements. Upon any reduction of the Revolving Credit
Commitment pursuant to this Section, the Borrower shall immediately make a
repayment of Revolving Credit Advances in accordance with Section 2.5(b) hereof.
The Borrower shall reimburse each Lender in connection with any such payment in
accordance with Section 2.9 hereof to the extent applicable. The Borrower shall
not have any right to rescind any termination or reduction. Once reduced, the
Revolving Credit Commitment may not be increased or reinstated.
Section 2.7 Non-Receipt of Funds by the Administrative Agent. Unless
the Administrative Agent shall have been notified by a Lender prior to the date
of any proposed Advance (which notice shall be effective upon receipt) that such
Lender does not intend to make the proceeds of such Advance available to the
Administrative Agent, the Administrative Agent may assume that such Lender has
made such proceeds available to the Administrative Agent on such date, and the
Administrative Agent may in reliance upon such assumption (but shall not be
required to) make available to the Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the Administrative Agent
by such Lender, the Administrative Agent shall be entitled to recover such
amount on demand from such Lender (or, if such Lender fails to pay such amount
forthwith upon such demand, from the Borrower) together with interest thereon in
respect of each day during the period commencing on the date such amount was
available to the Borrower and ending on (but excluding) the date the
Administrative Agent receives such amount from (a) the Lender, at a per annum
rate equal to the lesser of (i) the Highest Lawful Rate or (ii) the Federal
Funds Rate, or (b) the Borrower, at the per annum rate applicable at the time to
such Advance. No Lender shall be liable for any other Lender's failure to fund
an Advance hereunder.
Section 2.8 Payment of Principal of Advances.
(a) Revolving Credit Advances. To the extent not otherwise required to
be paid earlier as provided herein, the principal amount of the Revolving Credit
Advances shall be due and payable on the Revolving Commitment Maturity Date.
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(b) Term Loan Advances. To the extent not otherwise required to be paid
earlier as provided herein, the principal amount of the Term Loan Advances shall
be repaid on each Quarterly Date, commencing March 31, 2000 and thereafter, in
quarterly installments each in an amount equal to the product of (i) 5%
multiplied by (ii) the aggregate principal amount of Term Loan Advances
outstanding on the Term Loan Commitment Termination Date; provided, however, all
unpaid Term Loan Advances shall be repaid on the Term Loan Maturity Date.
Section 2.9 Reimbursement. Whenever any Lender shall sustain or incur
any actual losses (excluding loss of anticipated profits) or reasonable
out-of-pocket expenses in connection with (a) failure by the Borrower to borrow
any LIBOR Advance after having given notice of its intention to borrow in
accordance with Section 2.2 hereof (whether by reason of the Borrower's election
not to proceed or the non-fulfillment of any of the conditions set forth in
Article 3 hereof), (b) any prepayment for any reason of any LIBOR Advance in
whole or in part (including, but not limited to, a prepayment pursuant to
Section 9.3(b) hereof) on other than the last day of an Interest Period
applicable to such LIBOR Advance, (c) any prepayment of any of its LIBOR
Advances that is not made on any date specified in a notice of prepayment given
by the Borrower or (d) the selling by such Lender (provided that such Lender was
a Lender on the Agreement Date) of its rights and obligations under this
Agreement to an Eligible Assignee within 90 days after the Agreement Date, in
each case, the Borrower agrees to pay to any such Lender, within 30 days after
demand by such Lender, an amount sufficient to compensate such Lender for all
such actual losses (excluding loss of anticipated profits) and reasonable
out-of-pocket expenses, subject to Section 11.9 hereof. A certificate as to any
amounts payable to any Lender under this Section 2.9 shall be submitted to the
Borrower by such Lender and shall certify that such amounts were actually
incurred by such Lender and shall show in reasonable detail an accounting of the
amount payable and the calculations used to determine in good faith such amount
and shall be conclusive absent demonstrable error.
Section 2.10 Manner of Payment.
(a) Payment Timing and Type. Each payment (including prepayments) by
the Borrower of the principal of or interest on the Advances, fees, and any
other amount owed under this Agreement or any other Loan Document shall be made
not later than 12:00 noon (Dallas, Texas time) on the date specified for payment
under this Agreement to the Administrative Agent at the Administrative Agent's
office, in Dallas constituting immediately available funds.
(b) Non-Business Day Payments. If any payment under this Agreement or
any other Loan Document shall be specified to be made upon a day which is not a
Business Day, it shall be made on the next succeeding day which is a Business
Day, unless, with respect to a payment due in respect of a LIBOR Advance, such
Business Day falls in another calendar month, in which case payment shall be
made on the preceding Business Day. Any extension of time shall in such case be
included in computing interest and fees, if any, in connection with such
payment.
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(c) Payments Without Deduction. The Borrower agrees to pay principal,
interest, fees and all other amounts due under the Loan Documents without
deduction for set-off, counterclaim, Taxes or any deduction whatsoever.
(d) Apportionment of Payments. Whenever any amount received by the
Administrative Agent under this Agreement in respect of the Obligations
(including, without limitation, proceeds of Collateral or payments under any
Subsidiary Guaranty) is insufficient to pay in full amounts due and payable in
respect of the Obligations, such amount shall be applied in the following order:
first, to pay the Administrative Agent's reasonable fees and expenses incurred
on behalf of the Lenders then due and payable; second, to pay all other
reasonable fees then due and payable in respect of the Advances and the
Reimbursement Obligations under the Loan Documents; third, to pay all other
amounts other than principal and interest (including; without limitation,
expense reimbursements and indemnities) not otherwise referred to in clauses
first and second immediately preceding then due and payable in respect of the
Advances and the Reimbursement Obligations under the Loan Documents; fourth, to
pay interest then due and payable on the Advances and the Reimbursement
Obligations, to be applied in accordance with each Lenders' Total Specified
Percentage; and fifth, to pay principal then due and payable on the Advances and
Reimbursement Obligations, and in the case of proceeds of Collateral and
payments under any Subsidiary Guaranty, to pay any other obligations to any
Secured Party (as defined in the Security Agreement) not covered in first
through four above, ratably among the Secured Parties in accordance with the
aggregate principal amount of Advances and the Reimbursement Obligations and, in
the case of proceeds of Collateral or payments under any Subsidiary Guaranty,
the obligations secured or guaranteed thereby, owed to each Secured Party.
Section 2.11 LIBOR Lending Offices. Each Lender's initial LIBOR Lending
Office is set forth opposite its name in Schedule 1.1 attached hereto. Each
Lender shall have the right at any time and from time to time to designate a
different office of itself or of any Affiliate of such Lender as such Lender's
LIBOR Lending Office, and to transfer any outstanding LIBOR Advance to such
LIBOR Lending Office. No such designation or transfer shall result in any
liability on the part of the Borrower for increased costs or expenses resulting
solely from such designation or transfer (except any such transfer which is made
by a Lender pursuant to Section 9.2 or 9.3 hereof, or otherwise for the purpose
of complying with Applicable Law). Increased costs for expenses resulting from a
change in law occurring subsequent to any such designation or transfer shall be
deemed not to result solely from such designation or transfer.
Section 2.12 Sharing of Payments. If any Lender shall obtain a payment
(whether voluntary or involuntary, due to the exercise of any right of set-off,
or otherwise) on account of its Advances (other than pursuant to Sections
2.4(b), 2.14, 2.15(d), 9.3 or 9.5 hereof) in excess of its share of payments
made by the Borrower, such Lender shall purchase from each other Lender such
participation in the Advances made by such other Lender as shall be necessary to
cause such purchasing Lender to share a ratable portion of the excess payment
with each other Lender (based on its Applicable Specified Percentage so long as
there does not exist an Event of Default, and based on its Total Specified
Percentage if there exists an Event of Default); provided, however, that if all
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or any portion of such excess payment is thereafter recovered from such
purchasing Lender, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery, but without interest. The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section, to the fullest extent permitted by law, may exercise
all its rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
Section 2.13 Calculation of LIBOR Rate. The provisions of this
Agreement relating to calculation of the LIBOR Rate are included only for the
purpose of determining the rate of interest or other amounts to be paid
hereunder that are based upon such rate, it being understood that each Lender
shall be entitled to fund and maintain its funding of all or any part of a LIBOR
Advance as it sees fit.
Section 2.14 Taxes.
(a) Any and all payments by the Borrower and each other Obligor
hereunder and under the other Loan Documents (including, without limitation,
payments pursuant to Sections 2.9, 5.9, 9.3, and 9.5 hereof and this Section
2.15) shall be made, in accordance with Section 2.10 hereof, free and clear of
and without deduction for any and all present or future taxes, levies, imposts,
deductions, charges and withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender and the Administrative Agent, (i) taxes
imposed on, based upon or measured by its overall net income, and franchise
taxes, doing business taxes or minimum taxes imposed on it, by the jurisdiction
under the laws of which such Lender or the Administrative Agent (as the case may
be) is organized or in which it has its applicable lending office or any
political subdivision thereof; (ii) taxes imposed by reason of failure by the
Lender or the Administrative Agent to comply with the requirements of paragraph
(e) of this Section 2.14; and (iii) in the case of any Lender, any taxes in the
nature of transfer, stamp, recording or documentary taxes resulting from a
transfer (other than as a result of foreclosure) by such Lender of all or any
portion of its interest in this Agreement, the Notes or any other Loan Documents
(all such non-excluded taxes, levies, imposts, deductions, charges, withholdings
and liabilities being hereinafter referred to as "Taxes"). If the Borrower shall
be required by Law to deduct or withhold any Taxes from or in respect of any sum
payable hereunder to any Lender or the Administrative Agent, to the extent not
prohibited by Applicable Law, (x) the sum payable shall be increased as may be
necessary so that after making all required deductions for Taxes (including
deductions applicable to additional sums payable under this Section 2.14) such
Lender or the Administrative Agent (as the case may be) receives an amount equal
to the sum it would have received had no such deductions been made, (y) the
Borrower shall make such deductions and (z) the Borrower shall pay the full
amount of Taxes deducted to the relevant taxation authority or other authority
in accordance with Applicable Law.
(b) In addition, the Borrower agrees to pay any and all stamp and
documentary taxes and any and all other excise and property taxes, charges and
similar levies (other than taxes described in clause (iii) of the first sentence
of Section 2.14(a) hereof) that arise from any payment made
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hereunder or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or any other Loan Document (hereinafter referred to
as "Other Taxes").
(c) The Borrower will indemnify each Lender and the Administrative
Agent for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.14) paid by such Lender or the Administrative Agent
(as the case may be) and all liabilities (including penalties, additions to tax,
interest and reasonable expenses) arising therefrom or with respect thereto
whether or not such Taxes or Other Taxes were correctly or legally asserted,
other than penalties, additions to tax, interest and expenses which are finally
judicially determined by a court of competent jurisdiction to have arisen as a
result of gross negligence or wilful misconduct on the part of such Lender or
the Administrative Agent. This indemnification shall be made within 30 days from
the date such Lender or the Administrative Agent (as the case may be) makes
written demand therefor. A certificate as to any amounts payable to any Lender
under this Section 2.14 shall be submitted to the Borrower by such Lender and
shall certify that such amounts were actually incurred by such Lender and shall
show in reasonable detail an accounting of the amount payable and the
calculations used to determine in good faith such amount and shall be conclusive
absent demonstrable error.
(d) As soon as practicable after the date of any payment of Taxes, the
Borrower will furnish to the Administrative Agent the original or a certified
copy of a receipt evidencing payment thereof. For purposes of this Section 2.14
the terms "United States" and "United States Person" shall have the meanings set
forth in Section 7701 of the Code.
(e) Each Lender which is not a United States Person hereby agrees that:
(i) it shall (except as provided in Section 2.14(e)(vi)
hereof), no later than the Agreement Date (or, in the case of a Lender
which becomes a party hereto pursuant to Section 11.6 hereof after the
Agreement Date, the date upon which such Lender becomes a party hereto)
and at such times as necessary in the reasonable determination of the
Borrower, deliver to the Borrower through the Administrative Agent,
with a copy to the Administrative Agent:
(A) if any lending office is located in the United
States, two (2) accurate and complete signed
originals of Internal Revenue Service Form 4224 or
any successor form thereto ("Form 4224"),
(B) if any lending office is located outside the United
States, two (2) accurate and complete signed
originals of Internal Revenue Service Form 1001 or
any successor form thereto ("Form 1001"),
in each case establishing that such Lender is on the date of delivery
thereof entitled to receive payments of principal, interest, fees, or
other amounts payable at such lending office or
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lending offices under this Agreement or any other Loan Document free
from deduction or withholding of United States federal income tax;
(ii) if at any time such Lender changes its lending office or
lending offices or selects an additional lending office it shall, at
the same time or reasonably promptly thereafter, but only to the extent
the forms previously delivered by it hereunder are not effective with
respect to such changed or additional lending office or lending
offices, deliver to the Borrower through the Administrative Agent, with
a copy to the Administrative Agent, in replacement for the forms
previously delivered by it hereunder:
(A) if such changed or additional lending office is
located in the United States, two (2) accurate and
complete signed originals of Form 4224; or
(B) otherwise, two (2) accurate and complete signed
originals of Form 1001,
in each case establishing that such Lender is on the date of delivery
thereof entitled to receive payments of principal, interest, fees, or
other amounts payable at such changed or additional lending office
under this Agreement or any other Loan Document free from deduction of
withholding of United States federal income tax;
(iii) it shall, before or promptly after the occurrence of any
event (including the passing of time but excluding any event mentioned
in clause (ii) above) requiring a change in the most recent Form 4224
or Form 1001 previously delivered by such Lender and if the delivery of
the same be lawful, deliver to the Borrower through the Administrative
Agent, with a copy to the Administrative Agent, two (2) accurate and
complete original signed copies of Form 4224 or Form 1001, in each case
establishing that such Lender is on the date of delivery thereof
entitled to receive payments of principal, interest, fees, or other
amounts payable under this Agreement or any other Loan Document free
from deduction or withholding of United States federal income tax, in
replacement for the forms previously delivered by such Lender;
(iv) it shall, promptly upon the request of the Borrower to
that effect, deliver to the Borrower such other forms or similar
documentation as may be required from time to time by any applicable
law, treaty, rule or regulation in order to establish such Lender's tax
status for withholding purposes;
(v) it shall notify the Borrower promptly after any event
(including an amendment to or a change in any applicable law or
regulation or in the written interpretation thereof by any regulatory
authority or any judicial authority or by ruling applicable to such
Lender of any governmental authority charged with the interpretation or
administration of any law) shall occur that results in such Lender no
longer being capable of receiving payments under this Agreement without
any deduction or withholding of United States federal income tax; and
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(vi) if such Lender is not a "bank" or other person described
in Section 881(c)(3) of the Code and cannot deliver either Form 4224 or
Form 1001, a statement that such Lender is not a "bank" under Section
881(c)(3)(A) of the Code and two original copies of Internal Revenue
Service Form W-8 (or any successor form), properly completed and duly
executed by such Lender.
(f) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.14 shall survive the payment in full of the Obligations.
(g) Each Lender (and the Administrative Agent with respect to payments
to the Administrative Agent for its own account) agrees that (i) it will take
all reasonable actions by all usual means to maintain all exemptions, if any,
available to it from United States withholding taxes (whether available by
treaty, existing administrative waiver or by virtue of the location of any
Lender's lending office), (ii) it will use reasonable efforts (consistent with
its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its lending office, if the making of such a change would avoid
the need for, or reduce the amount of, any such additional amounts which may
thereafter accrue and would not, in the reasonable judgment of such Lender, be
disadvantageous to such Lender, (iii) otherwise cooperate with the Borrower (in
a manner that is not disadvantageous to such Lender in its reasonable
discretion) to minimize amounts payable by the Borrower under this Section 2.14
and (iv) notify the Borrower of any written assertion by any Tribunal with
respect to any Taxes for which the Borrower may be obligated to reimburse such
Lender under this Section 2.14; provided, however, no Lender nor the
Administrative Agent shall be obligated by reason of this Section 2.14(g) to (a)
disclose any information regarding its tax affairs or tax computations or
reorder its tax or other affairs or tax or other planning or (b) contest the
payment of any Taxes or Other Taxes. Subject to the foregoing, to the extent the
Borrower pays sums pursuant to this Section 2.14 and the Lender or the
Administrative Agent receives a refund of any or all of such sums, the party
receiving such refund shall promptly pay over all such refunded sums to the
Borrower, provided that no Default or Event of Default is in existence at such
time. At such time, if any, that such Default or Event of Default is cured or
waived, the party receiving such refund shall promptly pay over all such
refunded sums to the Borrower.
(h) If the Borrower becomes obligated to pay additional amounts
described in this Section 2.14 to any Lender, the Borrower may designate a
financial institution reasonably acceptable to the Administrative Agent to
replace such Lender by purchasing for cash and receiving an assignment of such
Lender's pro rata share of the Commitments and the Rights of such Lender under
the Loan Documents without recourse to or warranty by, or expense to, such
Lender, for a purchase price equal to the outstanding amounts owed to such
Lender (including such additional amounts owing to such Lender pursuant to this
Section 2.14). Upon execution of an Assignment Agreement, such other financial
institution shall be deemed to be a "Lender" for all purposes of this Agreement
as set forth in Section 11.6 hereof.
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Section 2.15 Letters of Credit.
(a) The Letter of Credit Facility. The Borrower may request the Issuing
Bank, on the terms and conditions hereinafter set forth, to issue, and the
Issuing Bank shall, if so requested, issue, letters of credit (including the
Existing Letters of Credit, the "Letters of Credit") for the account of the
Borrower from time to time on any Business Day from the date of the initial
Advance until the Revolving Commitment Maturity Date in an aggregate maximum
amount (assuming compliance with all conditions to drawing) not to exceed, at
any time outstanding, the lesser of (i) $7,500,000 and (ii) an amount equal to
(A) the lesser of the Revolving Credit Commitment and the Borrowing Base minus
(B) the aggregate principal amount of Revolving Credit Advances then outstanding
and the aggregate amount of all drawings under Letters of Credit that have not
been reimbursed by the Borrower or converted to Advances (the "Letter of Credit
Facility"). No Letter of Credit shall have an expiration date later than the
earlier of (i) thirty days prior to the Revolving Commitment Maturity Date or
(ii) one year after the date of issuance thereof (provided that any Letter of
Credit with a one-year term may provide for the renewal thereof for additional
one-year periods, which in no event extend beyond the date referred to in clause
(i) of this sentence). Immediately upon the issuance of each Letter of Credit
(or upon satisfaction of the conditions precedent set forth in Sections 3.1 and
3.2 hereof with respect to the Existing Letters of Credit), the Issuing Bank
shall be deemed to have sold and transferred to each Lender, and each Lender
shall be deemed to have purchased and received from the Issuing Bank, in each
case irrevocably and without any further action by any party, an undivided
interest and participation in such Letter of Credit, each drawing thereunder and
the obligations of the Borrower under this Agreement in respect thereof in an
amount equal to the product of (x) such Lender's Revolving Credit Specified
Percentage times (y) the maximum amount available to be drawn under such Letter
of Credit (assuming compliance with all conditions to drawing). Within the
limits of the Letter of Credit Facility, and subject to the limits referred to
above, the Borrower may request the issuance of Letters of Credit under this
Section 2.15(a), repay any Revolving Credit Advances resulting from drawings
thereunder pursuant to Section 2.15(c) hereof and request the issuance of
additional Letters of Credit under this Section 2.15(a).
(b) Request for Issuance. Each Letter of Credit shall be issued upon
notice, given not later than 1:00 p.m. (Dallas, Texas time) on the fourth
Business Day prior to the date of the proposed issuance of such Letter of
Credit, by the Borrower to the Issuing Bank. Each Letter of Credit shall be
issued upon notice given in accordance with the terms of any separate agreement
between the Borrower and the Issuing Bank in form and substance reasonably
satisfactory to the Borrower and the Issuing Bank providing for the issuance of
Letters of Credit pursuant to this Agreement and containing terms and conditions
not inconsistent with this Agreement (a "Letter of Credit Agreement"), provided
that if any such terms and conditions are inconsistent with this Agreement, this
Agreement shall control. Each such notice of issuance of a Letter of Credit by
the Borrower (a "Notice of Issuance") shall be by telecopier, specifying
therein, in the case of a Letter of Credit, the requested (i) date of such
issuance (which shall be a Business Day), (ii) maximum amount of such Letter of
Credit, (iii) expiration date of such Letter of Credit, (iv) name and address of
the beneficiary of such Letter of Credit, and (v) form of such Letter of Credit
and specifying such other
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information as shall be required pursuant to the relevant Letter of Credit
Agreement. If the requested terms of such Letter of Credit are acceptable to the
Issuing Bank in its reasonable discretion, the Issuing Bank will, upon
fulfillment of the applicable conditions set forth in Article 3 hereof, make
such Letter of Credit available to the Borrower at its office referred to in
Section 11.1 hereof or as otherwise agreed with the Borrower in connection with
such issuance.
(c) Drawing and Reimbursement. The payment by the Issuing Bank of a
draft drawn under any Letter of Credit shall constitute for all purposes of this
Agreement the making by the Issuing Bank of a Revolving Credit Advance, which
shall bear interest at the Base Rate Basis, in the amount of such draft (but
without any requirement for compliance with the conditions set forth in Article
3 hereof). In the event that a drawing under any Letter of Credit is not
reimbursed by the Borrower by 12:00 noon (Dallas, Texas time) on the first
Business Day after such drawing, the Issuing Bank shall promptly notify
Administrative Agent and each other Lender. Each such Lender shall, on the first
Business Day following such notification, make a Revolving Credit Advance (or,
if as a result of any Debtor Relief Law, the Lenders are prohibited from making
a Revolving Credit Advance, each Lender shall fund its participation purchased
pursuant to Section 2.15(a) hereof by making such amount available to the
Administrative Agent), which shall bear interest at the Base Rate Basis, and
shall be used to repay the applicable portion of the Issuing Bank's Revolving
Credit Advance with respect to such Letter of Credit, in an amount equal to the
amount of its participation in such drawing for application to reimburse the
Issuing Bank (but without any requirement for compliance with the applicable
conditions set forth in Article 3 hereof) and shall make available to the
Administrative Agent for the account of the Issuing Bank, by deposit at the
Administrative Agent's office, in same day funds, the amount of such Advance. In
the event that any Lender fails to make available to the Administrative Agent
for the account of the Issuing Bank the amount of such Advance, the Issuing Bank
shall be entitled to recover such amount on demand from such Lender together
with interest thereon at a rate per annum equal to the lesser of (i) the Highest
Lawful Rate or (ii) the Federal Funds Rate.
(d) Increased Costs. If, (i) any change after the Agreement Date in any
Law or in the interpretation thereof by any Tribunal charged with the
administration thereof or (ii) compliance by a Lender with any Law or any
guideline or requirement from any central bank or Tribunal (whether or not
having the force of law) adopted or promulgated after the Agreement Date
(including any implementation of the Basle Accord or similar guideline or
requirement adopted, promulgated or becoming effective after the Agreement Date)
shall either (A) impose, modify or deem applicable any reserve, special deposit
or similar requirement against letters of credit or guarantees issued by, or
assets held by, or deposits in or for the account of, the Issuing Bank or any
Lender or any corporation controlling the Issuing Bank or any Lender or (B)
impose on the Issuing Bank or any Lender or any corporation controlling the
Issuing Bank or any Lender any other condition regarding this Agreement or any
Letter of Credit, and the result of any event referred to in the preceding
clause (A) or (B) shall be to increase the cost to the Issuing Bank or any
corporation controlling the Issuing Bank of issuing or maintaining any Letter of
Credit or to any Lender or any corporation controlling such Lender of purchasing
any participation therein or making any Advance pursuant to Section 2.15(c),
then, within 10 days after demand by the Issuing Bank or such Lender, the
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Borrower shall, subject to Section 11.9 hereof, pay to the Issuing Bank or such
Lender, from time to time as specified by the Issuing Bank or such Lender,
additional amounts that shall be sufficient to compensate the Issuing Bank or
such Lender or any corporation controlling such Lender for such increased cost.
A certificate as to the amount of such increased cost shall be submitted to the
Borrower by the Issuing Bank or such Lender, shall certify that such increased
costs were actually incurred by the Issuing Bank or such Lender and shall show
in reasonable detail an accounting of the amount payable and the calculation
used to determine in good faith such amount and shall be conclusive absent
demonstrable error. In determining such amount, the Issuing Bank or such Lender
may use any reasonable averaging or attribution method. Nothing in this Section
2.15(d) shall provide the Borrower or any of its Subsidiaries the right to
inspect the records, files or books of the Issuing Bank or any Lender. If the
Borrower becomes obligated to pay additional amounts described in this Section
2.15(d) to any Lender, the Borrower may designate a financial institution
reasonably acceptable to the Administrative Agent to replace such Lender by
purchasing for cash and receiving an assignment of such Lender's pro rata share
of the Commitments and the Rights of such Lender under the Loan Documents
without recourse to or warranty by, or expenses to, such Lender, for a purchase
price equal to the outstanding amounts owing to such Lender (including such
additional amounts owing to such Lender pursuant to this Section 2.15(d)). Upon
execution of an Assignment Agreement, such other financial institution shall be
deemed to be a "Lender" for all purposes of this Agreement as set forth in
Section 11.6 hereof. The obligations of the Borrower under this Section 2.15(d)
shall survive termination of this Agreement. The Issuing Bank or any Lender
claiming any additional compensation under this Section 2.15(d) shall use
reasonable efforts (consistent with legal and regulatory restrictions) to reduce
or eliminate any such additional compensation which may thereafter accrue and
which efforts would not, in the reasonable judgment of the Issuing Bank or such
Lender, be otherwise disadvantageous.
(e) Obligations Absolute. The obligations of the Borrower under this
Agreement with respect to any Letter of Credit, any Letter of Credit Agreement
and any other agreement or instrument relating to any Letter of Credit or any
Revolving Credit Advance pursuant to Section 2.15(c) hereof shall be
unconditional and irrevocable, and shall be paid strictly in accordance with the
terms of this Agreement, such Letter of Credit Agreement and such other
agreement or instrument under all circumstances, including, without limitation,
the following circumstances:
(i) any lack of validity or enforceability of this Agreement,
any other Loan Document, any Letter of Credit Agreement, any Letter of
Credit or any other agreement or instrument relating thereto
(collectively, the "L/C Related Documents");
(ii) (A) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Obligations of the
Borrower in respect of the Letters of Credit or any Revolving Credit
Advance pursuant to Section 2.15(c) hereof or (B) any other amendment
or waiver of or any consent to departure from all or any of the L/C
Related Documents;
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(iii) the existence of any claim, set-off, defense or other
right that the Borrower may have at any time against any beneficiary or
any transferee of a Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), the Issuing Bank,
any Lender or any other Person, whether in connection with this
Agreement, the transactions contemplated hereby or by the L/C Related
Documents or any unrelated transaction;
(iv) any statement or any 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;
(v) payment by the Issuing Bank under a Letter of Credit
against presentation of a draft or certificate that does not comply
with the terms of the Letter of Credit, except for any payment made
upon the Issuing Bank's gross negligence or wilful misconduct;
(vi) any exchange, release or non-perfection of any
Collateral, or any release or amendment or waiver of or consent to
departure from any guarantee, for all or any of the Obligations of the
Borrower in respect of the Letters of Credit or any Revolving Credit
Advance pursuant to Section 2.15(c) hereof; or
(vii) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing, including, without limitation,
any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Borrower or a guarantor, other
than the Issuing's Bank gross negligence or wilful misconduct.
(f) Compensation for Letters of Credit.
(i) Credit Fee. Subject to Section 11.9 hereof, the Borrower
shall pay to the Administrative Agent for the account of the Lenders
according to their Revolving Credit Specified Percentages, a per annum
fee (which shall be payable quarterly in arrears on each Quarterly Date
and on the Revolving Commitment Maturity Date) equal to the product of
the Applicable LIBOR Rate Margin in effect from time to time for
Revolving Credit Advances multiplied by the average daily amount
available for drawing under all outstanding Letters of Credit. Subject
to Section 11.9 hereof, such fee shall be computed on the basis of a
360-day year for the actual number of days elapsed.
(ii) Fronting Fee. Subject to Section 11.9 hereof, the
Borrower shall pay to the Administrative Agent for the account of the
Issuing Bank a per annum fronting fee (which shall be payable quarterly
in arrears on each Quarterly Date and on the Revolving Commitment
Maturity Date) in an amount equal to the product of (a) 0.25% times (b)
the average daily amount available for drawing under all outstanding
Letters of Credit. Subject to Section 11.9 hereof, such fee shall be
computed on the basis of a 360-day year for the actual number of days
elapsed.
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(iii) Administrative Fee. Subject to Section 11.9 hereof, the
Borrower shall pay, with respect to each amendment, renewal or transfer
of each Letter of Credit and each drawing made thereunder, reasonable
documentary and processing charges in accordance with the Issuing
Bank's standard schedule for such charges in effect at the time of such
amendment, renewal, transfer or drawing, as the case may be.
(g) L/C Cash Collateral Account.
(i) Upon the occurrence of an Event of Default and demand by
the Administrative Agent pursuant to Section 8.2(c) hereof (except in
the case of an Event of Default specified in Section 8.1(f) or (g)
hereof, without any demand or taking of any other action by the
Administrative Agent or any Lender), the Borrower will promptly pay to
the Administrative Agent in immediately available funds an amount equal
to the maximum amount then available to be drawn under the Letters of
Credit then outstanding. Any amounts so received by the Administrative
Agent shall be deposited by the Administrative Agent in a deposit
account maintained by the Issuing Bank (the "L/C Cash Collateral
Account").
(ii) As security for the payment of all Reimbursement
Obligations and for any other Obligations, the Borrower hereby grants,
conveys, assigns, pledges, sets over and transfers to the
Administrative Agent (for the benefit of the Issuing Bank and Lenders),
and creates in the Administrative Agent's favor (for the benefit of the
Issuing Bank and Lenders) a Lien in, all money, instruments and
securities at any time held in or acquired in connection with the L/C
Cash Collateral Account, together with all proceeds thereof. The L/C
Cash Collateral Account shall be under the sole dominion and control of
the Administrative Agent and the Borrower shall have no right to
withdraw or to cause the Administrative Agent to withdraw any funds
deposited in the L/C Cash Collateral Account. At any time and from time
to time, upon the Administrative Agent's request, the Borrower promptly
shall execute and deliver any and all such further instruments and
documents, including UCC financing statements, as may be necessary,
appropriate or desirable in the Administrative Agent's judgment to
obtain the full benefits (including perfection and priority) of the
security interest created or intended to be created by this paragraph
(ii) and of the rights and powers herein granted. The Borrower shall
not create or suffer to exist any Lien on any amounts or investments
held in the L/C Cash Collateral Account other than the Lien granted
under this paragraph (ii).
(iii) The Administrative Agent shall (A) apply any funds in
the L/C Cash Collateral Account on account of Reimbursement Obligations
when the same become due and payable, (B) after the Revolving
Commitment Maturity Date, apply any proceeds remaining in the L/C Cash
Collateral Account first to pay any unpaid Obligations then outstanding
hereunder and then to refund any remaining amount to the Borrower.
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(iv) The Borrower, no more than once in any calendar month,
may direct the Administrative Agent to invest the funds held in the L/C
Cash Collateral Account (so long as the aggregate amount of such funds
exceeds any relevant minimum investment requirement) in (A) Cash and
Cash Equivalents or direct obligations of the United States or any
agency thereof, or obligations guaranteed by the United States or any
agency thereof and (B) one or more other types of investments permitted
by the Determining Lenders, in each case with such maturities as the
Borrower, with the consent of the Determining Lenders, may specify,
pending application of such funds on account of Reimbursement
Obligations or on account of other Obligations, as the case may be. In
the absence of any such direction from the Borrower, the Administrative
Agent shall invest the funds held in the L/C Cash Collateral Account
(so long as the aggregate amount of such funds exceeds any relevant
minimum investment requirement) in one or more types of investments and
maturities with the consent of the Determining Lenders, pending
application of such funds on account of Reimbursement Obligations or on
account of other Obligations, as the case may be. All such investments
shall be made in the Administrative Agent's name for the account of the
Lenders, subject to the ownership interest therein of the Borrower. The
Borrower recognizes that any losses or taxes with respect to such
investments shall be borne solely by the Borrower, and the Borrower
agrees to hold the Administrative Agent and the Lenders harmless from
any and all such losses and taxes, except to the extent that such
losses or taxes are finally judicially determined by a court of
competent jurisdiction to be the result of gross negligence or wilful
misconduct of the Administrative Agent. Administrative Agent may
liquidate any investment held in the L/C Cash Collateral Account in
order to apply the proceeds of such investment on account of the
Reimbursement Obligations as provided in Section 2.15(g)(iii) hereof
(or on account of any other Obligation then due and payable, as the
case may be) without regard to whether such investment has matured and
without liability for any penalty or other fee incurred (with respect
to which the Borrower hereby agrees to reimburse the Administrative
Agent) as a result of such application.
(v) After the establishment of the L/C Cash Collateral Account
pursuant to Section 2.15(g)(i) hereof, the Borrower shall pay to the
Administrative Agent the fees customarily charged by the Issuing Bank
with respect to the maintenance of accounts similar to the L/C Cash
Collateral Account.
(vi) At such time as no Event of Default is in existence, the
Administrative Agent shall return any amount remaining in the L/C Cash
Collateral Account to the Borrower.
Section 2.16 Booking Loans. Any Lender may make, carry or transfer
Advances at, to or for the account of any of its branch offices or the office of
an Affiliate. No such action shall result in any liability on the part of the
Borrower from such action (except any such action which is made by a Lender
pursuant to Section 9.2 or 9.3 hereof, or otherwise for the purpose of complying
with Applicable Law).
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ARTICLE 3
Conditions Precedent
Section 3.1 Conditions Precedent to the Initial Advances and the
Initial Letters of Credit. The obligation of each Lender to make the initial
Advance and the obligation of the Issuing Bank to issue the initial Letter of
Credit is subject to (i) receipt by the Administrative Agent of the following
items which are to be delivered, in form and substance satisfactory to each
Lender, with a copy (except for the Notes and this Agreement) for each Lender,
and (ii) satisfaction of the following conditions which are to be satisfied:
(a) A loan certificate of each Obligor certifying as to the accuracy of
its representations and warranties in the Loan Documents, certifying, in the
case of any such Obligor, that no Default or Event of Default has occurred, and
including a certificate of incumbency with respect to each Authorized Signatory,
and including (i) a copy of the articles or certificate of incorporation or
other organizational documents of such Obligor, certified to be true, complete
and correct by the secretary of state of its state of organization, (ii) a copy
of a certificate of good standing and a certificate of existence for its state
of organization and, in the case of any such Obligor, each state in which it is
qualified to do business, (iii) a copy of such Obligor's bylaws, partnership
agreement or similar document, certified to be true, complete and correct by its
secretary or general partner, as the case may be, and (iv) a copy of corporate
or similar resolutions authorizing the execution, delivery and performance of
the Loan Documents to be executed by such Obligor;
(b) a duly executed Revolving Credit Note and Term Loan Note, payable
to the order of each Lender and in an amount for each Lender equal to its
Applicable Specified Percentage of each Commitment, respectively;
(c) UCC searches in appropriate jurisdictions where Collateral is
located;
(d) opinions of counsel to each Obligor addressed to the Lenders and in
form and substance satisfactory to the Lenders, dated the Agreement Date, and
covering certain of the matters set forth in Sections 4.1(a), (b), (c), (h),
(m), (n) and (p) and such other matters incident to the transactions
contemplated hereby as the Administrative Agent or Special Counsel may
reasonably request (including opinions of local counsel for all states where
Collateral is located and the Borrower and each other Obligor is incorporated
and foreign counsel with respect to any Capital Stock of a Foreign Subsidiary as
Collateral);
(e) reimbursement for the Administrative Agent for Special Counsel's
reasonable and customary fees and expenses rendered through the date hereof;
(f) evidence that all proceedings of each Obligor taken in connection
with the transactions contemplated by this Agreement and the other Loan
Documents shall be reasonably satisfactory in form and substance to the
Administrative Agent and Special Counsel; and the Lenders
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shall have received copies of all documents or other evidence which the
Administrative Agent or Special Counsel may reasonably request in connection
with such transactions;
(g) any fees or any expenses required to be paid pursuant to the
Administrative Agent Fee Letter and the Underwriting Fee Letter;
(h) duly executed and completed Security Agreements, dated as of the
Agreement Date, granting a Lien, in all Collateral covered thereby, together
with related UCC financing statements, certificates of title with respect to
motor vehicles having a fair market value in excess of $30,000, stock powers,
stock certificates evidencing ownership of (i) 100% of the issued and
outstanding Capital Stock of each Domestic Subsidiary and (ii) 65% of the issued
and outstanding Capital Stock of each Foreign Subsidiary, and insurance
certificates listing Administrative Agent as loss payee and additional insured
and otherwise in a form required by the Collateral Documents.
(i) simultaneously with the making of the initial Advance, executed
UCC-3 Termination Statements to be filed in appropriate jurisdictions to
terminate all Liens against assets of European Touch, the Borrower and its
Subsidiaries (including the European Touch Companies) other than Permitted Liens
(or written agreements from each holder of such Liens to promptly execute such
Termination Statements);
(j) all European Touch Transaction Documents, which shall be in
substance and form satisfactory to the Administrative Agent and Special Counsel;
(k) consummation of the European Touch Transaction shall have occurred
on terms and conditions set forth in the European Touch Transaction Documents
satisfactory to the Administrative Agent and Special Counsel;
(l) Deeds of Trust executed by the Borrower and dated as of the
Agreement Date, together with environmental reports, surveys and title insurance
policies or commitments in form and substance satisfactory to the Administrative
Agent and Special Counsel;
(m) Landlord's Waivers executed by each lessor with respect to leased
properties on which Collateral is located in substantially the form set out on
Exhibit J ("Landlord's Waiver"), subject to the sixty-day grace period with
respect thereto provided in the definition of "Eligible Inventory" set forth in
Section 1.1 hereof;
(n) evidence satisfactory to the Administrative Agent that (i) the
European Touch Transaction shall have been consummated (or shall be consummated
simultaneously with the initial Advance hereunder), and (ii) the Borrower shall
have received at least $75,000,000 in gross proceeds from the sale of the Senior
Subordinated Notes;
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(o) a pro forma balance sheet of the Borrower and its Subsidiaries
taking into account the European Touch Transaction and reflecting such
information relating to the European Touch Transaction as the Administrative
Agent may require;
(p) after giving effect to the European Touch Transaction, there shall
have occurred no material adverse change in the business, assets, operations,
prospects or condition (financial or otherwise) of the Borrower and its
Subsidiaries (including in respect of the assets and liabilities of the European
Touch Companies to be acquired in the European Touch Transaction), taken as a
whole, since December 31, 1997;
(q) financial projections of the Borrower and its Subsidiaries
(including the European Touch Companies) in form and substance satisfactory to
the Administrative Agent;
(r) all Indebtedness of the Borrower under the Credit Agricole Credit
Agreement shall have been (or shall be consummated simultaneously with the
initial Advance hereunder) refinanced in full pursuant to the terms hereof, and
all obligations of the Borrower and its Subsidiaries under the Credit Agricole
Credit Agreement, except for those that expressly survive termination thereof,
shall terminate;
(s) all requisite approvals of all Tribunals and other third parties
with respect to the European Touch Transaction and the other transactions
contemplated hereby to the extent required shall have been obtained; and
(t) in form and substance reasonably satisfactory to the Administrative
Agent and Special Counsel, such other documents, instruments and certificates as
the Administrative Agent or any Lender may reasonably require in connection with
the transactions contemplated hereby, including without limitation, evidence of
the status, organization or authority of the Borrower or any Subsidiary of the
Borrower, and the enforceability of the Obligations.
Section 3.2 Conditions Precedent to All Advances and Letters of Credit.
The obligation of each Lender to make each Advance hereunder (including the
initial Advance) and the obligation of the Issuing Bank to issue or extend each
Letter of Credit (including the initial Letter of Credit) is subject to
fulfillment of the following conditions immediately prior to or
contemporaneously with each such Advance, issuance or extension:
(a) With respect to each Advance and each issuance or extension of a
Letter of Credit, all of the representations and warranties of the Borrower
under this Agreement, which, pursuant to Section 4.2 hereof, are made at and as
of the time of each such Advance, issuance or extension, shall be true and
correct, both before and after giving effect to the application of the proceeds
of the Advance or Letter of Credit, except as otherwise expressly provided in
said Section 4.2 hereof.
(b) The incumbency of the Authorized Signatories shall be as stated in
the certificate of incumbency delivered in the Borrower's loan certificate
pursuant to Section 3.1(a) or as subsequently
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modified and reflected in a certificate of incumbency delivered to the
Administrative Agent. The Lenders may, without waiving this condition, consider
it fulfilled and a representation by the Borrower made to such effect if no
written notice to the contrary, dated on or before the date of such Advance or
Letter of Credit, is received by the Administrative Agent from the Borrower
prior to the making of such Advance or issuance or extension of such Letter of
Credit;
(c) There shall not exist a Default or Event of Default hereunder;
(d) The aggregate Advances and Letters of Credit, after giving effect
to such proposed Advance or Letter of Credit, shall not exceed the maximum
principal amount then permitted to be outstanding hereunder;
(e) No order, judgment, injunction or decree of any Tribunal shall
purport to enjoin or restrain any Lender or the Issuing Bank from making any
Advance or issuing or extending any Letter of Credit;
(f) There shall be no Litigation pending against, or, to the Borrower's
current actual knowledge, threatened against the Borrower or any of its
Subsidiaries, or in any other manner relating directly and adversely to the
Borrower or any of its Subsidiaries, or any of their respective properties, in
any court or before any arbitrator of any kind or before or by any governmental
body which could reasonably be expected to have a Material Adverse Effect; and
(g) There shall have occurred no material adverse change in the
business, assets, condition (financial or otherwise) or results of operations of
the Borrower and its Subsidiaries (including the assets acquired and liabilities
of the European Touch Companies acquired in the European Touch Transaction),
taken as whole, since December 31, 1997 (but after giving effect to the European
Touch Transaction).
Notwithstanding the above, the obligation of each Lender to make a
Revolving Credit Advance pursuant to Section 2.15(c) hereof (or fund its
participation in respect of Letters of Credit pursuant to Section 2.15(c)
hereof) shall be absolute and unconditional and shall not be affected by any
circumstances, including, without limitation, (i) the occurrence of any Default
or Event of Default, unless the Issuing Bank had actual knowledge of such
Default or Event of Default prior to the issuance of the Letter of Credit
related to such Revolving Credit Advance, (ii) the failure of the Borrower to
satisfy any condition set forth in this Section 3.2, or (iii) any other
circumstance, happening or event whatsoever, except that the conditions
precedent set forth in Sections 3.1 and 3.2 hereof with respect to the Letter of
Credit for which such Revolving Credit Advance is made pursuant to Section
2.15(c) hereof shall have been satisfied in full at the time of the issuance of
such Letter of Credit.
Section 3.3 Conditions Precedent to Each Term Loan Advance and Each
Revolving Credit Acquisition Advance. The obligation of each Lender to make each
Term Loan Advance and each Revolving Credit Acquisition Advance hereunder
(including the initial Term Loan Advance
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and any initial Revolving Credit Acquisition Advance) is subject to fulfillment
of the following conditions (in addition to the conditions set forth in Sections
3.1 and 3.2 hereof):
(a) The conditions set forth in Section 7.6 with respect to such
Acquisition shall have been satisfied.
(b) On or before the date of the Term Loan Advance or the Revolving
Credit Acquisition Advance, the Borrower shall have complied with Sections 5.11
and 5.12 hereof as to any property acquired or to be acquired in connection with
such Acquisition.
(c) There shall be delivered to the Administrative Agent (in each case,
with sufficient copies for each Lender) upon consummation of the Acquisition, a
complete set of documents effecting such Acquisition, together with all
schedules and exhibits thereto.
(d) The Administrative Agent shall be reasonably satisfied with the
final terms and conditions of, and documentation relating to, the Acquisition
(including, without limitation, all representations, warranties and indemnities
contained in such documentation). The Administrative Agent shall be deemed to be
satisfied with the final terms and conditions of, and documentation related to,
such Acquisition unless it notifies the Borrower in writing to the contrary
within 5 Business Days after receipt by the Administrative Agent of such final
terms and documentation.
Section 3.4 Conditions Precedent to Conversions and Continuations. The
obligation of the Lenders to convert any existing Base Rate Advance into a LIBOR
Advance or to continue any existing LIBOR Advance is subject to the condition
precedent that on the date of such conversion or continuation no Default or
Event of Default shall have occurred and be continuing or would result from the
making of such conversion or continuation. The acceptance of the benefits of
each such conversion and continuation shall constitute a representation and
warranty by the Borrower to each of the Lenders that no Default or Event of
Default shall have occurred and be continuing or would result from the making of
such conversion or continuation.
ARTICLE 4
Representations and Warranties
Section 4.1 Representations and Warranties. The Borrower hereby
represents and warrants to each Lender as follows:
(a) Organization; Power; Qualification. As of the Agreement Date, the
respective jurisdiction of organization or incorporation and percentage
ownership by the Borrower of the Subsidiaries listed on Schedule 4.1(a) hereto
are true and correct. As of the Agreement Date, Schedule 4.1(a) hereto is a
complete and accurate listing, showing with respect to the Borrower and each
Subsidiary of the Borrower (a) its mailing address, which is its principal place
of business, and
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(b) the classes of its Capital Stock and the number of amount of its Capital
Stock authorized and outstanding. All of the outstanding Capital Stock of the
Borrower and each Subsidiary of the Borrower is validly issued, fully paid and
non-assessable (except that, pursuant to Section 180.0622 of the Wisconsin
Statutes, a shareholder of any Wisconsin corporation may be assessed up to six
months back wages for employees of such corporation). Each of the Borrower and
its Subsidiaries is a corporation or other legal Person duly organized, validly
existing and in good standing under the laws of its state of incorporation or
organization. Each of the Borrower and its Subsidiaries has the legal power and
authority to own its properties and to carry on its business as now being and
hereafter proposed to be conducted. Each of the Borrower and its Subsidiaries is
authorized to do business, duly qualified and in good standing in the
jurisdiction as set forth in Schedule 4.1(a) hereto and no qualification or
authorization is necessary in any other jurisdictions in which the character of
its properties or the nature of its business requires such qualification or
authorization, except where the failure to be so qualified or authorized could
not reasonably be expected to have a Material Adverse Effect.
(b) Authorization. The Borrower has corporate power and has taken all
necessary corporate action to authorize it to borrow and request Letters of
Credit hereunder. Each of the Borrower and its Subsidiaries has corporate or
other proper power and has taken all necessary corporate or other action to
execute, deliver and perform the Loan Documents to which it is party in
accordance with the terms thereof, and to consummate the transactions
contemplated thereby. Each Loan Document has been duly executed and delivered by
the Borrower or its Subsidiary executing it. Each of the Loan Documents to which
the Borrower or any of its Subsidiaries is a party is a legal, valid and binding
obligation of the Borrower or such Subsidiary, as applicable, enforceable in
accordance with its terms, subject, to enforcement of remedies, to the following
qualifications: (i) equitable principles generally, and (ii) Debtor Relief Laws
(insofar as any such law relates to the bankruptcy, insolvency or similar event
of the Borrower or any of its Subsidiaries).
(c) Compliance with Other Loan Documents and Contemplated Transactions.
The execution, delivery and performance by the Borrower and its Subsidiaries of
the Loan Documents to which they are respectively a party, and the consummation
of the transactions contemplated thereby, do not and will not (i) require any
consent or approval necessary on or prior to the Agreement Date not already
obtained, except for matters which could not reasonably be expected to gave a
Material Adverse Effect, (ii) violate any Applicable Law, (iii) conflict with,
result in a breach of, or constitute a default under the certificate of
incorporation or by-laws or other applicable organizational documents of the
Borrower or any Subsidiary of the Borrower, (iv) conflict with, result in a
breach of, or constitute a default under any Necessary Authorization, indenture,
agreement or other instrument, to which the Borrower or any Subsidiary of the
Borrower is a party or by which they or their respective properties may be
bound, except for matters which could not reasonably be expected to have a
Material Adverse Effect, or (v) result in or require the creation or imposition
of any Lien (other than Liens in favor of the Lenders to secure the Obligations
hereunder or other Permitted Liens) upon or with respect to any property now
owned or hereafter acquired by the Borrower or any of its Subsidiaries.
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(d) Business. The Borrower and its Subsidiaries are engaged primarily
in the business of the manufacture and distribution of personal care and salon
products and businesses or activities reasonably directly related thereto.
(e) Licenses, etc. All Necessary Authorizations have been duly
obtained, and are in full force and effect without any known conflict with the
rights of others and free from any unduly burdensome restrictions, unless the
failure to obtain or have in effect such Necessary Authorizations could not
reasonably be expected to result in a Material Adverse Effect. The Borrower and
its Subsidiaries are and will continue to be in compliance with all provisions
thereof, except to the extent that any such failure to comply could not
reasonably be expected to have a Material Adverse Effect. No circumstance exists
which could reasonably be expected to impair the utility of the Necessary
Authorization or the right to renew such Necessary Authorization the effect of
which could reasonably be expected to have a Material Adverse Effect. No
Necessary Authorization is the subject of any pending or, to the Borrower's
knowledge, threatened challenge, suspension, cancellation or revocation, the
effect of which could reasonably be expected to have a Material Adverse Effect.
(f) Compliance with Law. The Borrower and its Subsidiaries are in
compliance in all respects with all Applicable Laws, except where the failure to
so comply could not reasonably be expected to have a Material Adverse Effect.
(g) Title to Properties. The Borrower and its Subsidiaries have good
title to, or a valid leasehold or subleasehold interest in, all of their
material assets. None of their assets are subject to any Liens, except Permitted
Liens. No financing statement or other Lien filing (except relating to Permitted
Liens) is on file in any state or jurisdiction that names the Borrower or any of
its Subsidiaries as debtor or covers (or purports to cover) any assets of the
Borrower or any of its Subsidiaries, except for Indebtedness with respect to
which the requirements of Section 3.1(i) hereof have been satisfied. The
Borrower and its Subsidiaries have not signed any such financing statement or
filing, nor any security agreement authorizing any Person to file any such
financing statement or filing (except relating to Permitted Liens).
(h) Litigation. Except as reflected on Schedule 4.1(h) hereto, as of
the Agreement Date, there is no Litigation pending against, or, to the
Borrower's current actual knowledge, threatened against the Borrower or any of
its Subsidiaries, or in any other manner relating directly and adversely to the
Borrower or any of its Subsidiaries, or any of their respective properties, in
any court or before any arbitrator of any kind or before or by any governmental
body in which the amount claimed in an aggregate amount (excluding liabilities
for which credit worthy insurance companies have acknowledged coverage) exceeds
$500,000.
(i) Taxes. All federal, state and other tax returns of the Borrower and
its Subsidiaries required by law to be filed have been duly filed, or extensions
have been timely filed, and all taxes shown to be due and payable on such
returns, have been paid, unless the same are being diligently contested in
accordance with Section 5.6 hereof. The charges, accruals and reserves on the
books
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of the Borrower and its Subsidiaries in respect of their taxes are, in the
reasonable judgment of the Borrower, adequate.
(j) Financial Statements; Material Liabilities.
(i) The Borrower has heretofore delivered to the Lenders the
audited consolidated balance sheets of the Borrower as at December 31,
1997, and the related statements of earnings and changes in
shareholders' equity and statement of cash flows for the twelve-month
period then ended (the "Borrower's Audited Financial Statements"). The
Borrower's Audited Financial Statements were prepared in conformity
with GAAP and fairly present, in all material respects, the financial
position of the Borrower and its Subsidiaries on a consolidated basis
or as at the date thereof and the consolidated results of operations
and cash flows for the period covered thereby.
(ii) The Borrower has heretofore delivered to the Lenders the
unaudited consolidated balance sheets of the Borrower as at March 31,
1998 and the related statements of earnings and changes in
stockholders' equity and statement of cash flows for the three-month
period then ended (the "Borrower's Unaudited Financial Statements").
The Borrower's Unaudited Financial Statements were prepared in
conformity with GAAP and fairly present, in all material respects, the
financial position of the Borrower and its Subsidiaries on a
consolidated basis as at the end of and for such fiscal quarter,
subject to normal year-end adjustments.
(iii) The Borrower has heretofore delivered the audited
consolidated balance sheets of the European Touch Companies as at
December 31, 1997 and the related statements of earnings and changes in
stockholders' equity and statement of cash flows for the twelve-month
period then ended (the "European Touch Companies Audited Financial
Statements"). The European Touch Companies Audited Financial Statements
were prepared in conformity with GAAP and fair present, in all material
respects, the financial position of the European Touch Companies and
the consolidated results of operations and cash flows for the period
covered thereby.
(iv) The Borrower has heretofore delivered to the Lenders the
unaudited combined balance sheets of the European Touch Companies as at
March 31, 1998 and the related statements of earnings and changes in
stockholders' equity and statement of cash flows for the three-month
period then ended (the "European Touch Companies Unaudited Financial
Statements"). The European Touch Companies Unaudited Financial
Statements were prepared in conformity with GAAP and fairly present, in
all material respects, the financial position of the European Touch
Companies, as at the end of and for such fiscal quarter, subject to
normal year-end adjustments.
(v) The projected consolidated financial statements of the
Borrower and its Subsidiaries (including the European Touch Companies)
delivered to the Lenders prior to
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or on the Agreement Date are based on good faith estimates and
assumptions made by the management of the Borrower and believed to be
reasonable at the time made, it being recognized by the Lenders that
such projections as to future events are not to be viewed as facts and
that actual results during the period or periods covered by any such
projections may significantly differ from the projected results.
(vi) The consolidated financial statements of the Borrower and
its Subsidiaries delivered to the Lenders pursuant to Section 6.1 and
6.2 hereof fairly present in all material respects their respective
financial condition and their respective results of operations as of
the dates and for the periods shown, all in accordance with GAAP,
subject to normal year-end adjustments. The latest of such financial
statements reflects all material liabilities, direct and contingent, of
the Borrower and each Subsidiary of the Borrower that are required to
be disclosed in accordance with GAAP.
(k) No Adverse Change. Since December 31, 1997, no event or
circumstance has occurred or arisen which is reasonably likely to have a
Material Adverse Effect.
(l) ERISA. As of the Agreement Date, none of the Borrower or its
Controlled Group maintains or contributes to any Plan (other than a
Multiemployer Plan) subject to Title IV of ERISA. Each such Plan (other than any
Multiemployer Plan) is in compliance in all material respects with the
applicable provisions of ERISA, the Code, and any other applicable Law, except
to the extent that failure to so comply would not reasonably be expected to have
a Material Adverse Effect. With respect to each Plan (other than any
Multiemployer Plan) of the Borrower and each member of its Controlled Group, all
reports required under ERISA or any other Applicable Law to be filed with any
Tribunal, the failure of which to file could reasonably be expected to result in
liability of the Borrower or any member of its Controlled Group in excess of
$500,000, have been duly filed. All such reports are true and correct in all
material respects as of the date given. No Plan of the Borrower or any member of
its Controlled Group has been terminated under Section 4041(c) of ERISA nor has
any accumulated funding deficiency (as defined in Section 412(a) of the Code)
been incurred (without regard to any waiver granted under Section 412 of the
Code), nor has any funding waiver from the Internal Revenue Service been
received or requested the result of which could reasonably be expected to have a
Material Adverse Effect. None of the Borrower or any member of its Controlled
Group has failed to make any contribution or pay any amount due or owing as
required under the terms of any such Plan, or by Section 412 of the Code or
Section 302 of ERISA by the due date under Section 412 of the Code and Section
302 of ERISA, the result of which could reasonably be expected to have a
Material Adverse Effect. There has been no ERISA Event or any event requiring
disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA with respect to any
Plan or its related trust of the Borrower or any member of its Controlled Group
since the effective date of ERISA, the result of which could reasonably be
expected to have a Material Adverse Effect. The present value of the benefit
liabilities, as defined in Title IV of ERISA, of each Plan subject to Title IV
of ERISA (other than a Multiemployer Plan) of the Borrower and each member of
its Controlled Group does not exceed by more than $500,000 the present value of
the assets of each such Plan as of the most recent valuation date using each
such Plan's actuarial assumptions at such
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date. There are no pending, or to the Borrower's knowledge threatened, claims,
lawsuits or actions (other than routine claims for benefits in the ordinary
course) asserted or instituted against, and neither the Borrower nor any member
of its Controlled Group has knowledge of any threatened litigation or claims
against, the assets of any Plan or its related trust or against any fiduciary of
a Plan with respect to the operation of such Plan, the result of which could
reasonably be expected to have a Material Adverse Effect. None of the Borrower
or, to the Borrower's knowledge, any member of its Controlled Group has engaged
in any prohibited transactions, within the meaning of Section 406 of ERISA or
Section 4975 of the Code, in connection with any Plan the result of which could
reasonably be expected to have a Material Adverse Effect. None of the Borrower
or any member of its Controlled Group has withdrawn from any Multiemployer Plan,
nor has incurred or reasonably expects to incur (A) any liability under Title IV
of ERISA (other than premiums due under Section 4007 of ERISA to the PBGC), (B)
any withdrawal liability (and no event has occurred which with the giving of
notice under Section 4219 of ERISA would result in such liability) under Section
4201 of ERISA as a result of a complete or partial withdrawal (within the
meaning of Section 4203 or 4205 of ERISA) from a Multiemployer Plan, or (C) any
liability under Section 4062 of ERISA to the PBGC or to a trustee appointed
under Section 4042 of ERISA, the result of which could reasonably be expected to
have a Material Adverse Effect. None of the Borrower, any member of its
Controlled Group, or any organization to which the Borrower or any member of its
Controlled Group is a successor or parent corporation within the meaning of
ERISA Section 4069(b), has engaged in a transaction within the meaning of ERISA
Section 4069, the result of which could reasonably be expected to have a
Material Adverse Effect. None of the Borrower or any member of its Controlled
Group maintains or has established any Plan (other than a Multiemployer Plan)
which is a welfare benefit plan within the meaning of Section 3(1) of ERISA and
which provides for continuing benefits or coverage for any participant or any
beneficiary of any participant after such participant's termination of
employment, except as may be required by any Applicable Law, the result of which
could reasonably be expected to have a Material Adverse Effect. Each of Borrower
and its Controlled Group which maintains a Plan which is a welfare benefit plan
within the meaning of Section 3(1) of ERISA has complied in all material
respects with any applicable notice and continuation requirements of the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and the
regulations thereunder. None of the Borrower or any member of its Controlled
Group maintains or has established a multiemployer welfare benefit arrangement
within the meaning of Section 3(40)(A) of ERISA.
(m) Compliance with Regulations T, U and X. The Borrower is not engaged
principally or as one of its important activities in the business of extending
credit for the purpose of purchasing or carrying any margin stock within the
meaning of Regulations T, U and X of the Board of Governors of the Federal
Reserve System, and no part of the proceeds of the Advances or Letters of Credit
will be used to purchase or carry any margin stock or to extend credit to others
for the purpose of purchasing or carrying any margin stock in any manner which
might cause the borrowing of any Advances or the application of any proceeds
thereof to violate Regulations T, U and X of the Board of Governors of the
Federal Reserve System.
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63
(n) Required Consents. The Borrower and its Subsidiaries are not
required to obtain any Necessary Authorization on or prior to the Agreement Date
that has not already been obtained from, or effect any material filing or
registration that has not already been effected with, any Tribunal in connection
with the execution and delivery of this Agreement or any other Loan Document, or
the performance thereof, in accordance with their respective terms, including
any borrowings hereunder, except for the filing of financing statements (and
other similar notices) and other Collateral Documents containing a description
of the Collateral with certain Tribunals, including the United States Patent and
Trademark Office.
(o) Absence of Default. The Borrower and its Subsidiaries are in
compliance in all respects with all of the provisions of their certificate of
incorporation, by-laws and other organizational documents, other than matters
that could not reasonably be expected to have a Material Adverse Effect. No
event has occurred or failed to occur, which has not been remedied or waived,
the occurrence or non-occurrence of which constitutes, or which with the passage
of time or giving of notice or both would constitute, (i) an Event of Default or
(ii) a default by the Borrower or any of its Subsidiaries under any indenture,
agreement or other instrument, or any judgment, decree or order to which the
Borrower or any of its Subsidiaries or by which they or any of their respective
properties is bound, the result of which could reasonably be expected to have a
Material Adverse Effect.
(p) Governmental Regulation. Neither the Borrower nor any of its
Subsidiaries is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Interstate Commerce Act or the
Investment Company Act of 1940. Neither the entering into or performance by the
Borrower of this Agreement nor the issuance of the Notes violates any provision
of such act or requires any consent, approval, or authorization of, or
registration with, the Securities and Exchange Commission or any other Tribunal
pursuant to any provisions of such act.
(q) Environmental Matters. The Borrower does not have any knowledge
that any substance deemed hazardous by any Applicable Environmental Law, has
been placed (i) on any real property fee title to which is now owned by the
Borrower or any of its Subsidiaries or (ii) by Borrower or any of its
Subsidiaries on any real property leased by the Borrower or any of its
Subsidiaries, in either case in a manner which does not comply with Applicable
Environmental Laws, except to the extent that the failure to so comply could not
reasonably be expected to have a Material Adverse Effect. The Borrower and its
Subsidiaries are not in violation of or subject to any existing, pending or, to
the Borrower's knowledge, threatened investigation or inquiry by any Tribunal or
to any remedial obligations under any Applicable Environmental Laws, the effect
of which could reasonably be expected to have a Material Adverse Effect. The
Borrower and its Subsidiaries have not failed to obtain any permits, licenses or
similar authorizations other than certificates of occupancy and building permits
and other authorizations that have been obtained to construct, occupy, operate
or use any buildings, improvements, fixtures, and equipment forming a part of
any real property owned or leased by the Borrower or any Subsidiary of the
Borrower by reason of any Applicable Environmental Laws, except to the extent
that the failure to so obtain could not reasonably be expected to have a
Material Adverse Effect. The Borrower has no knowledge, that
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any hazardous substances or solid wastes have been disposed of or otherwise
released (i) on or to the real property fee title to which is owned by the
Borrower or any of its Subsidiaries or (ii) by Borrower or any of its
Subsidiaries on or to any real property leased by Borrower or any of its
Subsidiaries, all within the meaning of the Applicable Environmental Laws, the
effect of which could reasonably be expected to have a Material Adverse Effect.
(r) Certain Fees. Except for fees and expenses incurred in connection
with the European Touch Transaction, no broker's, finder's or other fee or
commission will be payable by the Borrower (other than to the Lenders hereunder)
with respect to the making of the Commitments or the Advances hereunder. The
Borrower agrees to indemnify and hold harmless the Administrative Agent and each
Lender from and against any claims, demand, liability, proceedings, costs or
expenses asserted with respect to or arising in connection with any such fees or
commissions, including those related to the European Touch Transaction.
(s) Intellectual Property. The Borrower and its Subsidiaries have
collectively obtained or applied for or licensed or otherwise obtained the right
to use all patents, patent applications, trademarks, trademark applications,
service marks, service ▇▇▇▇ applications, trade names, copyrights, trade secrets
and know how (collectively, the "Intellectual Property"), free from Liens
(except Permitted Liens), that are necessary for the operation of their business
as presently conducted, except to the extent that the failure to so obtain,
apply, license or obtain the right to use could not reasonably be expected to
have a Material Adverse Effect. Nothing has come to the knowledge of the
Borrower to the effect that (i) any process, method, part or other material
presently contemplated to be employed by the Borrower or any Subsidiary of the
Borrower infringes any valid and enforceable Intellectual Property or other
right owned by any other Person, or (ii) there is pending or overtly threatened
any claim or Litigation against or affecting the Borrower or any Subsidiary of
the Borrower contesting its right to sell or use any such process, method, part
or other material, which could reasonably be expected to have a Material Adverse
Effect.
(t) Disclosure. All factual information furnished by the Borrower or
any of its Subsidiaries in writing to the Administrative Agent or any Lender in
connection with this Agreement or the other Loan Documents is, and all other
such factual information hereafter furnished by or on behalf of the Borrower or
any of its Subsidiaries in writing to the Administrative Agent or any Lender
will be, true and accurate in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting to state any
material fact necessary to make such information not misleading at such time in
light of the circumstances under which such information was provided. There is
no fact known to the Borrower and not known to the public generally that could
reasonably be expected to have a Material Adverse Effect, which has not been set
forth in this Agreement or in the documents, certificates and statements
furnished to the Lenders by or on behalf of the Borrower in connection with the
transaction contemplated hereby.
(u) Solvency. The Borrower is, and Borrower and its Subsidiaries on a
consolidated basis are, Solvent.
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(v) Labor Relations. Except as provided on Schedule 4.1(v) hereto,
neither the Borrower nor any Subsidiary is a party to a collective bargaining
agreement or similar agreement, and the Borrower and each Subsidiary is in
compliance in all material respects with all Laws respecting employment and
employment practices, terms and conditions of employment, wages and hours and
other laws related to the employment of its employees, except where the failure
to comply could not reasonably be expected to result in a Material Adverse
Effect, and there are no arrears in the payment of wages, withholding or social
security taxes, unemployment insurance premiums or other similar obligations of
the Borrower or any Subsidiary or for which the Borrower or any Subsidiary may
be responsible other than in the ordinary course of business, except for such
unpaid or unwithheld arrears which could not reasonably be expected to result in
a Material Adverse Effect. There is no strike, work stoppage or labor dispute
with any union or group of employees pending or overtly threatened involving
Borrower or any Subsidiary that could reasonably be expected to have a Material
Adverse Effect.
(w) Common Enterprise. The Borrower and its Subsidiaries are engaged in
the businesses set forth in Section 4.1(d) hereof. These operations require
financing on a basis such that the credit supplied can be made available from
time to time to the Borrower and various of the Subsidiaries, as required for
the continued successful operation of the Borrower and its Subsidiaries as a
whole. The Borrower and its Subsidiaries expect to derive benefit (and the
boards of directors of the Borrower and its Subsidiaries have determined that
the Borrower and the Subsidiaries may reasonably be expected to derive benefit),
directly or indirectly, from the credit extended by Lenders hereunder, both in
their separate capacities and as members of the group of companies, since the
successful operation and condition of the Borrower and its Subsidiaries is
dependent on the continued successful performance of the functions of the group
as a whole.
(x) Year 2000 Compliance. The Company has (a) initiated a review and
assessment of all areas within its and each of its Subsidiaries' business and
operations that could be adversely affected by the "Year 2000 Problem" (that is,
the risk that computer applications used by the Company or any of its
Subsidiaries may be unable to recognize and perform properly date-sensitive
functions involving certain dates prior to and any date after December 31,
1999), (b) developed a plan and timeline for addressing the Year 2000 Problem on
a timely basis, and (c) to date, implemented that plan in accordance with that
timetable. The Company reasonably believes that all computer applications that
are material to its or any of its Subsidiaries' business and operations will on
a timely basis be able to perform properly date-sensitive functions for all
dates before and after January 1, 2000 (that is, be "Year 2000 Compliant"),
except to the extent that a failure to do so could not reasonably be expected to
have a Material Adverse Effect.
Section 4.2 Survival of Representations and Warranties, etc. All
representations and warranties made under this Agreement and the other Loan
Documents shall be deemed to be made at and as of the Agreement Date and at and
as of the date of each Advance and the date of issuance of each Letter of
Credit, and each shall be true and correct when made, except to the extent (a)
previously fulfilled in accordance with the terms hereof, (b) previously waived
in writing by the Determining Lenders with respect to any particular factual
circumstance or permitted by the terms
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of this Agreement or (c) such representations and warranties specifically relate
to an earlier date, in which case such representations and warranties shall have
been true and correct on and as of such date. All such representations and
warranties shall survive, and not be waived by, the execution hereof by any
Lender, any investigation or inquiry by any Lender, or by the making of any
Advance or the issuance or extension of any Letter of Credit under this
Agreement.
ARTICLE 5
General Covenants
Until all amounts under the Notes and in respect of the Reimbursement
Obligations have been paid in full and all other amounts and expenses due and
payable hereunder shall be paid and until the Commitments have been terminated:
Section 5.1 Preservation of Existence and Similar Matters. The Borrower
shall, and shall cause each of its Subsidiaries to:
(a) except as otherwise permitted pursuant to Section 7.4 hereof,
preserve and maintain, or timely obtain and thereafter preserve and maintain,
its existence, rights, franchises, licenses, authorizations, consents,
privileges and all other Necessary Authorizations from any Tribunal, the loss of
which could reasonably be expected to have a Material Adverse Effect; and
(b) except as otherwise permitted pursuant to Section 7.4 hereof,
qualify and remain qualified and authorized to do business in each jurisdiction
in which the character of its properties or the nature of its business requires
such qualification or authorization, unless the failure to do so could not
reasonably be expected to have a Material Adverse Effect.
Section 5.2 Business; Compliance with Applicable Law. The Borrower and
its Subsidiaries shall (a) engage primarily in the businesses set forth in
Section 4.1(d) hereof, and (b) comply in all respects with the requirements of
all Applicable Law, except where the failure to so comply could not reasonably
be expected to have a Material Adverse Effect.
Section 5.3 Maintenance of Properties. The Borrower shall, and shall
cause each of its Subsidiaries to, maintain or cause to be maintained all its
properties (whether owned or held under lease) in adequate operating condition
and repair for purposes of their current use with due regard to the age thereof,
taken as a whole, subject to ordinary wear and tear, and from time to time make
or cause to be made all appropriate (in the reasonable judgment of the Borrower)
repairs, renewals, replacements, additions, betterments and improvements thereto
in accordance with past practice, except where the failure to so maintain,
repair, renew, replace or improve could not reasonably be expected to have a
Material Adverse Effect.
Section 5.4 Accounting Methods and Financial Records. The Borrower
shall, and shall cause each of its Subsidiaries to, (a) maintain a system of
accounting established and administered
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in accordance with GAAP, (b) keep adequate records and books of account in which
complete entries will be made and all transactions reflected in accordance with
GAAP, and (c) keep accurate and complete records of its respective assets. The
Borrower and each of its Subsidiaries shall maintain a fiscal year ending on the
last day of December.
Section 5.5 Insurance. The Borrower shall, and shall cause each of its
Subsidiaries to, maintain insurance from responsible companies in such amounts
and against such risks (but, including any event, public liability and business
interruption insurance and flood insurance as to any portion of the real estate
Collateral which shall at any time be located in an identified "flood prone"
area in which flood insurance has been made available pursuant to the Federal
Flood Protection Act of 1973, as amended), as shall be customary and usual in
the industry for companies of similar size and capability. Each insurance policy
shall (a) provide for at least 30 days' prior notice to the Administrative Agent
of any proposed termination or cancellation of such policy, whether on account
of default or otherwise and (b) otherwise contain the requirements for insurance
set forth in the Collateral Documents.
Section 5.6 Payment of Taxes and Claims. The Borrower shall, and shall
cause each of its Subsidiaries to, pay and discharge all material taxes to which
they are subject prior to the date on which penalties attach thereto, and all
lawful material claims for labor, materials and supplies which, if unpaid, might
by Law become a Lien upon any of its properties; except that no such tax or
claim need be paid which is being diligently contested in good faith by
appropriate proceedings and for which adequate reserves shall have been set
aside on the appropriate books, but only so long as any Lien related thereto is
a Permitted Lien and no foreclosure sale or similar proceeding shall have been
commenced. The Borrower shall, and shall cause each of its Subsidiaries to,
timely file all information returns (or extensions of such filing deadlines)
required by federal, state or local tax authorities.
Section 5.7 Visits and Inspections. The Borrower shall, and shall cause
each of its Subsidiaries to, promptly permit representatives of the
Administrative Agent or any Lender from time to time after reasonable written
notice by the Administrative Agent or any Lender to (a) visit and inspect the
properties of the Borrower and its Subsidiaries as often as the Administrative
Agent or any Lender shall reasonably deem advisable, (b) review, inspect and
make extracts from and copies of the Borrower's and each such Subsidiary's books
and records, and (c) discuss with the Borrower's and each such Subsidiary's
directors, officers, employees and auditors its business, assets, liabilities,
financial positions, results of operations and business prospects, provided that
such representatives of the Administrative Agent or any Lender shall keep
confidential all information obtained pursuant to this Section 5.7 to the extent
required by Section 11.14 hereof. The Borrower shall pay the reasonable
out-of-pocket expenses related to inspections and reviews performed (a) at any
time by the Administrative Agent and (b) after the occurrence and during the
continuance of an Event of Default, by each Lender. Except after the occurrence
and during the continuance of an Event of Default, all such visits and
inspections shall be conducted during normal business hours. Following the
occurrence and during the continuance of an Event of Default, such visits and
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inspections shall be conducted at any time requested by the Administrative Agent
or any Lender without any requirement for reasonable notice.
Section 5.8 Use of Proceeds. The proceeds (a) of the Revolving Credit
Advances shall be used by the Borrower to finance the ongoing working capital
and general corporate requirements of the Borrower and its Subsidiaries,
including Acquisitions permitted hereunder, and (b) of the Term Loan Advances
shall be used by the Borrower to finance Acquisitions permitted hereunder.
SECTION 5.9 INDEMNITY.
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(a) THE BORROWER AGREES TO DEFEND, PROTECT, INDEMNIFY AND HOLD
HARMLESS THE ADMINISTRATIVE AGENT, EACH LENDER, THE ISSUING BANK, EACH OF THEIR
RESPECTIVE AFFILIATES, AND EACH OF THEIR RESPECTIVE (INCLUDING SUCH AFFILIATES')
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS AND CONSULTANTS (INCLUDING,
WITHOUT LIMITATION, THOSE RETAINED IN CONNECTION WITH THE SATISFACTION OR
ATTEMPTED SATISFACTION OF ANY OF THE CONDITIONS SET FORTH HEREIN) OF EACH OF THE
FOREGOING (COLLECTIVELY, "INDEMNITEES") FROM AND AGAINST ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS,
CLAIMS, REASONABLE COSTS, REASONABLE OUT-OF-POCKET EXPENSES AND REASONABLE
DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER (INCLUDING, WITHOUT LIMITATION,
THE REASONABLE FEES AND DISBURSEMENTS OF COUNSEL FOR SUCH INDEMNITEES IN
CONNECTION WITH ANY INVESTIGATIVE, ADMINISTRATIVE OR JUDICIAL PROCEEDING,
WHETHER OR NOT SUCH INDEMNITEES SHALL BE DESIGNATED A PARTY THERETO), IMPOSED
ON, INCURRED BY, OR ASSERTED AGAINST SUCH INDEMNITEES (WHETHER DIRECT, INDIRECT
OR CONSEQUENTIAL AND WHETHER BASED ON ANY FEDERAL, STATE, OR LOCAL LAWS AND
REGULATIONS, UNDER COMMON LAW OR AT EQUITABLE CAUSE, OR ON CONTRACT, TORT OR
OTHERWISE, ARISING FROM OR CONNECTED WITH THE PAST, PRESENT OR FUTURE OPERATIONS
OF THE BORROWER OR ANY OF ITS SUBSIDIARIES OR THEIR RESPECTIVE PREDECESSORS IN
INTEREST, OR THE PAST, PRESENT OR FUTURE ENVIRONMENTAL CONDITION OF PROPERTY OF
THE BORROWER OR ANY OF ITS SUBSIDIARIES) RELATING TO OR ARISING OUT OF THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR ANY ACT, EVENT OR TRANSACTION OR ALLEGED
ACT, EVENT OR TRANSACTION RELATING THERETO, INCLUDING IN CONNECTION WITH, OR AS
A RESULT, IN WHOLE OR IN PART, OF ANY ORDINARY OR MERE NEGLIGENCE OF
ADMINISTRATIVE AGENT OR ANY LENDER (OTHER THAN THOSE MATTERS RAISED EXCLUSIVELY
BY A PARTICIPANT AGAINST THE ADMINISTRATIVE AGENT OR ANY LENDER AND NOT THE
BORROWER), OR THE USE OR INTENDED USE OF THE PROCEEDS OF THE ADVANCES OR LETTERS
OF CREDIT HEREUNDER, OR IN CONNECTION WITH ANY INVESTIGATION OF ANY POTENTIAL
MATTER COVERED HEREBY, BUT EXCLUDING (i) ANY CLAIM OR LIABILITY THAT ARISES AS
THE RESULT OF THE GROSS NEGLIGENCE OR WILFUL MISCONDUCT OF ANY INDEMNITEE, AS
FINALLY JUDICIALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION, (ii) ANY
CLAIM OR LIABILITY THAT ARISES AS THE DIRECT RESULT OF THE OPERATION OF THE
PROPERTY OF THE BORROWER OR ANY OF ITS SUBSIDIARIES BY ANY OF THE LENDERS AFTER
TAKING POSSESSION THEREOF BY FORECLOSURE OR BY TRANSFER IN LIEU OF FORECLOSURE
(PROVIDED THAT SUCH CLAIM OR LIABILITY DOES NOT RELATE TO ANY CONDITION EXISTING
ON SUCH PROPERTY PRIOR TO FORECLOSURE OR TRANSFER IN LIEU OF FORECLOSURE), AND
(iii) MATTERS RAISED BY ONE
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LENDER AGAINST ANOTHER LENDER OR BY ANY SHAREHOLDERS OF A LENDER AGAINST A
LENDER OR ITS MANAGEMENT (COLLECTIVELY, EXCEPT FOR THE MATTERS REFERRED TO
CLAUSES (i), (ii) or (iii) ABOVE, "INDEMNIFIED MATTERS", AND THE MATTERS
REFERRED TO IN CLAUSES (i), (ii) or (iii) ABOVE, COLLECTIVELY, "EXCLUDED
MATTERS").
(b) WITHOUT DUPLICATION, THE BORROWER SHALL PERIODICALLY, UPON
REQUEST, REIMBURSE EACH INDEMNITEE FOR ITS REASONABLE OUT-OF-POCKET LEGAL AND
OTHER ACTUAL REASONABLE EXPENSES (INCLUDING THE REASONABLE COST OF ANY
INVESTIGATION AND PREPARATION) INCURRED IN CONNECTION WITH ANY INDEMNIFIED
MATTER; PROVIDED THAT SUCH INDEMNITEE SHALL PROVIDE ADEQUATE DOCUMENTATION OF
SUCH EXPENSES; PROVIDED, FURTHER, THAT IF AN INDEMNITEE IS REIMBURSED HEREUNDER
FOR SUCH AMOUNT, THE AMOUNT SO PAID SHALL BE REFUNDED TO THE BORROWER IF AND TO
THE EXTENT IT IS FINALLY JUDICIALLY DETERMINED THAT THE INDEMNIFIED MATTER IN
QUESTION WAS AN EXCLUDED MATTER. THE REIMBURSEMENT, INDEMNITY AND CONTRIBUTION
OBLIGATIONS UNDER THIS SECTION SHALL BE IN ADDITION TO ANY LIABILITY WHICH THE
BORROWER MAY OTHERWISE HAVE, SHALL EXTEND UPON THE SAME TERMS AND CONDITIONS TO
EACH INDEMNITEE, AND SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF ANY
SUCCESSORS, ASSIGNS, HEIRS AND PERSONAL REPRESENTATIVES OF THE BORROWER, THE
ADMINISTRATIVE AGENT, THE LENDERS AND ALL OTHER INDEMNITEES. THIS SECTION SHALL
SURVIVE ANY TERMINATION OF THIS AGREEMENT AND PAYMENT OF THE OBLIGATIONS.
Section 5.10 Environmental Law Compliance. The use which the
Borrower or any Subsidiary of the Borrower intends to make of any real property
which is owned or leased by it will not result in the disposal or other release
of any hazardous substance or solid waste on or to such real property which is
in violation of Applicable Environmental Laws, the effect of which could
reasonably be expected to have a Material Adverse Effect.
Section 5.11 Further Assurances. At any time or from time to time
upon the reasonable request by the Administrative Agent, the Borrower or any of
its Subsidiaries shall execute and deliver such further documents and do such
other acts and things as the Administrative Agent may reasonably request in
order to effect fully the purposes of this Agreement and the other Loan
Documents and to provide for payment of the Obligations in accordance with the
terms of this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, the Borrower agrees to (a) update and deliver to
the Administrative Agent Schedule 4.1(a) hereto (with respect to the identities,
jurisdictions of incorporation and ownership of the Borrower's Subsidiaries) at
the time of any Acquisition or delivery of the financial statements set forth in
Sections 6.1 and 6.2 hereof if the information provided therein is not complete
and correct, (b) update and deliver to the Administrative Agent Schedule 1.1 to
the Security Agreements promptly upon discovery if the
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information provided therein is not complete and correct, and (c) execute and
deliver to the Administrative Agent deeds of trust or mortgages, as appropriate,
in substantially the form of Exhibit I hereto with respect to any real property
hereafter acquired by the Borrower or any of its Subsidiaries, as applicable,
together with environmental reports and surveys in form satisfactory to the
Administrative Agent and title insurance thereon in an amount reasonably
satisfactory to the Administrative Agent, and such board resolutions, officer's
certificates, corporate and other documents and opinions of counsel as the
Administrative Agent shall reasonably request with respect thereto.
Section 5.12 Subsidiaries. At any time that any Person becomes a
Domestic Subsidiary, (a) such Subsidiary shall execute a Subsidiary Guaranty of
the Obligations and Collateral Documents granting a first priority Lien in all
assets of such Subsidiary required by the Determining Lenders to be pledged,
except, to the extent applicable, for Permitted Liens to secure the Obligations,
(b) 100% of such Subsidiary's Capital Stock shall be pledged to secure the
Obligations and (c) the Lenders shall receive such board resolutions, officer's
certificates, corporate and other documents and opinions of counsel as the
Administrative Agent shall reasonably request in connection with the actions
described in clauses (a) and (b) above. At any time that any Person becomes a
Foreign Subsidiary, (a) 65% of such Subsidiary's Capital Stock shall be pledged
to secure the Obligations and (b) the Lenders shall receive such board
resolutions, officers' certificates, corporate and other documents and opinions
of counsel as the Administrative Agent shall reasonably request in connection
with the action described in clause (a) above.
Section 5.13 Year 2000 Compliance. The Borrower will promptly notify
the Administrative Agent in the event the Borrower discovers or determines that
any computer application that is material to its or any of its Subsidiaries'
business and operations will not be Year 2000 Compliant on a timely basis,
except to the extent that such failure could not reasonably be expected to have
a Material Adverse Effect.
ARTICLE 6
Information Covenants
Until all amounts under the Notes and in respect of the
Reimbursement Obligations have been paid in full and all other amounts and
expenses due and payable hereunder shall be paid and until the Commitments have
been terminated, the Borrower shall furnish or cause to be furnished to each
Lender:
Section 6.1 Quarterly Financial Statements and Information. Within
45 after the end of each fiscal quarter of each fiscal year (other than the end
of a fiscal quarter which coincides with the end of a fiscal year), the
consolidated balance sheets of the Borrower and its Subsidiaries as at the end
of such fiscal quarter and the related consolidated statements of income for
such fiscal quarter and for the elapsed portion of the year ended with the last
day of such fiscal quarter, and
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consolidated statements of cash flow for the elapsed portion of the year ended
with the last day of such fiscal quarter, all of which shall be certified by the
president or chief financial officer or other officer of the Borrower acceptable
to the Administrative Agent, to, in his or her opinion acting solely in his or
her capacity as an officer of the Borrower, present fairly in all material
respects, in accordance with GAAP (except for the absence of footnotes), the
consolidated financial position and results of operations of the Borrower and
its Subsidiaries as at the end of and for such fiscal quarter, and for the
elapsed portion of the year ended with the last day of such fiscal quarter,
subject only to normal year-end adjustments.
Section 6.2 Annual Financial Statements and Information; Certificate
of No Default.
(a) Within 120 days after the end of each fiscal year, a copy of (i)
the consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries, as of the end of the current and prior fiscal years and (ii) the
consolidated and consolidating statements of earnings and consolidated
statements of changes in shareholders' equity, and statements of cash flow as of
and through the end of such fiscal year, all of which are prepared in accordance
with GAAP, and certified by independent certified public accountants reasonably
acceptable to the Lenders (provided, however, any big six public accounting firm
shall be acceptable to the Lenders), whose opinion shall be in scope and
substance in accordance with generally accepted auditing standards and shall be
unqualified.
(b) Simultaneously with the delivery of the statements required by
this Section 6.2, a letter from the Borrower's public accountants stating to the
effect that during their audit of such financial statements nothing has come to
their attention that would result in a Default or Event of Default under this
Agreement, recognizing, however, that the scope and purpose of their audit was
not to determine compliance with the terms of this Agreement or whether a
Default or Event of Default has otherwise occurred.
(c) As soon as available, but in any event within 90 days following
the end of each fiscal year, a copy of the annual consolidated operating budget
of the Borrower and its Subsidiaries for the succeeding fiscal year.
Section 6.3 Compliance Certificate. At the time financial statements
are furnished pursuant to Sections 6.1 and 6.2 hereof, the Compliance
Certificate, completed as provided therein.
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Section 6.4 Copies of Other Reports and Notices.
(a) Promptly upon their becoming available, a copy of (i) all
material final reports or letters submitted to the Borrower or any Subsidiary of
the Borrower by accountants in connection with any annual, interim or special
audit, including without limitation any final report prepared in connection with
the annual audit referred to in Section 6.2 hereof, and any other comment letter
submitted to management in connection with any such audit, (ii) each regular,
periodic or other report and any registration statement (other than statements
on Form S-8) or prospectus (or material written communication in respect of any
thereof) filed by the Borrower or any of its Subsidiaries with any securities
exchange, with the Securities and Exchange Commission or any successor agency,
and (iii) all press releases concerning material financial aspects of the
Borrower or any of its Subsidiaries;
(b) Promptly upon becoming aware that (i) the holder(s) of any
note(s) or other evidence of indebtedness or other security of the Borrower of
any of its Subsidiaries in excess of $500,000 in the aggregate has given notice
or taken any action with respect to a breach, failure to perform, claimed
default or event of default thereunder or (ii) any event, circumstance or
condition which could reasonably be expected to be classified as a Material
Adverse Effect, a written notice specifying the details thereof (or the nature
of any claimed default or event of default) and what action is being taken or is
proposed to be taken with respect thereto;
(c) Promptly upon becoming aware that any party to any Capitalized
Lease Obligations of the Borrower or any of its Subsidiaries in excess of
$500,000 or Operating Lease of the Borrower or any of its Subsidiaries in which
the annual rentals thereunder exceed $100,000, has given notice or taken any
action with respect to a breach, failure to perform, claimed default or event of
default thereunder, a written notice specifying the details thereof (or the
nature of any claimed default or event of default) and what action is being
taken or is proposed to be taken with respect thereto;
(d) Promptly upon receipt thereof, information with respect to and
copies of any notices received from any Tribunal relating to any order, ruling,
law, information or policy that relates to a breach of or noncompliance with any
Law, and could reasonably be expected to (i) result in the payment of money by
the Borrower or any of its Subsidiaries in an amount of $500,000 or more in the
aggregate (ii) have a Material Adverse Effect, or (iii) result in the loss or
suspension of any Necessary Authorization where such loss could reasonably be
expected to have a Material Adverse Effect; and
(e) From time to time and promptly upon each request, such material
data, certificates, reports, statements, documents or further information
regarding the assets, business, liabilities, financial position, projections,
results of operations or business prospects of the Borrower and its
Subsidiaries, as the Administrative Agent or any Lender may reasonably request.
Section 6.5 Notice of Litigation, Default and Other Matters. Prompt
notice of the following events after the Borrower has knowledge or notice
thereof:
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(a) The commencement of all Litigation and investigations by or
before any Tribunal, and all actions and proceedings in any court or before any
arbitrator involving claims for damages (including punitive damages) in excess
of $500,000 (after deducting the amount with respect to which creditworthy
insurance companies have acknowledged coverage), against or in any other way
relating directly to the Borrower, any of its Subsidiaries, or any of their
respective properties or businesses; and
(b) Promptly upon the happening of any condition or event of which
the Borrower has current actual knowledge which constitutes a Default, a written
notice specifying the nature and period of existence thereof and what action is
being taken or is proposed to be taken with respect thereto.
Section 6.6 ERISA Reporting Requirements.
(a) Promptly and in any event (i) within 30 days after the Borrower
or any member of its Controlled Group has current actual knowledge that any
ERISA Event described in clause (a) of the definition of ERISA Event or any
event described in Section 4063(a) of ERISA with respect to any Plan of the
Borrower or any member of its Controlled Group has occurred, and (ii) within 10
days after the Borrower or any member of its Controlled Group has current actual
knowledge that any other ERISA Event with respect to any Plan of the Borrower or
any member of its Controlled Group has occurred or a request for a minimum
funding waiver under Section 412 of the Code has been made with respect to any
Plan of the Borrower or any member of its Controlled Group, a written notice
describing such event and describing what action is being taken or is proposed
to be taken with respect thereto, together with a copy of any notice of such
event that is given to the PBGC;
(b) Promptly and in any event within ten Business Days after receipt
thereof by the Borrower or any member of its Controlled Group from the PBGC,
copies of each notice received by the Borrower or any member of its Controlled
Group of the PBGC's intention to terminate any Plan or to have a trustee
appointed to administer any Plan;
(c) Promptly and in any event within 30 days after the filing
thereof by the Borrower or any member of its Controlled Group with the United
States Department of Labor or the Internal Revenue Service, copies of each
annual report (including Schedule B thereto, if applicable) with respect to each
Plan subject to Title IV of ERISA of which Borrower or any member of its
Controlled Group is the "plan sponsor";
(d) Promptly, and in any event within 10 Business Days after receipt
thereof, a copy of any correspondence the Borrower or any member of its
Controlled Group receives from the Plan Sponsor (as defined by Section
4001(a)(10) of ERISA) of any Plan concerning potential withdrawal liability
pursuant to Section 4219 or 4202 of ERISA, and a statement from the chief
financial officer of the Borrower or such member of its Controlled Group setting
forth details as to the events giving
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rise to such potential withdrawal liability and the action which the Borrower or
such member of its Controlled Group is taking or proposes to take with respect
thereto;
(e) Notification within 30 days of any material increases in the
benefits provided under any existing Plan which is not a Multiemployer Plan, or
the establishment of any new Plans, or the commencement of contributions to any
Plan to which the Borrower or any member of its Controlled Group was not
previously contributing, which could reasonably be expected in any such case to
result in an additional material liability to the Borrower;
(f) Notification within three Business Days after the Borrower or
any member of its Controlled Group knows that the Borrower or any such member of
its Controlled Group has filed or intends to file a notice of intent to
terminate any Plan under a distress termination within the meaning of Section
4041(c) of ERISA and a copy of such notice; and
(g) Within three Business Days after receipt of written notice of
commencement thereof, notice of all actions, suits and proceedings before any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting the Borrower or any member of
its Controlled Group with respect to any Plan, except those which, in the
aggregate, if adversely determined could not reasonably be expected to have a
Material Adverse Effect.
ARTICLE 7
Negative Covenants
Until all amounts under the Notes and in respect of the
Reimbursement Obligations have been paid in full and all other amounts and
expenses due and payable hereunder shall be paid and until the Commitments have
been terminated:
Section 7.1 Indebtedness. The Borrower shall not, and shall not
permit any of its Subsidiaries to, create, assume, incur or otherwise become or
remain obligated in respect of, or permit to be outstanding, or suffer to exist
any Indebtedness, except:
(a) Indebtedness under the Loan Documents;
(b) Accounts payable and accrued liabilities incurred in the
ordinary course of business, and indemnities given in the ordinary course of
business in connection with Acquisitions and sales of assets;
(c) Indebtedness, including purchase money Indebtedness and
Indebtedness in respect of Capitalized Lease Obligations, incurred to purchase,
or to finance the purchase of, assets which constitute property, plant and
equipment, not to exceed, together with Indebtedness permitted
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pursuant to clauses (h) and (l) of this Section 7.1, $15,000,000 in aggregate
principal amount outstanding;
(d) Subordinated Debt; provided that the Net Cash Proceeds of such
Subordinated Debt are applied in accordance with Section 2.5(e) hereof.
(e) Interest hedging obligations under Interest Hedge Agreements
entered into with any Lender in the ordinary course of business and not for
speculative purposes;
(f) Indebtedness existing on the Agreement Date which is described
on Schedule 7.1(e) hereof, including renewals, replacements and refinancings
(but no increases) thereof;
(g) Indebtedness in respect of endorsement of negotiable instruments
in the ordinary course of business;
(h) Indebtedness assumed in connection with Acquisitions permitted
under Section 7.6 or seller carry-back financing incurred in connection with
Acquisitions permitted under Section 7.6 not to exceed, together with
Indebtedness permitted pursuant to clauses (c) and (l) of this Section 7.1,
$15,000,000 in aggregate principal amount outstanding;
(i) Indebtedness (including as the result of intercompany transfers
made in the ordinary course of business) owing among the Obligors, provided such
Indebtedness is (A) subordinated to the Obligations pursuant to terms acceptable
to the Determining Lenders and (B) evidenced by an entry on the financial
records of such Obligors;
(j) Guaranties by the Borrower or its Subsidiaries of Indebtedness
of the Borrower or other Subsidiaries, to the extent such underlying
Indebtedness is permitted hereunder;
(k) Indebtedness in respect of the Senior Subordinated Notes; and
(l) Indebtedness not otherwise permitted pursuant to clauses (a)
through (k) above not to exceed, together with Indebtedness permitted pursuant
to clauses (c) and (h) of this Section 7.1, $15,000,000 in aggregate principal
amount outstanding;
provided, however, that no Indebtedness otherwise permitted pursuant to clauses
(c), (d), (e), (h) and (l) above may be incurred if, immediately before or after
giving effect to the incurrence thereof, any Default or Event of Default shall
have occurred and be continuing.
Section 7.2 Liens. The Borrower shall not, and shall not permit any
of its Subsidiaries to, create, assume, incur, permit or suffer to exist,
directly or indirectly, any Lien on any of its assets, whether now owned or
hereafter acquired, except Permitted Liens. The Borrower shall not, and shall
not permit any of its Subsidiaries to, agree with any other Person that it shall
not create, assume, incur, permit or suffer to exist or to be created, assumed,
incurred or permitted to exist, directly or indirectly, any Lien on any of its
assets other than in respect of (a) the Senior Subordinated Notes
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or any other Subordinated Debt and (b) Indebtedness permitted by Sections 7.1(c)
and (h) hereof, provided that such agreement with respect to Indebtedness
permitted by Sections 7.1(c) and (h) hereof relates only to the assets purchased
or acquired.
Section 7.3 Investments. The Borrower shall not, and shall not
permit any of its Subsidiaries to, make any Investment, except that the Borrower
and any of its Subsidiaries may purchase or otherwise acquire and own:
(a) Cash and Cash Equivalents;
(b) Accounts receivable that arise in the ordinary course of
business and are payable on standard terms; loans and advances to employees for
reasonable travel and business expenses in the ordinary course of business; and
deposits for utilities, security deposits, leases and similar prepaid expenses
incurred in the ordinary course of business;
(c) Investments in existence on the Agreement Date which are
described on Schedule 7.3(c) hereto;
(d) Investments which are Acquisitions permitted pursuant to Section
7.6 hereof, and to the extent that the Acquisition is of a direct Foreign
Subsidiary, subject to the limitations set forth in Section 7.3(f) hereof;
(e) Investments in the form of Interest Hedge Agreements permitted
by Section 7.1(e) hereof;
(f) Investments in, and expenditures in respect of Acquisitions of,
direct Foreign Subsidiaries in an aggregate amount after the Agreement Date not
to exceed (calculated immediately prior to the date of each such Investment or
Acquisition) 25% of Net Worth at any time outstanding;
(g) Investments in Obligors;
(h) Investments consisting of non-cash consideration received in
connection with a sale of assets permitted by Section 7.5 not to exceed
$4,000,000 in aggregate amount outstanding at any time;
(i) Investments arising from transactions by the Borrower or any of
its Subsidiaries with customers or suppliers in the ordinary course of business,
including endorsements of negotiable instruments, debt obligations and other
investments received in connection with the bankruptcy or reorganization of
customers and suppliers and in settlement of delinquent obligations of, and
other disputes with, customers and suppliers; and
(j) Investments not otherwise permitted pursuant to clauses (a)
through (i) above not to exceed $5,000,000 in aggregate amount outstanding at
any time;
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provided, however, that no Investment otherwise permitted by clauses (d), (e),
(f), (h) and (j) above shall be permitted to be made if, immediately before or
after giving effect thereto, any Event of Default shall have occurred and be
continuing.
Section 7.4 Liquidation, Merger. The Borrower shall not, and shall
not permit any of its Subsidiaries to, at any time:
(a) liquidate or dissolve itself (or suffer any liquidation or
dissolution) or otherwise wind up, except that (i) a Subsidiary of the Borrower
may liquidate or dissolve into the Borrower or a Subsidiary of the Borrower
which is an Obligor and (ii) a Subsidiary of the Borrower which is a direct
Foreign Subsidiary may liquidate or dissolve into an Obligor or another direct
Foreign Subsidiary; or
(b) enter into any merger or consolidation unless (i) with respect
to a merger or consolidation involving the Borrower, the Borrower shall be the
surviving corporation, or if the merger or consolidation involves a Subsidiary
of the Borrower which is an Obligor and not the Borrower, such Subsidiary shall
be the surviving corporation, (ii) such transaction shall not be utilized to
circumvent compliance with any term or provision herein and (iii) no Default or
Event of Default shall then be in existence or occur as a result of such
transaction.
Section 7.5 Sales of Assets. The Borrower shall not, and shall not
permit any of its Subsidiaries to, sell, transfer or otherwise dispose of, any
of its assets except (a) inventory in the ordinary course of business, (b)
obsolete or worn-out assets, (c) asset sales (i) for full and fair consideration
at least equal to the fair market value of the assets sold or otherwise disposed
of, (ii) at least 50% of the consideration received by the Borrower or its
Subsidiary, as the case may be, is in the form of Cash and Cash Equivalents and
is received at the time of such disposition, and (iii) in which the Net Cash
Proceeds from the disposition thereof (to the extent not applied pursuant to
clause (d) immediately following) are reinvested, within 270 days before or
after such disposition, in productive tangible assets used in the business of
the Borrower or its Subsidiaries, and provided that the aggregate amount of Net
Cash Proceeds outstanding and pending reinvestment pursuant to this clause (c)
shall not exceed $3,000,000 at any time, (d) sales and dispositions among
Obligors, and (e) asset sales (i) for full and fair consideration at least equal
to the fair market value of the assets sold or otherwise disposed of, (ii) at
least 50% of the consideration received by the Borrower or its Subsidiary, as
the case may be, is in the form of Cash and Cash Equivalents and is received at
the time of such disposition, and (iii) in which the Net Cash Proceeds of which
are applied in accordance with Section 2.5(c) hereof to the extent required
therein.
Section 7.6 Acquisitions. The Borrower shall not, and shall not
permit any of its Subsidiaries to, make any Acquisitions; provided, however, if
(a) immediately prior to and after giving effect to the proposed Acquisition
there shall not exist a Default or Event of Default and (b) immediately after
giving effect to the proposed transaction the Unused Portion shall be no less
than $7,000,000, the Borrower or any Subsidiary of the Borrower may make
Acquisitions so long as (i) if the Acquisition relates to a publicly-traded
company, such Acquisition shall not be opposed
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by a majority of the board of the directors of the Person being acquired, (ii)
the Lenders shall have received written notice at least 10 Business Days prior
to the date of such Acquisition, (iii) the Administrative Agent shall have
received at least 5 Business Days prior to the date of such Acquisition a
Compliance Certificate setting forth the covenant calculations both immediately
prior to and after giving effect to the proposed Acquisition (taking into
account Adjusted EBITDA and capital expenditures attributable to the assets
being acquired for the four fiscal quarters preceding such Acquisition and the
pro forma debt and interest expense incurred to complete such Acquisition), (iv)
the assets, property or business acquired shall be in the business described in
Section 4.1(d) hereof and the Administrative Agent for the benefit of the
Lenders shall have a first priority Lien in substantially all of such assets
(or, if less than substantially all of such assets are to be pledged, such
assets required by the Determining Lenders to be pledged), except for Permitted
Liens, (v) if such Acquisition results in a Domestic Subsidiary, (A) such
Subsidiary shall execute a Subsidiary Guaranty and Collateral Documents granting
a first priority Lien in substantially all of such assets (or, if less than
substantially all of such assets are to be pledged, all assets required by the
Determining Lenders to be pledged), except for Permitted Liens to secure the
Obligations, (B) 100% of such Subsidiary's Capital Stock shall be pledged to
secure the Obligations and (C) the Administrative Agent on behalf of the Lenders
shall have received such board resolutions, officer's certificates and opinions
of counsel as the Administrative Agent shall reasonably request in connection
with the actions described in clauses (A) and (B) above, (vi) if such
Acquisition results in a Foreign Subsidiary, (A) 65% of such Subsidiary's
Capital Stock shall be pledged to secure the Obligations and (B) the
Administrative Agent on behalf of the Lenders shall have received such board
resolutions, officer's certificates and opinions of counsel as the
Administrative Agent shall reasonably request in connection with clause (A)
immediately preceding, and (vii) the Acquisition Consideration for such
Acquisition does not exceed $25,000,000.
Section 7.7 Capital Expenditures. The Borrower shall not, and shall
not permit any of its Subsidiaries to, make or commit to make any Capital
Expenditures after the Agreement Date in an aggregate amount in excess of an
amount equal to the sum of (a) $2,000,000 plus (b) 5% of cumulative consolidated
net revenues of the Borrower and its Subsidiaries from and after the Agreement
Date.
Section 7.8 Restricted Payments. The Borrower shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly declare, pay or
make any Restricted Payments except (a) Dividends payable by a Subsidiary to the
Borrower, (b) purchases, redemptions, retirements or acquisitions of shares of
Capital Stock of the Borrower, or options or warrants to purchase shares of such
Capital Stock, (i) held by officers, directors or employees of the Borrower or
any of its Subsidiaries pursuant to a compensation plan or arrangement in
connection with the death, disability or termination of employment of any such
officer, director or employee or (ii) otherwise, in all such cases taken as a
whole for aggregate cash payments from and including the Agreement Date not in
excess of 10% of Net Worth at the time any such purchase, redemption, retirement
or acquisition is made, (c) payments of regularly scheduled interest on
Subordinated Debt, (d) reasonable executive compensation and related benefits to
▇▇▇ ▇. ▇▇▇▇▇▇▇ consistent with customary business practices and (e) payments
pursuant to the ▇▇▇▇ Stock Agreement; provided, however, the Borrower shall not
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pay or make any Restricted Payments permitted by this Section 7.8 unless there
shall exist no Default or Event of Default prior to or after giving effect to
any such proposed Restricted Payment.
Section 7.9 Affiliate Transactions. The Borrower shall not, and
shall not permit any of its Subsidiaries to, at any time engage in any
transaction with an Affiliate (other than the Borrower or any of its Domestic
Subsidiaries) on terms materially less advantageous to the Borrower or such
Subsidiary than would be the case if such transaction had been effected with a
non-Affiliate. The Borrower shall not, and shall not permit any of its
Subsidiaries to, in any event incur or suffer to exist any Indebtedness or
Guaranty in favor of any Affiliate, unless such Affiliate shall subordinate the
payment and performance thereof to the Obligations on terms, conditions and
documentation reasonably satisfactory to the Determining Lenders.
Section 7.10 Compliance with ERISA. The Borrower shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, or permit
any member of its Controlled Group to directly or indirectly, (a) terminate any
Plan so as likely to result in liability to the Borrower or any member of its
Controlled Group taken as a whole which could reasonably be expected to have a
Material Adverse Effect, (b) permit to exist any ERISA Event, or any other event
or condition with respect to a Plan which could reasonably be expected to have a
Material Adverse Effect, (c) make a complete or partial withdrawal (within the
meaning of Section 4201 of ERISA) from any Multiemployer Plan which could
reasonably be expected to have a Material Adverse Effect on the Borrower or any
member of its Controlled Group taken as a whole, or (d) enter into any new Plan
or modify any existing Plan so as to increase its obligations thereunder which
could reasonably be expected to have a Material Adverse Effect.
Section 7.11 Maximum Leverage Ratio. At the end of each fiscal
quarter occurring during the periods indicated below, the Borrower shall not
permit the Leverage Ratio to be greater than the ratio set forth below opposite
the period in which such fiscal quarter occurs:
Period Ratio
------ -----
From and including the Agreement Date to and including June 30, 4.75 to 1
1999
From and including July 1, 1999 to but not including December 31, 4.25 to 1
1999
From and including December 31, 1999 to but not including June 30, 3.75 to 1
2000
From and including June 30, 2000 to but not including December 31, 3.25 to 1
2000
From and including December 31, 2000 and thereafter 3.00 to 1
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Section 7.12 Minimum Fixed Charge Coverage Ratio. At the end of each
fiscal quarter occurring during this Agreement commencing with September 30,
1998, the Borrower shall not permit the Fixed Charge Coverage Ratio to be less
than 1.15 to 1.
Section 7.13 Minimum Net Worth. The Borrower shall not permit Net
Worth to be less than the sum of (a) $20,000,000, plus (b) 75% of cumulative Net
Income for the period from, but not including the Agreement Date through the
date of calculation (but excluding from the calculation of such cumulative Net
Income the effect, if any, of any fiscal quarter (or portion of a fiscal quarter
not then ended) of the Borrower for which Net Income was a negative number);
plus (c) an amount equal to 100% of the net worth of any Person that becomes a
Subsidiary of the Borrower or substantially all of the net assets of which are
acquired by the Borrower or any of its Subsidiaries to the extent that the
purchase price paid therefor is paid in Capital Stock of the Borrower, plus (d),
without duplication, 100% of the Net Cash Proceeds of any offerings of Capital
Stock of the Borrower.
Section 7.14 Sale or Discount of Receivables. The Borrower shall
not, and shall not permit any of this Subsidiaries to, directly or indirectly,
sell, with or without recourse, for discount or otherwise, any notes or accounts
receivable other than in the ordinary course of business consistent with such
practices of the Borrower prior to the Agreement Date.
Section 7.15 Business. Neither the Borrower nor any of its
Subsidiaries shall conduct any business other than the business described in
Section 4.1(d) hereof.
Section 7.16 Sale and Leaseback. The Borrower shall not, and shall
not permit any of its Subsidiaries to, enter into any arrangement whereby it
sells or transfers any of its assets, and thereafter rents or leases such asset,
other than sale-leasebacks during any fiscal year of the Borrower that do not
involve property having a fair market value in excess of $1,000,000 in the
aggregate.
Section 7.17 Amendment of Organizational Documents. The Borrower
shall not, and shall not permit any of its Subsidiaries to, amend its articles
of incorporation, bylaws or other applicable organizational documents in any
manner that could reasonably be expected to (a) result in a Material Adverse
Effect or (b) materially impair or materially adversely affect the Rights of the
Administrative Agent or any Lender under any Loan Documents or in respect of any
Collateral.
Section 7.18 Amendments and Waivers of Subordinated Debt. The
Borrower shall not, and shall not permit any of its Subsidiaries to, change or
amend (or take any action or fail to take any action the result of which is an
effective amendment or change) or accept any waiver or consent with respect to,
any document, instrument or agreement relating to any Subordinated Debt that
would result in (a) an increase in the principal, interest, overdue interest,
premium, penalty, fees or other amounts payable under any Subordinated Debt (not
including any increase of the Senior Subordinated Notes up to an amount of
$25,000,000, provided that the aggregate principal amount of the Senior
Subordinated Notes does not exceed $125,000,000, (b) an acceleration in any date
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fixed for payment or prepayment of principal, interest, fees or other amounts
payable under any Subordinated Debt (including, without limitation, as a result
of any redemption), (c) a reduction in any percentage of holders of any
Subordinated Debt required under the terms of any Subordinated Debt to take (or
refrain from taking) any action under any Subordinated Debt, (d) a change in any
covenant under any Subordinated Debt making such covenant more restrictive, (e)
a change in any default or event of default (however designated) under any
Subordinated Debt which makes such default or event of default more restrictive,
(f) a change in the definition of "Change of Control" or "Change in Control" or
similar event or circumstance, however defined or designated, as provided in any
Subordinated Debt which would result in such definition being more restrictive
than such definition in this Agreement, (g) a change in any of the subordination
provisions of any Subordinated Debt, (h) a change in any covenant, term or
provision in any Subordinated Debt which would result in such term or provision
being more restrictive than the terms of this Agreement and the other Loan
Documents or (i) a change in any term or provision of any Subordinated Debt that
could have, in any material respect, an adverse effect on the interest of the
Lenders.
Section 7.19 Indirect Foreign Subsidiaries. The Borrower shall not,
and shall not permit any of its Subsidiaries to, create or acquire any indirect
Foreign Subsidiaries.
Section 7.20 Designated Senior Debt. The Borrower shall not
designate any Indebtedness other than the Obligations as "Designated Senior
Debt" in connection with the Senior Subordinated Notes.
ARTICLE 8
Default
Section 8.1 Events of Default. Each of the following shall
constitute an Event of Default, whatever the reason for such event, and whether
voluntary, involuntary, or effected by operation of Law or pursuant to any
judgment or any Law of any Tribunal or any non-governmental body:
(a) Any representation or warranty made under any Loan Document
shall prove to have been incorrect or misleading in any material respect when
made;
(b) The Borrower shall fail to pay any (i) principal under any Note
when due; or (ii) interest under any Note or any fees payable hereunder or any
other costs, fees, expenses or other amounts payable hereunder or under any
other Loan Document within three Business Days after the date due;
(c) The Borrower or any of its Subsidiaries shall default in the
performance or observance of any agreement or covenant contained Section 5.1(a)
hereof or in Article 7 hereof;
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(d) The Borrower or any of its Subsidiaries shall default in the
performance or observance of any other agreement or covenant contained in this
Agreement not specifically referred to elsewhere in this Section 8.1, and such
default shall not be cured within a period of thirty days after the earlier of
notice from the Administrative Agent thereof or actual notice thereof by a
Responsible Officer of the Borrower or any such Subsidiary;
(e) The Borrower or any of its Subsidiaries shall default in the
performance or observance of any agreement or covenant in any of the Loan
Documents (other than this Agreement) and such default shall not be cured within
a period of thirty days after the earlier of notice from the Administrative
Agent thereof or actual notice thereof by a Responsible Officer of the Borrower
or any such Subsidiary;
(f) There shall be commenced an involuntary proceeding or an
involuntary petition shall be filed in a court having competent jurisdiction
seeking (i) relief in respect of the Borrower or any of its Subsidiaries, or a
substantial part of the property or the assets of the Borrower or any of its
Subsidiaries, under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other applicable Federal, state or foreign bankruptcy
law or other similar law, (ii) the appointment of a receiver, liquidator,
assignee, trustee, custodian, sequestrator or similar official of the Borrower
or any of its Subsidiaries, or of any substantial part of their respective
properties, or (iii) the winding-up or liquidation of the affairs of the
Borrower or any of its Subsidiaries, and any such proceeding or petition shall
continue unstayed and in effect for a period of sixty consecutive days;
(g) The Borrower or any of its Subsidiaries shall (i) file a
petition, answer or consent seeking relief under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other applicable Federal,
state or foreign bankruptcy law or other similar law, (ii) consent to the
institution of proceedings thereunder or to the filing of any such petition or
to the appointment or taking of possession of a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Borrower or
any of its Subsidiaries or of substantially all of its properties, (iii) file an
answer admitting the material allegations filed against it in any such
proceeding, (iv) make a general assignment for the benefit of creditors, (v)
become unable, admit in writing its inability, or fail generally, to pay its
debts as they become due, or (vi) the Borrower or any of its Subsidiaries shall
take any corporate or other action in furtherance of any such action;
(h) A final judgment or judgments shall be entered by any court
against the Borrower or any of its Subsidiaries for the payment of money which
exceeds $500,000 in the aggregate, or a warrant of attachment or execution or
similar process shall be issued or levied against property of the Borrower or
any of its Subsidiaries which, together with all other such property of the
Borrower and its Subsidiaries subject to other such process, exceeds in value
$500,000 in the aggregate, and if such judgment or award is not insured or,
within 30 days after the entry, issue or levy thereof, such judgment, warrant or
process shall not have been paid or discharged or stayed pending appeal, or if,
after the expiration of any such stay, such judgment, warrant or process shall
not have been paid or discharged;
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84
(i) With respect to any Plan of the Borrower or any member of its
Controlled Group: (i) the Borrower, any such member, or any other
party-in-interest or disqualified person (other than any Lender) shall engage in
transactions which in the aggregate would reasonably be expected to result in a
direct or indirect liability to the Borrower or any member of its Controlled
Group under Section 409 or 502 of ERISA or Section 4975 of the Code; (ii) the
Borrower or any member of its Controlled Group shall incur any accumulated
funding deficiency, as defined in Section 412 of the Code, or request a funding
waiver from the Internal Revenue Service for contributions; (iii) the Borrower
or any member of its Controlled Group shall incur any withdrawal liability as a
result of a complete or partial withdrawal within the meaning of Section 4203 or
4205 of ERISA, or any other liability with respect to a Plan, unless the amount
of such liability has been funded within the Plan or pursuant to one or more
insurance contracts; (iv) the Borrower or any member of its Controlled Group
shall fail to make a required contribution by the due date under Section 412 of
the Code or Section 302 of ERISA which would result in the imposition of a lien
under Section 412 of the Code or Section 302 of ERISA; (v) the Borrower, any
member of its Controlled Group or any Plan sponsor shall notify the PBGC of an
intent to terminate, or the PBGC shall institute proceedings to terminate, or
the PBGC shall institute proceedings to terminate, any Plan subject to Title IV
of ERISA; (vi) a Reportable Event shall occur with respect to a Plan subject to
Title IV of ERISA, and within 15 days after the reporting of such Reportable
Event to the Administrative Agent, the Administrative Agent shall have notified
the Borrower in writing that the Determining Lenders have made a determination
that, on the basis of such Reportable Event, there are reasonable grounds for
the termination of such Plan by the PBGC or for the appointment by the
appropriate United States District Court of a trustee to administer such Plan
and as a result thereof an Event of Default shall have occurred hereunder; (vii)
a trustee shall be appointed by a court of competent jurisdiction to administer
any Plan or the assets thereof; or (viii) any ERISA Event with respect to a Plan
subject to Title IV of ERISA shall have occurred, and 30 days thereafter (A)
such ERISA Event, other than such event described in clause (f) of the
definition of ERISA Event herein, (if correctable) shall not have been corrected
and (B) the then present value of such Plan's benefit liabilities, as defined in
Title IV of ERISA, shall exceed the then current value of assets accumulated in
such Plan; provided, however, that the events listed in subsections (i) - (viii)
above shall constitute Events of Default only if the maximum aggregate liability
which the Borrower or any member of its Controlled Group has a reasonable
likelihood of incurring under the applicable provisions of ERISA resulting from
an event or events exceeds $500,000;
(j) The Borrower or any of its Subsidiaries shall default in any
payment in respect of Indebtedness beyond any grace period provided with respect
thereto, or shall default in the performance of any agreement or instrument
under which such Indebtedness is created or evidenced beyond any applicable
grace period, or any other event or condition shall occur in respect of such
Indebtedness, if the effect of such default, event or condition is to permit or
cause the holder of such Indebtedness (or a trustee on behalf of any such
holder) to cause such Indebtedness to become due, repurchased or redeemed prior
to its date of maturity, provided that (i) a default, event or condition of the
type described above in this Section 8.1(j) shall not constitute an Event of
Default under this Agreement unless, at such time, one or more defaults, events
or conditions of the type described
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above in this Section 8.1(j) shall have occurred and be continuing with respect
to Indebtedness the outstanding amount of which exceeds in the aggregate
$1,000,000 and (ii) a default in any payment due under the ▇▇▇▇ Stock Agreement
shall not constitute an Event of Default under this Agreement so long as the
Borrower in good faith asserts an offset or a claim for damages as a defense to
such payment default;
(k) Any provision of any Loan Document shall for any reason cease to
be valid and binding on or enforceable against any party to it (other than the
Administrative Agent or any Lender) other than in accordance with its terms, or
any such party (other than the Administrative Agent or any Lender) shall so
assert in writing;
(l) Any Collateral Document shall for any reason cease to create a
valid and perfected first priority Lien in any Collateral subject thereto, other
than as (i) expressly provided or permitted in such Collateral Document or in
this Agreement or (ii) as a result of the negligence of the Administrative
Agent, the Documentation Agent, any Lender or any of their respective agents or
representatives; or
(m) A Change of Control shall occur.
Section 8.2 Remedies. If an Event of Default shall have occurred and
shall be continuing:
(a) With the exception of an Event of Default specified in Section
8.1(f) or (g) hereof, the Administrative Agent may at its election (provided
that the Administrative Agent has not previously received notice to the contrary
from the Determining Lenders), and shall upon the direction of the Determining
Lenders, terminate the Commitments and/or declare the principal of and interest
on the Advances and all Obligations and other amounts owed under the Loan
Documents to be forthwith due and payable without presentment, demand, protest
or notice of any kind, all of which are hereby expressly waived, except for
notices expressly set forth in the Loan Documents.
(b) Upon the occurrence of an Event of Default specified in Section
8.1(f) or (g) hereof, such principal, interest and other amounts shall thereupon
and concurrently therewith become due and payable and the Commitments shall
forthwith terminate, all without any action by the Administrative Agent, any
Lender or any holders of the Notes and without presentment, demand, protest or
other notice of any kind, all of which are expressly waived, anything in the
Loan Documents to the contrary notwithstanding.
(c) If any Letter of Credit shall be then outstanding, the
Administrative Agent may at its election, and shall upon the direction of the
Determining Lenders shall, demand upon the Borrower to, and forthwith upon such
demand (but in the case of an Event of Default specified in Section 8.1(f) or
(g) hereof, without any demand or taking of any other action by the
Administrative Agent or any Lender), the Borrower shall, pay to the
Administrative Agent in same day funds at the office of the Administrative Agent
for deposit in the L/C Cash Collateral Account, an amount equal to the maximum
amount available to be drawn under the Letters of Credit then outstanding.
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(d) The Administrative Agent and the Lenders may exercise all of the
Rights granted to them under the Loan Documents or under Applicable Law.
(e) The Rights of the Administrative Agent and the Lenders hereunder
shall be cumulative, and not exclusive.
ARTICLE 9
Changes in Circumstances
Section 9.1 LIBOR Basis Determination Inadequate. If with respect to
any proposed LIBOR Advance for any Interest Period, (i) any Lender reasonably
determines that deposits in dollars (in the applicable amount) are not being
offered to that Lender in the relevant market for such Interest Period or (ii)
any Lender reasonably determines that the LIBOR Rate for such proposed LIBOR
Advance does not adequately cover the cost to such Lender of making and
maintaining such proposed LIBOR Advance for such Interest Period, such Lender
shall forthwith give notice thereof to the Borrower, whereupon until such Lender
notifies the Borrower that the circumstances giving rise to such situation no
longer exist, the obligation of such Lender to make LIBOR Advances shall be
suspended; provided, however, such Lender shall promptly notify the Borrower if
the circumstances giving rise to such situation no longer exist.
Section 9.2 Illegality. If after the Agreement Date any change in
applicable law, rule or regulation, or adoption thereof, or any change in any
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or its 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 make it unlawful or
impossible for such Lender (or its LIBOR Lending Office) to make, maintain or
fund its LIBOR Advances, such Lender shall so notify the Borrower and the
Administrative Agent. Before giving any notice to the Borrower pursuant to this
Section, the notifying Lender shall designate a different LIBOR Lending Office
or other lending office if such designation will avoid the need for giving such
notice and will not, in the reasonable judgment of the Lender, be materially
disadvantageous to the Lender. Upon receipt of such notice, notwithstanding
anything contained in Article 2 hereof, the Borrower shall repay in full the
then outstanding principal amount of each LIBOR Advance owing to the notifying
Lender, together with accrued interest thereon and any reimbursement required
under Section 2.9 hereof, on either (a) the last day of the Interest Period
applicable to such Advance, if the Lender may lawfully continue to maintain and
fund such Advance to such day, or (b) immediately, if the Lender may not
lawfully continue to fund and maintain such Advance to such day or if the
Borrower so elects. Concurrently with repaying each affected LIBOR Advance owing
to such Lender if the Borrower does not terminate this Agreement,
notwithstanding anything contained in Article 2 hereof, the Borrower may,
without any requirement to satisfy the conditions precedent set forth in Section
3.1, 3.2 or 3.3
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hereof, borrow a Base Rate Advance from such Lender, and such Lender shall make
such Base Rate Advance, in an amount such that the outstanding principal amount
of the Advances owing to such Lender shall equal the outstanding principal
amount of the Advances owing immediately prior to such repayment.
Section 9.3 Increased Costs.
(a) If after the Agreement Date any change in or adoption of any
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 Lender
(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 compatible
agency:
(i) shall subject a Lender (or its LIBOR Lending Office) to any
Tax (net of any tax benefit engendered thereby) with respect to its
LIBOR Advances or its obligation to make such Advances, or shall
change the basis of taxation of payments to a Lender (or to its
LIBOR Lending Office) of the principal of or interest on its LIBOR
Advances or in respect of any other amounts due under this
Agreement, as the case may be, or its obligation to make such
Advances (except for changes in (A) the rate of tax on the overall
net income of the Lender and franchise taxes, doing business taxes
or minimum taxes imposed upon such Lender and (B) withholding taxes
of any Tribunal other than the United States of America or any state
thereof); or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of
Governors of the Federal Reserve System), special deposit or similar
requirement against assets of, deposits with or for the account of,
or credit extended by, a Lender's LIBOR Lending Office or shall
impose on the Lender (or its LIBOR Lending Office) or on the London
interbank market any other condition affecting its LIBOR Advances or
its obligation to make such Advances (but excluding any reserves or
deposits that are included in the calculation of LIBOR Basis);
and the result of any of the foregoing is to increase the cost to a Lender (or
its LIBOR Lending Office) of making or maintaining any LIBOR Advances, or to
reduce the amount of any sum received or receivable by a Lender (or its LIBOR
Lending Office) with respect thereto, by an amount reasonably deemed by a Lender
to be material, then, within 30 days after demand by a Lender, the Borrower
agrees to pay to such Lender such additional amount as will compensate such
Lender for such increased costs or reduced amounts, subject to Section 11.9
hereof. The affected Lender will as soon as practicable notify the Borrower of
any event of which it has knowledge, occurring after the date hereof, which will
entitle such Lender to compensation pursuant to this Section and will designate
a different LIBOR Lending Office or other lending office if such designation
will avoid the need for, or reduce the amount of, such compensation and will
not, in the reasonable judgment of the affected Lender made in good faith, be
disadvantageous to such Lender.
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(b) Any Lender claiming compensation under this Section shall
provide the Borrower with a certificate setting forth the additional amounts to
be paid to it hereunder and shall certify that such amounts or costs were
actually incurred by such Lender and shall show in reasonable detail an
accounting of the amount payable and the calculations used to determine in good
faith such amount which shall be conclusive absent demonstrable error. In
determining such amount, a Lender may use any reasonable averaging and
attribution methods. Nothing in this Section 9.3 shall provide the Borrower or
any Subsidiary of the Borrower the right to inspect the records, files or books
of any Lender. If a Lender demands compensation under this Section, the Borrower
may at any time, upon at least five Business Days' prior notice to the Lender,
after reimbursement to the Lender by the Borrower in accordance with this
Section of all costs incurred, prepay in full the then outstanding LIBOR
Advances of the Lender, together with accrued interest thereon to the date of
prepayment, along with any reimbursement required under Section 2.9 hereof.
Concurrently with prepaying such LIBOR Advances, the Borrower may, without any
requirement to satisfy the conditions precedent set forth in Section 3.1, 3.2 or
3.3 hereof, borrow a Base Rate Advance from the Lender, and the Lender shall
make such Base Rate Advance, in an amount such that the outstanding principal
amount of the Advances owing to such Lender shall equal the outstanding
principal amount of the Advances owing immediately prior to such prepayment.
Section 9.4 Effect On Base Rate Advances. If notice has been given
pursuant to Section 9.1, 9.2 or 9.3 hereof suspending the obligation of a Lender
to make LIBOR Advances, or requiring LIBOR Advances of a Lender to be repaid or
prepaid, then, unless and until the Lender notifies the Borrower that the
circumstances giving rise to such repayment no longer apply, all Advances which
would otherwise be made by such Lender as LIBOR Advances shall be made instead
as Base Rate Advances.
Section 9.5 Capital Adequacy. If (a) the introduction of or any
change in or in the interpretation of any Law after the Agreement Date or (b)
compliance by a Lender with any Law or any guideline or request from any central
bank or other governmental authority (whether or not having the force of law)
adopted or promulgated after the Agreement Date (including any implementation of
the Basle Accord or similar guideline or requirement adopted, promulgated or
becoming effective after the Agreement Date) affects or would affect the amount
of capital required or expected to be maintained by a Lender or any corporation
controlling such Lender, and such Lender determines that the amount of such
capital is increased by or based upon the existence of such Lender's commitment
or Advances hereunder and other commitments or advances of such Lender of this
type, then, within 10 days after demand by such Lender, subject to Section 11.9
hereof, the Borrower shall immediately pay to such Lender, from time to time as
specified by such Lender, additional amounts sufficient to compensate such
Lender with respect to such circumstances, to the extent that such Lender
reasonably determines in good faith such increase in capital to be allocable to
the existence of such Lender's Commitments hereunder. A certificate as to any
additional amounts payable to any Lender under this Section 9.5 shall be
submitted to the Borrower by such Lender and shall certify that such amounts
were actually incurred by such Lender or corporation controlling such Lender and
shall show in reasonable detail an accounting of the amount payable and the
calculations used to determine in good faith such amount and shall be conclusive
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absent demonstrable error. In determining such amount, such Lender or a
corporation controlling such Lender may use any reasonable averaging and
attribution methods. Notwithstanding the foregoing, nothing in this Section 9.5
shall provide the Borrower or any Subsidiary of the Borrower the right to
inspect the records, files or books of any Lender or any corporation controlling
such Lender.
Section 9.6 Replacement Lender. If the Borrower becomes obligated to
pay additional amounts to any Lender described in Section 9.2, 9.3 or 9.5
hereof, the Borrower may designate a financial institution reasonably acceptable
to the Administrative Agent to replace such Lender by purchasing for cash and
receiving an assignment of such Lender's pro rata share of such Lender's
commitment and the Rights of such Lender under the Loan Documents without
recourse to or warranty by, or expense to, such Lender, for a purchase price
equal to the outstanding amounts owing to such Lender (including such additional
amounts owing to such Lender pursuant to Section 9.3 or 9.5 hereof). Upon
execution of an Assignment Agreement, such other financial institution shall be
deemed to be a "Lender" for all purposes of this Agreement as set forth in
Section 11.6 hereof.
ARTICLE 10
Agreement Among Lenders
Section 10.1 Agreement Among Lenders. The Lenders agree among
themselves that:
(a) Administrative Agent. Each Lender hereby appoints the
Administrative Agent as its nominee in its name and on its behalf, to receive
all documents and items to be furnished hereunder; to act as nominee for and on
behalf of all Lenders under the Loan Documents; to, except as otherwise
expressly set forth herein, take such action as may be requested by the
Determining Lenders, provided that, (i) unless and until the Administrative
Agent shall have received such requests, the Administrative Agent may take such
administrative action, or refrain from taking such administrative action, as it
may deem advisable and in the best interests of the Lenders, and (ii) the
Administrative Agent shall not be required to take any action that exposes the
Administrative Agent to personal liability or that is contrary to any Loan
Document or Applicable Law; to arrange the means whereby the proceeds of the
Advances of the Lenders are to be made available to the Borrower; to distribute
promptly to each Lender information, requests and documents received from the
Borrower, and each payment (in like funds received) with respect to any of such
Lender's Advances, or the ratable amount of fees or other amounts; and to
deliver to the Borrower requests, demands, approvals and consents received from
the Lenders. Administrative Agent agrees to promptly distribute to each Lender,
at such Lender's address set forth below information, requests, documents and
payments received from the Borrower. The Administrative Agent shall have no
trustee or other fiduciary relationship in respect of any Lender by reason of
this Agreement or any other Loan Document. The Administrative Agent shall have
no duties or responsibilities except those expressly set forth in this
Agreement. The duties of the Administrative Agent are mechanical and
administrative in nature.
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(b) Replacement of Administrative Agent. Should the Administrative
Agent or any successor Administrative Agent ever cease to be a Lender hereunder,
or should the Administrative Agent or any successor Administrative Agent ever
resign as Administrative Agent, or should the Administrative Agent or any
successor Administrative Agent ever be removed with cause or without cause by
the action of the Determining Lenders (other than the Administrative Agent),
then the Lender appointed by the other Lenders (provided that no Event of
Default has occurred and is continuing, with the consent of the Borrower, which
consent shall not be unreasonably withheld) shall forthwith become the
Administrative Agent, and the Borrower and the Lenders shall execute such
documents as any Lender may reasonably request to reflect such change at no cost
to the Borrower. If the Administrative Agent also then serves in the capacity of
the Issuing Bank, such resignation or removal shall constitute resignation or
removal of the Issuing Bank and the successor Administrative Agent shall serve
in the capacity of the Issuing Bank. Any resignation or removal of the
Administrative Agent or any successor Administrative Agent shall become
effective upon the appointment by the Lenders of a successor Administrative
Agent; provided, however, if no successor Administrative Agent shall have been
so appointed and shall have accepted such appointment within 30 days after the
retiring Administrative Agent's giving of notice of resignation or the Lenders'
removal of the retiring Administrative Agent, then the retiring Administrative
Agent may, on behalf of the Lenders, appoint a successor Administrative Agent,
which shall be a commercial bank organized under the Laws of the United States
of America or of any State thereof and having a combined capital and surplus of
at least $500,000,000. Upon the acceptance of any appointment as the
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations under
the Loan Documents, provided that if the retiring or removed Administrative
Agent is unable to appoint a successor Administrative Agent, the Administrative
Agent shall, after the expiration of a 60 day period from the date of notice, be
relieved of all obligations as Administrative Agent hereunder. Notwithstanding
any Administrative Agent's resignation or removal hereunder, the provisions of
this Article shall continue to inure to its benefit as to any actions taken or
omitted to be taken by it while it was the Administrative Agent under this
Agreement.
(c) Expenses. Each Lender shall pay its pro rata share, based on its
Total Specified Percentage, of any reasonable expenses paid by the
Administrative Agent directly and solely in connection with any of the Loan
Documents if Administrative Agent does not receive reimbursement therefor from
other sources within 60 days after the date incurred. Any amount so paid by the
Lenders to the Administrative Agent shall be returned by the Administrative
Agent pro rata to each paying Lender to the extent later paid by the Borrower or
any other Person on the Borrower's behalf to the Administrative Agent.
(d) Delegation of Duties. The Administrative Agent may execute any
of its duties hereunder by or through officers, directors, employees, attorneys
or agents, and shall be entitled to
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(and shall be protected in relying upon) advice of counsel concerning all
matters pertaining to its duties hereunder.
(e) Reliance by Administrative Agent. The Administrative Agent and
its officers, directors, employees, attorneys and agents shall be entitled to
rely and shall be fully protected in relying on any writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telex or teletype
message, statement, order, or other document or conversation reasonably believed
by it or them in good faith to be genuine and correct and to have been signed or
made by the proper Person and, with respect to legal matters, upon opinions of
counsel selected by the Administrative Agent. The Administrative Agent may, in
its reasonable judgment, deem and treat the payee of any Note as the owner
thereof for all purposes hereof.
(f) Limitation of Administrative Agent's Liability. Neither the
Administrative Agent nor any of its officers, directors, employees, attorneys or
agents shall be liable for any action taken or omitted to be taken by it or them
hereunder in good faith and believed by it or them to be within the discretion
or power conferred to it or them by the Loan Documents or be responsible for the
consequences of any error of judgment, except for its or their own gross
negligence or wilful misconduct. Except as aforesaid, the Administrative Agent
shall be under no duty to enforce any rights with respect to any of the
Advances, or any security therefor. The Administrative Agent shall not be
compelled to do any act hereunder or to take any action towards the execution or
enforcement of the powers hereby created or to prosecute or defend any suit in
respect hereof, unless indemnified to its reasonable satisfaction against loss,
cost, liability and expense. The Administrative Agent shall not be responsible
in any manner to any Lender for the effectiveness, enforceability, genuineness,
validity or due execution of any of the Loan Documents, or for any
representation, warranty, document, certificate, report or statement made herein
or furnished in connection with any Loan Documents, or be under any obligation
to any Lender to ascertain or to inquire as to the performance or observation of
any of the terms, covenants or conditions of any Loan Documents on the part of
the Borrower. TO THE EXTENT NOT REIMBURSED BY THE BORROWER, EACH LENDER HEREBY
SEVERALLY INDEMNIFIES AND HOLDS HARMLESS THE ADMINISTRATIVE AGENT, PRO RATA
ACCORDING TO ITS TOTAL SPECIFIED PERCENTAGE, FROM AND AGAINST ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS,
COSTS, REASONABLE EXPENSES AND/OR DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER
WHICH MAY BE IMPOSED ON, ASSERTED AGAINST, OR INCURRED BY THE ADMINISTRATIVE
AGENT (IN SUCH CAPACITY) IN ANY WAY WITH RESPECT TO ANY LOAN DOCUMENTS OR ANY
ACTION TAKEN OR OMITTED BY THE ADMINISTRATIVE AGENT UNDER THE LOAN DOCUMENTS
(INCLUDING ANY NEGLIGENT ACTION OF THE ADMINISTRATIVE AGENT), EXCEPT TO THE
EXTENT THE SAME ARE FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION TO
RESULT FROM GROSS NEGLIGENCE OR WILFUL MISCONDUCT BY THE ADMINISTRATIVE AGENT.
THE INDEMNITY PROVIDED IN THIS SECTION 10.1(f) SHALL SURVIVE TERMINATION OF THIS
AGREEMENT.
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(g) Liability Among Lenders. No Lender shall incur any liability
(other than the sharing of expenses and other matters specifically set forth
herein and in the other Loan Documents) to any other Lender, except for acts or
omissions in bad faith.
(h) Rights as Lender. With respect to its commitment hereunder, the
Advances made by it and the Notes issued to it, the Administrative Agent shall
have the same rights as a Lender and may exercise the same as though it were not
the Administrative Agent, and the term "Lender" or "Lenders" shall, unless the
context otherwise indicates, include the Administrative Agent in its individual
capacity. The Administrative Agent or any Lender may accept deposits from, act
as trustee under indentures of, and generally engage in any kind of business
with, the Borrower and any of its Affiliates, and any Person who may do business
with or own securities of the Borrower or any of its Affiliates, all as if the
Administrative Agent were not the Administrative Agent hereunder and without any
duty to account therefor to the Lenders.
Section 10.2 Lender Credit Decision. Each Lender acknowledges that
it has, independently and without reliance upon the Administrative Agent or any
other Lender and based upon the financial statements referred to in Sections
4.1(j), 6.1, and 6.2 hereof, and such other documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon the Administrative Agent or any other Lender and based upon such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and the other Loan Documents. Each Lender also acknowledges that its
decision to fund the initial Advances shall constitute evidence to the
Administrative Agent that such Lender has deemed all of the conditions set forth
in Section 3.1 hereof to have been satisfied.
Section 10.3 Benefits of Article. None of the provisions of this
Article shall inure to the benefit of any Person other than Lenders and, with
respect to Section 10.1(b) hereof, the Borrower; consequently, no such other
Person shall be entitled to rely upon, or to raise as a defense, in any manner
whatsoever, the failure of the Administrative Agent or any Lender to comply with
such provisions.
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ARTICLE 11
Miscellaneous
Section 11.1 Notices.
(a) All notices and other communications under this Agreement shall
be in writing (except in those cases where giving notice by telephone is
expressly permitted) and shall be deemed to have been given on the date
personally delivered or sent by telecopy (answerback received), or three days
after deposit in the mail, designated as certified mail, return receipt
requested, postage-prepaid, or one day after being entrusted to a reputable
commercial overnight delivery service, addressed to the party to which such
notice is directed at its address determined as provided in this Section. All
notices and other communications under this Agreement shall be given to the
parties hereto at the following addresses:
(i) If to the Borrower, at:
Styling Technology Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
with a copy to:
▇'▇▇▇▇▇▇, Cavanagh, Anderson, ▇▇▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
(ii) If to the Administrative Agent, at:
NationsBank, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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with a copy to:
NationsBank, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
(iii) If to a Lender, at its address shown below its name on the
signature pages hereof, or if applicable, set forth in its
Assignment Agreement.
(b) Any party hereto may change the address to which notices shall
be directed by giving 10 days' written notice of such change to the other
parties.
Section 11.2 Expenses. The Borrower shall promptly pay:
(a) all reasonable out-of-pocket expenses of the Administrative
Agent in connection with the preparation, negotiation, execution and delivery of
this Agreement and the other Loan Documents, the transactions contemplated
hereunder and thereunder, and the making of Advances hereunder, including
without limitation the reasonable fees and disbursements of Special Counsel;
(b) all reasonable out-of-pocket expenses, including reasonable
attorneys' fees, of the Administrative Agent in connection with the transactions
contemplated in this Agreement and the other Loan Documents and the preparation,
negotiation, execution and delivery of any waiver, amendment or consent by the
Administrative Agent relating to this Agreement or the other Loan Documents; and
(c) all reasonable out-of-pocket costs, expenses and attorneys' fees
of the Administrative Agent and each Lender incurred for enforcement,
collection, restructuring, refinancing and "workout", or otherwise incurred in
obtaining performance under the Loan Documents, which in each case shall include
without limitation reasonable fees and expenses of consultants, counsel for the
Administrative Agent and any Lender.
Section 11.3 Waivers. The rights and remedies of the Lenders under
this Agreement and the other Loan Documents shall be cumulative and not
exclusive of any rights or remedies which they would otherwise have. No failure
or delay by the Administrative Agent or any Lender in exercising any right shall
operate as a waiver of such right. The Lenders expressly reserve the right to
require strict compliance with the terms of this Agreement in connection with
any funding of a request for an Advance or issuance of a Letter of Credit. In
the event that any Lender decides to fund an Advance or the Issuing Bank decides
to issue a Letter of Credit at a time when the Borrower is not in strict
compliance with the terms of this Agreement, such decision by such Lender or the
Issuing Bank, as the case may be, shall not be deemed to constitute an
undertaking by the Lender
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or the Issuing Bank, as the case may be, to fund any further requests for
Advances or Letters of Credit or preclude the Lenders or the Issuing Bank, as
the case may be, from exercising any rights available under the Loan Documents
or at law or equity. Any waiver or indulgence granted by the Lenders or the
Issuing Bank shall not constitute a modification of this Agreement, except to
the extent expressly provided in such waiver or indulgence, or constitute a
course of dealing by the Lenders or the Issuing Bank at variance with the terms
of the Agreement such as to require further notice by the Lenders or the Issuing
Bank of the Lenders' or Issuing Bank's intent to require strict adherence to the
terms of the Agreement in the future. Any such actions shall not in any way
affect the ability of the Administrative Agent, the Lenders or the Issuing Bank,
in their discretion, to exercise any rights available to them under this
Agreement or under any other agreement, whether or not the Administrative Agent,
any of the Lenders or the Issuing Bank are a party thereto, relating to the
Borrower.
Section 11.4 Calculation by the Lenders Conclusive and Binding. Any
mathematical calculation required or expressly permitted to be made by the
Administrative Agent or any Lender under this Agreement or any other Loan
Document shall be controlling, absent demonstrable error.
Section 11.5 Set-Off. In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
upon the occurrence and during the continuation of an Event of Default, each
Lender and any subsequent holder of any Note, and any assignee of any Note is
hereby authorized by the Borrower at any time or from time to time, without
notice to the Borrower or any other Person, any such notice being hereby
expressly waived, to set-off, appropriate and apply any deposits (general or
special (except trust and escrow accounts), time or demand, including without
limitation Indebtedness evidenced by certificates of deposit, in each case
whether matured or unmatured) and any other Indebtedness at any time held or
owing by such Lender or holder to or for the credit or the account of the
Borrower, against and on account of the Obligations and other liabilities of the
Borrower to such Lender or holder, irrespective of whether or not (a) the Lender
or holder shall have made any demand hereunder, or (b) the Lender or holder
shall have declared the principal of and interest on the Advances and other
amounts due hereunder to be due and payable as permitted by Section 8.2 hereof.
Any sums obtained by any Lender or by any assignee or subsequent holder of any
Note shall be subject to pro rata treatment of all Obligations and other
liabilities hereunder in accordance with each Lender's Total Specified
Percentage.
Section 11.6 Assignment.
(a) The Borrower may not assign or transfer any of its rights or
obligations hereunder or under the other Loan Documents without the prior
written consent of the Lenders.
(b) No Lender shall be entitled to assign or grant a participation
in its interest in this Agreement, its Notes or its Advances, except as
hereinafter set forth.
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(c) Each Lender may sell participations to one or more banks or
other entities (the "Participants") in or to all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of the Advances or Reimbursement Obligations owing to it and the Note or
Notes held by it) (the "Participations"); provided, however, that (i) such
Lender's obligations under this Agreement (including, without limitation, its
Specified Percentage of the Commitments) shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) such Lender shall remain the holder of
any such Note for all purposes of this Agreement, (iv) the Borrower, the
Administrative Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, and (v) no Participant under any such
Participation shall have any right to approve any amendment or waiver of any
provision of any Loan Document, or any consent to any departure by the Borrower
therefrom, except to the extent that such amendment, waiver or consent would (A)
reduce or postpone any date fixed for payment of principal of, or interest on,
the Notes or any fees or other amounts payable hereunder (excluding any
mandatory prepayment pursuant to Section 2.5(c), (d) and (e) hereof), (B)
increase the commitment of any Participant or (C) release any Collateral or
security for the Obligations, except pursuant to the Loan Documents, in each
case to the extent subject to such Participation. Notwithstanding the foregoing,
the Borrower agrees that Participants shall be entitled to the benefits of
Article 9 hereof as though they were Lenders and the Lenders may, subject to
Section 11.14 hereof, provide copies of all financial information received from
the Borrower to such Participants.
(d) Each Lender may assign to one or more Eligible Assignees its
rights and obligations under this Agreement and the other Loan Documents;
provided, however, that (i) each such assignment shall be subject to the prior
written consent of the Administrative Agent and Borrower, which consents shall
not be unreasonably withheld (provided, however, notwithstanding anything herein
to the contrary, no consent of the Borrower is required for any assignment (A)
during any time that an Event of Default has occurred and is continuing, (B) to
an Affiliate of a Lender, (C) to an existing Lender hereunder or (D) to a
Related Fund), (ii) no such assignment shall be in an amount of Commitments or
Advances less than $5,000,000, unless the portion of the Commitments of a Lender
are less than $5,000,000, in which case such assignment may be in the aggregate
amount of such Lender's portion of the Commitments or Advances, (iii) the
applicable Lender, Administrative Agent and Eligible Assignee shall execute and
deliver to the Administrative Agent an Assignment and Acceptance Agreement (an
"Assignment Agreement") in substantially the form of Exhibit E hereto, together
with the Notes subject to such assignment and (iv) the Eligible Assignee
executing the Assignment, shall deliver to the Administrative Agent a processing
fee of $3,500. Upon such execution, delivery and acceptance from and after the
effective date specified in each Assignment, which effective date shall be at
least three Business Days after the execution thereof, (A) the Eligible Assignee
thereunder shall be party hereto and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment, have the rights
and obligations of a Lender hereunder and (B) the applicable Lender shall, to
the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment, relinquish such rights and be released from such
obligations under this Agreement.
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(e) Notwithstanding anything in clause (d) above to the contrary,
(i) any Lender may assign and pledge all or any portion of its Advances and
Notes to any Federal Reserve Bank as collateral security pursuant to Regulation
A of F.R.S. Board and any Operating Circular issued by such Federal Reserve Bank
and (ii) any Lender that is a fund may at any time assign or pledge all or any
portion of its rights under this Agreement to secure such Lender's indebtedness;
provided, however, that no such assignment under this clause (e) shall release
the assignor Lender from its obligations hereunder.
(f) Upon its receipt of an Assignment Agreement executed by a Lender
and an Eligible Assignee, and any Note or Notes subject to such assignment, the
Borrower shall, subject to the Borrower's rights under Section 11.6(d) hereof,
within five Business Days after its receipt of such Assignment Agreement execute
and deliver to the Administrative Agent in exchange for the surrendered Notes
new Notes to the order of such Eligible Assignee in an amount equal to the
portion of the Advances and Commitments assigned to it pursuant to such
Assignment Agreement and new Notes to the order of the assignor Lender in an
amount equal to the portion of the Advances and Commitments retained by it
hereunder. Such new Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Notes, shall be dated the
effective date of such Assignment Agreement and shall otherwise be in
substantially the form of Exhibit A or B hereto, as applicable.
(g) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
11.6, disclose to the Eligible Assignee or Participant or proposed Eligible
Assignee or participant, any information relating to the Borrower furnished to
such Lender by or on behalf of the Borrower, provided such Person agrees in
writing to handle such information in accordance with the standards set forth in
Section 11.14 hereof.
(h) Except as specifically set forth in this Section 11.6, nothing
in this Agreement or any other Loan Documents, expressed or implied, is intended
to or shall confer on any Person other than the respective parties hereto and
thereto and their successors and assignees permitted hereunder and thereunder
any benefit or any legal or equitable right, remedy or other claim under this
Agreement or any other Loan Documents.
(i) Notwithstanding anything in this Section 11.6 to the contrary,
no Eligible Assignee or Participant (nor the assigning or participating Lender)
shall be entitled to receive (whether individually or collectively) any greater
payment under Section 2.14 hereof or Section 9.3 or Section 9.5 hereof than such
assigning or participating Lender would have been entitled to receive with
respect to the interest assigned or participated to such Eligible Assignee or
Participant.
Section 11.7 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
such separate counterparts shall together constitute but one and the same
instrument.
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Section 11.8 Severability. Any provision of this Agreement or any
other Loan Document which is for any reason prohibited or found or held invalid
or unenforceable by any court or governmental agency shall be ineffective to the
extent of such prohibition or invalidity or unenforceability without
invalidating the remaining provisions hereof or thereof in such jurisdiction or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 11.9 Interest and Charges. It is not the intention of any
parties to this Agreement to make an agreement in violation of the laws of any
applicable jurisdiction relating to usury. Regardless of any provision in any
Loan Documents, no Lender shall ever be entitled to receive, collect or apply,
as interest on the Obligations, any amount in excess of the Highest Lawful
Amount. If any Lender or participant ever receives, collects or applies, as
interest, any such excess, such amount which would be excessive interest shall
be deemed a partial repayment of principal and treated hereunder as such; and if
principal is paid in full, any remaining excess shall be paid to the Borrower.
In determining whether or not the interest paid or payable, under any specific
contingency, exceeds the Highest Lawful Rate, the Borrower and the Lenders
shall, to the maximum extent permitted under Applicable Law, (a) characterize
any nonprincipal payment as an expense, fee or premium rather than as interest,
(b) exclude voluntary prepayments and the effect thereof, and (c) amortize,
prorate, allocate and spread in equal parts, the total amount of interest
throughout the entire contemplated term of the Obligations so that the interest
rate is uniform throughout the entire term of the Obligations; provided,
however, that if the Obligations are paid and performed in full prior to the end
of the full contemplated term thereof, and if the interest received for the
actual period of existence thereof exceeds the Highest Lawful Rate, the Lenders
shall refund to the Borrower the amount of such excess or credit the amount of
such excess against the total principal amount of the Obligations owing, and, in
such event, the Lenders shall not be subject to any penalties provided by any
laws for contracting for, charging or receiving interest in excess of the
Highest Lawful Rate. This Section shall control every other provision of all
agreements pertaining to the transactions contemplated by or contained in the
Loan Documents.
Section 11.10 Headings. Headings used in this Agreement are for
convenience only and shall not be used in connection with the interpretation of
any provision hereof.
Section 11.11 Amendment and Waiver. The provisions of this Agreement
may not be amended, modified or waived except by the written agreement of the
Borrower and the Determining Lenders; provided, however, that no such amendment,
modification or waiver shall be made (a) without the consent of all Lenders, if
it would (i) increase the Applicable Specified Percentage or commitment of any
Lender, (ii) extend or postpone the date of maturity of, extend the due date for
any payment of principal or interest on, reduce the amount of any installment of
principal or interest on, or reduce the rate of interest on, any Advance, the
Reimbursement Obligations or other amount owing under any Loan Documents to
which such Lender is entitled, (iii) release any guaranty of the Obligations or
all or substantially all of the Collateral (except, in any case, pursuant to
this Agreement or the other Loan Documents), (iv) reduce the fees payable
hereunder to which such Lender is entitled, (v) revise this Section 11.11, (vi)
waive the date for payment of any principal, interest or fees hereunder, (vii)
amend the definition of "Determining Lenders", "Total
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Specified Percentage", "Revolving Credit Specified Percentage" or "Term Loan
Specified Percentage", or (viii) revise, or waive any mandatory prepayment
pursuant to, Section 2.5(c), (d) or (e) hereof; (b) without the consent of the
Administrative Agent, if it, would alter the rights, duties or obligations of
the Administrative Agent; or (c) without the consent of the Issuing Bank, if it
would alter the rights, duties or obligations of the Issuing Bank. Neither this
Agreement nor any term hereof may be amended orally, nor may any provision
hereof be waived orally but only by an instrument in writing signed by the
Administrative Agent and, in the case of an amendment, by the Borrower.
Section 11.12 Exception to Covenants. Neither the Borrower nor any
of its Subsidiaries of the Borrower shall be deemed to be permitted to take any
action or fail to take any action which is permitted as an exception to any of
the covenants contained herein or which is within the permissible limits of any
of the covenants contained herein if such action or omission would result in the
breach of any other covenant contained herein.
Section 11.13 No Liability of Issuing Bank. The Borrower assumes all
risks of the acts or omissions of any beneficiary or transferee of any Letter of
Credit with respect to its use of such Letter of Credit. Neither the Issuing
Bank nor any Lender nor any of their respective officers or directors shall be
liable or responsible for: (a) the use that may be made of any Letter of Credit
or any acts or omissions of any beneficiary or transferee in connection
therewith; (b) the validity, sufficiency or genuineness of documents, or of any
endorsement thereon, even if such documents should prove to be in any or all
respects invalid, insufficient, fraudulent or forged; (c) payment by the Issuing
Bank against presentation of documents that do not comply with the terms of a
Letter of Credit, including failure of any documents to bear any reference or
adequate reference to the Letter of Credit; or (d) any other circumstances
whatsoever in making or failing to make payment under any Letter of Credit,
except that the Borrower shall have a claim against the Issuing Bank, and the
Issuing Bank shall be liable to the Borrower, to the extent of any direct, but
not consequential, damages suffered by the Borrower that a court of competent
jurisdiction finally judicially determines were caused by (i) the Issuing Bank's
wilful misconduct or gross negligence or (ii) the Issuing Bank's wilful failure
to make lawful payment under a Letter of Credit after the presentation to it of
a draft and certificates strictly complying with the terms and conditions of the
Letter of Credit. In furtherance and not in limitation of the foregoing, the
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.
Section 11.14 Confidentiality. Each Lender and the Administrative
Agent agrees (on behalf of itself and each of its Affiliates, directors,
officers and employees) to use reasonable efforts to keep confidential, in
accordance with customary procedures for handling confidential information of
this nature and in accordance with safe and sound banking practices, any
non-public information supplied to it by the Borrower or any of its Affiliates
pursuant to this Agreement, provided that nothing herein shall limit the
disclosure of any such information (a) to the extent required by statute, rule,
regulation or judicial process, (b) to counsel for any Lender or the
Administrative Agent, (c) to bank or other examiners, regulatory bodies
(including the National Association of Insurance
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Commissioners or any similar organization, or any nationally recognized rating
agency that requires access to information about any Lender's investment
portfolio), auditors or accountants of any Lender, (d) to the Administrative
Agent or any other Lender or any Affiliate thereof, (e) in connection with any
Litigation to which any one or more of Lenders is a party, (f) to the extent
necessary in connection with the exercise of any Right under this Agreement or
any other Loan Document, or (g) to any Eligible Assignee or Participant (or
prospective Eligible Assignee or Participant) or to any direct or indirect
contractual counterparties in swap agreements or to the professional advisors of
such swap counterparties so long as such Eligible Assignee or Participant (or
prospective Eligible Assignee or Participant) or direct or indirect contractual
counterparties in swap agreements or such swap counterparties' professional
advisors agrees to handle such information in accordance with the provisions of
this Section 11.14. Non-public information does not include information that (a)
was publicly known prior to the time of disclosure by the Borrower or any of its
Subsidiaries, (b) after disclosure by the Borrower to any Lender or the
Administrative Agent becomes publicly known through no act or omission by any
Lender or the Administrative Agent or by any Person acting on behalf of any
Lender or the Administrative Agent or (c) otherwise becomes known to any Lender
or the Administrative Agent other than through disclosure by the Borrower or any
of its Subsidiaries or Affiliates or any of their respective representatives or
consultants.
Section 11.15 No Duties of Documentation Agent. The Borrower, the
Lenders and the Administrative Agent acknowledge that the Documentation Agent
shall have no duties, responsibilities or liabilities in its capacity as
Documentation Agent.
SECTION 11.16 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF TEXAS (WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS) AND THE
APPLICABLE FEDERAL LAWS OF THE UNITED STATES OF AMERICA. THE LOAN DOCUMENTS ARE
PERFORMABLE IN DALLAS COUNTY, TEXAS, AND THE BORROWER AND EACH SURETY,
GUARANTOR, ENDORSER AND ANY OTHER PARTY EVER LIABLE FOR PAYMENT OF ANY MONEY
PAYABLE WITH RESPECT TO THE LOAN DOCUMENTS, JOINTLY AND SEVERALLY WAIVE THE
RIGHT TO BE SUED ELSEWHERE. WITHOUT EXCLUDING ANY OTHER JURISDICTION, THE
BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER EACH AGREES THAT THE STATE
AND FEDERAL COURTS OF TEXAS LOCATED IN DALLAS, TEXAS, SHALL HAVE NON-EXCLUSIVE
JURISDICTION OVER PROCEEDINGS IN CONNECTION WITH THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS AND HEREBY SUBMITS WITH RESPECT TO ITSELF AND ITS PROPERTY TO THE
JURISDICTION OF ANY SUCH COURT FOR THE PURPOSE OF ANY SUIT, ACTION, PROCEEDING
OR JUDGMENT RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT.
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101
SECTION 11.17 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY KNOWINGLY VOLUNTARILY, IRREVOCABLY
AND INTENTIONALLY WAIVE, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM ARISING OUT OF OR RELATED TO
ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY. THIS
PROVISION IS A MATERIAL INDUCEMENT TO EACH LENDER ENTERING INTO THIS AGREEMENT
AND MAKING ANY ADVANCES HEREUNDER.
SECTION 11.18 ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER
WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES REGARDING THE SUBJECT MATTER HEREIN AND THEREIN AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
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102
IN WITNESS WHEREOF, this Credit Agreement is executed as of the date
first set forth above.
BORROWER: STYLING TECHNOLOGY CORPORATION
By:
---------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Secretary
- 95 -
103
ADMINISTRATIVE AGENT: NATIONSBANK, N.A., as Administrative Agent
By:
----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
- 96 -
104
DOCUMENTATION AGENT: BANKBOSTON, N.A., as Documentation Agent
By:
--------------------------------------
Name:
-------------------------------
Title:
-------------------------------
- 97 -
105
LENDERS: NATIONSBANK, N.A., as a Lender and Issuing
Bank
By:
----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
- 98 -
106
BANKBOSTON, N.A., as a Lender
By:
--------------------------------------
Name:
-------------------------------
Title:
-------------------------------
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ BOS 01-08-05
Boston, Massachusetts 02106-2016
Attn: ▇▇▇ ▇▇▇▇▇▇
- 99 -
107
SCHEDULE 1.1(a)
LIBOR LENDING OFFICES
NATIONSBANK, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
BANKBOSTON, N.A.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ BOS ▇▇-▇▇-▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
108
SCHEDULE 1.1(b)
COMMITMENTS AND SPECIFIED PERCENTAGES
NationsBank, N.A. $12,500,000 50.0%
BankBoston, N.A. $12,500,000 50.0%
109
SCHEDULE 1.1(c)
EXISTING LETTERS OF CREDIT
Amount Maturity Date
------ -------------
$500,000.00 November 26, 1998
$789,225.26 January 31, 1999
$ 14,600.00 November 1, 1998
$ 52,000.00 October 15, 1998
110
SCHEDULE 4.1(a)
SUBSIDIARIES, QUALIFICATION AND GOOD STANDING
111
SCHEDULE 4.1(h)
EXISTING LITIGATION
112
SCHEDULE 4.1(v)
LABOR RELATIONS
113
SCHEDULE 7.1(f)
EXISTING INDEBTEDNESS
114
SCHEDULE 7.2
EXISTING LIENS
115
SCHEDULE 7.3(c)
EXISTING INVESTMENTS