EXHIBIT 4.3
O'MM DRAFT
06/12/98
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AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF JUNE 23, 1998
AMONG
▇▇▇▇▇ NURSERIES, INC.,
SUN GRO HORTICULTURE CANADA LTD.
AND
LAKELAND CANADA LTD.,
AS BORROWERS,
THE LENDERS LISTED HEREIN,
AS LENDERS,
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
AS SYNDICATION AGENT,
▇▇▇▇▇▇ TRUST AND SAVINGS BANK,
AS DOCUMENTATION AGENT,
BT BANK OF CANADA,
AS CANADIAN AGENT,
AND
BANKERS TRUST COMPANY,
AS ADMINISTRATIVE AGENT
ARRANGED BY:
BT ALEX. ▇▇▇▇▇ INCORPORATED
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TABLE OF CONTENTS
AMENDED AND RESTATED CREDIT AGREEMENT
Page
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SECTION 1. DEFINITIONS.......................................................... 3
1.1 Certain Defined Terms................................................ 3
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1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations
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Under Agreement...................................................... 38
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1.3 Other Definitional Provisions and Rules of Construction.............. 38
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SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS........................... 38
2.1 Commitments; Making of Loans; the Register; Notes.................... 38
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2.2 Interest on the Loans................................................ 48
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2.3 Fees................................................................. 52
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2.4 Repayments, Prepayments and Reductions in Revolving Loan
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Commitments; General Provisions Regarding Payments................... 53
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2.5 Use of Proceeds...................................................... 61
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2.6 Special Provisions Governing Eurodollar Rate Loans and Canadian
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Eurodollar Rate Loans................................................ 61
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2.7 Increased Costs; Taxes; Capital Adequacy............................. 64
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2.8 Obligation of Lenders and Issuing Lenders to Mitigate................ 68
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SECTION 3. LETTERS OF CREDIT.................................................... 69
3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations
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Therein.............................................................. 69
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3.2 Letter of Credit Fees................................................ 72
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3.3 Drawings and Reimbursement of Amounts Paid Under Letters of Credit... 72
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3.4 Obligations Absolute................................................. 75
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3.5 Indemnification; Nature of Issuing Lenders' Duties................... 76
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3.6 Increased Costs and Taxes Relating to Letters of Credit.............. 77
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SECTION 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT............................ 78
4.1 Conditions to Term Loans and Initial Revolving Loans and Swing Line
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Loans................................................................ 78
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4.2 Conditions to All Loans.............................................. 86
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4.3 Conditions to Acquisition Loans...................................... 88
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4.4 Conditions to Letters of Credit...................................... 88
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SECTION 5. BORROWERS' REPRESENTATIONS AND WARRANTIES............................ 89
5.1 Organization, Powers, Qualification, Good Standing, Business and
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Subsidiaries......................................................... 89
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5.2 Authorization of Borrowing, etc...................................... 90
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5.3 Financial Condition................................................... 91
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5.4 No Material Adverse Change; No Restricted Junior Payments............. 91
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5.5 Title to Properties; Liens............................................ 92
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5.6 Litigation; Adverse Facts............................................. 92
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5.7 Payment of Taxes...................................................... 92
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5.8 Performance of Agreements; Materially Adverse Agreements; Material
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Contracts............................................................. 93
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5.9 Governmental Regulation............................................... 93
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5.10 Securities Activities................................................. 93
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5.11 Employee Benefit Plans................................................ 93
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5.12 Certain Fees.......................................................... 94
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5.13 Environmental Protection.............................................. 94
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5.14 Employee Matters...................................................... 96
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5.15 Solvency.............................................................. 96
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5.16 Disclosure............................................................ 96
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5.17 Matters Relating to Collateral........................................ 97
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5.18 Year 2000 Compliance.................................................. 98
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5.19 Water Availability.................................................... 98
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SECTION 6. BORROWERS' AFFIRMATIVE COVENANTS...................................... 98
6.1 Financial Statements and Other Reports................................ 98
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6.2 Corporate Existence, etc.............................................. 104
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6.3 Payment of Taxes and Claims; Tax Consolidation........................ 105
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6.4 Maintenance of Properties; Insurance.................................. 105
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6.5 Inspection; Lender Meeting............................................ 106
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6.6 Compliance with Laws, etc............................................. 106
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6.7 Environmental Disclosure and Inspection............................... 107
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6.8 Company's Remedial Action Regarding Hazardous Materials............... 108
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6.9 Execution of Guaranties and Collateral Documents by Future............ 109
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Subsidiaries.........................................................
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6.10 Additional Mortgages.................................................. 110
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6.11 Assignability and Recording of Lease Agreements....................... 111
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SECTION 7. BORROWERS' NEGATIVE COVENANTS......................................... 111
7.1 Indebtedness.......................................................... 111
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7.2 Liens and Related Matters............................................. 113
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7.3 Investments; Joint Ventures........................................... 114
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7.4 Contingent Obligations................................................ 114
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7.5 Restricted Junior Payments............................................ 115
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7.6 Financial Covenants................................................... 116
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7.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions...... 119
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7.8 Consolidated Capital Expenditures..................................... 121
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7.9 Restriction on Leases................................................. 122
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7.10 Sales and Lease-Backs................................................. 122
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7.11 Sale or Discount of Receivables...................................... 122
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7.12 Transactions with Shareholders and Affiliates........................ 122
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7.13 Disposal of Subsidiary Stock......................................... 123
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7.14 Conduct of Business.................................................. 123
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7.15 Amendments of Certain Documents; Designation of Designated Senior
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Debt................................................................. 123
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7.16 Fiscal Year.......................................................... 124
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SECTION 8. EVENTS OF DEFAULT.................................................... 124
8.1 Failure to Make Payments When Due.................................... 124
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8.2 Default in Other Agreements.......................................... 124
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8.3 Breach of Certain Covenants.......................................... 125
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8.4 Breach of Warranty................................................... 125
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8.5 Other Defaults Under Loan Documents.................................. 125
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8.6 Involuntary Bankruptcy; Appointment of Receiver, etc................. 125
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8.7 Voluntary Bankruptcy; Appointment of Receiver, etc................... 125
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8.8 Judgments and Attachments............................................ 126
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8.9 Dissolution.......................................................... 126
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8.10 Employee Benefit Plans............................................... 126
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8.11 Material Adverse Effect.............................................. 126
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8.12 Change in Control.................................................... 127
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8.13 Invalidity of Any Guaranty........................................... 127
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8.14 Failure of Security.................................................. 128
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SECTION 9. AGENT................................................................ 129
9.1 Appointment.......................................................... 129
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9.2 Powers and Duties; General Immunity.................................. 129
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9.3 Representations and Warranties; No Responsibility For Appraisal of
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Creditworthiness..................................................... 131
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9.4 Right to Indemnity................................................... 131
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9.5 Successor Agent and Swing Line Lender................................ 131
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9.6 Collateral Documents and Guaranties.................................. 132
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SECTION 10. MISCELLANEOUS........................................................ 132
10.1 Assignments and Participations in Loans and Letters of Credit........ 132
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10.2 Expenses............................................................. 135
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10.3 Indemnity............................................................ 136
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10.4 Set-Off; Security Interest in Deposit Accounts....................... 137
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10.5 Ratable Sharing...................................................... 137
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10.6 Amendments and Waivers............................................... 139
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10.7 Independence of Covenants............................................ 140
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10.8 Notices.............................................................. 140
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10.9 Survival of Representations, Warranties and Agreements............... 140
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10.10 Failure or Indulgence Not Waiver; Remedies Cumulative................ 141
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10.11 Marshalling; Payments Set Aside...................................... 141
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10.12 Severability......................................................... 141
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10.13 Obligations Several; Independent Nature of Lenders' Rights........... 141
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10.14 Headings............................................................. 142
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10.15 Applicable Law....................................................... 142
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10.16 Successors and Assigns............................................... 142
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10.17 Consent to Jurisdiction and Service of Process....................... 142
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10.18 Waiver of Jury Trial................................................. 143
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10.19 Confidentiality...................................................... 144
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10.20 Judgment Currency.................................................... 144
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10.21 Counterparts; Effectiveness.......................................... 144
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EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF REQUEST FOR ISSUANCE OF LETTER OF CREDIT
IV-A FORM OF DOMESTIC TERM NOTE
IV-B FORM OF ACQUISITION NOTE
IV-C FORM OF WORKING CAPITAL REVOLVING NOTE
IV-D FORM OF CANADIAN TERM NOTE
IV-E FORM OF SWING LINE NOTE
V FORM OF NOTICE OF COMMENCEMENT OF CLEAN DOWN PERIOD
VI FORM OF COMPLIANCE CERTIFICATE
VII FORM OF OPINION OF COUNSEL TO BORROWERS
VIII FORM OF OPINION OF O'MELVENY & ▇▇▇▇▇
IX FORM OF ASSIGNMENT AGREEMENT
X FORM OF AUDITOR'S LETTER
XI FORM OF CERTIFICATE RE NON-BANK STATUS
XII FORM OF COLLATERAL ACCOUNT AGREEMENT
XIII FORM OF ACKNOWLEDGEMENT AND CONSENT
XIV FORM OF MASTER ASSIGNMENT AGREEMENT
XV FORM OF HOLDINGS GUARANTY
XVI FORM OF COMPANY GUARANTY
XVII FORM OF CANADIAN SUBSIDIARY GUARANTY
XVIII FORM OF CANADIAN SUBSIDIARY PATENT SECURITY AGREEMENT
XIX FORM OF CANADIAN SUBSIDIARY PLEDGE AGREEMENT
XX FORM OF CANADIAN SUBSIDIARY SECURITY AGREEMENT
XXI FORM OF CANADIAN SUBSIDIARY TRADEMARK SECURITY
AGREEMENT
XXII FORM OF DOMESTIC SUBSIDIARY SECURITY AGREEMENT
XXIII FORM OF DOMESTIC SUBSIDIARY PLEDGE AGREEMENT
XXIV FORM OF DOMESTIC SUBSIDIARY TRADEMARK SECURITY AGREEMENT
XXV FORM OF DOMESTIC SUBSIDIARY PATENT SECURITY
AGREEMENT
XXVI FORM OF DOMESTIC SUBSIDIARY GUARANTY
XXVII FORM OF COLLATERAL ACCESS AGREEMENT
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SCHEDULES
2.1 COMMITMENTS AND PRO RATA SHARES
5.1 SUBSIDIARIES OF HOLDINGS
5.5 REAL PROPERTY ASSETS OF HOLDINGS AND ITS SUBSIDIARIES
7.1 PERMITTED EXISTING INDEBTEDNESS
7.2 PERMITTED LIENS
7.3 PERMITTED EXISTING INVESTMENTS
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O'MM Draft 6/12/98
▇▇▇▇▇ NURSERIES, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT is dated as of June 23,
1998 and entered into by and among ▇▇▇▇▇ NURSERIES, INC., a California
corporation ("COMPANY"), SUN GRO HORTICULTURE CANADA LTD., a Canadian
corporation ("SUN GRO CANADA"), LAKELAND CANADA LTD., an Alberta corporation
("LAKELAND CANADA"; together with Sun Gro Canada, the "CANADIAN BORROWERS"; the
Canadian Borrowers and Company shall collectively be referred to herein as
"BORROWERS"), THE ▇▇▇▇▇ CIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF
(each individually referred to herein as a "LENDER" and collectively as
"LENDERS"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ("BOFA") as
syndication agent (in such capacity, "SYNDICATION AGENT"), ▇▇▇▇▇▇ TRUST AND
SAVINGS BANK ("▇▇▇▇▇▇") as documentation agent (in such capacity, "DOCUMENTATION
AGENT"), BT BANK OF CANADA ("BT CANADA") as Canadian agent (in such capacity,
"CANADIAN AGENT") and BANKERS TRUST COMPANY ("BTCO"), as administrative agent
for Lenders (in such capacity, "AGENT").
R E C I T A L S
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WHEREAS, Company, Sun Gro Canada, Sun Gro Horticulture Inc., a Nevada
corporation, the financial institutions listed on the signature pages of the
▇▇▇▇▇ I Existing Credit Agreement (hereinafter defined) (the "▇▇▇▇▇ I LENDERS")
and BT Commercial Corporation, as agent ("BTCC"), are parties to that certain
Credit Agreement dated as of August 4, 1995, as amended by that certain First
Amendment dated as of October 11, 1995, that certain Second Amendment dated as
of October 26, 1995, that certain Third Amendment dated as of March 15, 1996,
that certain Fourth Amendment dated as of August 28, 1996, that certain Fifth
Amendment and Consent dated as of November 14, 1996, that certain Sixth
Amendment dated as of February 14, 1997, that certain Seventh Amendment and
Consent to Credit Agreement dated as of March 26, 1997, that certain Eighth
Amendment and Limited Waiver to Credit Agreement and First Amendment to Holdings
Guaranty and Holdings Pledge Agreement dated as of November 7, 1997, that
certain Ninth Amendment to Credit Agreement and Second Amendment to Holdings
Pledge Agreement dated as of December 16, 1997, and that certain Tenth Amendment
to Credit Agreement and Second Amendment to Holdings
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Guaranty dated as of March 9, 1998 (as so amended, the "▇▇▇▇▇ I EXISTING CREDIT
AGREEMENT");
WHEREAS, ▇▇▇▇▇ II, Inc. ("▇▇▇▇▇ II"), Lakeland Canada (formerly known
as ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Ltd.), the financial institutions listed on the signature
pages of the ▇▇▇▇▇ II Existing Credit Agreement (hereinafter defined) (the
"▇▇▇▇▇ II LENDERS") and BTCC, as agent, are parties to that certain Credit
Agreement dated as of December 16, 1997, as amended by that certain First
Amendment to Credit Agreement dated as of February 10, 1998 and that certain
Second Amendment and Consent to Credit Agreement and First Amendment to Holdings
Guaranty dated as of March 9, 1998 (as so amended, the "▇▇▇▇▇ II EXISTING CREDIT
AGREEMENT"; the ▇▇▇▇▇ I Existing Credit Agreement and the ▇▇▇▇▇ II Existing
Credit Agreement are collectively referred to herein as the "EXISTING CREDIT
AGREEMENTS");
WHEREAS, Company, which was formerly known as "▇▇▇▇▇ Horticulture,
Inc." or "▇▇▇▇▇ I" has been renamed "▇▇▇▇▇ Nurseries, Inc.", and ▇▇▇▇▇ II has
been merged with and into Company, with Company as the surviving entity;
WHEREAS, ▇▇▇▇▇ Holdings, Inc., a Nevada corporation, has merged with
and into ▇▇▇▇▇ Horticulture, Inc., a Delaware corporation ("HOLDINGS"), with
Holdings as the surviving entity;
WHEREAS, Holdings will be offering shares of its common stock to the
public and will apply the proceeds raised by such public offering, in part, to
repay or redeem (i) approximately $15,500,000 in existing mortgage debt of
Company and (ii) approximately $42,000,000 in principal of the Subordinated
Notes;
WHEREAS, Lakeland Canada, the wholly-owned subsidiary of Lakeland
U.S., Inc., a Delaware corporation, has sold all of its stock in Black Gold,
Inc., an Oregon corporation, and Pacific Soil Company, a Nevada corporation, to
Lakeland U.S., Inc.;
WHEREAS, Black Gold, Inc. and Pacific Soil Company have merged with
and into Lakeland U.S., Inc., with Lakeland U.S., Inc. as the surviving entity
and Lakeland U.S., Inc. has merged with and into Sun Gro Horticulture Inc., a
Nevada corporation, with Sun Gro Horticulture Inc. as the surviving entity;
WHEREAS, Sun Gro Horticulture Inc. has contributed all of its stock in
Lakeland Canada to Sun Gro Canada so that Lakeland Canada is a wholly-owned
subsidiary of Sun Gro Canada;
WHEREAS, Sphag Sorb Ltd., an Alberta corporation is a wholly-owned
Subsidiary of Lakeland Canada;
WHEREAS, Borrowers desire to consolidate the Existing Credit
Agreements into a single credit agreement and to make certain amendments to the
terms and provisions of
2
the Existing Credit Agreements, including increasing the amount of the Loans and
the Commitments, all as more specifically provided for in this Agreement;
WHEREAS, to facilitate such restructuring of the loans and the
commitments, all Lenders under the Existing Credit Agreements have agreed to
assign to BTCo all of their existing loans and commitments pursuant to the
Master Assignment Agreement and BTCo has agreed pursuant to the Master
Assignment Agreement to assign to each Lender under this Agreement the Loans and
Commitments as set forth on Schedule 2.1 to this Agreement;
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WHEREAS, to effect the foregoing, Borrowers, Agent and Lenders, have
agreed to amend and restate the Existing Credit Agreements in their entirety,
all as hereinafter set forth in this Agreement;
WHEREAS, Holdings has agreed to continue to guaranty the Obligations
of Borrowers and to continue to secure such guaranty with a pledge to Agent for
the benefit of Lenders of all of the capital stock of Company;
WHEREAS, each of Company and each of Company's Domestic Subsidiaries
has agreed to continue to guaranty the Obligations of Borrowers, and Company has
agreed to continue to secure its Obligations as Borrower hereunder, and each of
Company's Domestic Subsidiaries has agreed to continue to secure its guaranty,
by pledging to Agent for the benefit of Lenders (a) all of the capital stock of
Company's Domestic Subsidiaries, (b) 65% of the capital stock of Company's
Canadian Subsidiaries, (c) substantially all of its personal property and (d)
certain of its interests in real property; and
WHEREAS, each Canadian Borrower and each of Company's Canadian
Subsidiaries has agreed to guaranty the Obligations of Canadian Borrowers, and
each Canadian Borrower has agreed to continue to secure its Obligations as
Borrower hereunder, and each of Company's Canadian Subsidiaries has agreed to
secure its guaranty, by pledging (a) all of the capital stock of the
Subsidiaries owned by it, (b) certain of its personal property and (c) certain
of its interests in real property.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Borrowers, Lenders, Canadian Agent
and Agent agree as follows:
SECTION 1. DEFINITIONS
1.1 CERTAIN DEFINED TERMS.
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The following terms used in this Agreement shall have the following
meanings:
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"ACQUISITION LOAN CONVERSION DATE" means June 30, 2000.
"ACQUISITION LOAN EXPOSURE" means with respect to any Domestic Lender
as of any date of determination (i) prior to the termination of the Acquisition
Revolving Loan Commitments, that Domestic Lender's Acquisition Revolving Loan
Commitment and (ii) after the termination of the Acquisition Revolving Loan
Commitments, the aggregate outstanding principal amount of the Acquisition Loans
of that Domestic Lender.
"ACQUISITION LOANS" means the Loans made by Domestic Lenders to
Company pursuant to subsection 2.1A(iii).
"ACQUISITION NOTES" means (i) the promissory notes of Company issued
pursuant to subsection 2.1E(i)(b) on the Closing Date and (ii) any promissory
notes issued by Company pursuant to the last sentence of subsection 10.1B(i) in
connection with assignments of the Acquisition Revolving Loan Commitments and
Acquisition Loans of any Domestic Lenders, in each case substantially in the
form of Exhibit IV-B annexed hereto, as they may be amended, supplemented or
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otherwise modified from time to time.
"ACQUISITION REVOLVING LOAN COMMITMENT" means the commitment of a
Domestic Lender to make Acquisition Loans to Company pursuant to subsection
2.1A(iii), and "ACQUISITION REVOLVING LOAN COMMITMENTS" means such commitments
of all Domestic Lenders in the aggregate.
"ADJUSTED EURODOLLAR RATE" means, for any Interest Rate Determination
Date with respect to an Interest Period for a Eurodollar Rate Loan, the rate per
annum obtained by dividing (i) the offered quotation (rounded upward to the
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nearest 1/16 of one percent) to first class banks in the interbank Eurodollar
market by BTCo for U.S. dollar deposits of amounts in same day funds comparable
to the principal amount of the Eurodollar Rate Loan of BTCo for which the
Adjusted Eurodollar Rate is then being determined with maturities comparable to
such Interest Period as of approximately 10:00 a.m. (New York time) on such
Interest Rate Determination Date by (ii) a percentage equal to 100% minus the
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stated maximum rate of all reserve requirements (including any marginal,
emergency, supplemental, special or other reserves) applicable on such Interest
Rate Determination Date to any member bank of the Federal Reserve System in
respect of "Eurocurrency liabilities" as defined in Regulation D (or any
successor category of liabilities under Regulation D).
"AFFECTED LENDER" has the meaning assigned to that term in subsection
2.6C.
"AFFILIATE", as applied to any Person, means any other Person directly
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of
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the management and policies of that Person, whether through the ownership of
voting securities or by contract or otherwise.
"AGENT" has the meaning assigned to that term in the introduction to
this Agreement and also means any successor Agent appointed pursuant to
subsection 9.5A. For purposes of Section 9 of this Agreement, Agent shall also
mean Canadian Agent. With respect to matters dealing with the Canadian Term
Loans or Canadian Term Loan Commitment, Agent shall mean Canadian Agent.
"AGREEMENT" means this Amended and Restated Credit Agreement dated as
of June 23, 1998, which Agreement consolidates and amends and restates the
Existing Credit Agreements, as it may be further amended, supplemented or
otherwise modified from time to time.
"APPLICABLE BASE RATE MARGIN" means as of any date of determination, a
percentage per annum as set forth below opposite the applicable Consolidated
Leverage Ratio; provided that for the period from the Closing Date through the
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date following the six-month anniversary of the Closing Date on which the
Company first delivers a Compliance Certificate pursuant to subsection 6.1(iv)
establishing that, based on Company's Consolidated Leverage Ratio as set forth
in such Compliance Certificate, a different Applicable Base Rate Margin applies,
the Applicable Base Rate Margin shall be 0.25% per annum:
Applicable Base
Consolidated Leverage Ratio Rate Margin
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Greater than or equal to 4.00:1.00 1.000%
Greater than or equal to 3.75:1.00 but less 0.750%
than 4.00:1.00
Greater than or equal to 3.50:1.00 but less 0.500%
than 3.75:1.00
Greater than or equal to 3.00:1.00 but less 0.250%
than 3.50:1.00
Less than 3.00:1.00 0.000%
"APPLICABLE EURODOLLAR RATE MARGIN" means as of any date of
determination, a percentage per annum set forth below opposite the applicable
Consolidated Leverage Ratio; provided that for the period from the Closing Date
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through the date following the six-month anniversary of the Closing Date on
which the Company first delivers a Compliance Certificate pursuant to subsection
6.1(iv) establishing that, based on Company's Consolidated Leverage Ratio as set
forth in such Compliance Certificate, a different Applicable Eurodollar Rate
Margin applies, the Applicable Eurodollar Rate Margin shall be 1.25% per annum:
5
Applicable
Consolidated Leverage Ratio Eurodollar Rate Margin
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Greater than or equal to 4.00:1.00 2.000%
Greater than or equal to 3.75:1.00 but less 1.750%
than 4.00:1.00
Greater than or equal to 3.50:1.00 but less 1.500%
than 3.75:1.00
Greater than or equal to 3.00:1.00 but less 1.250%
than 3.50:1.00
Greater than or equal to 2.75:1.00 but less 1.000%
than 3.00:1.00
Greater than or equal to 2.50:1.00 but less 0.875%
than 2.75:1.00
Less than 2.50:1.00 0.750%
"ASSET SALE" means the sale by any Borrower or any of its Subsidiaries
to any Person other than such Borrower or any of its wholly-owned Subsidiaries
of (i) any of the stock of any of such Borrower's Subsidiaries, (ii)
substantially all of the assets of any division or line of business of the
Borrower or any of its Subsidiaries, or (iii) any other assets (whether tangible
or intangible) of Company or any of its Subsidiaries (other than (a) inventory
sold in the ordinary course of business and (b) any such other assets to the
extent that the aggregate value of such assets sold in any single transaction or
related series of transactions is equal to $250,000 or less).
"ASSIGNMENT AGREEMENT" means an Assignment Agreement in substantially
the form of Exhibit IX annexed hereto.
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"AUDITOR'S LETTER" means a letter, substantially in the form of
Exhibit X annexed hereto, acknowledged and agreed to by Company and Price
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Waterhouse LLP and delivered to Agent pursuant to subsections 4.1N and 6.1(iii).
"BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"BASE RATE" means, at any time, the higher of (x) the Prime Rate or
(y) the rate which is 1/2 of 1% in excess of the Federal Funds Effective Rate.
"BASE RATE LOANS" means Domestic Loans bearing interest at rates
determined by reference to the Base Rate as provided in subsection 2.2A.
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"BOFA" has the meaning assigned to that term in the introduction to
this Agreement.
"BORROWERS" has the meaning assigned to that term in the introduction
to this Agreement.
"BT CANADA" has the meaning assigned to that term in the introduction
to this Agreement.
"BTCC" means BT Commercial Corporation.
"BTCO" has the meaning assigned to that term in the introduction to
this Agreement.
"BUSINESS DAY" means (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the State of New York or California or is a day
on which banking institutions located in either such state are authorized or
required by law or other governmental action to close, and (ii) with respect to
all notices, determinations, fundings and payments in connection with any
Canadian Term Loans, any day that is a Business Day described in clause (i)
above but excluding any day which, under the laws of the Province of Ontario,
Canada, is a day on which banking institutions located in such province are
authorized or required by law or other governmental action to close.
"CANADIAN AGENT" means initially BT Canada and any successor Canadian
Agent appointed by Company and Agent.
"CANADIAN BASE RATE" means, as at any date with respect to any
Canadian Term Loan, the rate of interest per annum equal to the greater of (a)
the rate which BT Canada announces in Canada from time to time as the reference
rate of interest for loans in Dollars to its Canadian borrowers, adjusted
automatically with each change in such rates all without the necessity of any
notice to any Borrower or any other Person, and (b) the aggregate of (i) the
Federal Funds Effective Rate for such day and (ii) 1/2 of 1% per annum. As to
any loan, the Canadian Base Rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged to any Canadian customer for
loans denominated in Dollars. BT Canada may make commercial or other loans to
Canadian customers denominated in Dollars at rates of interest at, above or
below the Canadian Base Rate.
"CANADIAN BASE RATE LOANS" means Canadian Term Loans denominated in
Dollars and bearing interest at rates determined by reference to the Canadian
Base Rate as provided in subsection 2.2A.
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"CANADIAN BORROWERS" has the meaning assigned to that term in the
introduction to this Agreement.
"CANADIAN DOLLARS" means the lawful money of Canada.
"CANADIAN EURODOLLAR RATE" means, for any Interest Rate Determination
Date with respect to each Interest Period for a Canadian Eurodollar Rate Loan,
the interest rate per annum equal to the arithmetic average (rounded upward to
the nearest whole multiple of 1/16 of 1% per annum) of the rates per annum which
leading banks in the interbank Eurodollar markets shall quote and offer to
Canadian Reference Bank for placing deposits with Canadian Reference Bank in
Dollars, at approximately 10:00 A.M. (Toronto time), two Business Days before
the first day of such Interest Period, for a period comparable to such Interest
Period and in an amount approximately equal to the amount of such Canadian
Eurodollar Rate Loan.
"CANADIAN EURODOLLAR RATE LOANS" means Canadian Term Loans denominated
in Dollars and bearing interest at rates determined by reference to the Canadian
Eurodollar Rate as provided in subsection 2.2A.
"CANADIAN FUNDING AND PAYMENT OFFICE" means (i) the office of BT
Canada located at ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ or (ii) such other
office of Canadian Agent as may from time to time hereafter be designated as
such in a written notice delivered by Canadian Agent to Borrowers and each
Lender.
"CANADIAN LENDERS" means any Lenders having Canadian Term Loan
Commitments or, on and after the termination of the Canadian Term Loan
Commitments, having Canadian Term Loans outstanding.
"CANADIAN REFERENCE BANK" means BT Canada.
"CANADIAN SUBSIDIARY" means a Subsidiary of Company that is
incorporated or organized under the laws of Canada or any of its provinces.
"CANADIAN SUBSIDIARY GUARANTOR" means any Canadian Subsidiary of
Company that executes and delivers a counterpart of the Canadian Subsidiary
Guaranty on the Closing Date or from time to time thereafter pursuant to
subsection 6.9B.
"CANADIAN SUBSIDIARY GUARANTY" means the Amended and Restated Canadian
Subsidiary Guaranty executed and delivered by Sphag Sorb Ltd. on the Closing
Date, or the Canadian Subsidiary Guaranties to be executed and delivered by Sun
Gro Canada and Lakeland Canada on the Closing Date or to be executed and
delivered by Canadian Subsidiaries from time to time after the Closing Date in
accordance with subsection 6.9B, substantially in the form of Exhibit XVII
------------
annexed hereto, as such Canadian Subsidiary Guaranties may be
8
amended, supplemented or otherwise modified from time to time, and "CANADIAN
SUBSIDIARY GUARANTIES" means all such Canadian Subsidiary Guaranties,
collectively.
"CANADIAN SUBSIDIARY PATENT SECURITY AGREEMENT" means the Canadian
Subsidiary Patent Collateral Assignment and Security Agreement dated as of
December 16, 1997, executed and delivered by Sphag Sorb Ltd., each Amended and
Restated Canadian Subsidiary Patent Collateral Security Agreement and
Conditional Assignment to be executed and delivered by Sun Gro Canada and
Lakeland Canada on the Closing Date, or each Canadian Subsidiary Patent
Collateral Security Agreement and Conditional Assignment to be executed and
delivered by Canadian Subsidiaries from time to time thereafter in accordance
with subsection 6.9B, in each case substantially in the form of Exhibit XVIII
-------------
annexed hereto, as such Canadian Subsidiary Patent Security Agreements may be
amended, supplemented or otherwise modified from time to time, and "CANADIAN
SUBSIDIARY PATENT SECURITY AGREEMENTS" means all such Amended and Restated
Canadian Patent Collateral Security Agreement and Conditional Assignments and
Canadian Subsidiary Patent Collateral Security Agreement and Conditional
Assignments, collectively.
"CANADIAN SUBSIDIARY PLEDGE AGREEMENT" means each Canadian Subsidiary
Pledge Agreement to be executed and delivered by Sun Gro Canada and Lakeland
Canada on the Closing Date or each Canadian Subsidiary Pledge Agreement to be
executed and delivered by Canadian Subsidiaries from time to time thereafter in
accordance with subsection 6.9B, in each case substantially in the form of
Exhibit XIX annexed hereto, as such Canadian Subsidiary Pledge Agreements may be
-----------
amended, supplemented or otherwise modified from time to time, and "CANADIAN
SUBSIDIARY PLEDGE AGREEMENTS" means all such Canadian Subsidiary Pledge
Agreements, collectively.
"CANADIAN SUBSIDIARY SECURITY AGREEMENT" means the Canadian Subsidiary
Security Agreement dated as of December 16, 1997, executed and delivered by
Sphag Sorb Ltd., each Amended and Restated Canadian Subsidiary Security
Agreement to be executed and delivered by Sun Gro Canada and Lakeland Canada on
the Closing Date, or each Canadian Subsidiary Security Agreement to be executed
and delivered by Canadian Subsidiaries from time to time thereafter in
accordance with subsection 6.9B, in each case substantially in the form of
Exhibit XX annexed hereto, as such Canadian Subsidiary Security Agreements may
----------
be amended, supplemented or otherwise modified from time to time, and "CANADIAN
SUBSIDIARY SECURITY AGREEMENTS" means all such Canadian Subsidiary Security
Agreements, collectively.
"CANADIAN SUBSIDIARY TRADEMARK SECURITY AGREEMENT" means the Canadian
Subsidiary Trademark Security Agreement dated as of December 16, 1997, executed
and delivered by Sphag Sorb Ltd., each Amended and Restated Canadian Subsidiary
Trademark Collateral Security Agreement to be executed and delivered by Sun Gro
Canada and Lakeland Canada on the Closing Date, or each Canadian Subsidiary
Trademark Collateral Security Agreement to be executed and delivered by Canadian
Subsidiaries from time to time thereafter in accordance with subsection 6.9B, in
each case substantially in the form of Exhibit XXI
-----------
9
annexed hereto, as such Canadian Subsidiary Trademark Security Agreements may be
amended, supplemented or otherwise modified from time to time, and "CANADIAN
SUBSIDIARY TRADEMARK SECURITY AGREEMENTS" means all such Amended and Restated
Canadian subsidiary Trademark Collateral Security Agreements and Canadian
Subsidiary Trademark Collateral Security Agreements, collectively.
"CANADIAN TERM LOAN COMMITMENT" means the Sun Gro Canada Term Loan
Commitment or Lakeland Canada Term Loan Commitment or any combination thereof.
"CANADIAN TERM LOAN EXPOSURE" means with respect to any Canadian
Lender as of any date of determination (i) prior to the funding of the Canadian
Term Loans, that Canadian Lender's Canadian Term Loan Commitment and (ii) after
the funding of the Canadian Term Loans, the outstanding principal amount of the
Canadian Term Loans of that Canadian Lender.
"CANADIAN TERM LOANS" means one or more of the Sun Gro Canada Term
Loans and the Lakeland Canada Term Loans purchased or made by Canadian Lenders
to a Canadian Borrower pursuant to subsection 2.1A(ii).
"CANADIAN TERM NOTES" means (i) the promissory notes of a Canadian
Borrower issued pursuant to subsection 2.1E(ii) on the Closing Date and (ii) any
promissory notes issued by a Canadian Borrower pursuant to the last sentence of
subsection 10.1B(i) in connection with assignments of the Canadian Term Loan
Commitments or Canadian Term Loans of any Lenders, in each case substantially in
the form of Exhibit IV-D annexed hereto, as they may be amended, supplemented or
------------
otherwise modified from time to time.
"CAPITAL LEASE", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"CASH" means money, currency or a credit balance in a Deposit Account.
"CASH EQUIVALENTS" means, as at any date of determination, (i) (a)
marketable securities (1) issued or directly and unconditionally guaranteed as
to interest and principal by the United States Government or (2) issued by any
agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within one year
after such date; (b) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof, in each case maturing within one year after such
date and having, at the time of the acquisition thereof, the highest rating
obtainable from either Standard & Poor's Ratings Group ("S&P") or ▇▇▇▇▇'▇
Investors Service, Inc. ("MOODY'S"); (c) commercial paper maturing no more than
one year from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Moody's;
10
(d) certificates of deposit or bankers' acceptances maturing within one year
after such date and issued or accepted by any Lender or by any commercial bank
organized under the laws of the United States of America or any state thereof or
the District of Columbia that (1) is at least "adequately capitalized" (as
defined in the regulations of its primary Federal banking regulator) and (2) has
Tier 1 capital (as defined in such regulations) of not less than $100,000,000;
and (e) shares of any money market mutual fund that (1) has at least 95% of its
assets invested continuously in the types of investments referred to in clauses
(a) and (b) above, (2) has net assets of not less than $500,000,000, and (3) has
the highest rating obtainable from either S&P or Moody's, and (ii) comparable
Canadian short term investments.
"CERTIFICATE RE NON-BANK STATUS" means a certificate substantially in
the form of Exhibit XI annexed hereto delivered by a Lender to Agent pursuant to
----------
subsection 2.7B(iii).
"CLASS" means, as applied to Lenders, each of the two classes of
Lenders consisting of (i) Domestic Lenders and (ii) Canadian Lenders.
"CLOSING DATE" means June 23, 1998.
"COLLATERAL" means, collectively, all of the real, personal and mixed
property (including capital stock) in which Liens are purported to be granted
pursuant to the Collateral Documents as security for the Obligations.
"COLLATERAL ACCESS AGREEMENT" means any landlord waiver, mortgagee
waiver, bailee letter or any similar acknowledgement or agreement of any
landlord or mortgagee in respect of any Real Property Asset where any Collateral
is located or any warehouseman or processor in possession of any Inventory of
any Loan Party, substantially in the form of Exhibit XXVII annexed hereto with
-------------
such changes thereto as may be agreed to by Agent in the reasonable exercise of
its discretion.
"COLLATERAL ACCOUNT" has the meaning assigned to that term in the
Collateral Account Agreement.
"COLLATERAL ACCOUNT AGREEMENT" means the Collateral Account Agreement
executed and delivered by Company on the Closing Date, substantially in the form
of Exhibit XII annexed hereto, as such Collateral Account Agreement may be
-----------
amended, supplemented or otherwise modified from time to time.
"COLLATERAL DOCUMENTS" means the Collateral Account Agreement, the
Holdings Pledge Agreement, the Company Security Agreement, the Company Pledge
Agreement, the Company Trademark Security Agreement, the Company Patent Security
Agreement, the Domestic Subsidiary Security Agreements, the Domestic Subsidiary
Pledge Agreements, the Domestic Subsidiary Trademark Security Agreements, the
Domestic Subsidiary Patent Security Agreements, the Canadian Subsidiary Security
Agreements, the Canadian Subsidiary Pledge Agreements, the
11
Canadian Subsidiary Trademark Security Agreements, the Canadian Subsidiary
Patent Security Agreements, and the Mortgages.
"COMMITMENT FEE PERCENTAGE" means, as at any date of determination, a
percentage per annum set forth below opposite the applicable Consolidated
Leverage Ratio; provided that for the period from the Closing Date through the
date following the six-month anniversary of the Closing Date on which the
Company first delivers a Compliance Certificate pursuant to subsection 6.1(iv),
establishing that, based on Company's Consolidated Leverage Ratio as set forth
in such compliance certificate, a different Commitment Fee Percentage applies,
the Commitment Fee Percentage shall be 0.375% per annum:
Commitment Fee
Consolidated Leverage Ratio Percentage
--------------------------- ----------
Greater than or equal to 3.50:1.00 0.500%
Greater than or equal to 2.50:1.00 but less 0.375%
than 3.50:1.00
Less than 2.50:1.00 0.250%
"COMMITMENTS" means the Domestic Term Loan Commitments, the Revolving
Loan Commitments or the Canadian Term Loan Commitments or any combination
thereof.
"COMPANY" has the meaning assigned to that term in the introduction to
this Agreement.
"COMPANY COMMON STOCK" means the common stock of Company, par value
$.01 per share.
"COMPANY GUARANTY" means the Amended and Restated Company Guaranty
executed and delivered by Company on the Closing Date, substantially in the form
of Exhibit XVI annexed hereto, as such Amended and Restated Company Guaranty may
-----------
be further amended, supplemented or otherwise modified from time to time.
"COMPANY PATENT SECURITY AGREEMENT" means the Company Patent
Collateral Assignment and Security Agreement dated as of August 4, 1995,
executed and delivered by Company, as supplemented by the delivery of additional
schedules relating to ▇▇▇▇▇ II on the Closing Date, as such Company Patent
Collateral Assignment and Security Agreement may be further amended,
supplemented or otherwise modified from time to time.
"COMPANY PLEDGE AGREEMENT" means the Company Pledge Agreement dated as
of August 4, 1995, executed and delivered by Company, as such Company Pledge
Agreement may be amended, supplemented or otherwise modified from time to time.
12
"COMPANY SECURITY AGREEMENT" means the Company Security Agreement
dated as of August 4, 1995, executed and delivered by Company, as supplemented
by the delivery of additional schedules relating to ▇▇▇▇▇ II on the Closing
Date, as such Company Security Agreement may be further amended or supplemented
or otherwise modified from time to time.
"COMPANY TRADEMARK SECURITY AGREEMENT" means the Company Trademark
Collateral Security Agreement and Conditional Assignment dated as of August 4,
1995, executed and delivered by Company, as supplemented by the delivery of
additional schedules relating to ▇▇▇▇▇ II on the Closing Date, as such Company
Trademark Collateral Security Agreement and Conditional Assignment may be
further amended, supplemented or otherwise modified from time to time.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form
of Exhibit VI annexed hereto delivered to Agent and Lenders by Company pursuant
----------
to subsection 6.1(iv).
"CONSOLIDATED AVERAGE DEBT" means, as at any date of determination,
the aggregate stated balance sheet amount of all Indebtedness of Company and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP;
provided that for purposes of calculating the amount of such Indebtedness
--------
derived from Working Capital Revolving Loans, the average of such outstanding
Working Capital Revolving Loans as of the last day of each month over a rolling
twelve-month period shall be used.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the sum of
the aggregate of all expenditures (whether paid in cash or other consideration
or accrued as a liability and including that portion of Capital Leases which is
capitalized on the consolidated balance sheet of Company and its Subsidiaries)
by Company and its Subsidiaries during that period that, in conformity with
GAAP, are included in "additions to property, plant or equipment" or comparable
items reflected in the consolidated statement of cash flows of Company and its
Subsidiaries; provided that, (a) in connection with the purchase or other
--------
acquisition of any asset (the "REPLACEMENT ASSET") by Company or any of its
Subsidiaries substantially concurrently with the sale of, or pursuant to an
exchange for or trade-in of, any existing asset of Company or such Subsidiary of
like kind and character (which, in the case of a Real Property Asset, shall be
located within a 30-mile radius of the Replacement Asset) (the "REPLACED
ASSET"), there shall be included in Consolidated Capital Expenditures only the
excess, if any, of the gross purchase price of the Replacement Asset over the
credit given by the seller of the Replacement Asset for the trade-in or exchange
of the Replaced Asset or the amount of proceeds received from the sale of the
Replaced Asset, as the case may be, and (b) in connection with the purchase,
repair or other acquisition of any asset by Company or any of its Subsidiaries
with insurance proceeds received by Company or any of its Subsidiaries in
respect of the actual or constructive loss of any similar asset, there shall be
included in
13
Consolidated Capital Expenditures only the excess of the gross amount of the
purchase price over the amount of such insurance proceeds.
"CONSOLIDATED CASH INTEREST EXPENSE" means, for any period,
Consolidated Interest Expense for such period excluding, however, any interest
--------- -------
expense not payable in Cash (including amortization of discount and amortization
of debt issuance costs).
"CONSOLIDATED CURRENT ASSETS" means, as at any date of determination,
the total assets of Company and its Subsidiaries on a consolidated basis which
may properly be classified as current assets in conformity with GAAP, excluding
Cash and Cash Equivalents.
"CONSOLIDATED CURRENT LIABILITIES" means, as at any date of
determination, the total liabilities of Company and its Subsidiaries on a
consolidated basis which may properly be classified as current liabilities in
conformity with GAAP, excluding the current portion of any Indebtedness,
---------
including without limitation outstanding Working Capital Revolving Loans to the
extent included in Consolidated Current Liabilities.
"CONSOLIDATED EBITDA" means, for any period, the sum of the amounts
for such period of (i) Consolidated Net Income, (ii) Consolidated Interest
Expense, (iii) provisions for taxes based on income, (iv) total depreciation
expense, (v) total amortization expense, and (vi) other non-cash items reducing
Consolidated Net Income less other non-cash items increasing Consolidated Net
----
Income, all of the foregoing as determined on a consolidated basis for Company
and its Subsidiaries in conformity with GAAP.
"CONSOLIDATED EXCESS CASH FLOW" means, for any period, an amount equal
to (i) the sum, without duplication, of the amounts for such period of (a) the
sum of Consolidated EBITDA and non-cash extraordinary losses which are expected
to have a cash impact on Company's financial statements during the term of this
Agreement, and (b) the Consolidated Working Capital Adjustment minus (ii) the
-----
sum, without duplication, of the amounts for such period of (a) voluntary and
scheduled repayments of Indebtedness (excluding repayments of Working Capital
Revolving Loans except to the extent the Working Capital Revolving Loan
Commitments are permanently reduced in connection with such repayments and
excluding repayments of the Acquisition Loans prior to the Acquisition Loan
Conversion Date), (b) Consolidated Capital Expenditures (net of any proceeds of
any related financings with respect to such expenditures), (c) Consolidated Cash
Interest Expense, and (d) the provision for current taxes based on income of
Company and its Subsidiaries and payable in cash with respect to such period.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, total interest
expense (including that portion attributable to Capital Leases in accordance
with GAAP and capitalized interest) of Company and its Subsidiaries on a
consolidated basis with respect to all outstanding Indebtedness of Company and
its Subsidiaries, including, without limitation, all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
14
acceptance financing and net costs under Interest Rate Agreements, but
excluding, however, any amounts referred to in subsection 2.3 payable to Agent
--------- -------
and Lenders on or before the Closing Date.
"CONSOLIDATED LEVERAGE RATIO" means as at any date of determination,
the ratio of Consolidated Average Debt as of the last day of the Fiscal Quarter
immediately preceding the Fiscal Quarter in which such date of determination
occurs to Consolidated EBITDA for the four Fiscal Quarters ending as of such
last day of such immediately preceding Fiscal Quarter; provided that with
--------
respect to the calculation of the Consolidated Leverage Ratio, to the extent
that during the period for which compliance is being determined, Company or any
Subsidiary of Company has made an acquisition permitted under subsection 7.7(v)
or has disposed of any assets or operations in an amount for any such
transaction or series of related transactions exceeding $250,000, such
calculations shall be made as if such acquisition or such disposition took place
on the first day of such period on a pro forma basis (such pro forma adjustments
--- ----- --- -----
being calculated in accordance with Regulation S-X of the Securities and
Exchange Commission), and such calculations shall be made after giving effect to
the incurrence, assumption or repayment of any Indebtedness made in connection
with such acquisition or disposition.
"CONSOLIDATED NET INCOME" means, for any period, the net income (or
loss) of Company and its Subsidiaries on a consolidated basis for such period
taken as a single accounting period determined in conformity with GAAP; provided
--------
that there shall be excluded (i) the income (or loss) of any Person (other than
a Subsidiary of Company) in which any other Person (other than Company or any of
its Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Company or any of its
Subsidiaries by such Person during such period, (ii) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of Company or is merged
into or consolidated with Company or any of its Subsidiaries or that Person's
assets are acquired by Company or any of its Subsidiaries, (iii) the income of
any Subsidiary of Company to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary, (iv) any after-tax gains or losses attributable
to Asset Sales or returned surplus assets of any Pension Plan, and (v) (to the
extent not included in clauses (i) through (iv) above) any net extraordinary
gains or net non-cash extraordinary losses which non-cash extraordinary losses
are not expected to have a cash impact on Company's financial statements during
the term of this Agreement.
"CONSOLIDATED NET WORTH" means, as at any date of determination, the
sum of the capital stock and additional paid-in capital plus retained earnings
(or minus accumulated deficits) of Company and its Subsidiaries on a
consolidated basis determined in conformity with GAAP.
15
"CONSOLIDATED RENTAL PAYMENTS" means, for any period, the aggregate
amount of all rents paid or payable by Company and its Subsidiaries on a
consolidated basis during that period under all Capital Leases and Operating
Leases to which Company or any of its Subsidiaries is a party as lessee.
"CONSOLIDATED WORKING CAPITAL" means, as at any date of determination,
the excess of Consolidated Current Assets over Consolidated Current Liabilities.
"CONSOLIDATED WORKING CAPITAL ADJUSTMENT" means, for any period on a
consolidated basis, the amount (which may be a negative number) by which the
Consolidated Working Capital of Company and its Subsidiaries as of the beginning
of such period exceeds (or is less than) the Consolidated Working Capital of
Company and its Subsidiaries as of the end of such period.
"CONTINGENT OBLIGATION", as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person (i) with respect to
any Indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect thereof, (ii)
with respect to any letter of credit issued for the account of that Person or as
to which that Person is otherwise liable for reimbursement of drawings, or (iii)
under Hedge Agreements. Contingent Obligations shall include (a) the direct or
indirect guaranty, endorsement (otherwise than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse or sale with
recourse by such Person of the obligation of another, (b) the obligation to make
take-or-pay or similar payments if required regardless of non-performance by any
other party or parties to an agreement, and (c) any liability of such Person for
the obligation of another through any agreement (contingent or otherwise) (X) to
purchase, repurchase or otherwise acquire such obligation or any security
therefor, or to provide funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases, capital contributions
or otherwise) or (Y) to maintain the solvency or any balance sheet item, level
of income or financial condition of another if, in the case of any agreement
described under subclauses (X) or (Y) of this sentence, the primary purpose or
intent thereof is as described in the preceding sentence. The amount of any
Contingent Obligation shall be equal to the amount of the obligation so
guaranteed or otherwise supported or, if less, the amount to which such
Contingent Obligation is specifically limited.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any
provision of any Security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that Person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject.
16
"CURRENCY AGREEMENT" means any foreign exchange contract, currency
swap agreement, futures contract, option contract, synthetic cap or other
similar agreement or arrangement.
"DOCUMENTATION AGENT" has the meaning assigned to that term in the
introduction to this Agreement.
"DEPOSIT ACCOUNT" means a demand, time, savings, passbook or like
account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate of
deposit.
"DOLLAR EQUIVALENTS" means Dollars or, with respect to any amount of
Canadian Dollars, an equivalent amount of Dollars determined at the rate of
exchange quoted by Agent in New York City, at 9:00 A.M. (New York time) on the
date of determination, to prime banks in New York City for the spot purchase in
the New York foreign exchange market of Dollars with Canadian Dollars.
"DOLLARS" and the sign "$" mean the lawful money of the United States
of America.
"DOMESTIC COMMITMENTS" means the Revolving Loan Commitments or the
Domestic Term Loan Commitments or both.
"DOMESTIC FUNDING AND PAYMENT OFFICE" means (i) the office of Agent
and Swing Line Lender located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇ or (ii) such other office of Agent and Swing Line Lender as may from time
to time hereafter be designated as such in a written notice delivered by Agent
to Borrowers and each Domestic Lender.
"DOMESTIC LENDERS" means any Lenders having Domestic Commitments or,
on and after the termination of the Domestic Commitments, having Domestic Loans
outstanding.
"DOMESTIC LOANS" means the Acquisition Loans, the Working Capital
Revolving Loans or the Domestic Term Loans or any combination thereof.
"DOMESTIC SUBSIDIARY" means a Subsidiary of Company that is
incorporated or organized under the laws of a state of the United States of
America.
"DOMESTIC SUBSIDIARY GUARANTOR" means any Domestic Subsidiary of
Company that executes and delivers a counterpart of the Domestic Subsidiary
Guaranty on the Closing Date or from time to time thereafter pursuant to
subsection 6.9A.
17
"DOMESTIC SUBSIDIARY GUARANTY" means the Amended and Restated Domestic
Subsidiary Guaranty executed and delivered by Sun Gro Horticulture on the
Closing Date or to be executed and delivered by Domestic Subsidiaries from time
to time after the Closing Date in accordance with subsection 6.9A, substantially
in the form of Exhibit XXVI annexed hereto, as such Domestic Subsidiary Guaranty
------------
may be further amended, supplemented or otherwise modified from time to time,
and "DOMESTIC SUBSIDIARY GUARANTIES" means all such Amended and Restated
Domestic Subsidiary Guaranties, collectively.
"DOMESTIC SUBSIDIARY PATENT SECURITY AGREEMENT" means the Domestic
Subsidiary Patent Collateral Assignment and Security Agreement dated as of
August 4, 1995 executed and delivered by Sun Gro Horticulture, as supplemented
by the delivery of additional schedules relating to Lakeland U.S., Inc., Pacific
Soil Company and Black Gold, Inc. on the Closing Date or each Domestic
Subsidiary Patent Collateral Assignment and Security Agreement to be executed
and delivered by Domestic Subsidiaries from time to time thereafter in
accordance with subsection 6.9A, substantially in the form of Exhibit XXV
-----------
annexed hereto, as such Domestic Subsidiary Patent Collateral Security
Agreements may be amended, supplemented or otherwise modified from time to time,
and "DOMESTIC SUBSIDIARY PATENT SECURITY AGREEMENTS" means all such Domestic
Subsidiary Patent Collateral Assignment and Security Agreements, collectively.
"DOMESTIC SUBSIDIARY PLEDGE AGREEMENT" means the Domestic Subsidiary
Pledge Agreement dated as of August 4, 1995, executed and delivered by Sun Gro
Horticulture or each Domestic Subsidiary Pledge Agreement to be executed and
delivered by Domestic Subsidiaries from time to time thereafter in accordance
with subsection 6.9A, substantially in the form of Exhibit XXIII annexed hereto,
-------------
as such Domestic Subsidiary Pledge Agreements may be amended, supplemented or
otherwise modified from time to time, and "DOMESTIC SUBSIDIARY PLEDGE
AGREEMENTS" means all such Domestic Subsidiary Pledge Agreements, collectively.
"DOMESTIC SUBSIDIARY SECURITY AGREEMENT" means the Domestic Subsidiary
Security Agreement dated as of August 4, 1995, executed and delivered by Sun Gro
Horticulture, as supplemented by the delivery of additional schedules relating
to Lakeland U.S., Inc., Black Gold, Inc. and Pacific Soil Company on the Closing
Date or each Domestic Subsidiary Security Agreement to be executed and delivered
by Domestic Subsidiaries from time to time thereafter in accordance with
subsection 6.9A, substantially in the form of Exhibit XXII annexed hereto, as
------------
such Domestic Subsidiary Security Agreements may be amended, supplemented or
otherwise modified from time to time, and "DOMESTIC SUBSIDIARY SECURITY
AGREEMENTS" means all such Domestic Subsidiary Security Agreements,
collectively.
"DOMESTIC SUBSIDIARY TRADEMARK SECURITY AGREEMENT" means the Domestic
Subsidiary Trademark Collateral Security Agreement and Conditional Assignment
dated as of August 4, 1995, executed and delivered by Sun Gro Horticulture, as
supplemented by the delivery of additional schedules relating to Lakeland U.S.,
Inc., Black Gold, Inc. and Pacific
18
Soil Company on the Closing Date or each Domestic Subsidiary Trademark
Collateral Security Agreement to be executed and delivered by Domestic
Subsidiaries from time to time thereafter in accordance with subsection 6.9A,
substantially in the form of Exhibit XXIV annexed hereto, as such Domestic
------------
Subsidiary Trademark Collateral Security Agreement may be amended, supplemented
or otherwise modified from time to time, and "DOMESTIC SUBSIDIARY TRADEMARK
SECURITY AGREEMENTS" means all such Domestic Subsidiary Trademark Collateral
Security Agreement and Conditional Assignment and Domestic Subsidiary Trademark
Collateral Security Agreements, collectively.
"DOMESTIC TERM LOAN COMMITMENT" means the commitment of a Domestic
Lender to purchase Domestic Term Loans pursuant to the Master Assignment
Agreement or to make Domestic Term Loans to Company pursuant to subsection
2.1A(i), and "DOMESTIC TERM LOAN COMMITMENTS" means such commitments of all
Domestic Lenders in the aggregate.
"DOMESTIC TERM LOAN EXPOSURE" means, with respect to any Domestic
Lender as of any date of determination (i) prior to the funding of the Domestic
Term Loans, that Lender's Domestic Term Loan Commitment and (ii) after the
funding of the Domestic Term Loans, the outstanding principal amount of the
Domestic Term Loan of that Lender.
"DOMESTIC TERM LOANS" means the Term Loans purchased or made by
Domestic Lenders to Company pursuant to subsection 2.1A(i).
"DOMESTIC TERM NOTES" means (i) the promissory notes of Company issued
pursuant to subsection 2.1E(i)(a) on the Closing Date and (ii) any promissory
notes issued by Company pursuant to the last sentence of subsection 10.1B(i) in
connection with assignments of the Domestic Term Loan Commitments or Domestic
Term Loans of any Lenders, in each case substantially in the form of Exhibit IV-
----------
A annexed hereto, as they may be amended, supplemented or otherwise modified
-
from time to time.
"ELIGIBLE ASSIGNEE" means (A) (i) a commercial bank organized under
the laws of the United States or any state thereof; (ii) a savings and loan
association or savings bank organized under the laws of the United States or any
state thereof; (iii) a commercial bank organized under the laws of any other
country or a political subdivision thereof; provided that (x) such bank is
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acting through a branch or agency located in the United States or (y) such bank
is organized under the laws of a country that is a member of the Organization
for Economic Cooperation and Development or a political subdivision of such
country; and (iv) any other entity which is an "accredited investor" (as defined
in Regulation D under the Securities Act) which extends credit or buys loans as
one of its businesses including insurance companies, mutual funds and lease
financing companies; and (B) any Lender and any Affiliate of any Lender;
provided that no Affiliate of Company shall be an Eligible Assignee.
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19
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as defined
in Section 3(3) of ERISA which is or was maintained or contributed to by
Company, any of its Subsidiaries or any of their respective ERISA Affiliates.
"ENVIRONMENTAL CLAIM" means any investigation, notice, notice of
violation, claim, action, suit, proceeding, demand, abatement order or other
order or directive (conditional or otherwise), by any governmental authority or
any other Person, arising (i) pursuant to or in connection with any actual or
alleged violation of any Environmental Law, (ii) in connection with any
Hazardous Materials or any actual or alleged Hazardous Materials Activity, or
(iii) in connection with any actual or alleged damage, injury, threat or harm to
health, safety, natural resources or the environment.
"ENVIRONMENTAL LAWS" means any and all current or future statutes,
ordinances, orders, rules, regulations, guidance documents, judgments,
Governmental Authorizations, or any other requirements of governmental
authorities relating to (i) environmental matters, including those relating to
any Hazardous Materials Activity, (ii) the generation, use, storage,
transportation or disposal of Hazardous Materials, or (iii) occupational safety
and health, industrial hygiene, land use or the protection of human, plant or
animal health or welfare, in any manner applicable to Company or any of its
Subsidiaries or any Facility, including the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. (S) 9601 et seq.), the
-- ---
Hazardous Materials Transportation Act (49 U.S.C. (S) 1801 et seq.), the
-- ---
Resource Conservation and Recovery Act (42 U.S.C. (S) 6901 et seq.), the Federal
-- ---
Water Pollution Control Act (33 U.S.C. (S) 1251 et seq.), the Clean Air Act (42
-- ---
U.S.C. (S) 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. (S) 2601
-- ---
et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C.
-- ---
(S)136 et seq.), the Occupational Safety and Health Act (29 U.S.C. (S) 651 et
-- --- --
seq.), the Oil Pollution Act (33 U.S.C. (S) 2701 et seq) and the Emergency
--- ------
Planning and Community Right-to-Know Act (42 U.S.C. (S) 11001 et seq.), each as
-- ---
amended or supplemented, any analogous present or future state or local statutes
or laws, and any regulations promulgated pursuant to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor thereto.
"ERISA AFFILIATE" means, as applied to any Person, (i) any corporation
which is a member of a controlled group of corporations within the meaning of
Section 414(b) of the Internal Revenue Code of which that Person is a member;
(ii) any trade or business (whether or not incorporated) which is a member of a
group of trades or businesses under common control within the meaning of Section
414(c) of the Internal Revenue Code of which that Person is a member; and (iii)
any member of an affiliated service group within the meaning of Section 414(m)
or (o) of the Internal Revenue Code of which that Person, any corporation
described in clause (i) above or any trade or business described in clause (ii)
above is a member. Any former ERISA Affiliate of Company or any of its
Subsidiaries shall continue to
20
be considered an ERISA Affiliate of Company or such Subsidiary within the
meaning of this definition with respect to the period such entity was an ERISA
Affiliate of Company or such Subsidiary and with respect to liabilities arising
after such period for which Company or such Subsidiary could be liable under the
Internal Revenue Code or ERISA.
"ERISA EVENT" means (i) a "reportable event" within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to any
Pension Plan (excluding those for which the provision for 30-day notice to the
PBGC has been waived by regulation); (ii) the failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code with respect to any
Pension Plan (whether or not waived in accordance with Section 412(d) of the
Internal Revenue Code) or the failure to make by its due date a required
installment under Section 412(m) of the Internal Revenue Code with respect to
any Pension Plan or the failure to make any required contribution to a
Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan
pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such
plan in a distress termination described in Section 4041(c) of ERISA; (iv) the
withdrawal by Company, any of its Subsidiaries or any of their respective ERISA
Affiliates from any Pension Plan with two or more contributing sponsors or the
termination of any such Pension Plan resulting in liability pursuant to Section
4063 or 4064 of ERISA; (v) the institution by the PBGC of proceedings to
terminate any Pension Plan, or the occurrence of any event or condition which
might constitute grounds under ERISA for the termination of, or the appointment
of a trustee to administer, any Pension Plan; (vi) the imposition of liability
on Company, any of its Subsidiaries or any of their respective ERISA Affiliates
pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of
Section 4212(c) of ERISA; (vii) the withdrawal of Company, any of its
Subsidiaries or any of their respective ERISA Affiliates in a complete or
partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from
any Multiemployer Plan if there is any potential liability therefor, or the
receipt by Company, any of its Subsidiaries or any of their respective ERISA
Affiliates of notice from any Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to
terminate or has terminated under Section 4041A or 4042 of ERISA; (viii) the
occurrence of an act or omission which could give rise to the imposition on
Company, any of its Subsidiaries or any of their respective ERISA Affiliates of
fines, penalties, taxes or related charges under Chapter 43 of the Internal
Revenue Code or under Section 409, Section 502(c), (i) or (l), or Section 4071
of ERISA in respect of any Employee Benefit Plan; (ix) the assertion of a
material claim (other than routine claims for benefits) against any Employee
Benefit Plan other than a Multiemployer Plan or the assets thereof, or against
Company, any of its Subsidiaries or any of their respective ERISA Affiliates in
connection with any Employee Benefit Plan; (x) receipt from the Internal Revenue
Service of notice of the failure of any Pension Plan (or any other Employee
Benefit Plan intended to be qualified under Section 401(a) of the Internal
Revenue Code) to qualify under Section 401(a) of the Internal Revenue Code, or
the failure of any trust forming part of any Pension Plan to qualify for
exemption from taxation under Section 501(a) of the Internal Revenue Code; or
(xi) the imposition of a Lien pursuant to Section 401(a)(29)
21
or 412(n) of the Internal Revenue Code or pursuant to ERISA with respect to any
Pension Plan.
"EURODOLLAR RATE LOANS" means Loans bearing interest at rates
determined by reference to the Adjusted Eurodollar Rate as provided in
subsection 2.2A.
"EVENT OF DEFAULT" means each of the events set forth in Section 8.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.
"FACILITIES" means any and all real property (including all
buildings, fixtures or other improvements located thereon) now, hereafter or
heretofore owned, leased, operated or used by Company or any of its Subsidiaries
or any of their respective predecessors or Affiliates.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by Agent from three Federal funds brokers of recognized
standing selected by Agent.
"FEE PROPERTY" means a Real Property Asset consisting of a fee
interest in real property.
"FINANCIAL PLAN" has the meaning assigned to that term in subsection
6.1(xiii).
"FIRST PRIORITY" means, with respect to any Lien purported to be
created in any Collateral pursuant to any Collateral Document, that (i) such
Lien has priority over any other Lien (other than Prior Liens) on such
Collateral and (ii) such Lien is the only Lien (other than Permitted
Encumbrances) to which such Collateral is subject.
"FISCAL QUARTER" means a fiscal quarter of any Fiscal Year.
"FISCAL YEAR" means the fiscal year of Company and its Subsidiaries
ending on December 31 of each calendar year.
"FLOOD HAZARD PROPERTY" means a Mortgaged Property located in an area
designated by the Federal Emergency Management Agency as having special flood or
mud slide hazards.
22
"FUNDING DATE" means the date of the funding of a Loan.
"GAAP" means, subject to the limitations on the application thereof
set forth in subsection 1.2, generally accepted accounting principles set forth
in opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, in each case as the same are applicable to the
circumstances as of the date of determination.
"GOVERNMENTAL AUTHORIZATION" means any permit, license, authorization,
plan, directive, consent order or consent decree of or from any federal, state
or local governmental authority, agency or court.
"GUARANTIES" means the Holdings Guaranty, the Company Guaranty, the
Domestic Subsidiary Guaranty and the Canadian Subsidiary Guaranty.
"▇▇▇▇▇▇" has the meaning assigned to it in the introduction to this
Agreement.
"HAZARDOUS MATERIALS" means (i) any chemical, material or substance at
any time defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous waste", acutely
hazardous waste", "radioactive waste", "biohazardous waste", "pollutant", "toxic
pollutant", "contaminant", "restricted hazardous waste", "infectious waste",
"toxic substances", or any other term or expression intended to define, list or
classify substances by reason of properties harmful to health, safety or the
indoor or outdoor environment (including harmful properties such as
ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive
toxicity, "TCLP toxicity" or "EP toxicity" or words of similar import under any
applicable Environmental Laws); (ii) any oil, petroleum, petroleum fraction or
petroleum derived substance; (iii) any drilling fluids, produced waters and
other wastes associated with the exploration, development or production of crude
oil, natural gas or geothermal resources; (iv) any flammable substances or
explosives; (v) any radioactive materials; (vi) any asbestos-containing
materials; (vii) urea formaldehyde foam insulation; (viii) electrical equipment
which contains any oil or dielectric fluid containing polychlorinated biphenyls;
(ix) pesticides; and (x) any other chemical, material or substance, exposure to
which is prohibited, limited or regulated by any governmental authority or which
may or could pose a hazard to the health and safety of the owners, occupants or
any Persons in the vicinity of any Facility or to the indoor or outdoor
environment.
"HAZARDOUS MATERIALS ACTIVITY" means any past, current, proposed or
threatened activity, event or occurrence involving any Hazardous Materials,
including the use, manufacture, possession, storage, holding, presence,
existence, location, Release, threatened Release, discharge, placement,
generation, transportation, processing, construction, treatment,
23
abatement, removal, remediation, disposal, disposition or handling of any
Hazardous Materials, and any corrective action or response action with respect
to any of the foregoing.
"HEDGE AGREEMENTS" means an Interest Rate Agreement or a Currency
Agreement designed to hedge against fluctuations in interest rates or currency
values, respectively.
"▇▇▇▇▇ I EXISTING CREDIT AGREEMENT" has the meaning assigned to it in
the introduction to this Agreement.
"▇▇▇▇▇ II EXISTING CREDIT AGREEMENT" has the meaning assigned to it in
the introduction to this Agreement.
"HOLDINGS" means ▇▇▇▇▇ Horticulture, Inc., a Delaware corporation, the
successor by merger to ▇▇▇▇▇ Holdings, Inc., a Nevada corporation.
"HOLDINGS COMMON STOCK" means the common stock of Holdings, par value
$.01 per share.
"HOLDINGS GUARANTY" means the Amended and Restated Holdings Guaranty
executed and delivered by Holdings on the Closing Date, substantially in the
form of Exhibit XV annexed hereto, as such Holdings Guaranty may thereafter be
----------
amended, supplemented or otherwise modified from time to time.
"HOLDINGS PLEDGE AGREEMENT" means the Holdings Pledge Agreement dated
as of August 4, 1995, executed and delivered by Holdings, as amended by a First
Amendment dated as of November 7, 1997, and a Second Amendment dated as of
December 16, 1997, as such Holdings Pledge Agreement may be further amended,
supplemented or otherwise modified from time to time.
"INDEBTEDNESS", as applied to any Person, means (i) all indebtedness
for borrowed money, (ii) that portion of obligations with respect to Capital
Leases that is properly classified as a liability on a balance sheet in
conformity with GAAP, (iii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed money,
(iv) any obligation owed for all or any part of the deferred purchase price of
property or services (excluding any such obligations incurred under ERISA),
which purchase price is (a) due more than six months from the date of incurrence
of the obligation in respect thereof or (b) evidenced by a note or similar
written instrument, and (v) all indebtedness secured by any Lien on any property
or asset owned or held by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is nonrecourse to the
credit of that Person. Obligations under Hedge Agreements constitute Contingent
Obligations and not Indebtedness.
24
"INDEMNITEE" has the meaning assigned to that term in subsection 10.3.
"INSOLVENCY EVENT" means, with respect to any Person, the occurrence
of any of the events described in subsection 8.6 or 8.7; provided that, solely
--------
for purposes of this definition, any references to any Borrower or any of its
Subsidiaries in subsection 8.6 or 8.7 shall be deemed to be a reference to such
Person.
"INSOLVENCY LAWS" means the Bankruptcy Code, the Bankruptcy and
Insolvency Act (Canada), the Company Creditors' Arrangement Act (Canada), the
Winding-Up Act (Canada) or any comparable law of Canada or any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect in the United
States of America or any state thereof or Canada or any province thereof.
"INTELLECTUAL PROPERTY" means all patents, trademarks, tradenames,
copyrights, technology, know-how and processes used in or necessary for the
conduct of the business of Company and its Subsidiaries as currently conducted
that are material to the condition (financial or otherwise), business or
operations of Company and its Subsidiaries, taken as a whole.
"INTEREST PAYMENT DATE" means (i) with respect to any Base Rate Loan
or any Canadian Base Rate Loan, each June 30, September 30, December 31 or March
31, commencing on the first such date to occur after the Closing Date, and (ii)
with respect to any Eurodollar Rate Loan or any Canadian Eurodollar Rate Loan,
the last day of each Interest Period applicable to such Loan; provided that in
--------
the case of each Interest Period of six months "Interest Payment Date" shall
also include the date that is three months after the commencement of such
Interest Period.
"INTEREST PERIOD" has the meaning assigned to that term in subsection
2.2B.
"INTEREST RATE AGREEMENT" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement.
"INTEREST RATE DETERMINATION DATE" means, with respect to any Interest
Period, the second Business Day prior to the first day of such Interest Period.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter, and any successor
statute.
"INVENTORY" means, with respect to any Person as of any date of
determination, all goods, merchandise and other personal property which are then
held by such Person for sale or lease, including raw materials and work in
process.
25
"INVESTMENT" means (i) any direct or indirect purchase or other
acquisition by Company or any of its Subsidiaries of, or of a beneficial
interest in, any Securities of any other Person (other than a Person that prior
to such purchase or acquisition was a wholly-owned Domestic Subsidiary of
Company), (ii) any direct or indirect redemption, retirement, purchase or other
acquisition for value, by any Subsidiary of Company from any Person other than
Company or any of its Subsidiaries, of any equity Securities of such Subsidiary,
or (iii) any direct or indirect loan, advance (other than advances to employees
for moving, entertainment and travel expenses, drawing accounts and similar
expenditures in the ordinary course of business) or capital contribution by
Company or any of its Subsidiaries to any other Person other than a wholly-owned
Domestic Subsidiary of Company, including all indebtedness and accounts receiv
able from that other Person that are not current assets or did not arise from
sales to that other Person in the ordinary course of business. The amount of
any Investment shall be the original cost of such Investment plus the cost of
----
all additions thereto, without any adjustments for increases or decreases in
value, or write-ups, write-downs or write-offs with respect to such Investment.
"IP COLLATERAL" means, collectively, the Collateral under the Company
Patent Security Agreement, the Company Trademark Security Agreement, the
Subsidiary Patent Security Agreements and the Subsidiary Trademark Security
Agreements.
"ISSUING LENDER" means, with respect to any Letter of Credit, BTCo or
any other Lender which agrees or is otherwise obligated to issue such Letter of
Credit, determined as provided in subsection 3.1A(v).
"JOINT VENTURE" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided
--------
that in no event shall any corporate Subsidiary of any Person be considered to
be a Joint Venture to which such Person is a party.
"LAKELAND CANADA" has the meaning assigned to that term in the
introduction to this Agreement.
"LAKELAND CANADA TERM LOAN COMMITMENT" means the commitment of a
Canadian Lender to purchase Lakeland Canada Term Loans pursuant to the Master
Assignment Agreement or to make new Lakeland Canada Term Loans to Lakeland
Canada pursuant to subsection 2.1A(ii), and "LAKELAND CANADA TERM LOAN
COMMITMENTS" means such commitments of all Canadian Lenders in the aggregate.
"LAKELAND CANADA TERM LOANS" means the Term Loans purchased or made by
Canadian Lenders to Lakeland Canada pursuant to subsection 2.1A(ii).
"LENDER" and "LENDERS" means the persons identified as "Lenders" and
listed on the signature pages of this Agreement, together with their successors
and permitted assigns
26
pursuant to subsection 10.1, and the term "Lenders" shall include Swing Line
Lender unless the context otherwise requires; provided that the term "Lenders",
--------
when used in the context of a particular Commitment, shall mean Lenders having
that Commitment.
"LETTER OF CREDIT" or "LETTERS OF CREDIT" means Standby Letters of
Credit issued or to be issued by Issuing Lenders for the account of Company
pursuant to subsection 3.1.
"LETTER OF CREDIT USAGE" means, as at any date of determination, the
sum of (i) the maximum aggregate amount which is or at any time thereafter may
become available for drawing under all Letters of Credit then outstanding plus
----
(ii) the aggregate amount of all drawings under Letters of Credit honored by
Issuing Lenders and not theretofore reimbursed by Company. For purposes of this
definition, any amount described in clause (i) or (ii) of the preceding sentence
which is denominated in Canadian Dollars shall be valued in Dollar Equivalents
as of the applicable date of determination.
"LIEN" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.
"LOAN" or "LOANS" means one or more of the Term Loans, Revolving Loans
or Swing Line Loans or any combination thereof.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Letters of
Credit (and any applications for, or reimbursement agreements or other documents
or certificates executed by Company in favor of an Issuing Lender relating to,
the Letters of Credit), the Guaranties, any Interest Rate Agreements with a
Lender or any of its Affiliates, the Collateral Documents and, solely for
purposes of the use of the term "Loan Documents" in the definition of
"Obligations", the Currency Agreements to which any Lender or any of its
Affiliates is a party.
"LOAN PARTY" means each of the Borrowers and Guarantors and "LOAN
PARTIES" means all such Persons, collectively.
"MARGIN STOCK" has the meaning assigned to that term in Regulation U
of the Board of Governors of the Federal Reserve System as in effect from time
to time.
"MASTER ASSIGNMENT AGREEMENT" means that certain Master Assignment
Agreement substantially in the form of Exhibit XIV annexed hereto, among
-----------
Company, the lenders under the Existing Credit Agreements, BTCC, as agent under
the Existing Credit Agreements, the lenders under this Agreement and the Agent
pursuant to which all lenders
27
under the Existing Credit Agreements assign their loans and/or revolving loan
commitments to the Agent, and Agent assigns to each Lender under this Agreement,
and each such lender purchases from Agent, the Loans and/or Revolving Loan
Commitments as set forth on Schedule 2.1 attached to this Agreement and BTCC
------------
assigns its rights and responsibilities as agent to the Agent and Canadian
Agent, as the case may be.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect upon the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of Company and its Subsidiaries, taken as a whole, (ii) the impairment
of the ability of any Loan Party to perform, or of Agent or Lenders to enforce,
the Obligations, or (iii) a material adverse effect on the value of the
Collateral or the amount which Agent or Lenders would be likely to receive
(after giving consideration to delays in payment and costs of enforcement) in
the liquidation of the Collateral.
"MATERIAL CONTRACT" means any contract or other arrangement to which
Company or any of its Subsidiaries is a party (other than the Loan Documents)
for which breach, nonperformance, cancellation or failure to renew could have a
Material Adverse Effect.
"MATERIAL LEASEHOLD" means a Real Property Asset consisting of a
leasehold interest in an Operating Lease or a Capital Lease which is reasonably
determined by Agent to be of material value as collateral for the Obligations.
"MDCP" means Madison Dearborn Capital Partners, L.P., a Delaware
limited partnership.
"MORTGAGE" means an instrument (whether designated as a deed of trust,
a trust deed or a mortgage or by any similar title) executed and delivered by
any Borrower or any of its Subsidiaries encumbering a Fee Property or a Material
Leasehold, as such instrument may be amended, supplemented or otherwise modified
from time to time, and "MORTGAGES" means all such instruments, including any
Additional Mortgages (as defined in subsection 6.10A), collectively.
"MULTIEMPLOYER PLAN" means any Employee Benefit Plan which is a
"multiemployer plan" as defined in Section 3(37) of ERISA.
"NET ASSET SALE PROCEEDS" means, with respect to any Asset Sale, Cash
payments (including any Cash received by way of deferred payment pursuant to, or
by monetization of, a note receivable or otherwise, but only as and when so
received) received from such Asset Sale, net of any bona fide direct costs
incurred in connection with such Asset Sale, including (i) income taxes
reasonably estimated to be actually payable within two years of the date of such
Asset Sale as a result of any gain recognized in connection with such Asset Sale
and (ii) payment of the outstanding principal amount of, premium or penalty, if
any, and
28
interest on any Indebtedness (other than the Loans) that is secured by a Lien on
the stock or assets in question and that is required to be repaid under the
terms thereof as a result of such Asset Sale; provided that, in connection with
--------
the sale of any existing asset (the "REPLACED ASSET") by Company or any of its
Subsidiaries substantially concurrently with the purchase of a replacement asset
by Company or such Subsidiary of like kind and character (which, in the case of
a Real Property Asset, shall be located within a 30-mile radius of the
Replacement Asset) (the "REPLACEMENT ASSET"), there shall be included in Net
Cash Proceeds only the excess, if any, of the Net Cash Proceeds received for the
Replaced Asset (calculated without giving effect to this proviso) over the
purchase price of the Replacement Asset.
"NET INSURANCE/CONDEMNATION PROCEEDS" means any Cash payments or
proceeds received by Company or any of its Subsidiaries (i) under any business
interruption or casualty insurance policy in respect of a covered loss
thereunder or (ii) as a result of the taking of any assets of Company or any of
its Subsidiaries by any Person pursuant to the power of eminent domain,
condemnation or otherwise, or pursuant to a sale of any such assets to a
purchaser with such power under threat of such a taking, in each case net of any
actual and reasonable documented costs incurred by Company or any of its
Subsidiaries in connection with the adjustment or settlement of any claims of
Company or such Subsidiary in respect thereof.
"NOTES" means one or more of the Domestic Term Notes, the Canadian
Term Notes, the Acquisition Notes, the Working Capital Revolving Notes or Swing
Line Note or any combination thereof.
"NOTICE OF BORROWING" means a notice substantially in the form of
Exhibit I annexed hereto delivered by a Borrower to Agent pursuant to subsection
---------
2.1B with respect to a proposed borrowing.
"NOTICE OF COMMENCEMENT OF CLEAN DOWN PERIOD" means a notice
substantially in the form of Exhibit V annexed hereto delivered by Company to
---------
Agent pursuant to subsection 2.1A(iv) with respect to the commencement of each
clean down period with respect to outstanding Working Capital Revolving Loans
and Swing Line Loans.
"NOTICE OF CONVERSION/CONTINUATION" means a notice substantially in
the form of Exhibit II annexed hereto delivered by a Borrower to Agent pursuant
----------
to subsection 2.2D with respect to a proposed conversion or continuation of the
applicable basis for determining the interest rate with respect to the Loans
specified therein.
"OBLIGATIONS" means all obligations of every nature of each Loan Party
from time to time owed to Agent, Lenders or any of them under the Loan
Documents, whether for principal, interest (including interest accruing on or
after the occurrence of an Insolvency Event), reimbursement of amounts drawn
under Letters of Credit, fees, expenses, indemnification or otherwise.
29
"OFFICERS' CERTIFICATE" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its chairman of the board
(if an officer) or its president or one of its vice presidents and by its chief
financial officer or its treasurer; provided that every Officers' Certificate
--------
with respect to the compliance with a condition precedent to the making of any
Loans hereunder shall include (i) a statement that the officer or officers
making or giving such Officers' Certificate have read such condition and any
definitions or other provisions contained in this Agreement relating thereto,
(ii) a statement that, in the opinion of the signers, they have made or have
caused to be made such examination or investigation as is necessary to enable
them to express an informed opinion as to whether or not such condition has been
complied with, and (iii) a statement as to whether, in the opinion of the
signers, such condition has been complied with.
"OPERATING LEASE" means, as applied to any Person, any lease
(including leases that may be terminated by the lessee at any time) of any
property (whether real, personal or mixed) that is not a Capital Lease other
than any such lease under which that Person is the lessor.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"PENSION PLAN" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code
or Section 302 of ERISA.
"PERMITTED ENCUMBRANCES" means the following types of Liens (excluding
any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal
Revenue Code or by ERISA, any such Lien relating to or imposed in connection
with any Environmental Claim, and any such Lien expressly prohibited by any
applicable terms of any of the Collateral Documents):
(i) Liens for taxes, assessments or governmental charges or claims
the payment of which is not, at the time, required by subsection 6.3;
(ii) statutory Liens of landlords, statutory Liens of banks and
rights of set-off, statutory Liens of carriers, warehousemen, mechanics,
repairmen, workmen and materialmen, and other Liens imposed by law, in each
case incurred in the ordinary course of business (a) for amounts not yet
overdue or (b) for amounts that are overdue and that (in the case of any
such amounts overdue for a period in excess of 5 days) are being contested
in good faith by appropriate proceedings, so long as (1) such reserves or
other appropriate provisions, if any, as shall be required by GAAP shall
have been made for any such contested amounts, and (2) in the case of a
Lien with respect to any portion of the Collateral, such contest
proceedings conclusively operate to stay the sale of any portion of the
Collateral on account of such Lien;
30
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, trade contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money), so long as no foreclosure, sale or similar
proceedings have been commenced with respect to any portion of the
Collateral on account thereof;
(iv) any attachment or judgment Lien not constituting an Event of
Default under subsection 8.8;
(v) leases or subleases granted to third parties in accordance with
any applicable terms of the Collateral Documents and not interfering in any
material respect with the ordinary conduct of the business of Company or
any of its Subsidiaries or resulting in a material diminution in the value
of any Collateral as security for the Obligations;
(vi) easements, rights-of-way, restrictions, encroachments, and
other minor defects or irregularities in title, in each case which do not
and will not interfere in any material respect with the ordinary conduct of
the business of Company or any of its Subsidiaries or result in a material
diminution in the value of any Collateral as security for the Obligations;
(vii) any (a) interest or title of a lessor or sublessor under any
lease permitted by subsection 7.9, (b) restriction or encumbrance that the
interest or title of such lessor or sublessor may be subject to, or (c)
subordination of the interest of the lessee or sublessee under such lease
to any restriction or encumbrance referred to in the preceding clause (b),
so long as the holder of such restriction or encumbrance agrees to
recognize the rights of such lessee or sublessee under such lease;
(viii) Liens arising from filing UCC financing statements relating
solely to leases permitted by this Agreement;
(ix) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(x) any zoning or similar law or right reserved to or vested in any
govern mental office or agency to control or regulate the use of any real
property;
(xi) Liens securing obligations (other than obligations representing
Indebted ness for borrowed money) under operating, reciprocal easement or
similar agreements entered into in the ordinary course of business of
Company and its Subsidiaries; and
31
(xii) licenses of patents, trademarks and other intellectual property
rights granted by Company or any of its Subsidiaries in the ordinary course
of business and not interfering in any material respect with the ordinary
conduct of the business of Company or such Subsidiary.
"PERSON" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, Joint Ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments (whether federal,
state or local, domestic or foreign, and including political subdivisions
thereof) and agencies or other administrative or regulatory bodies thereof.
"PLEDGED COLLATERAL" means, collectively, the "Pledged Collateral" as
defined in the Holdings Pledge Agreement, the Company Pledge Agreement and the
Subsidiary Pledge Agreements.
"POTENTIAL EVENT OF DEFAULT" means a condition or event that, after
notice or lapse of time or both, would constitute an Event of Default.
"PPSA" means the Personal Property Security Act or any other statute
pertaining to the creation, perfection or priority of security interests in any
collateral, in each case as in effect in any Canadian province.
"PRIME RATE" means the rate that BTCo announces from time to time as
its prime lending rate in the United States for Dollar denominated loans, as in
effect from time to time. The Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any customer.
BTCo or any other Lender may make commercial loans or other loans at rates of
interest at, above or below the Prime Rate.
"PRIOR LIENS" means Permitted Encumbrances, but only to the extent
that the law or regulation creating or authorizing such Lien provides that such
Lien must be superior to the Lien and security interest created and evidenced by
the Collateral Documents.
"PRO RATA SHARE" means (i) with respect to all payments, computations
and other matters relating to the Domestic Term Loan Commitment or the Domestic
Term Loan of any Domestic Lender, the percentage obtained by dividing (x) the
--------
Domestic Term Loan Exposure of that Domestic Lender by (y) the aggregate
--
Domestic Term Loan Exposure of all Domestic Lenders, (ii) with respect to all
payments, computations and other matters relating to the Acquisition Revolving
Loan Commitment or the Acquisition Loan Exposure of any Domestic Lender, the
percentage obtained by dividing (x) the Acquisition Loan Exposure of that
--------
Domestic Lender by (y) the aggregate Acquisition Loan Exposure of all Domestic
--
Lenders, (iii) with respect to all payments, computations and other matters
relating to the Working Capital Revolving Loan Commitment or the Working Capital
Revolving Loans of any
32
Domestic Lender or any Letters of Credit issued or participations therein
purchased by any Domestic Lender, the percentage obtained by dividing (x) the
--------
Working Capital Revolving Loan Exposure of that Domestic Lender by (y) the
--
aggregate Working Capital Revolving Loan Exposure of all Domestic Lenders, (iv)
with respect to all payments, computations and other matters relating to the
Canadian Term Loan Commitment or the Canadian Term Loan of any Canadian Lender,
the percentage obtained by dividing (x) the Canadian Term Loan Exposure of that
--------
Lender by (y) the aggregate Canadian Term Loan Exposure of all Canadian Lenders,
--
and (v) for all other purposes with respect to each Lender, the percentage
obtained by dividing (x) the sum of the Domestic Term Loan Exposure of that
--------
Lender plus the Acquisition Loan Exposure of that Lender plus the Working
---- ----
Capital Revolving Loan Exposure of that Lender plus the Canadian Term Loan
----
Exposure of that Lender by (y) the sum of the aggregate Domestic Term Loan
--
Exposure of all Lenders plus the aggregate Acquisition Loan Exposure of all
Lenders plus the aggregate Working Capital Revolving Loan Exposure of all
----
Lenders plus the aggregate Canadian Term Loan Exposure of all Lenders, in any
----
such case as the applicable percentage may be adjusted by assignments permitted
pursuant to subsection 10.1. The initial Pro Rata Share of each Lender for
purposes of each of clauses (i), (ii), (iii), (iv) and (v) of the preceding
sentence is set forth opposite the name of that Lender in Schedule 2.1 annexed
------------
hereto.
"PTO" means the United States Patent and Trademark Office or any
successor or substitute office in which filings are necessary or, in the opinion
of Agent, desirable in order to create or perfect Liens on any IP Collateral.
"REAL PROPERTY ASSETS" means all real property from time to time owned
in fee by any Loan Party and all rights, title and interest in and to any and
all leases of real property as to which any Loan Party has a leasehold interest,
including without limitation any such fee or leasehold interests acquired by any
Loan Party after the date hereof.
"RECORDED LEASEHOLD INTEREST" means a Leasehold Property with respect
to which a Record Document (as hereinafter defined) has been recorded in all
places necessary or desirable, in Agent's reasonable judgment, to give
constructive notice of such Leasehold Property to third-party purchasers and
encumbrancers of the affected real property. For purposes of this definition,
the term "RECORD DOCUMENT" means, with respect to any Leasehold Property, (a)
the lease evidencing such Leasehold Property or a memorandum thereof, executed
and acknowledged by the owner of the affected real property, as lessor, or (b)
if such Leasehold Property was acquired or subleased from the holder of a
Recorded Leasehold Interest, the applicable assignment or sublease document,
executed and acknowledged by such holder, in each case in form sufficient to
give such constructive notice upon recordation and otherwise in form reasonably
satisfactory to Agent.
"REFUNDED SWING LINE LOANS" has the meaning assigned to that term in
subsection 2.1A(v).
33
"REGISTER" has the meaning assigned to that term in subsection 2.1D.
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"REIMBURSEMENT DATE" has the meaning assigned to that term in
subsection 3.3B.
"RELEASE" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including the abandonment or disposal of any barrels, containers or
other closed receptacles containing any Hazardous Materials), including the
movement of any Hazardous Materials through the air, soil, surface water or
groundwater.
"REQUEST FOR ISSUANCE OF LETTER OF CREDIT" means a notice
substantially in the form of Exhibit III annexed hereto delivered by Company to
-----------
Agent pursuant to subsection 3.1A(iv) with respect to the proposed issuance of a
Letter of Credit.
"REQUIREMENT OF LAW" means (a) the certificates or articles of
incorporation, by-laws and other organizational or governing documents of a
Person, (b) any law, treaty, rule, regulation or determination of an arbitrator,
court or other governmental authority, or (c) any franchise, license, lease,
permit, certificate, authorization, qualification, easement, right of way, right
or approval binding on a Person or any of its property.
"REQUISITE CLASS LENDERS" means, at any time of determination (x) for
the Class of Lenders consisting of Domestic Lenders, Domestic Lenders having or
holding more than 66 2/3% of the sum of (i) the aggregate Domestic Term Loan
Exposure of all Domestic Lenders, (ii) the aggregate Acquisition Loan Exposure
of all Domestic Lenders, plus (iii) the aggregate Working Capital Revolving Loan
----
Exposure of all Domestic Lenders and (y) for the Class of Lenders consisting of
Canadian Lenders, Canadian Lenders having or holding more than 66 2/3% of the
aggregate Canadian Term Loan Exposure of all Canadian Lenders.
"REQUISITE LENDERS" means Lenders having or holding 51% or more of the
sum of the aggregate Term Loan Exposure of all Lenders plus the aggregate
----
Revolving Loan Exposure of all Lenders.
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of Company now or hereafter outstanding, except a dividend payable solely in
shares of that class of stock to the holders of that class, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of stock of Company now or
hereafter outstanding, (iii) any payment made to retire, or to obtain the
surrender of, any
34
outstanding warrants, options or other rights to acquire shares of any class of
stock of Company now or hereafter outstanding, and (iv) any payment or
prepayment of principal of, premium, if any, or interest on, or redemption,
purchase, retirement, defeasance (including in-substance or legal defeasance),
sinking fund or similar payment with respect to, any Subordinated Indebtedness.
"REVOLVING LOAN COMMITMENT" means the Acquisition Revolving Loan
Commitment or Working Capital Revolving Loan Commitment or any combination
thereof.
"REVOLVING LOAN COMMITMENT TERMINATION DATE" means June 30, 2003.
"REVOLVING LOAN EXPOSURE" means the Acquisition Loan Exposure and the
Working Capital Revolving Loan Exposure or any combination thereof.
"REVOLVING LOANS" means Acquisition Loans and Working Capital
Revolving Loans or any combination thereof.
"REVOLVING NOTES" means the Acquisition Notes and the Working Capital
Revolving Notes or any combination thereof.
"SECURITIES" means any stock, shares, partnership interests, voting
trust certificates, certificates of interest or participation in any profit-
sharing agreement or arrangement, options, warrants, bonds, debentures, notes,
or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or participations in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time, and any successor statute.
"SOLVENT" means, with respect to any Person, that as of the date of
determination both (A) (i) the then fair saleable value of the property of such
Person is (y) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (z) not less than the amount that will be
required 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; (ii) such Person's
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (B) such Person is
"solvent" within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall be computed
as the amount that, in light of all of
35
the facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability.
"STANDBY LETTER OF CREDIT" means any standby letter of credit or
similar instrument issued for the purpose of supporting (i) Indebtedness of
Company or any of its Subsidiaries in respect of industrial revenue or
development bonds or financings, (ii) workers' compensation liabilities of
Company or any of its Subsidiaries, (iii) the obligations of third party
insurers of Company or any of its Subsidiaries arising by virtue of the laws of
any jurisdiction requiring third party insurers, (iv) obligations with respect
to Capital Leases or Operating Leases of Company or any of its Subsidiaries, and
(v) performance, payment, deposit or surety obligations of Company or any of its
Subsidiaries, in any case if required by law or governmental rule or regulation
or in accordance with custom and practice in the industry; provided that Standby
--------
Letters of Credit may not be issued for the purpose of supporting (a) trade
payables or (b) any Indebtedness constituting "antecedent debt" (as that term is
used in Section 547 of the Bankruptcy Code).
"SUBORDINATED INDEBTEDNESS" means (i) the Indebtedness of Company
evidenced by the Subordinated Notes and (ii) any other Indebtedness of Company
subordinated in right of payment to the Obligations pursuant to documentation
containing maturities, amortization schedules, covenants, defaults, remedies,
subordination provisions and other material terms in form and substance
satisfactory to Agent and Requisite Lenders.
"SUBORDINATED NOTE INDENTURE" means the indenture dated as of October
19, 1995 between Company, as issuer, Holdings and Sun Gro Horticulture, Inc.,
and IBJ ▇▇▇▇▇▇▇▇ Bank & Trust Company, as Trustee.
"SUBORDINATED NOTES" means Company's $120,000,000 in initial aggregate
principal amount of 11-3/4% Senior Subordinated Notes due 2005.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, limited liability company, association, joint venture or other
business entity of which more than 50% of the total voting power of shares of
stock or other ownership interests entitled (without regard to the occurrence of
any contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar functions)
having the power to direct or cause the direction of the management and policies
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof.
"SUN GRO CANADA" has the meaning assigned to that term in the
introduction to this Agreement.
"SUN GRO CANADA TERM LOAN COMMITMENT" means the commitment of a
Canadian Lender to purchase Sun Gro Canada Term Loans pursuant to the Master
Assignment
36
Agreement or to make new Sun Gro Canada Term Loans to Sun Gro Canada pursuant to
subsection 2.1A(ii), and "SUN GRO CANADA TERM LOAN COMMITMENTS" means such
commitments of all Canadian Lenders in the aggregate.
"SUN GRO CANADA TERM LOANS" means the Term Loans purchased or made by
Canadian Lenders to Sun Gro Canada pursuant to subsection 2.1A(ii).
"SUN GRO HORTICULTURE" means Sun Gro Horticulture, Inc., a Nevada
corporation.
"SWING LINE LENDER" means BTCo, or any Person serving as a successor
Agent hereunder, in its capacity as Swing Line Lender hereunder.
"SWING LINE LOAN COMMITMENT" means the commitment of Swing Line Lender
to make Swing Line Loans to Company pursuant to subsection 2.1A(v).
"SWING LINE LOANS" means the Loans made by Swing Line Lender to
Company pursuant to subsection 2.1A(v).
"SWING LINE NOTE" means (i) the promissory note of Company issued
pursuant to subsection 2.1E(iii) on the Closing Date and (ii) any promissory
note issued by Company to any successor Agent and Swing Line Lender pursuant to
the last sentence of subsection 9.5B, in each case substantially in the form of
Exhibit IV-E annexed hereto, as it may be amended, supplemented or otherwise
------------
modified from time to time.
"SYNDICATION AGENT" has the meaning assigned to that term in the
introduction to this Agreement.
"TAX" or "TAXES" means any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever called, by
whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or
assessed; provided that "TAX ON THE OVERALL NET INCOME" of a Person shall be
--------
construed as a reference to a tax imposed by the jurisdiction in which that
Person is organized or in which that Person's principal office (and/or, in the
case of a Lender, its lending office) is located or in which that Person
(and/or, in the case of a Lender, its lending office) is deemed to be doing
business on all or part of the net income, profits or gains (whether worldwide,
or only insofar as such income, profits or gains are considered to arise in or
to relate to a particular jurisdiction, or otherwise) of that Person (and/or, in
the case of a Lender, its lending office).
"TERM LOAN EXPOSURE" means the Domestic Term Loan Exposure and the
Canadian Term Loan Exposure or any combination thereof.
37
"TERM LOANS" means the Domestic Term Loans or Canadian Term Loans or
any combination thereof.
"TERM NOTES" means the Domestic Term Notes and the Canadian Term Notes
or any combination thereof.
"TERM LOAN COMMITMENT" means the Domestic Term Loan Commitment and the
Canadian Term Loan Commitment or any combination thereof.
"TOTAL UTILIZATION OF WORKING CAPITAL REVOLVING LOAN COMMITMENTS"
means, as at any date of determination, the sum of (i) the aggregate principal
amount of all outstanding Working Capital Revolving Loans (other than Working
Capital Revolving Loans made for the purpose of repaying any Refunded Swing Line
Loans or reimbursing the applicable Issuing Lender for any amount drawn under
any Letter of Credit but not yet so applied) plus (ii) the aggregate principal
----
amount of all outstanding Swing Line Loans plus (iii) the Letter of Credit
----
Usage.
"TRANSACTIONS" means the repayment of approximately $15,500,000 in
existing mortgage indebtedness of the Company, the redemption of up to
$42,000,000 in aggregate principal amount of the Subordinated Notes and the
reduction in Indebtedness outstanding on the Closing Date under this Agreement
from that outstanding under the Existing Credit Agreements, in each case from
the application of the proceeds of Company's initial public offering and the
increase in Term Loans under this Agreement.
"UCC" means the Uniform Commercial Code (or any similar or equivalent
legislation) as in effect in any applicable jurisdiction.
"WORKING CAPITAL REVOLVING LOAN COMMITMENT" means the commitment of a
Domestic Lender to purchase Working Capital Revolving Loans pursuant to the
Master Assignment Agreement or to make Working Capital Revolving Loans to
Company pursuant to subsection 2.1A(iv), and "WORKING CAPITAL REVOLVING LOAN
COMMITMENTS" means such commitments of all Domestic Lenders in the aggregate.
"WORKING CAPITAL REVOLVING LOAN EXPOSURE" means, with respect to any
Domestic Lender as of any date of determination (i) prior to the termination of
the Working Capital Revolving Loan Commitments, that Domestic Lender's Working
Capital Revolving Loan Commitment and (ii) after the termination of the Working
Capital Revolving Loan Commitments, the aggregate outstanding principal amount
of the Working Capital Revolving Loans of that Domestic Lender.
"WORKING CAPITAL REVOLVING LOANS" means the Loans purchased or made by
Domestic Lenders to Company pursuant to subsection 2.1A(iv).
38
"WORKING CAPITAL REVOLVING NOTES" means (i) the promissory notes of
Company issued pursuant to subsection 2.1E(i)(c) on the Closing Date and (ii)
any promissory notes issued by Company pursuant to the last sentence of
subsection 10.1B(i) in connection with assignments of the Working Capital
Revolving Loan Commitments and Working Capital Revolving Loans of any Domestic
Lenders, in each case substantially in the form of Exhibit IV-C annexed hereto,
------------
as they may be amended, supplemented or otherwise modified from time to time.
1.2 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS UNDER
------------------------------------------------------------------------
AGREEMENT.
---------
Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. Financial statements and other information
required to be delivered by Company to Lenders pursuant to clauses (i), (ii),
(iii) and (xiii) of subsection 6.1 shall be prepared in accordance with GAAP as
in effect at the time of such preparation (and delivered together with the
reconciliation statements provided for in subsection 6.1(v)). Calculations in
connection with the definitions, covenants and other provisions of this
Agreement shall utilize accounting principles and policies in conformity with
those used to prepare the financial statements referred to in subsections 4.1K
and 5.3.
1.3 OTHER DEFINITIONAL PROVISIONS AND RULES OF CONSTRUCTION.
-------------------------------------------------------
A. Any of the terms defined herein may, unless the context otherwise
requires, be used in the singular or the plural, depending on the reference.
B. References to "Sections" and "subsections" shall be to Sections
and subsections, respectively, of this Agreement unless otherwise specifically
provided.
C. The use in any of the Loan Documents of the word "include" or
"including", when following any general statement, term or matter, shall not be
construed to limit such statement, term or matter to the specific items or
matters set forth immediately following such word or to similar items or
matters, whether or not nonlimiting language (such as "without limitation" or
"but not limited to" or words of similar import) is used with reference thereto,
but rather shall be deemed to refer to all other items or matters that fall
within the broadest possible scope of such general statement, term or matter.
39
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 COMMITMENTS; MAKING OF LOANS; THE REGISTER; NOTES.
-------------------------------------------------
A. COMMITMENTS. Subject to the terms and conditions of this Agreement
and in reliance upon the representations and warranties of each Borrower herein
set forth, each Domestic Lender hereby severally agrees to purchase or to make
the Loans described in subsections 2.1A(i), 2.1A(iii) and 2.1A(iv), each
Canadian Lender hereby severally agrees to purchase or to make the Loans
described in subsection 2.1A(ii) and Swing Line Lender hereby agrees to make the
Loans described in subsection 2.1A(v).
(i) Domestic Term Loans. Each Domestic Lender severally agrees to
-------------------
purchase under the Master Assignment Agreement or to lend to Company on the
Closing Date an amount not exceeding its Pro Rata Share of the aggregate
amount of the Domestic Term Loan Commitments to be used for the purposes
identified in subsection 2.5A. The amount of each Lender's Domestic Term
Loan Commitment is set forth opposite its name on Schedule 2.1 annexed
------------
hereto and the aggregate amount of the Domestic Term Loan Commitments is
$30,000,000; provided that the Domestic Term Loan Commitments of Domestic
--------
Lenders shall be adjusted to give effect to any assignments of the Domestic
Term Loan Commitments pursuant to subsection 10.1B. Each Lender's Domestic
Term Loan Commitment shall expire immediately and without further action on
July 31, 1998 if the Domestic Term Loans are not purchased or made on or
before that date. Company may make only one borrowing under the Domestic
Term Loan Commitments. Amounts borrowed under this subsection 2.1A(i) and
subsequently repaid or prepaid may not be reborrowed.
(ii) Canadian Term Loans. Each Canadian Lender severally agrees to
-------------------
purchase under the Master Assignment Agreement or to lend to Sun Gro Canada
and to Lakeland Canada, respectively, on the Closing Date an amount in
Dollars not exceeding its Pro Rata Share of the aggregate amount of the Sun
Gro Term Loan Commitment and the Lakeland Canada Term Loan Commitment to be
used for the purposes identified in subsection 2.5A. The amount of each
Canadian Lender's Sun Gro Term Loan Commitment and Lakeland Canada Term
Loan Commitment is set forth opposite its name on Schedule 2.1 annexed
------------
hereto and the aggregate amount of the Sun Gro Term Loan Commitments is
$15,000,000 and of the Lakeland Canada Term Loan Commitments is $5,000,000,
respectively; provided that the Canadian Term Loan Commitments of Canadian
--------
Lenders shall be adjusted to give effect to any assignments of the Canadian
Term Loan Commitments pursuant to subsection 10.1B. Each Canadian Lender's
Canadian Term Loan Commitment shall expire immediately and without further
action on July 31, 1998 if the Canadian Term Loans are not purchased or
made on or before that date. Each Canadian Borrower may make only one
borrowing under the Canadian Term Loan Commitments. Amounts borrowed under
this subsection 2.1A(ii) and subsequently repaid or prepaid may not be
reborrowed.
40
(iii) Acquisition Loans. Each Domestic Lender severally agrees,
-----------------
subject to the limitations set forth below with respect to the maximum
amount of Acquisition Loans permitted to be outstanding from time to time,
to lend to Company from time to time during the period from the Closing
Date to but excluding the Acquisition Loan Conversion Date an aggregate
amount not exceeding its Pro Rata Share of the aggregate amount of the
Acquisition Revolving Loan Commitments to be used for the purposes
identified in subsection 2.5B. The original amount of each Lender's
Acquisition Revolving Loan Commitment is set forth opposite its name on
Schedule 2.1 annexed hereto and the aggregate original amount of the
------------
Acquisition Revolving Loan Commitments is $100,000,000; provided that the
--------
Acquisition Revolving Loan Commitments of Lenders shall be adjusted to give
effect to any assignments of the Acquisition Revolving Loan Commitments
pursuant to subsection 10.1B; and provided, further that the amount of the
-------- -------
Acquisition Revolving Loan Commitments shall be reduced from time to time
by the amount of any reductions thereto made pursuant to subsections
2.4A(ii), 2.4B(ii) and 2.4B(iii). Each Lender's Acquisition Revolving Loan
Commitment shall expire on the Acquisition Loan Conversion Date; provided
--------
that each Lender's Acquisition Revolving Loan Commitment shall expire
immediately and without further action on July 31, 1998 if the Domestic
Term Loans are not purchased or made on or before that date. Amounts
borrowed under this subsection 2.1A(iii) may be repaid and reborrowed to
but excluding the Acquisition Loan Conversion Date.
Anything contained in this Agreement to the contrary notwithstanding,
prior to the Acquisition Loan Conversion Date, the Acquisition Loans shall
in no event exceed the Acquisition Revolving Loan Commitments then in
effect.
(iv) Working Capital Revolving Loans. Each Lender severally agrees,
-------------------------------
subject to the limitations set forth below with respect to the maximum
amount of Working Capital Revolving Loans permitted to be outstanding from
time to time, to lend to Company from time to time during the period from
the Closing Date to but excluding the Revolving Loan Commitment Termination
Date an aggregate amount not exceeding its Pro Rata Share of the aggregate
amount of the Working Capital Revolving Loan Commitments to be used for the
purposes identified in subsection 2.5C. The original amount of each
Lender's Working Capital Revolving Loan Commitment is set forth opposite
its name on Schedule 2.1 annexed hereto and the aggregate original amount
------------
of the Working Capital Revolving Loan Commitments is $100,000,000; provided
--------
that the Working Capital Revolving Loan Commitments of Lenders shall be
adjusted to give effect to any assignments of the Working Capital Revolving
Loan Commitments pursuant to subsection 10.1B; and provided, further that
-------- -------
the amount of the Working Capital Revolving Loan Commitments shall be
reduced from time to time by the amount of any reductions thereto made
pursuant to subsections 2.4B(ii) and 2.4B(iii). Each Lender's Working
Capital Revolving Loan Commitment shall expire on the Revolving Loan
Commitment Termination Date and all Working Capital Revolving Loans and all
other amounts owed hereunder with respect to the Working Capital
41
Revolving Loans and the Working Capital Revolving Loan Commitments shall be
paid in full no later than that date; provided that each Lender's Working
--------
Capital Revolving Loan Commitment shall expire immediately and without
further action on July 31, 1998 if the Domestic Term Loans are not
purchased or made on or before that date. Amounts borrowed under this
subsection 2.1A(iv) may be repaid and reborrowed to but excluding the
Revolving Loan Commitment Termination Date.
Anything contained in this Agreement to the contrary notwithstanding,
the Working Capital Revolving Loans and the Working Capital Revolving Loan
Commitments shall be subject to the limitation that
(a) in no event shall the Total Utilization of Working Capital
Revolving Loan Commitments at any time exceed the Working Capital
Revolving Loan Commitments then in effect; and
(b) for sixty consecutive days commencing with the date
specified by Company for the commencement of such clean down period in
a Notice of Commencement of Clean Down Period delivered to Agent on or
prior to such commencement date, the Company shall not have
outstanding Working Capital Revolving Loans and Swing Line Loans
during any of the periods set forth below in excess of the correlative
amount indicated:
Fiscal Year 1998 $15,000,000
Fiscal Year 1999 15,000,000
Fiscal Year 2000 10,000,000
Fiscal Year 2001 and thereafter -0-
(v) Swing Line Loans. Swing Line Lender hereby agrees, subject to
----------------
the limitations set forth below with respect to the maximum amount of Swing
Line Loans permitted to be outstanding from time to time, to make a portion
of the Working Capital Revolving Loan Commitments available to Company from
time to time during the period from the Closing Date to but excluding the
Revolving Loan Commitment Termination Date by making Swing Line Loans to
Company in an aggregate amount not exceeding the amount of the Swing Line
Loan Commitment to be used for the purposes identified in subsection 2.5C,
notwithstanding the fact that such Swing Line Loans, when aggregated with
Swing Line Lender's outstanding Working Capital Revolving Loans and Swing
Line Lender's Pro Rata Share of the Letter of Credit Usage then in effect,
may exceed Swing Line Lender's Working Capital Revolving Loan Commitment.
The original amount of the Swing Line Loan Commitment is $5,000,000;
provided that any reduction of the Working Capital Revolving Loan
Commitments made pursuant to subsection 2.4B(ii) or 2.4B(iii) which reduces
the aggregate Working Capital Revolving Loan Commitments to an amount less
than the then current amount of the Swing Line Loan Commitment shall result
in an automatic
42
corresponding reduction of the Swing Line Loan Commitment to the amount of
the Working Capital Revolving Loan Commitments, as so reduced, without any
further action on the part of Company, Agent or Swing Line Lender. The
Swing Line Loan Commitment shall expire on the Revolving Loan Commitment
Termination Date and all Swing Line Loans and all other amounts owed
hereunder with respect to the Swing Line Loans shall be paid in full no
later than that date; provided that the Swing Line Loan Commitment shall
--------
expire immediately and without further action on July 31, 1998 if the
Domestic Term Loans are not purchased or made on or before that date.
Amounts borrowed under this subsection 2.1A(v) may be repaid and reborrowed
to but excluding the Revolving Loan Commitment Termination Date.
Anything contained in this Agreement to the contrary notwithstanding,
the Swing Line Loans and the Swing Line Loan Commitment shall be subject to
the limitation that
(a) in no event shall the outstanding Swing Line Loans exceed
the Swing Line Loan Commitment then in effect;
(b) in no event shall the Total Utilization of Working Capital
Revolving Loan Commitments at any time exceed the Working Capital
Revolving Loan Commitments then in effect; and
(c) for sixty consecutive days commencing with the date
specified by Company for the commencement of such clean down period in
a Notice of Commencement of Clean Down Period delivered to Agent on or
prior to such commencement date, the Company shall not have
outstanding Working Capital Revolving Loans and Swing Line Loans
during any of the periods set forth below in excess of the correlative
amount indicated:
Fiscal Year 1998 $15,000,000
Fiscal Year 1999 15,000,000
Fiscal Year 2000 10,000,000
Fiscal Year 2001 and thereafter -0-
With respect to any Swing Line Loans which have not been voluntarily
prepaid by Company pursuant to subsection 2.4B(i), Swing Line Lender may,
at any time in its sole and absolute discretion, deliver to Agent (with a
copy to Company), no later than 10:00 A.M. (New York City time) on the
first Business Day in advance of the proposed Funding Date, a notice (which
shall be deemed to be a Notice of Borrowing given by Company) requesting
Lenders to make Working Capital Revolving Loans that are Base Rate Loans on
such Funding Date in an amount equal to the amount of such Swing Line Loans
(the "REFUNDED SWING LINE LOANS") outstanding on the date such notice is
43
given which Swing Line Lender requests Lenders to prepay. Anything
contained in this Agreement to the contrary notwithstanding, (i) the
proceeds of such Working Capital Revolving Loans made by Lenders other than
Swing Line Lender shall be immediately delivered by Agent to Swing Line
Lender (and not to Company) and applied to repay a corresponding portion of
the Refunded Swing Line Loans and (ii) on the day such Working Capital
Revolving Loans are made, Swing Line Lender's Pro Rata Share of the
Refunded Swing Line Loans shall be deemed to be paid with the proceeds of a
Working Capital Revolving Loan made by Swing Line Lender, and such portion
of the Swing Line Loans deemed to be so paid shall no longer be outstanding
as Swing Line Loans and shall no longer be due under the Swing Line Note of
Swing Line Lender but shall instead constitute part of Swing Line Lender's
outstanding Working Capital Revolving Loans and shall be due under the
Working Capital Revolving Note of Swing Line Lender. Company hereby
authorizes Agent and Swing Line Lender to charge Company's accounts with
Agent and Swing Line Lender (up to the amount available in each such
account) in order to immediately pay Swing Line Lender the amount of the
Refunded Swing Line Loans to the extent the proceeds of such Working
Capital Revolving Loans made by Lenders, including the Working Capital
Revolving Loan deemed to be made by Swing Line Lender, are not sufficient
to repay in full the Refunded Swing Line Loans. If any portion of any such
amount paid (or deemed to be paid) to Swing Line Lender should be recovered
by or on behalf of Company from Swing Line Lender in bankruptcy, by
assignment for the benefit of creditors or otherwise, the loss of the
amount so recovered shall be ratably shared among all Lenders in the manner
contemplated by subsection 10.6.
If for any reason (a) Working Capital Revolving Loans are not made
upon the request of Swing Line Lender as provided in the immediately
preceding paragraph in an amount sufficient to repay any amounts owed to
Swing Line Lender in respect of any outstanding Swing Line Loans or (b) the
Working Capital Revolving Loan Commitments are terminated at a time when
any Swing Line Loans are outstanding, each Lender shall be deemed to, and
hereby agrees to, have purchased a participation in such outstanding Swing
Line Loans in an amount equal to its Pro Rata Share (calculated, in the
case of the foregoing clause (b), immediately prior to such termination of
the Working Capital Revolving Loan Commitments) of the unpaid amount of
such Swing Line Loans together with accrued interest thereon. Upon one
Business Day's notice from Swing Line Lender, each Lender shall deliver to
Swing Line Lender an amount equal to its respective participation in same
day funds at the Funding and Payment Office. In order to further evidence
such participation (and without prejudice to the effectiveness of the
participation provisions set forth above), each Lender agrees to enter into
a separate participation agreement at the request of Swing Line Lender in
form and substance reasonably satisfactory to Swing Line Lender and such
Lender. In the event any Lender fails to make available to Swing Line
Lender the amount of such Lender's participation as provided in this
paragraph, Swing Line Lender shall be entitled to recover such amount on
demand from such Lender together
44
with interest thereon at the rate customarily used by Swing Line Lender for
the correction of errors among banks for three Business Days and thereafter
at the Base Rate. In the event Swing Line Lender receives a payment of any
amount in which other Lenders have purchased participations as provided in
this paragraph, Swing Line Lender shall promptly distribute to each such
other Lender its Pro Rata Share of such payment.
Anything contained herein to the contrary notwithstanding, each
Lender's obligation to make Working Capital Revolving Loans for the purpose
of repaying any Refunded Swing Line Loans pursuant to the second preceding
paragraph and each Lender's obligation to purchase a participation in any
unpaid Swing Line Loans pursuant to the immediately preceding paragraph
shall be absolute and unconditional and shall not be affected by any
circumstance, including (a) any set-off, counterclaim, recoupment, defense
or other right which such Lender may have against Swing Line Lender,
Company or any other Person for any reason whatsoever; (b) the occurrence
or continuation of an Event of Default or a Potential Event of Default; (c)
any adverse change in the business, operations, properties, assets,
condition (financial or otherwise) or prospects of Company or any of its
Subsidiaries; (d) any breach of this Agreement or any other Loan Document
by any party thereto; or (e) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing; provided that
--------
such obligations of each Lender are subject to the condition that (X) Swing
Line Lender believed in good faith that all conditions under Section 4 to
the making of the applicable Refunded Swing Line Loans or other unpaid
Swing Line Loans, as the case may be, were satisfied at the time such
Refunded Swing Line Loans or unpaid Swing Line Loans were made or (Y) the
satisfaction of any such condition not satisfied had been waived in
accordance with subsection 10.6 prior to or at the time such Refunded Swing
Line Loans or other unpaid Swing Line Loans were made.
B. BORROWING MECHANICS. Term Loans or Revolving Loans made on any
Funding Date (other than Working Capital Revolving Loans made pursuant to a
request by Swing Line Lender pursuant to subsection 2.1A(v) for the purpose of
repaying any Refunded Swing Line Loans or Working Capital Revolving Loans made
pursuant to subsection 3.3B for the purpose of reimbursing any Issuing Lender
for the amount of a drawing under a Letter of Credit issued by it) shall be in
an aggregate minimum amount of $1,000,000 and integral multiples of $500,000 in
excess of that amount; provided Revolving Loans made on any Funding Date as
--------
Eurodollar Rate Loans or Term Loans made on any Funding Date as Eurodollar Rate
Loans or Canadian Eurodollar Rate Loans, as the case may be, with a particular
Interest Period shall be in an aggregate minimum amount of $5,000,000 and
integral multiples of $500,000 in excess of that amount. Swing Line Loans made
on any Funding Date shall be in an aggregate minimum amount of $500,000 and
integral multiples of $100,000 in excess of that amount. Whenever any Borrower
desires that Lenders make Term Loans or Revolving Loans it shall deliver to
Agent a Notice of Borrowing no later than 12:00 Noon (New York City time) at
least three Business Days in advance of the proposed Funding Date (in the case
of a Eurodollar
45
Rate Loan or Canadian Eurodollar Rate Loan, as the case may be) or no later than
12:00 Noon (New York City time) at least one Business Day in advance of the
proposed Funding Date (in the case of a Base Rate Loan) or no later than 12:00
Noon (Toronto time) at least one Business Day in advance of the proposed Funding
Date (in the case of a Canadian Base Rate Loan). Whenever Company desires that
Swing Line Lender make a Swing Line Loan, it shall deliver to Agent a Notice of
Borrowing no later than 12:00 Noon (New York City time) on the proposed Funding
Date. The Notice of Borrowing shall specify (i) the proposed Borrower, (ii) the
proposed Funding Date (which shall be a Business Day), (iii) the amount and type
of Loans requested, (iv) in the case of Loans made on the Closing Date, that
such Loans shall be Base Rate Loans or Canadian Base Rate Loans, as applicable,
(v) in the case of Revolving Loans not made on the Closing Date, whether such
Loans shall be Base Rate Loans or Eurodollar Rate Loans, (vi) in the case of any
Loans requested to be made as Eurodollar Rate Loans, the initial Interest Period
requested therefor, (vii) in the case of Acquisition Loans prior to the
Acquisition Loan Conversion Date, that, after giving effect to the requested
Loans, the Acquisition Loans will not exceed the Acquisition Revolving Loan
Commitments, (viii) in the case of Working Capital Revolving Loans, that, after
giving effect to the requested Loans, the Total Utilization of Working Capital
Revolving Loan Commitments will not exceed the Working Capital Revolving Loan
Commitments and (ix) that after giving effect to the requested Loans, that
Company's Consolidated Fixed Charge Coverage Ratio (as that term is defined in
the Subordinated Note Indenture) will be greater than 2.25 to 1.00. Revolving
Loans may be continued as or converted into Base Rate Loans and Eurodollar Rate
Loans in the manner provided in subsection 2.2D. Canadian Term Loans may be
continued as or converted into Canadian Base Rate Loans and Canadian Eurodollar
Rate Loans in the manner provided in subsection 2.2D. In lieu of delivering the
above-described Notice of Borrowing, a Borrower may give Agent telephonic notice
by the required time of any proposed borrowing under this subsection 2.1B;
provided that such notice shall be promptly confirmed in writing by delivery of
--------
a Notice of Borrowing to Agent on or before the applicable Funding Date.
Neither Agent nor any Lender shall incur any liability to any Borrower
in acting upon any telephonic notice referred to above that Agent believes in
good faith to have been given by a duly authorized officer or other person
authorized to borrow on behalf of such Borrower or for otherwise acting in good
faith under this subsection 2.1B, and upon funding of Loans by Lenders in
accordance with this Agreement pursuant to any such telephonic notice such
Borrower shall have effected Loans hereunder.
The applicable Borrower shall notify Agent prior to the funding of any
Loans in the event that any of the matters to which such Borrower is required to
certify in the applicable Notice of Borrowing is no longer true and correct as
of the applicable Funding Date, and the acceptance by such Borrower of the
proceeds of any Loans shall constitute a re-certification by such Borrower, as
of the applicable Funding Date, as to the matters to which such Borrower is
required to certify in the applicable Notice of Borrowing.
46
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Borrowing for a Eurodollar Rate Loan or Canadian Eurodollar Rate Loan,
as the case may be, (or telephonic notice in lieu thereof) shall be irrevocable
on and after the related Interest Rate Determination Date, and the applicable
Borrower shall be bound to make a borrowing in accordance therewith.
C. DISBURSEMENT OF FUNDS.
(i) All Loans under this Agreement shall be made by Lenders
simultaneously and proportionately to their respective Pro Rata Shares, it
being understood that no Lender shall be responsible for any default by any
other Lender in that other Lender's obligation to make a Loan requested
hereunder nor shall the Commitment of any Lender to make the particular
type of Loan requested be increased or decreased as a result of a default
by any other Lender in that other Lender's obligation to make a Loan
requested hereunder.
(ii) Promptly after receipt by Agent of a Notice of Borrowing pursuant
to subsection 2.1B (or telephonic notice in lieu thereof) for any Loans,
Agent shall notify each Domestic Lender (in the case of a Domestic Loan) or
each Canadian Lender (in the case of a Canadian Term Loan) of the proposed
borrowing. Each Lender shall make the amount of its Loan available to
Agent (in the case of a Domestic Loan) or Canadian Agent (in the case of a
Canadian Term Loan), in same day funds in Dollars, at the Domestic Funding
and Payment Office, not later than 12:00 Noon (New York City time) (in the
case of a Domestic Loan) or at the Canadian Funding and Payment Office, not
later than 12:00 Noon (Toronto time) (in the case of a Canadian Term Loan)
on the applicable Funding Date. Except as provided in subsection 3.3B with
respect to Working Capital Revolving Loans used to reimburse any Issuing
Lender for the amount of a drawing under a Letter of Credit issued by it,
upon satisfaction or waiver of the conditions precedent specified in
subsections 4.1 (in the case of Loans made on the Closing Date), 4.3 (in
the case of Acquisition Loans) and, subject to the provisions set forth in
the immediately preceding paragraph, 4.2 (in the case of all Loans), Agent
or Canadian Agent, as the case may be, shall make the proceeds of such
Loans available to the applicable Borrower on the applicable Funding Date
by causing an amount of same day funds in Dollars equal to the proceeds of
all such Loans received by Agent or Canadian Agent, as the case may be,
from Lenders to be credited to the account of the applicable Borrower at
the Domestic Funding and Payment Office or at the Canadian Funding and
Payment Office, as applicable.
Unless Agent shall have been notified by any Lender prior to the
Funding Date for any Loans that such Lender does not intend to make
available to Agent the amount of such Lender's Loan requested on such
Funding Date, Agent may assume that such Lender has made such amount
available to Agent on such Funding Date and Agent may, in its sole
discretion, but shall not be obligated to, make available to the
47
applicable Borrower a corresponding amount on such Funding Date. If such
corresponding amount is not in fact made available to Agent by such Lender,
Agent shall be entitled to recover such corresponding amount on demand from
such Lender together with interest thereon, for each day from such Funding
Date until the date such amount is paid to Agent, at the customary rate set
by Agent for the correction of errors among banks for three Business Days
and thereafter at the Base Rate. If such Lender does not pay such
corresponding amount forthwith upon Agent's demand therefor, Agent shall
promptly notify the applicable Borrower and such Borrower shall immediately
pay such corresponding amount to Agent together with interest thereon, for
each day from such Funding Date until the date such amount is paid to
Agent, at the rate payable under this Agreement for Base Rate Loans.
Nothing in this subsection 2.1C shall be deemed to relieve any Lender from
its obligation to fulfill its Commitments hereunder or to prejudice any
rights that such Borrower may have against any Lender as a result of any
default by such Lender hereunder.
D. THE REGISTER.
(i) Agent shall maintain, at its address referred to in subsection
10.8, a register for the recordation of the names and addresses of Lenders
and the Commitments and Loans of each Lender from time to time (the
"REGISTER"). The Register shall be available for inspection by any
Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(ii) Agent shall record in the Register the Term Loan Commitments and
Revolving Loan Commitments and the Term Loans and Revolving Loans from time
to time of each Lender and each repayment or prepayment in respect of the
principal amount of the Term Loans or Revolving Loans of each Lender. Any
such recordation shall be conclusive and binding on each Borrower and each
Lender, absent manifest error; provided that failure to make any such
--------
recordation, or any error in such recordation, shall not affect Borrower's
Obligations in respect of the applicable Loans.
(iii) Each Lender shall record on its internal records (including,
without limitation, the Notes held by such Lender) the amount of each Loan
made by it and each payment in respect thereof. Any such recordation shall
be conclusive and binding on each Borrower, absent manifest error; provided
--------
that failure to make any such recordation, or any error in such
recordation, shall not affect such Borrower's Obligations in respect of the
applicable Loans; and provided, further that in the event of any
-------- -------
inconsistency between the Register and any Lender's records, the
recordations in the Register shall govern.
(iv) Borrowers, Agent and Lenders shall deem and treat the Persons
listed as Lenders in the Register as the holders and owners of the
corresponding Commitments and Loans listed therein for all purposes hereof,
and no assignment or transfer of any
48
such Commitment or Loan shall be effective, in each case unless and until
an Assignment Agreement effecting the assignment or transfer thereof shall
have been accepted by Agent and recorded in the Register as provided in
subsection 10.1B(ii). Prior to such recordation, all amounts owed with
respect to the applicable Commitment or Loan shall be owed to the Lender
listed in the Register as the owner thereof, and any request, authority or
consent of any Person who, at the time of making such request or giving
such authority or consent, is listed in the Register as a Lender shall be
conclusive and binding on any subsequent holder, assignee or transferee of
the corresponding Commitments or Loans.
(v) Each Borrower hereby designates BTCo to serve as such Borrower's
agent solely for purposes of maintaining the Register as provided in this
subsection 2.1D, and each Borrower hereby agrees that, to the extent BTCo
serves in such capacity, BTCo and its officers, directors, employees,
agents and affiliates shall constitute Indemnitees for all purposes under
subsection 10.3.
E. NOTES. Company shall execute and deliver (i) to each Domestic Lender
(or to Agent for that Domestic Lender) on the Closing Date (a) a Domestic Term
Note substantially in the form of Exhibit IV-A annexed hereto to evidence that
------------
Domestic Lender's Domestic Term Loan, in the principal amount of that Domestic
Lender's Domestic Term Loan and with other appropriate insertions, (b) an
Acquisition Note substantially in the form of Exhibit IV-B annexed hereto to
------------
evidence that Domestic Lender's Acquisition Loans, in the principal amount of
that Domestic Lender's Acquisition Revolving Loan Commitment and with other
appropriate insertions, (c) a Working Capital Revolving Note substantially in
the form of Exhibit IV-C annexed hereto to evidence that Domestic Lender's
------------
Working Capital Revolving Loans, in the principal amount of that Domestic
Lender's Working Capital Revolving Loan Commitment and with other appropriate
insertions and (ii) to Swing Line Lender (or to Agent for Swing Line Lender) on
the Closing Date a Swing Line Note substantially in the form of Exhibit IV-E
------------
annexed hereto to evidence Swing Line Lender's Swing Line Notes, in the
principal amount of the Swing Line Loan Commitment and with other applicable
insertions. Each Canadian Borrower shall execute and deliver to each Canadian
Lender (or to Agent for that Lender) on the Closing Date, a Canadian Term Note
substantially in the form of Exhibit IV-D annexed hereto to evidence that
------------
Canadian Lender's Canadian Term Loan, in the principal amount of that Canadian
Lender's Canadian Term Loan and with other appropriate insertions.
2.2 INTEREST ON THE LOANS.
---------------------
A. RATE OF INTEREST. Subject to the provisions of subsections 2.6 and
2.7, each Term Loan and each Revolving Loan shall bear interest on the unpaid
principal amount thereof from the date made through maturity (whether by
acceleration or otherwise) at a rate determined by reference to the Base Rate or
Canadian Base Rate or the Adjusted Eurodollar Rate or Canadian Eurodollar Rate,
as the case may be. Subject to the provisions of subsection 2.7, each Swing Line
Loan shall bear interest on the unpaid principal amount thereof from the
49
date made through maturity (whether by acceleration or otherwise) at a rate
determined by reference to the Base Rate. The applicable basis for determining
the rate of interest with respect to any Term Loan or any Revolving Loan shall
be selected by the applicable Borrower initially at the time a Notice of
Borrowing is given with respect to such Loan pursuant to subsection 2.1B, and
the basis for determining the interest rate with respect to any Term Loan or any
Revolving Loan may be changed from time to time pursuant to subsection 2.2D. If
on any day a Term Loan or Revolving Loan is outstanding with respect to which
notice has not been delivered to Agent in accordance with the terms of this
Agreement specifying the applicable basis for determining the rate of interest,
then for that day that Loan shall bear interest determined by reference to the
Base Rate or Canadian Base Rate, as the case may be.
Subject to the provisions of subsections 2.2E and 2.7, the Term Loans
and the Revolving Loans shall bear interest through maturity as follows:
(i) if a Base Rate Loan, then at the sum of the Base Rate plus the
----
Applicable Base Rate Margin;
(ii) if a Canadian Base Rate Loan, then at the sum of the Canadian
Base Rate plus the Applicable Base Rate Margin;
----
(iii) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate plus the Applicable Eurodollar Rate Margin; or
----
(iv) if a Canadian Eurodollar Rate Loan, then at the sum of the
Canadian Eurodollar Rate plus the Applicable Eurodollar Rate Margin.
----
Subject to the provisions of subsections 2.2E and 2.7, the Swing Line
Loans shall bear interest through maturity at the sum of the Base Rate plus the
----
Applicable Base Rate Margin less the applicable Commitment Fee Percentage.
----
The Applicable Base Rate Margin or the Applicable Eurodollar Rate
Margin shall be the Base Rate Margin or the Eurodollar Rate Margin, as the case
may be, set forth in the table above opposite Company's Consolidated Leverage
Ratio for the four fiscal quarters ending as of the last day of the fiscal
quarter immediately preceding the fiscal quarter during which the determination
is being made as set forth in the Compliance Certificate delivered pursuant to
subsection 6.1(iv)(b), any required adjustment to become automatically effective
on the next succeeding Business Day following receipt by the Agent of such
Compliance Certificate. If Company fails to deliver a Compliance Certificate by
the time required by subsection 6.1(iv)(b), from such time the Compliance
Certificate was required to be delivered until delivery of such Compliance
Certificate, the Applicable Base Rate Margin and the Applicable Eurodollar Rate
Margin shall automatically be adjusted to 1.00% per annum and 2.00% per annum,
respectively.
50
B. INTEREST PERIODS. In connection with each Eurodollar Rate Loan or
Canadian Eurodollar Rate Loan, the applicable Borrower may, pursuant to the
applicable Notice of Borrowing or Notice of Conversion/Continuation, as the case
may be, select an interest period (each an "INTEREST PERIOD") to be applicable
to such Loan, which Interest Period shall be, at such Borrower's option, either
a one, two, three or six month period provided that:
--------
(i) the initial Interest Period for any such Loan shall commence on
the Funding Date in respect of such Loan, in the case of a Loan initially
made as a Eurodollar Rate Loan or a Canadian Eurodollar Rate Loan, as
applicable, or on the date specified in the applicable Notice of
Conversion/Continuation, in the case of a Loan converted to a Eurodollar
Rate Loan or a Canadian Eurodollar Rate Loan, as applicable;
(ii) in the case of immediately successive Interest Periods
applicable to a Eurodollar Rate Loan or a Canadian Eurodollar Rate Loan, as
applicable, continued as such pursuant to a Notice of
Conversion/Continuation, each successive Interest Period shall commence on
the day on which the next preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day that is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that, if any Interest Period would
--------
otherwise expire on a day that is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall,
subject to clause (v) of this subsection 2.2B, end on the last Business Day
of a calendar month;
(v) no Interest Period with respect to any portion of the Loans
shall extend beyond the Revolving Loan Commitment Termination Date;
(vi) no Interest Period with respect to any portion of the Term Loans
of any Borrower shall extend beyond a date on which such Borrower is
required to make a scheduled payment of principal of the Term Loans of such
Borrower unless the sum of (a) the aggregate principal amount of Term Loans
of such Borrower that are Base Rate Loans or Canadian Base Rate Loans, as
applicable, plus (b) the aggregate principal amount of Term Loans of such
----
Borrower that are Eurodollar Rate Loans or Canadian Eurodollar Rate Loans,
as applicable, with Interest Periods expiring on or before such date equals
or exceeds the principal amount required to be paid on the Term Loans of
such Borrower on such date;
51
(vii) there shall be no more than 15 Interest Periods outstanding at
any time; and
(viii) in the event a Borrower fails to specify an Interest Period
for any Eurodollar Rate Loan or any Canadian Eurodollar Rate Loan, as
applicable, in the applicable Notice of Borrowing or Notice of
Conversion/Continuation, such Borrower shall be deemed to have selected an
Interest Period of one month.
C. INTEREST PAYMENTS. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity); provided that in the event any Swing Line Loans or Revolving Loans
--------
that are Base Rate Loans are prepaid pursuant to subsection 2.4B(i), interest
accrued on such Swing Line Loans or Revolving Loans through the date of such
prepayment shall be payable on the next succeeding Interest Payment Date
applicable to Base Rate Loans (or, if earlier, at final maturity).
D. CONVERSION OR CONTINUATION. Subject to the provisions of subsection
2.6, Borrower shall have the option (i) from and after the earlier to occur of
(a) the date which is 90 days after the Closing Date and (b) the date on which
Agent notifies Borrower that the primary syndication of the Commitments and the
Loans has been completed, to convert at any time all or any part of its
outstanding Term Loans or Revolving Loans equal to $5,000,000 and integral
multiples of $500,000 in excess of that amount from Loans bearing interest at a
rate determined by reference to the Base Rate or Canadian Base Rate to Loans
bearing interest at a rate determined by reference to the Adjusted Eurodollar
Rate or Canadian Eurodollar Rate, as the case may be, or (ii) upon the
expiration of any Interest Period applicable to a Eurodollar Rate Loan or a
Canadian Eurodollar Rate Loan, as applicable, to continue all or any portion of
such Loan equal to $5,000,000 and integral multiples of $500,000 in excess of
that amount as a Eurodollar Rate Loan or a Canadian Eurodollar Rate Loan, as
applicable; provided, however, that a Eurodollar Rate Loan or a Canadian
--------- -------
Eurodollar Rate Loan may only be converted into a Base Rate Loan or a Canadian
Base Rate Loan, as applicable, on the expiration date of an Interest Period
applicable thereto.
The applicable Borrower shall deliver a Notice of
Conversion/Continuation to Agent no later than 12:00 Noon (New York time) of the
proposed conversion date (in the case of a conversion to a Base Rate Loan), at
least one Business Day in advance of the proposed conversion date (in the case
of a conversion into a Canadian Base Rate Loan) and at least three Business Days
in advance of the proposed conversion/continuation date (in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan or a Canadian
Eurodollar Rate Loan, as applicable). A Notice of Conversion/Continuation shall
specify (i) the proposed conversion/ continuation date (which shall be a
Business Day), (ii) the amount and type of the Loan to be converted/continued,
(iii) the nature of the proposed conversion/continuation, (iv) in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan or a Canadian
52
Eurodollar Rate Loan, the requested Interest Period, and (v) in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan or a Canadian
Eurodollar Rate Loan, that no Potential Event of Default or Event of Default has
occurred and is continuing. In lieu of delivering the above-described Notice of
Conversion/Continuation, the applicable Borrower may give Agent telephonic
notice by the required time of any proposed conversion/continuation under this
subsection 2.2D; provided that such notice shall be promptly confirmed in
--------
writing by delivery of a Notice of Conversion/ Continuation to Agent on or
before the proposed conversion/continuation date.
Neither Agent nor any Lender shall incur any liability to any Borrower
in acting upon any telephonic notice referred to above that Agent believes in
good faith to have been given by a duly authorized officer or other person
authorized to act on behalf of such Borrower or for otherwise acting in good
faith under this subsection 2.2D, and upon conversion or continuation of the
applicable basis for determining the interest rate with respect to any Loans in
accordance with this Agreement pursuant to any such telephonic notice Borrower
shall have effected a conversion or continuation, as the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Conversion/Continuation for conversion to, or continuation of, a
Eurodollar Rate Loan or a Canadian Eurodollar Rate Loan (or telephonic notice in
lieu thereof) shall be irrevocable on and after the related Interest Rate
Determination Date, and the applicable Borrower shall be bound to effect a
conversion or continuation in accordance therewith.
E. DEFAULT RATE. Upon the occurrence and during the continuation of any
Event of Default, the outstanding principal amount of all Loans and, to the
extent permitted by applicable law, any interest payments thereon not paid when
due and any fees and other amounts then due and payable hereunder, shall
thereafter bear interest (including post-petition interest in any proceeding
under the Bankruptcy Code or other applicable Insolvency Laws) payable upon
demand at a rate that is 2% per annum in excess of the interest rate otherwise
payable under this Agreement with respect to Base Rate Loans or Canadian Base
Rate Loans, as applicable. Payment or acceptance of the increased rates of
interest provided for in this subsection 2.2E is not a permitted alternative to
timely payment and shall not constitute a waiver of any Event of Default or
otherwise prejudice or limit any rights or remedies of Agent or any Lender.
F. COMPUTATION OF INTEREST. Interest on the Loans shall be computed on
the basis of a 360-day year, in each case for the actual number of days elapsed
in the period during which it accrues. In computing interest on any Loan, (i)
the date of the making of such Loan or the first day of an Interest Period
applicable to such Loan or, with respect to a Base Rate Loan being converted
from a Eurodollar Rate Loan, the date of conversion of such Eurodollar Rate Loan
to such Base Rate Loan or, with respect to a Canadian Base Rate Loan being
converted from a Canadian Eurodollar Rate Loan, the date of conversion of such
Canadian Eurodollar Rate Loan to such Canadian Base Rate Loan, as the case may
be, shall be included,
53
and (ii) the date of payment of such Loan or the expiration date of an Interest
Period applicable to such Loan or, with respect to a Base Rate Loan being
converted to a Eurodollar Rate Loan, the date of conversion of such Base Rate
Loan to such Eurodollar Rate Loan or, with respect to a Canadian Base Rate Loan
being converted to a Canadian Eurodollar Rate Loan, the date of conversion of
such Canadian Base Rate Loan to such Canadian Eurodollar Rate Loan, as the case
may be, shall be excluded; provided that if a Loan is repaid on the same day on
--------
which it is made, one day's interest shall be paid on that Loan.
G. CANADIAN INTEREST PROVISIONS. For purposes of the Interest Act
(Canada) and disclosure thereunder, whenever interest to be paid under this
Agreement is to be calculated on the basis of a year of 360 days, the yearly
rate of interest to which the rate determined pursuant to such calculation is
equivalent to is the rate so determined multiplied by the actual number of days
---------- --
in the calendar year in which the same is to be ascertained divided by 360.
------- --
2.3 FEES.
----
A. COMMITMENT FEES. Company agrees to pay to Agent, for distribution to
each Domestic Lender in proportion to that Domestic Lender's Pro Rata Share,
commitment fees (i) for the period from and including the Closing Date to and
excluding the Revolving Loan Commitment Termination Date equal to the average of
the daily excess of the Working Capital Revolving Loan Commitments over the
Total Utilization of Working Capital Revolving Loan Commitments excluding any
outstanding Swing Line Loans multiplied by the Commitment Fee Percentage, such
-------------
commitment fees to be calculated on the basis of a 360-day year and the actual
number of days elapsed and to be payable quarterly in arrears on March 31, June
30, September 30 and December 31 of each year, commencing on the first such
date to occur after the Closing Date, and on the Revolving Loan Commitment
Termination Date and (ii) for the period from and including the Closing Date to
and excluding the Acquisition Loan Conversion Date equal to the average of the
daily excess of the Acquisition Revolving Loan Commitments over the aggregate
principal amount of outstanding Acquisition Loans multiplied by the Commitment
-------------
Fee Percentage, such commitment fees to be calculated on the basis of a 360-day
year and the actual number of days elapsed and to be payable quarterly in
arrears on March 31, June 30, September 30 and December 31 of each year,
commencing on the first such date to occur after the Closing Date, and on the
Acquisition Loan Conversion Date.
B. OTHER FEES. Borrowers jointly and severally agree to pay to Agent
such other fees in the amounts and at the times separately agreed upon between
Borrowers and Agent.
54
2.4 REPAYMENTS, PREPAYMENTS AND REDUCTIONS IN REVOLVING LOAN COMMITMENTS;
---------------------------------------------------------------------
GENERAL PROVISIONS REGARDING PAYMENTS.
-------------------------------------
A. SCHEDULED PAYMENTS OF TERM LOANS AND ACQUISITION LOANS.
(i) Scheduled Payments of Term Loans. The applicable Borrower shall
--------------------------------
make principal payments on the Term Loans in installments on the dates and
in the amounts set forth below:
Scheduled Repayment Scheduled Repayment Scheduled Repayment
of Domestic of Sun Gro Canada of Lakeland Canada
Date Term Loans Term Loans Term Loans
--------- ------------------- ------------------- -------------------
9/30/99 $ 750,000 $ 375,000 $ 125,000
12/31/99 750,000 375,000 125,000
6/30/00 1,500,000 750,000 250,000
9/30/00 1,125,000 562,500 187,500
12/31/00 1,125,000 562,500 187,500
6/30/01 2,250,000 1,125,000 375,000
9/30/01 2,250,000 1,125,000 375,000
12/31/01 2,250,000 1,125,000 375,000
6/30/02 4,500,000 2,250,000 750,000
9/30/02 3,375,000 1,687,500 562,500
12/31/02 3,375,000 1,687,500 562,500
6/30/03 6,750,000 3,375,000 1,125,000
; provided that the scheduled installments of principal of the Term Loans
--------
set forth above shall be reduced in connection with any voluntary or
mandatory prepayments of the applicable Term Loans in accordance with
subsection 2.4B(iv); and provided, further that the Term Loans and all
-------- -------
other amounts owed hereunder with respect to the Term Loans shall be paid
in full no later than June 30, 2003, and the final installment payable by
the applicable Borrower in respect of the Term Loans on such date shall be
in an amount, if such amount is different from that specified above,
sufficient to repay all amounts owing by such Borrower under this Agreement
with respect to the Term Loans.
(ii) Scheduled Payments of Acquisition Loans. The Company shall make
---------------------------------------
principal payments on the Acquisition Loans in installments on the dates
and in the
55
amounts equal to the percentage set forth below of the aggregate principal
amount of the Acquisition Loans outstanding on the Acquisition Loan
Conversion Date:
Scheduled Repayment of
Date Acquisition Loans
--------- ----------------------
9/30/00 2.50%
12/31/00 2.50%
6/30/01 5.00%
9/30/01 3.75%
12/31/01 3.75%
6/30/02 7.50%
9/30/02 18.75%
12/31/02 18.75%
6/30/03 37.50%
; provided that the scheduled installments of principal of the Acquisition
--------
Loans set forth above shall be reduced in connection with any voluntary or
mandatory prepayments of the Acquisition Loans in accordance with
subsection 2.4B(iv); and provided, further that the Acquisition Loans and
-------- -------
all other amounts owed hereunder with respect to the Acquisition Loans
shall be paid in full no later than June 30, 2003, and the final
installment payable by Company in respect of the Acquisition Loans on such
date shall be in an amount, if such amount is different from that specified
above, sufficient to repay all amounts owing by Company under this
Agreement with respect to the Acquisition Loans.
B. PREPAYMENTS AND UNSCHEDULED REDUCTIONS IN REVOLVING LOAN COMMITMENTS.
(i) Voluntary Prepayments. Company may, upon written or telephonic
---------------------
notice to Agent on or prior to 12:00 Noon (New York City time) on the date
of prepayment, which notice, if telephonic, shall be promptly confirmed in
writing, at any time and from time to time prepay any Swing Line Loan on
any Business Day in whole or in part in an aggregate minimum amount of
$500,000 and integral multiples of $100,000 in excess of that amount. The
applicable Borrower may, upon not less than one Business Day's prior
written or telephonic notice, in the case of Base Rate Loans or Canadian
Base Rate Loans, and three Business Days' prior written or telephonic
notice, in the case of Eurodollar Rate Loans or Canadian Eurodollar Rate
Loans, in each case given to Agent by 12:00 Noon (New York City time) on
the date required and, if given
56
by telephone, promptly confirmed in writing to Agent (which original
written or telephonic notice Agent will promptly transmit by telefacsimile
or telephone to the applicable Lenders), at any time and from time to time
prepay any Term Loans or Revolving Loans on any Business Day in whole or in
part in an aggregate minimum amount of $1,000,000 and integral multiples of
$500,000 in excess of that amount provided, however, that a Eurodollar Rate
-------- -------
Loan or a Canadian Eurodollar Rate Loan may only be prepaid on the
expiration of the Interest Period applicable thereto. Notice of prepayment
having been given as aforesaid, the principal amount of the Loans specified
in such notice shall become due and payable on the prepayment date
specified therein. Any such voluntary prepayment shall be applied as
specified in subsection 2.4B(iv).
(ii) Voluntary Reductions of Revolving Loan Commitments. Company may,
--------------------------------------------------
upon not less than three Business Days' prior written or telephonic notice
confirmed in writing to Agent (which original written or telephonic notice
Agent will promptly transmit by telefacsimile or telephone to each Lender),
at any time and from time to time terminate in whole or permanently reduce
in part, without premium or penalty, (a) the Acquisition Revolving Loan
Commitments in an amount up to the amount by which the Acquisition
Revolving Loan Commitments exceed the aggregate outstanding Acquisition
Loans at the time of such proposed termination or reduction; and (b) the
Working Capital Revolving Loan Commitments in an amount up to the amount by
which the Working Capital Revolving Loan Commitments exceed the Total
Utilization of Working Capital Revolving Loan Commitments at the time of
such proposed termination or reduction, provided that any such partial
--------
reduction of the Revolving Loan Commitments shall be in an aggregate
minimum amount of $1,000,000 and integral multiples of $500,000 in excess
of that amount. Company's notice to Agent shall designate the date (which
shall be a Business Day) of such termination or reduction and the amount of
any partial reduction, and such termination or reduction of the Revolving
Loan Commitments shall be effective on the date specified in Company's
notice and shall reduce the Revolving Loan Commitment of each Lender
proportionately to its Pro Rata Share. Any such voluntary reduction of the
Revolving Loan Commitments shall be applied as specified in subsection
2.4B(iv).
(iii) Mandatory Prepayments and Mandatory Reductions of Revolving Loan
----------------------------------------------------------------
Commitments. The Loans shall be prepaid and/or the Revolving Loan
-----------
Commitments shall be permanently reduced in the amounts and under the
circumstances set forth below, all such prepayments and/or reductions to be
applied as set forth below or as more specifically provided in subsection
2.4B(iv):
(a) Prepayments and Reductions From Net Asset Sale Proceeds. No
-------------------------------------------------------
later than the earlier to occur of (X) the date at which the
applicable Borrower or its Subsidiaries determines such Net Asset Sale
Proceeds shall not be reinvested in property or assets used in the
business of the Borrower or its
57
Subsidiaries and (Y) the first Business Day which is nine months after
the date of receipt by any Borrower or any of its Subsidiaries of any
Net Asset Sale Proceeds in respect of any Asset Sale, such Borrower
shall prepay the Loans and/or the Revolving Loan Commitments shall be
permanently reduced in an aggregate amount equal to such Net Asset
Sale Proceeds; provided that so long as no Event of Default shall have
--------
occurred and be continuing, such Net Asset Sale Proceeds, to the
extent reinvested in property or assets used in the business of the
Borrower or its Subsidiaries within the nine-month period, are not
required to be applied to prepay the Loans and/or reduce the Revolving
Loan Commitments under this subsection 2.4A(iii)(a).
(b) Prepayments and Reductions from Net Insurance/ Condemnation
-----------------------------------------------------------
Proceeds. No later than the first Business Day following the date of
--------
receipt by Agent or by any Borrower or any of its Subsidiaries of any
Net Insurance/ Condemnation Proceeds that are required to be applied
to prepay the Loans and/or reduce the Revolving Loan Commitments
pursuant to the provisions of subsection 6.4, such Borrowers shall
prepay the Loans and/or the Revolving Loan Commitments shall be
permanently reduced in an aggregate amount equal to the amount of such
Net Insurance/Condemnation Proceeds.
(c) Prepayments and Reductions Due to Issuance of Debt
--------------------------------------------------
Securities. On the date of receipt by Holdings or any of its
----------
Subsidiaries of the cash proceeds (any such proceeds, net of
underwriting discounts and commissions and other reasonable costs and
expenses associated therewith, including reasonable legal fees and
expenses, being "NET DEBT SECURITIES PROCEEDS") from the issuance of
any debt Securities of Holdings or any of its Subsidiaries other than
Indebtedness permitted under subsection 7.1 as in effect on the
Closing Date, the Borrowers shall prepay the Loans and/or the
Revolving Loan Commitments shall be permanently reduced in an
aggregate amount equal to such Net Debt Securities Proceeds.
(d) Prepayments and Reductions Due to issuance of Holdings
------------------------------------------------------
Equity Securities. On the date of receipt by Holdings or any of its
-----------------
Subsidiaries (other than the cash proceeds from the initial public
offering of Holdings Common Stock or the exercise of any over-
allotment option in connection with such initial public offering) of
the cash proceeds (any such proceeds, net of underwriting discounts,
commissions and other reasonable legal fees and expenses, being "NET
EQUITY SECURITIES PROCEEDS") from the issuance of any equity
securities of Holdings or any of its Subsidiaries, the Borrowers shall
prepay the Loans and/or the Revolving Loan Commitments shall be
permanently reduced in an aggregate amount equal to 75% of such Net
Equity Securities Proceeds.
58
(e) Prepayments and Reductions from Consolidated Excess Cash
--------------------------------------------------------
Flow. In the event that there shall be Consolidated Excess Cash Flow
----
for any Fiscal Year, the applicable Borrower shall, no later than 90
days after the end of such Fiscal Year, prepay the Loans and/or the
Revolving Loan Commitments shall be permanently reduced in an
aggregate amount equal to 50% of such Consolidated Excess Cash Flow.
(f) Prepayments Due to Reductions or Restrictions of Revolving
----------------------------------------------------------
Loan Commitments. Company shall from time to time prepay first the
---------------- -----
Swing Line Loans and second the Working Capital Revolving Loans to the
------
extent necessary (1) so that the Total Utilization of Working Capital
Revolving Loan Commitments shall not at any time exceed the Working
Capital Revolving Loan Commitments then in effect and (2) to give
effect to the limitations set forth in clause (b) of the second
paragraph of subsection 2.1A(iv).
(iv) Application of Prepayments and Unscheduled Reductions of
--------------------------------------------------------
Revolving Loan Commitments.
--------------------------
(a) Application of Voluntary Prepayments by Type of Loans and
---------------------------------------------------------
Order of Maturity. Any voluntary prepayments pursuant to subsection
-----------------
2.4B(i) shall be applied as specified by the Borrower in the
applicable notice of prepayment; provided that in the event Company
--------
fails to specify the Loans to which any such prepayment shall be
applied, such prepayment shall be applied first to repay outstanding
-----
Swing Line Loans to the full extent thereof, second to repay
------
outstanding Working Capital Revolving Loans to the full extent
thereof, third, prior to the Acquisition Loan Conversion Date, to
-----
repay outstanding Acquisition Loans to the full extent thereof, fourth
------
to repay outstanding Domestic Term Loans, fifth to repay outstanding
-----
Sun Gro Canada Term Loans and Lakeland Canada Term Loans on a pro rata
basis, and sixth after the Acquisition Loan Conversion Date, to repay
-----
outstanding the Acquisition Loans. Any voluntary prepayments of the
Term Loans and, after the Acquisition Loan Conversion Date, the
Acquisition Loans, pursuant to subsection 2.4B(i) shall be applied to
reduce the scheduled installments of principal of the Term Loans set
forth in subsection 2.4A(i) in inverse order of maturity.
(b) Application of Mandatory Prepayments by Type of Loans. Any
-----------------------------------------------------
amount (the "APPLIED AMOUNT") required to be applied as a mandatory
prepayment of the Loans and/or a reduction of the Revolving Loan
Commitments pursuant to subsection 2.4B(iii) shall be applied first to
-----
prepay (1) if the applicable Borrower is Company, the Domestic Term
Loans to the full extent thereof and then to prepay the Sun Gro Canada
Term Loans and the Lakeland Canada Term Loans on a pro rata basis to
the full extent thereof, (2) if the applicable Borrower is Sun Gro
Canada, the Sun Gro Canada Term Loans to the full extent thereof, then
to prepay the Lakeland Canada Term Loans to the
59
full extent thereof and then to prepay the Domestic Term Loans to the
full extent thereof, or (3) if the applicable Borrower is Lakeland
Canada, the Lakeland Canada Term Loans to the full extent thereof,
then to prepay the Sun Gro Canada Term Loans to the full extent
thereof and then to prepay the Domestic Term Loans to the full extent
thereof, second, to prepay the Acquisition Loans to the full extent
------
thereof but before the Acquisition Loan Conversion Date without
permanently reducing the Acquisition Revolving Loan Commitments by the
amount of such prepayment, third, to the extent of any remaining
-----
portion of the Applied Amount, to prepay the Swing Line Loans to the
full extent thereof without permanently reducing the Swing Line Loan
Commitments by the amount of such prepayment, and fourth, to the
------
extent of any remaining portion of the Applied Amount, to prepay the
Working Capital Revolving Loans to the full extent thereof but without
permanently reducing the Working Capital Revolving Loan Commitments by
the amount of such prepayment.
(c) Application of Mandatory Prepayments of Term Loans by Order
-----------------------------------------------------------
of Maturity. Any mandatory prepayments of the Term Loans and of the
-----------
Acquisition Loans after the Acquisition Loan Conversion Date pursuant
to subsection 2.4B(iii) shall be applied to reduce the scheduled
installments of principal of the Term Loans set forth in subsection
2.4A(i) and of the Acquisition Loans set forth in subsection 2.4A(ii)
in inverse order of maturity.
(d) Application of Prepayments to Base Rate Loans and Eurodollar
------------------------------------------------------------
Rate Loans. Considering Term Loans and Revolving Loans being prepaid
----------
separately, any prepayment thereof shall be applied first to Base
Rate Loans to the full extent thereof before application to Eurodollar
Rate Loans, in each case in a manner which minimizes the amount of any
payments required to be made by Company pursuant to subsection 2.6D.
C. GENERAL PROVISIONS REGARDING PAYMENTS.
(i) Manner and Time of Payment. All payments by the applicable
--------------------------
Borrower of principal, interest, fees and other Obligations hereunder and
under the Notes shall be made in Dollars in same day funds, without
defense, setoff or counterclaim, free of any restriction or condition, and
delivered to Agent not later than 12:00 Noon (New York City time) on the
date due at the Domestic Funding and Payment Office or 12:00 Noon (Toronto
Time) on the date due at the Canadian Funding and Payment Office, as the
case may be, for the account of Lenders; funds received by Agent after that
time on such due date shall be deemed to have been paid by such Borrower on
the next succeeding Business Day. Borrowers hereby authorizes Agent to
charge its accounts with Agent in order to cause timely payment to be made
to Agent of all principal, interest,
60
fees and expenses due hereunder (subject to sufficient funds being
available in its accounts for that purpose).
(ii) Application of Payments to Principal and Interest. Except as
-------------------------------------------------
provided in subsection 2.2C, all payments in respect of the principal
amount of any Loan shall include payment of accrued interest on the
principal amount being repaid or prepaid, and all such payments (and, in
any event, any payments in respect of any Loan on a date when interest is
due and payable with respect to such Loan) shall be applied to the payment
of interest before application to principal.
(iii) Apportionment of Payments. Aggregate principal and interest
-------------------------
payments in respect of Term Loans and Revolving Loans shall be apportioned
among all outstanding Loans to which such payments relate, in each case
proportionately to Lenders' respective Pro Rata Shares. Agent shall
promptly distribute to each Lender, at its primary address set forth below
its name on the appropriate signature page hereof or at such other address
as such Lender may request, its Pro Rata Share of all such payments
received by Agent and the commitment fees of such Lender when received by
Agent pursuant to subsection 2.3. Notwithstanding the foregoing provisions
of this subsection 2.4C(iii), if, pursuant to the provisions of subsection
2.6C, any Notice of Conversion/Continuation is withdrawn as to any Affected
Lender or if any Affected Lender makes Base Rate Loans or Canadian Base
Rate Loans in lieu of its Pro Rata Share of any Eurodollar Rate Loans or
Canadian Eurodollar Rate Loans, as the case may be, Agent shall give effect
thereto in apportioning payments received thereafter.
(iv) Payments on Business Days. Whenever any payment to be made
-------------------------
hereunder shall be stated to be due on a day that is not a Business Day,
such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of the payment of
interest hereunder or of the commitment fees hereunder, as the case may be.
(v) Notation of Payment. Each Lender agrees that before disposing of
-------------------
any Note held by it, or any part thereof (other than by granting
participations therein), that Lender will make a notation thereon of all
Loans evidenced by that Note and all principal payments previously made
thereon and of the date to which interest thereon has been paid; provided
--------
that the failure to make (or any error in the making of) a notation of any
Loan made under such Note shall not limit or otherwise affect the
obligations of Company hereunder or under such Note with respect to any
Loan or any payments of principal or interest on such Note.
D. APPLICATION OF PROCEEDS OF COLLATERAL AND PAYMENTS UNDER GUARANTIES.
(i) Application of Proceeds of Collateral. Except as provided in
-------------------------------------
subsection 2.4B(iii)(a) with respect to prepayments from Net Asset Sale
Proceeds, all proceeds
61
received by Agent in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral under any Collateral
Document may, in the discretion of Agent, be held by Agent as Collateral
for, and/or (then or at any time thereafter) applied in full or in part by
Agent against, the applicable Secured Obligations (as defined in such
Collateral Document) in the following order of priority:
(a) To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Agent and its agents and counsel, and all other expenses, liabilities
and advances made or incurred by Agent in connection therewith, and
all amounts for which Agent is entitled to indemnification under such
Collateral Document and all advances made by Agent thereunder for the
account of the applicable Loan Party, and to the payment of all costs
and expenses paid or incurred by Agent in connection with the exercise
of any right or remedy under such Collateral Document, all in
accordance with the terms of this Agreement and such Collateral
Document;
(b) thereafter, to the extent of any excess such proceeds, to
the payment of all other such Secured Obligations for the ratable
benefit of the holders thereof; and
(c) thereafter, to the extent of any excess such proceeds, to
the payment to or upon the order of such Loan Party or to whosoever
may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct.
(ii) Application of Payments Under Guaranties. All payments received
----------------------------------------
by Agent under the Subsidiary Guaranty shall be applied promptly from time
to time by Agent in the following order of priority:
(a) To the payment of the costs and expenses of any collection
or other realization under such Guaranty, including reasonable
compensation to Agent and its agents and counsel, and all expenses,
liabilities and advances made or incurred by Agent in connection
therewith, all in accordance with the terms of this Agreement and such
Guaranty;
(b) thereafter, to the extent of any excess such payments, to
the payment of all other Guarantied Obligations (as defined in such
Guaranty) for the ratable benefit of the holders thereof; and
(c) thereafter, to the extent of any excess such payments, to
the payment to Holdings or the applicable Subsidiary Guarantor or to
whosoever may be lawfully entitled to receive the same or as a court
of competent jurisdiction may direct.
62
2.5 USE OF PROCEEDS.
---------------
A. TERM LOANS. The proceeds of any increase in the Term Loans, together
with up to $68,000,000 in net proceeds from the public offering of Holdings
Common Stock, will be used to (i) prepay approximately $15,500,000 in mortgage
debt, (ii) to redeem approximately $42,000,000 in principal amount of
Subordinated Notes, and (iii) to the extent of any excess after the application
of such proceeds in accordance with the foregoing clauses (i) and (ii), to
prepay Working Capital Revolving Loans but without any related commitment
reductions.
B. ACQUISITION LOANS. The proceeds of the Acquisition Loans shall be
utilized to finance the acquisition of companies and/or the assets of operations
of companies, engaged in the nursery business, the peat or potting soil or mix
business or businesses related thereto.
C. WORKING CAPITAL REVOLVING LOANS; SWING LINE LOANS. The proceeds of
the Working Capital Revolving Loans and any Swing Line Loans shall be applied by
Company for working capital and general corporate purposes.
D. MARGIN REGULATIONS. No portion of the proceeds of any borrowing under
this Agreement shall be used by any Borrower or any of its Subsidiaries in any
manner that might cause the borrowing or the application of such proceeds to
violate Regulation U, Regulation T or Regulation X of the Board of Governors of
the Federal Reserve System or any other regulation of such Board or to violate
the Exchange Act, in each case as in effect on the date or dates of such
borrowing and such use of proceeds.
2.6 SPECIAL PROVISIONS GOVERNING EURODOLLAR RATE LOANS AND CANADIAN EURODOLLAR
--------------------------------------------------------------------------
RATE LOANS.
-----------
Notwithstanding any other provision of this Agreement to the contrary the
following provisions shall govern with respect to Eurodollar Rate Loans and
Canadian Eurodollar Rate Loans as to the matters covered:
A. DETERMINATION OF APPLICABLE INTEREST RATE. As soon as practicable
after 10:00 A.M. (New York time or Toronto time, as the case may be) on each
Interest Rate Determination Date, Agent shall determine (which determination
shall, absent manifest error, be final, conclusive and binding upon all parties)
the interest rate that shall apply to the Eurodollar Rate Loans or Canadian
Eurodollar Rate Loans for which an interest rate is then being determined for
the applicable Interest Period and shall promptly give notice thereof (in
writing or by telephone confirmed in writing) to the applicable Borrower and
each Domestic Lender or each Canadian Lender, as applicable.
B. INABILITY TO DETERMINE APPLICABLE INTEREST RATE. In the event that
Agent shall have determined (which determination shall be final and conclusive
and binding on all parties
63
hereto), on any Interest Rate Determination Date with respect to any Eurodollar
Rate Loans or any Canadian Eurodollar Rate Loans, that by reason of
circumstances affecting the interbank Eurodollar market adequate and fair means
do not exist for ascertaining the interest rate applicable to such Loans on the
basis provided for in the definition of Adjusted Eurodollar Rate or Canadian
Eurodollar Rate, as applicable, Agent shall on such date give notice (by
telefacsimile or by telephone confirmed in writing) to the applicable Borrower
and each Domestic Lender or each Canadian Lender, as applicable, of such
determination, whereupon (i) no Loans may be made as, or converted to,
Eurodollar Rate Loans or Canadian Eurodollar Rate Loans, as applicable, until
such time as Agent notifies such Borrower and such Lenders that the
circumstances giving rise to such notice no longer exist and (ii) any Notice of
Borrowing or Notice of Conversion/Continuation given by a Borrower with respect
to the Loans in respect of which such determination was made shall be deemed to
be rescinded by such Borrower.
C. ILLEGALITY OR IMPRACTICABILITY OF EURODOLLAR RATE LOANS AND CANADIAN
EURODOLLAR RATE LOANS. In the event that on any date any Lender shall have
determined (which determination shall be final and conclusive and binding upon
all parties hereto but shall be made only after consultation with Company and
Agent) that the making, maintaining or continuation of its Eurodollar Rate Loans
or Canadian Eurodollar Rate Loans (i) has become unlawful as a result of
compliance by such Lender in good faith with any law, treaty, governmental rule,
regulation, guideline or order (or would conflict with any such treaty,
governmental rule, regulation, guideline or order not having the force of law
even though the failure to comply therewith would not be unlawful) or (ii) has
become impracticable, or would cause such Lender material hardship, as a result
of contingencies occurring after the date of this Agreement which materially and
adversely affect the interbank Eurodollar market or the position of such Lender
in that market, then, and in any such event, such Lender shall be an "AFFECTED
LENDER" and it shall on that day give notice (by telefacsimile or by telephone
confirmed in writing) to Company and Agent of such determination (which notice
Agent shall promptly transmit to each other Lender). Thereafter (a) the
obligation of the Affected Lender to make Loans as, or to convert Loans to,
Eurodollar Rate Loans or Canadian Eurodollar Rate Loans, as applicable, shall be
suspended until such notice shall be withdrawn by the Affected Lender, (b) to
the extent such determination by the Affected Lender relates to a Eurodollar
Rate Loan or a Canadian Eurodollar Rate Loan then being requested by a Borrower
pursuant to a Notice of Borrowing or a Notice of Conversion/Continuation, the
Affected Lender shall make such Loan as (or convert such Loan to, as the case
may be) a Base Rate Loan or a Canadian Base Rate Loan, as applicable, (c) the
Affected Lender's obligation to maintain its outstanding Eurodollar Rate Loans
or Canadian Eurodollar Rate Loans, as applicable (the "AFFECTED LOANS"), shall
be terminated at the earlier to occur of the expiration of the Interest Period
then in effect with respect to the Affected Loans or when required by law, and
(d) the Affected Loans shall automatically convert into Base Rate Loans or
Canadian Base Rate Loans, as applicable, on the date of such termination.
Notwithstanding the foregoing, to the extent a determination by an Affected
Lender as described above relates to a Eurodollar Rate Loan or a Canadian
Eurodollar Rate Loan then being requested by a Borrower pursuant to a Notice of
64
Borrowing or a Notice of Conversion/Continuation, such Borrower shall have the
option, subject to the provisions of subsection 2.6D, to rescind such Notice of
Borrowing or Notice of Conversion/Continuation as to all Lenders by giving
notice (by telefacsimile or by telephone confirmed in writing) to Agent of such
rescission on the date on which the Affected Lender gives notice of its
determination as described above (which notice of rescission Agent shall
promptly transmit to each other Lender). Except as provided in the immediately
preceding sentence, nothing in this subsection 2.6C shall affect the obligation
of any Lender other than an Affected Lender to make or maintain Loans as, or to
convert Loans to, Eurodollar Rate Loans or Canadian Eurodollar Rate Loans, as
applicable, in accordance with the terms of this Agreement.
D. COMPENSATION FOR BREAKAGE OR NON-COMMENCEMENT OF INTEREST PERIODS. The
applicable Borrower shall compensate each Lender, upon written request by that
Lender (which request shall set forth the basis for requesting such amounts),
for all reasonable losses, expenses and liabilities (including, without
limitation, any interest paid by that Lender to lenders of funds borrowed by it
to make or carry its Eurodollar Rate Loans or Canadian Eurodollar Rate Loans, as
applicable, and any loss, expense or liability sustained by that Lender in
connection with the liquidation or reemployment of such funds) which that Lender
may sustain: (i) if for any reason (other than a default by that Lender) a
borrowing of any Eurodollar Rate Loan or any Canadian Eurodollar Rate Loan does
not occur on a date specified therefor in a Notice of Borrowing or a telephonic
request for borrowing, or a conversion to or continuation of any Eurodollar Rate
Loan or any Canadian Eurodollar Rate Loan does not occur on a date specified
therefor in a Notice of Conversion/Continuation or a telephonic request for
conversion or continuation, (ii) if any prepayment or other principal payment or
any conversion of any of its Eurodollar Rate Loans or Canadian Eurodollar Rate
Loans occurs on a date prior to the last day of an Interest Period applicable to
that Loan, (iii) if any prepayment of any of its Eurodollar Rate Loans or
Canadian Eurodollar Rate Loans is not made on any date specified in a notice of
prepayment given by the applicable Borrower, or (iv) as a consequence of any
other default by Company in the repayment of its Eurodollar Rate Loans or
Canadian Eurodollar Rate Loans when required by the terms of this Agreement.
E. BOOKING OF EURODOLLAR RATE LOANS AND CANADIAN EURODOLLAR RATE LOANS.
Any Lender may make, carry or transfer Eurodollar Rate Loans and Canadian
Eurodollar Rate Loans at, to, or for the account of any of its branch offices or
the office of an Affiliate of that Lender.
F. ASSUMPTIONS CONCERNING FUNDING OF EURODOLLAR RATE LOANS AND CANADIAN
EURODOLLAR RATE LOANS. Calculation of all amounts payable to a Lender under
this subsection 2.6 and under subsection 2.7A shall be made as though that
Lender had actually funded each of its relevant Eurodollar Rate Loans and
Canadian Eurodollar Rate Loans through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to clause (i) of the definition
of Adjusted Eurodollar Rate or pursuant to the definition of Canadian Eurodollar
Rate in an amount equal to the amount of such Eurodollar Rate Loan or Canadian
Eurodollar
65
Rate Loan, as applicable, and having a maturity comparable to the relevant
Interest Period and through the transfer of such Eurodollar deposit from an
offshore office of that Lender to a domestic office of that Lender in the United
States of America or in Canada, as applicable; provided, however, that each
-----------------
Lender may fund each of its Eurodollar Rate Loans and Canadian Eurodollar Rate
Loans in any manner it sees fit and the foregoing assumptions shall be utilized
only for the purposes of calculating amounts payable under this subsection 2.6
and under subsection 2.7A.
G. EURODOLLAR RATE LOANS AND CANADIAN EURODOLLAR RATE LOANS AFTER
DEFAULT. After the occurrence of and during the continuation of a Potential
Event of Default or an Event of Default, (i) Borrower may not elect to have a
Loan be made or maintained as, or converted to, a Eurodollar Rate Loan or
Canadian Eurodollar Rate Loan, as applicable, after the expiration of any
Interest Period then in effect for that Loan and (ii) subject to the provisions
of subsection 2.6D, any Notice of Borrowing or Notice of Conversion/Continuation
given by any Borrower with respect to a requested borrowing or
conversion/continuation that has not yet occurred shall be deemed to be
rescinded by such Borrower.
2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY.
----------------------------------------
A. COMPENSATION FOR INCREASED COSTS AND TAXES. Subject to the provisions
of subsection 2.7B, in the event that any Lender shall determine (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) that any law, treaty or governmental rule, regulation
or order, or any change therein or in the interpretation, administration or
application thereof (including the introduction of any new law, treaty or
governmental rule, regulation or order), or any determination of a court or
governmental authority, in each case that becomes effective after the date
hereof, or compliance by such Lender with any guideline, request or directive
issued or made after the date hereof by any central bank or other governmental
or quasi-governmental authority (whether or not having the force of law);
(i) subjects such Lender (or its applicable lending office) to any
additional Tax (other than any Tax on the overall net income of such
Lender) with respect to this Agreement or any of its obligations hereunder
or any payments to such Lender (or its applicable lending office) of
principal, interest, fees or any other amount payable hereunder;
(ii) imposes, modifies or holds applicable any reserve (including
without limitation any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement against assets held by, or deposits or other liabilities in or
for the account of, or advances or loans by, or other credit extended by,
or any other acquisition of funds by, any office of such Lender (other than
any such reserve or other requirements with respect to Eurodollar Rate
Loans that are reflected in the definition of Adjusted Eurodollar Rate); or
66
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Lender (or its applicable lending office) or
its obligations hereunder or the interbank Eurodollar market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Loans hereunder or to reduce any amount
received or receivable by such Lender (or its applicable lending office) with
respect thereto; then, in any such case, each Borrower shall promptly pay to
such Lender, upon receipt of the statement referred to in the next sentence,
such additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
sole discretion shall determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder. Such Lender shall deliver to the applicable Borrower (with a copy to
Agent) a written statement, setting forth in reasonable detail the basis for
calculating the additional amounts owed to such Lender under this subsection
2.7A, which statement shall be conclusive and binding upon all parties hereto
absent manifest error.
B. WITHHOLDING OF TAXES.
(i) Payments to Be Free and Clear. All sums payable by any Borrower
------------------------------
under this Agreement and the other Loan Documents shall (except to the
extent required by law) be paid free and clear of, and without any
deduction or withholding on account of, any Tax (other than a Tax on the
overall net income of any Lender) imposed, levied, collected, withheld or
assessed by or within the United States of America or Canada or any
political subdivision in or of the United States of America or Canada or
any other jurisdiction from or to which a payment is made by or on behalf
of any Borrower or by any federation or organization of which the United
States of America or Canada or any such jurisdiction is a member at the
time of payment.
(ii) Grossing-up of Payments. If any Borrower or any other Person is
------------------------
required by law to make any deduction or withholding on account of any such
Tax from any sum paid or payable by any Borrower to Agent or any Lender
under any of the Loan Documents:
(a) such Borrower shall notify Agent of any such requirement or
any change in any such requirement as soon as such Borrower becomes
aware of it;
(b) such Borrower shall pay any such Tax before the date on
which penalties attach thereto, such payment to be made (if the
liability to pay is imposed on such Borrower) for its own account or
(if that liability is imposed on Agent or such Lender, as the case may
be) on behalf of and in the name of Agent or such Lender;
67
(c) the sum payable by such Borrower in respect of which the
relevant deduction, withholding or payment is required shall be
increased to the extent necessary to ensure that, after the making of
that deduction, withholding or payment, Agent or such Lender, as the
case may be, receives on the due date a net sum equal to what it would
have received had no such deduction, withholding or payment been
required or made; and
(d) within 30 days after paying any sum from which it is
required by law to make any deduction or withholding, and within 30
days after the due date of payment of any Tax which it is required by
clause (b) above to pay, such Borrower shall deliver to Agent evidence
satisfactory to the other affected parties of such deduction,
withholding or payment and of the remittance thereof to the relevant
taxing or other authority;
provided that no such additional amount shall be required to be paid to any
--------
Lender under clause (c) above except to the extent that any change after the
date hereof (in the case of each Lender listed on the signature pages hereof) or
after the date of the Assignment Agreement pursuant to which such Lender became
a Lender (in the case of each other Lender) in any such requirement for a
deduction, withholding or payment as is mentioned therein shall result in an
increase in the rate of such deduction, withholding or payment from that in
effect at the date of this Agreement or at the date of such Assignment
Agreement, as the case may be, in respect of payments to such Lender.
(iii) Evidence of Exemption from Withholding Taxes.
--------------------------------------------
(a) (1) Each Domestic Lender that is organized under the laws of
any jurisdiction other than the United States or any state or other
political subdivision thereof (for purposes of this subsection
2.7B(iii), a "NON-US LENDER") shall deliver to Agent for transmission
to Company, on or prior to the Closing Date (in the case of each
Domestic Lender listed on the signature pages hereof) or on or prior
to the date of the Assignment Agreement pursuant to which it becomes a
Domestic Lender (in the case of each other Domestic Lender), and at
such other times as may be necessary in the determination of Company
or Agent (each in the reasonable exercise of its discretion), (X) two
original copies of Internal Revenue Service Form 1001 or 4224 (or any
successor forms), properly completed and duly executed by such Lender,
together with any other certificate or statement of exemption required
under the Internal Revenue Code or the regulations issued thereunder
to establish that such Lender is not subject to deduction or
withholding of United States federal income tax with respect to any
payments to such Lender of principal, interest, fees or other amounts
payable under any of the Loan Documents or (Y) if such Lender is not a
"bank" or other Person described in Section 881(c)(3) of the Internal
Revenue Code and cannot deliver either Internal Revenue Service Form
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1001 or 4224 pursuant to clause (X) above, a Certificate re Non-Bank
Status together with two original copies of Internal Revenue Service
Form W-8 (or any successor form), properly completed and duly executed
by such Lender, together with any other certificate or statement of
exemption required under the Internal Revenue Code or the regulations
issued thereunder to establish that such Lender is not subject to
deduction or withholding of United States federal income tax with
respect to any payments to such Lender of interest payable under any
of the Loan Documents.
(2) Each Canadian Lender that is organized under the laws of any
jurisdiction other than Canada or any province thereof or is not resident
in Canada agrees to deliver to Canadian Borrowers and Canadian Agent upon
request such certificates, documents or other evidence as may be required
from time to time, properly completed and duly executed by such Canadian
Lender, to establish the basis for any applicable exemption from or
reduction of Taxes with respect to any payments to such Canadian Lender of
principal, interest, fees, commissions or any other amount payable under
this Agreement or the Canadian Term Loans.
(b) Each Lender required to deliver any forms, certificates or
other evidence with respect to United States federal income tax
withholding matters or Canadian income tax withholding matters
pursuant to subsection 2.7B(iii)(a) hereby agrees, from time to time
after the initial delivery by such Lender of such forms, certificates
or other evidence, whenever a lapse in time or change in circumstances
renders such forms, certificates or other evidence obsolete or
inaccurate in any material respect, that such Lender shall (1)
promptly deliver to Agent for transmission to Company (X) in the case
of any Domestic Lender, two new original copies of Internal Revenue
Service Form 1001 or 4224, or a Certificate re Non-Bank Status and two
original copies of Internal Revenue Service Form W-8, as the case may
be, or (Y) in the case of any Canadian Lender, such certificates,
documents or other evidence as may be required from time to time under
subsection 2.7B(iii)(a)(2), in each case properly completed and duly
executed by such Lender, together with any other certificate or
statement of exemption required in order to confirm or establish that
such Lender is not subject to deduction or withholding of United
States or Canadian (as applicable) federal income tax with respect to
payments to such Lender under the Loan Documents or (2) notify Agent
and Company of its inability to deliver any such forms, certificates
or other evidence.
(c) The applicable Borrower shall not be required to pay any
additional amount to any Non-US Lender under clause (c) of subsection
2.7B(ii) if such Lender shall have failed to satisfy the requirements
of clause (a) or (b) of this subsection 2.7B(iii); provided that if
--------
such Lender shall have satisfied the requirements of subsection
2.7B(iii)(a) on the Closing Date (in the case of each
69
Lender listed on the signature pages hereof) or on the date of the
Assignment Agreement pursuant to which it became a Lender (in the case
of each other Lender), nothing in this subsection 2.7B(iii)(c) shall
relieve the applicable Borrower of its obligation to pay any
additional amounts pursuant to clause (c) of subsection 2.7B(ii) in
the event that, as a result of any change in any applicable law,
treaty or governmental rule, regulation or order, or any change in the
interpretation, administration or application thereof, such Lender is
no longer properly entitled to deliver forms, certificates or other
evidence at a subsequent date establishing the fact that such Lender
is not subject to withholding as described in subsection 2.7B(iii)(a).
C. CAPITAL ADEQUACY ADJUSTMENT. If any Lender shall have determined that
the adoption, effectiveness, phase-in or applicability after the date hereof of
any law, rule or regulation (or any provision thereof) regarding capital
adequacy, or any change therein or in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Lender
(or its applicable lending office) with any guideline, request or directive
regarding capital adequacy (whether or not having the force of law) of any such
governmental authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of, or with reference to,
such Lender's Loans, Commitments or Letters of Credit or participations therein
or other obligations hereunder to a level below that which such Lender or such
controlling corporation could have achieved but for such adoption,
effectiveness, phase-in, applicability, change or compliance (taking into
consideration the policies of such Lender or such controlling corporation with
regard to capital adequacy), then from time to time, within five Business Days
after receipt by Company from such Lender of the statement referred to in the
next sentence, Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender or such controlling corporation on an
after-tax basis for such reduction. Such Lender shall deliver to Company (with a
copy to Agent) a written statement, setting forth in reasonable detail the basis
of the calculation of such additional amounts, which statement shall be
conclusive and binding upon all parties hereto absent manifest error.
2.8 OBLIGATION OF LENDERS AND ISSUING LENDERS TO MITIGATE.
-----------------------------------------------------
Each Lender and Issuing Lender agrees that, as promptly as practicable
after the officer of such Lender or Issuing Lender responsible for administering
the Loans or Letters of Credit of such Lender or Issuing Lender, as the case may
be, becomes aware of the occurrence of an event or the existence of a condition
that would cause such Lender to become an Affected Lender or that would entitle
such Lender or Issuing Lender to receive payments under subsection 2.7 or
subsection 3.6, it will, to the extent not inconsistent with the internal
policies of such Lender or Issuing Lender and any applicable legal or regulatory
restrictions, use reasonable efforts (i) to make, issue, fund or maintain the
Commitments of such Lender or the affected Loans or Letters of Credit of such
Lender or Issuing Lender through another lending
70
or letter of credit office of such Lender or Issuing Lender, or (ii) take such
other measures as such Lender or Issuing Lender may deem reasonable, if as a
result thereof the circumstances which would cause such Lender to be an Affected
Lender would cease to exist or the additional amounts which would otherwise be
required to be paid to such Lender or Issuing Lender pursuant to subsection 2.7
or subsection 3.6 would be materially reduced and if, as determined by such
Lender or Issuing Lender in its sole discretion, the making, issuing, funding or
maintaining of such Commitments or Loans or Letters of Credit through such other
lending or letter of credit office or in accordance with such other measures, as
the case may be, would not otherwise materially adversely affect such
Commitments or Loans or Letters of Credit or the interests of such Lender or
Issuing Lender; provided that such Lender or Issuing Lender will not be
--------
obligated to utilize such other lending or letter of credit office pursuant to
this subsection 2.8 unless Borrower agrees to pay all incremental expenses
incurred by such Lender or Issuing Lender as a result of utilizing such other
lending or letter of credit office as described in clause (i) above. A
certificate as to the amount of any such expenses payable by Borrower pursuant
to this subsection 2.8 (setting forth in reasonable detail the basis for
requesting such amount) submitted by such Lender or Issuing Lender to Company
(with a copy to Agent) shall be conclusive absent manifest error.
SECTION 3. LETTERS OF CREDIT
3.1 ISSUANCE OF LETTERS OF CREDIT AND LENDERS' PURCHASE OF PARTICIPATIONS
---------------------------------------------------------------------
THEREIN.
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A. LETTERS OF CREDIT. In addition to Company requesting that Domestic
Lenders make Working Capital Revolving Loans pursuant to subsection 2.1A(iv) and
that Swing Line Lender make Swing Line Loans pursuant to subsection 2.1A(v),
Company may request, in accordance with the provisions of this subsection 3.1,
from time to time during the period from the Closing Date to but excluding the
Revolving Loan Commitment Termination Date, that one or more Domestic Lenders
issue Letters of Credit for the account of Company for the purposes specified in
the definition of Standby Letters of Credit. Subject to the terms and
conditions of this Agreement and in reliance upon the representations and
warranties of Company herein set forth, any one or more Domestic Lenders may,
but (except as provided in subsection 3.1B(ii)) shall not be obligated to, issue
such Letters of Credit in accordance with the provisions of this subsection 3.1;
provided that Company shall not request that any Domestic Lender issue (and no
--------
Domestic Lender shall issue):
(i) any Letter of Credit if, after giving effect to such issuance,
the Total Utilization of Working Capital Revolving Loan Commitments
would exceed the Working Capital Revolving Loan Commitments then in
effect;
(ii) any Letter of Credit if, after giving effect to such issuance,
the Letter of Credit Usage would exceed $3,000,000;
71
(iii) any Letter of Credit having an expiration date later than the
earlier of (a) the Revolving Loan Commitment Termination Date and (b) the
date which is one year from the date of issuance of such Letter of Credit;
provided that the immediately preceding clause (b) shall not prevent any
--------
Issuing Lender from agreeing that a Letter of Credit will automatically be
extended for one or more successive periods not to exceed one year each
unless such Issuing Lender elects not to extend for any such additional
period; and provided, further that such Issuing Lender shall elect not to
-------- -------
extend such Letter of Credit if it has knowledge that an Event of Default
has occurred and is continuing (and has not been waived in accordance with
subsection 10.6) at the time such Issuing Lender must elect whether or not
to allow such extension; or
(iv) any Letter of Credit denominated in a currency other than
Dollars or Canadian Dollars.
B. MECHANICS FOR ISSUANCE.
(i) Request for Issuance. Whenever Company desires the issuance of
--------------------
a Letter of Credit, it shall deliver to Agent a Request for Issuance of
Letter of Credit substantially in the form of Exhibit III annexed hereto no
-----------
later than 12:00 Noon (New York City time) at least three Business Days or
such shorter period as may be agreed to by the Issuing Lender in any
particular instance, in advance of the proposed date of issuance. The
Request for Issuance of Letter of Credit shall specify (a) the proposed
date of issuance (which shall be a Business Day), (b) the face amount of
the Letter of Credit, (c) whether the Letter of Credit is requested to be
denominated in Dollars or in Canadian Dollars, (d) the expiration date of
the Letter of Credit, (e) the name and address of the beneficiary, and (f)
either the verbatim text of the proposed Letter of Credit or the proposed
terms and conditions thereof, including a precise description of any
documents to be presented by the beneficiary which, if presented by the
beneficiary prior to the expiration date of the Letter of Credit, would
require the Issuing Lender to make payment under the Letter of Credit;
provided that the Issuing Lender, in its reasonable discretion, may require
--------
changes in the text of the proposed Letter of Credit or any such documents;
and provided, further that no Letter of Credit shall require payment
-------- -------
against a conforming draft to be made thereunder on the same business day
(under the laws of the jurisdiction in which the office of the Issuing
Lender to which such draft is required to be presented is located) that
such draft is presented if such presentation is made after 10:00 A.M. (in
the time zone of such office of the Issuing Lender) on such business day.
Company shall notify the applicable Issuing Lender (and Agent,
if Agent is not such Issuing Lender) prior to the issuance of any Letter of
Credit in the event that any of the matters to which Company is required to
certify in the applicable Request for Issuance of Letter of Credit is no
longer true and correct as of the proposed date of issuance of such Letter
of Credit, and upon the issuance of any Letter of Credit
72
Company shall be deemed to have re-certified, as of the date of such
issuance, as to the matters to which Company is required to certify in the
applicable Request for Issuance of Letter of Credit.
(ii) Determination of Issuing Lender. Upon receipt by Agent of a
-------------------------------
Request for Issuance of Letter of Credit pursuant to subsection 3.1B(i)
requesting the issuance of a Letter of Credit, in the event Agent elects to
issue such Letter of Credit, Agent shall promptly so notify Company, and
Agent shall be the Issuing Lender with respect thereto. In the event that
Agent, in its sole discretion, elects not to issue such Letter of Credit,
Agent shall promptly so notify Company, whereupon Company may request any
other Domestic Lender to issue such Letter of Credit by delivering to such
Domestic Lender a copy of the applicable Request for Issuance of Letter of
Credit. Any Domestic Lender so requested to issue such Letter of Credit
shall promptly notify Company and Agent whether or not, in its sole
discretion, it has elected to issue such Letter of Credit, and any such
Domestic Lender which so elects to issue such Letter of Credit shall be the
Issuing Lender with respect thereto. In the event that all other Domestic
Lenders shall have declined to issue such Letter of Credit, notwithstanding
the prior election of Agent not to issue such Letter of Credit, Agent shall
be obligated to issue such Letter of Credit and shall be the Issuing Lender
with respect thereto, notwithstanding the fact that the Letter of Credit
Usage with respect to such Letter of Credit and with respect to all other
Letters of Credit issued by Agent, when aggregated with Agent's outstanding
Working Capital Revolving Loans and Swing Line Loans, may exceed Agent's
Working Capital Revolving Loan Commitment then in effect; provided that
--------
Agent shall not be obligated to issue any Letter of Credit denominated in a
foreign currency other than Canadian Dollars.
(iii) Issuance of Letter of Credit. Upon satisfaction or waiver (in
----------------------------
accordance with subsection 10.6) of the conditions set forth in subsection
4.4, the Issuing Lender shall issue the requested Letter of Credit in
accordance with the Issuing Lender's standard operating procedures.
(iv) Notification to Lenders. Upon the issuance of any Letter of
-----------------------
Credit the applicable Issuing Lender shall promptly notify Agent and each
other Domestic Lender of such issuance, which notice shall be accompanied
by a copy of such Letter of Credit. Promptly after receipt of such notice
(or, if Agent is the Issuing Lender, together with such notice), Agent
shall notify each Domestic Lender of the amount of such Domestic Lender's
respective participation in such Letter of Credit, determined in accordance
with subsection 3.1C.
()v Reports to Lenders. Within 15 days after the end of each
------------------
calendar quarter ending after the Closing Date, so long as any Letter of
Credit shall have been outstanding during such calendar quarter, each
Issuing Lender shall deliver to each other Lender a report setting forth
for such calendar quarter the daily aggregate amount
73
available to be drawn under the Letters of Credit issued by such Issuing
Lender that were outstanding during such calendar quarter.
C. DOMESTIC LENDERS' PURCHASE OF PARTICIPATIONS IN LETTERS OF CREDIT.
Immediately upon the issuance of each Letter of Credit, each Domestic Lender
shall be deemed to, and hereby agrees to, have irrevocably purchased from the
Issuing Lender a participation in such Letter of Credit and any drawings honored
thereunder in an amount equal to such Lender's Pro Rata Share of the maximum
amount which is or at any time may become available to be drawn thereunder.
3.2 LETTER OF CREDIT FEES.
---------------------
Company agrees to pay the following amounts with respect to Letters of
Credit issued hereunder:
(i) with respect to each Letter of Credit, (a) a fronting fee,
payable directly to the applicable Issuing Lender for its own account,
equal to the greater of (X) $500 and (Y) 0.25% per annum of the daily
amount available to be drawn under such Letter of Credit and (b) a letter
of credit fee, payable to Agent for the account of Domestic Lenders, equal
to the Applicable Eurodollar Rate Margin for Working Capital Revolving
Loans multiplied by the daily amount available to be drawn under such
----------
Letter of Credit, each such fronting fee or letter of credit fee to be
payable in arrears on and to (but excluding) each March 31, June 30,
September 30 and December 31 of each year and computed on the basis of a
360-day year for the actual number of days elapsed;
(ii) with respect to the issuance, amendment or transfer of each
Letter of Credit and each payment of a drawing made thereunder (without
duplication of the fees payable under clause (i) above), documentary and
processing charges payable directly to the applicable Issuing Lender for
its own account in accordance with such Issuing Lender's standard schedule
for such charges in effect at the time of such issuance, amendment,
transfer or payment, as the case may be.
Promptly upon receipt by Agent of any amount described in clause (i)(b) of this
subsection 3.2, Agent shall distribute to each Domestic Lender its Pro Rata
Share of such amount.
3.3 DRAWINGS AND REIMBURSEMENT OF AMOUNTS PAID UNDER LETTERS OF CREDIT.
------------------------------------------------------------------
A. RESPONSIBILITY OF ISSUING LENDER WITH RESPECT TO DRAWINGS. In
determining whether to honor any drawing under any Letter of Credit by the
beneficiary thereof, the Issuing Lender shall be responsible only to examine the
documents delivered under such Letter of Credit with reasonable care so as to
ascertain whether they appear on their face to be in accordance with the terms
and conditions of such Letter of Credit.
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B. REIMBURSEMENT BY COMPANY OF AMOUNTS PAID UNDER LETTERS OF CREDIT. In
the event an Issuing Lender has determined to honor a drawing under a Letter of
Credit issued by it, such Issuing Lender shall immediately notify Company and
Agent, and Company shall reimburse such Issuing Lender on the date on which such
drawing is honored (the "REIMBURSEMENT DATE") in an amount in Dollars (which
amount, in the case of a drawing under a Letter of Credit which is denominated
in Canadian Dollars, shall be calculated in Dollar Equivalents) and in same day
funds equal to the amount of such drawing; provided that, anything contained in
--------
this Agreement to the contrary notwithstanding, (i) unless Company shall have
notified Agent and such Issuing Lender prior to 10:00 A.M. (New York City time)
on the date such drawing is honored that Company intends to reimburse such
Issuing Lender for the amount of such drawing with funds other than the proceeds
of Working Capital Revolving Loans, Company shall be deemed to have given a
timely Notice of Borrowing to Agent requesting Lenders to make Working Capital
Revolving Loans that are Base Rate Loans on the Reimbursement Date in an amount
in Dollars (calculated in Dollar Equivalents in the case of a drawing equal to
the amount of any drawing honored by such Issuing Lender under a Letter of
Credit denominated in Canadian Dollars) equal to the amount of such drawing and
(ii) subject to satisfaction or waiver of the conditions specified in subsection
4.2B, Domestic Lenders shall, on the Reimbursement Date, make Working Capital
Revolving Loans that are Base Rate Loans in the amount of such drawing, the
proceeds of which shall be applied directly by Agent to reimburse such Issuing
Lender for the amount of such drawing; and provided, further that if for any
-------- -------
reason proceeds of Working Capital Revolving Loans are not received by such
Issuing Lender on the Reimbursement Date in an amount equal to the amount of
such drawing, Company shall reimburse such Issuing Lender, on demand, in an
amount in same day funds equal to the excess of the amount of such honored
drawing over the aggregate amount of such Working Capital Revolving Loans, if
any, which are so received. Nothing in this subsection 3.3B shall be deemed to
relieve any Domestic Lender from its obligation to make Working Capital
Revolving Loans on the terms and conditions set forth in this Agreement, and
Company shall retain any and all rights it may have against any Domestic Lender
resulting from the failure of such Domestic Lender to make such Working Capital
Revolving Loans under this subsection 3.3B.
C. PAYMENT BY LENDERS OF UNREIMBURSED AMOUNTS PAID UNDER LETTERS OF
CREDIT.
(i) Payment by Domestic Lenders. In the event that Company shall
---------------------------
fail for any reason to reimburse any Issuing Lender as provided in
subsection 3.3B in an amount (calculated in Dollar Equivalents in the case
of a drawing equal to the amount of any drawing honored by such Issuing
Lender under a Letter of Credit denominated in Canadian Dollars) equal to
the amount of any drawing honored by such Issuing Lender under a Letter of
Credit issued by it, such Issuing Lender shall promptly notify each other
Domestic Lender of the unreimbursed amount of such drawing and of such
other Domestic Lender's respective participation therein based on such
Domestic Lender's Pro Rata Share. Each Domestic Lender shall make
available to such Issuing
75
Lender an amount equal to its respective participation, in Dollars and in
same day funds, at the office of such Issuing Lender specified in such
notice, on the date of such notice by such Issuing Lender. In the event
that any Domestic Lender fails to make available to such Issuing Lender on
such business day the amount of such Domestic Lender's participation in
such Letter of Credit as provided in this subsection 3.3C, such Issuing
Lender shall be entitled to recover such amount on demand from such
Domestic Lender together with interest thereon at the rate customarily used
by such Issuing Lender for the correction of errors among banks for three
Business Days and thereafter at the Base Rate. Nothing in this subsection
3.3C shall be deemed to prejudice the right of any Domestic Lender to
recover from any Issuing Lender any amounts made available by such Domestic
Lender to such Issuing Lender pursuant to this subsection 3.3C in the event
that it is determined by the final judgment of a court of competent
jurisdiction that the payment with respect to a Letter of Credit by such
Issuing Lender in respect of which payment was made by such Domestic Lender
constituted gross negligence or willful misconduct on the part of such
Issuing Lender.
(ii) Distribution to Lenders of Reimbursements Received From
-------------------------------------------------------
Company. In the event any Issuing Lender shall have been reimbursed by
-------
other Domestic Lenders pursuant to subsection 3.3C(i) for all or any
portion of any drawing honored by such Issuing Lender under a Letter of
Credit issued by it, such Issuing Lender shall distribute to each other
Domestic Lender which has paid all amounts payable by it under subsection
3.3C(i) with respect to such drawing such other Domestic Lender's Pro Rata
Share of all payments subsequently received by such Issuing Lender from
Company in reimbursement of such drawing when such payments are received.
Any such distribution shall be made to a Domestic Lender at its primary
address set forth below its name on the appropriate signature page hereof
or at such other address as such Domestic Lender may request.
D. INTEREST ON AMOUNTS PAID UNDER LETTERS OF CREDIT.
(i) Payment of Interest by Company. Company agrees to pay to each
------------------------------
Issuing Lender, with respect to drawings made under any Letters of Credit
issued by it, interest on the amount paid by such Issuing Lender in respect
of each such drawing from the date of such drawing to but excluding the
date such amount is reimbursed by Company (including any such reimbursement
out of the proceeds of Working Capital Revolving Loans pursuant to
subsection 3.3B) at a rate equal to (a) for the period from the date of
such drawing to but excluding the Reimbursement Date, the rate then in
effect under this Agreement with respect to Working Capital Revolving Loans
that are Base Rate Loans and (b) thereafter, a rate which is 2% per annum
in excess of the rate of interest otherwise payable under this Agreement
with respect to Working Capital Revolving Loans that are Base Rate Loans.
Interest payable pursuant to this subsection 3.3D(i) shall be computed on
the basis of a 360-day year for the actual number of days elapsed in the
period during which it accrues and shall be payable on demand or, if no
76
demand is made, on the date on which the related drawing under a Letter of
Credit is reimbursed in full.
(ii) Distribution of Interest Payments by Issuing Lender. Promptly
---------------------------------------------------
upon receipt by any Issuing Lender of any payment of interest pursuant to
subsection 3.3D(i) with respect to a drawing honored under a Letter of
Credit issued by it, (a) such Issuing Lender shall distribute to each other
Domestic Lender, out of the interest received by such Issuing Lender in
respect of the period from the date of such drawing to but excluding the
date on which such Issuing Lender is reimbursed for the amount of such
drawing (including any such reimbursement out of the proceeds of Working
Capital Revolving Loans pursuant to subsection 3.3B), the amount that such
other Domestic Lender would have been entitled to receive in respect of the
letter of credit fee that would have been payable in respect of such Letter
of Credit for such period pursuant to subsection 3.2 if no drawing had been
made under such Letter of Credit, and (b) in the event such Issuing Lender
shall have been reimbursed by other Domestic Lenders pursuant to subsection
3.3C(i) for all or any portion of such honored drawing, such Issuing Lender
shall distribute to each other Domestic Lender which has paid all amounts
payable by it under subsection 3.3C(i) with respect to such honored drawing
such other Domestic Lender's Pro Rata Share of any interest received by
such Issuing Lender in respect of that portion of such honored drawing so
reimbursed by other Domestic Lenders for the period from the date on which
such Issuing Lender was so reimbursed by other Domestic Lenders to but
excluding the date on which such portion of such honored drawing is
reimbursed by Company. Any such distribution shall be made to a Domestic
Lender at its primary address set forth below its name on the appropriate
signature page hereof or at such other address as such Domestic Lender may
request.
3.4 OBLIGATIONS ABSOLUTE.
--------------------
The obligation of Company to reimburse each Issuing Lender for
drawings made under the Letters of Credit issued by it and to repay any Working
Capital Revolving Loans made by Lenders pursuant to subsection 3.3B and the
obligations of Lenders under subsection 3.3C(i) shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances including any of the following circumstances:
(i) any lack of validity or enforceability of any Letter of Credit;
(ii) the existence of any claim, set-off, defense or other right
which Company or any Domestic Lender may have at any time against a
beneficiary or any transferee of any Letter of Credit (or any Persons for
whom any such transferee may be acting), any Issuing Lender or other
Domestic Lender or any other Person or, in the case of a Domestic Lender,
against Company, whether in connection with this
77
Agreement, the transactions contemplated herein or any unrelated
transaction (including any underlying transaction between Company or one of
its Subsidiaries and the beneficiary for which any Letter of Credit was
procured);
(iii) any draft or other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect;
(iv) payment by the applicable Issuing Lender under any Letter of
Credit against presentation of a draft or other document which does not
substantially comply with the terms of such Letter of Credit;
(v) any adverse change in the business, operations, properties,
assets, condition (financial or otherwise) or prospects of Company or any
of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan Document by any
party thereto;
(vii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing; or
(viii) the fact that an Event of Default or a Potential Event of
Default shall have occurred and be continuing;
provided, in each case, that payment by the applicable Issuing Lender under the
--------
applicable Letter of Credit shall not have constituted gross negligence or
willful misconduct of such Issuing Lender under the circumstances in question
(as determined by a final judgment of a court of competent jurisdiction).
3.5 INDEMNIFICATION; NATURE OF ISSUING LENDERS' DUTIES.
--------------------------------------------------
A. INDEMNIFICATION. In addition to amounts payable as provided in
subsection 3.6, Company hereby agrees to protect, indemnify, pay and save
harmless each Issuing Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and allocated costs of internal
counsel) which such Issuing Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit by such Issuing
Lender, other than as a result of (a) the gross negligence or willful misconduct
of such Issuing Lender as determined by a final judgment of a court of competent
jurisdiction or (b) subject to the following clause (ii), the wrongful dishonor
by such Issuing Lender of a proper demand for payment made under any Letter of
Credit issued by it or (ii) the failure of such Issuing Lender to honor a
drawing under any such Letter of Credit as a result of any act or omission,
whether
78
rightful or wrongful, of any present or future de jure or de facto government or
governmental authority (all such acts or omissions herein called "GOVERNMENTAL
ACTS").
B. NATURE OF ISSUING LENDERS' DUTIES. As between Company and any Issuing
Lender, Company assumes all risks of the acts and omissions of, or misuse of the
Letters of Credit issued by such Issuing Lender by, the respective beneficiaries
of such Letters of Credit. In furtherance and not in limitation of the
foregoing, such Issuing Lender shall not be responsible for: (i) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for and issuance of
any such Letter of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason; (iii) failure of the beneficiary of
any such Letter of Credit to comply fully with any conditions required in order
to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (v) errors in
interpretation of technical terms; (vi) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any such
Letter of Credit or of the proceeds thereof; (vii) the misapplication by the
beneficiary of any such Letter of Credit of the proceeds of any drawing under
such Letter of Credit; or (viii) any consequences arising from causes beyond the
control of such Issuing Lender, including any Governmental Acts, and none of the
above shall affect or impair, or prevent the vesting of, any of such Issuing
Lender's rights or powers hereunder.
In furtherance and extension and not in limitation of the specific
provisions set forth in the first paragraph of this subsection 3.5B, any action
taken or omitted by any Issuing Lender under or in connection with the Letters
of Credit issued by it or any documents and certificates delivered thereunder,
if taken or omitted in good faith, shall not put such Issuing Lender under any
resulting liability to Company.
Notwithstanding anything to the contrary contained in this subsection
3.5, Company shall retain any and all rights it may have against any Issuing
Lender for any liability arising solely out of the gross negligence or willful
misconduct of such Issuing Lender, as determined by a final judgment of a court
of competent jurisdiction.
3.6 INCREASED COSTS AND TAXES RELATING TO LETTERS OF CREDIT.
-------------------------------------------------------
Subject to the provisions of subsection 2.7B (which shall be
controlling with respect to the matters covered thereby), in the event that any
Issuing Lender or Domestic Lender shall determine (which determination shall,
absent manifest error, be final and conclusive and binding upon all parties
hereto) that any law, treaty or governmental rule, regulation or order, or any
change therein or in the interpretation, administration or application
79
thereof (including the introduction of any new law, treaty or governmental rule,
regulation or order), or any determination of a court or governmental authority,
in each case that becomes effective after the date hereof, or compliance by any
Issuing Lender or Domestic Lender with any guideline, request or directive
issued or made after the date hereof by any central bank or other governmental
or quasi-governmental authority (whether or not having the force of law):
(i) subjects such Issuing Lender or Domestic Lender (or its
applicable lending or letter of credit office) to any additional Tax (other
than any Tax on the overall net income of such Issuing Lender or Lender)
with respect to the issuing or maintaining of any Letters of Credit or the
purchasing or maintaining of any participations therein or any other
obligations under this Section 3, whether directly or by such being imposed
on or suffered by any particular Issuing Lender;
(ii) imposes, modifies or holds applicable any reserve (including
any marginal, emergency, supplemental, special or other reserve), special
deposit, compulsory loan, FDIC insurance or similar requirement in respect
of any Letters of Credit issued by any Issuing Lender or participations
therein purchased by any Domestic Lender; or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Issuing Lender or Domestic Lender (or its
applicable lending or letter of credit office) regarding this Section 3 or
any Letter of Credit or any participation therein;
and the result of any of the foregoing is to increase the cost to such Issuing
Lender or Lender of agreeing to issue, issuing or maintaining any Letter of
Credit or agreeing to purchase, purchasing or maintaining any participation
therein or to reduce any amount received or receivable by such Issuing Lender or
Domestic Lender (or its applicable lending or letter of credit office) with
respect thereto; then, in any case, Company shall promptly pay to such Issuing
Lender or Domestic Lender, upon receipt of the statement referred to in the next
sentence, such additional amount or amounts as may be necessary to compensate
such Issuing Lender or Domestic Lender for any such increased cost or reduction
in amounts received or receivable hereunder. Such Issuing Lender or Lender
shall deliver to Company a written statement, setting forth in reasonable detail
the basis for calculating the additional amounts owed to such Issuing Lender or
Domestic Lender under this subsection 3.6, which statement shall be conclusive
and binding upon all parties hereto absent manifest error.
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SECTION 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT
The obligations of Lenders to make Loans and the issuance of Letters
of Credit hereunder are subject to the satisfaction of the following conditions.
4.1 CONDITIONS TO TERM LOANS AND INITIAL REVOLVING LOANS AND SWING LINE LOANS.
-------------------------------------------------------------------------
The obligations of Lenders to make the Term Loans and any Revolving
Loans and Swing Line Loans to be made on the Closing Date are, in addition to
the conditions precedent specified in subsection 4.2, subject to prior or
concurrent satisfaction of the following conditions:
A. LOAN PARTY DOCUMENTS. On or before the Closing Date, Company shall,
and shall cause each other Loan Party to, deliver to Lenders (or to Agent with
sufficient originally executed copies, where appropriate, for each Lender and
its counsel) the following with respect to Company or such Loan Party, as the
case may be, each, unless otherwise noted, dated the Closing Date:
(i) Certified copies of the Certificate or Articles of
Incorporation of such Person, together with a good standing certificate
from the Secretary of State of its jurisdiction of incorporation and each
other state in which such Person is qualified as a foreign corporation to
do business and, to the extent generally available, a certificate or other
evidence of good standing as to payment of any applicable franchise or
similar taxes from the appropriate taxing authority of each of such
jurisdictions, each dated a recent date prior to the Closing Date;
(ii) Copies of the Bylaws of such Person, certified as of the
Closing Date by such Person's corporate secretary or an assistant
secretary;
(iii) Resolutions of the Board of Directors of such Person approving
and authorizing the execution, delivery and performance of the Loan
Documents to which it is a party, certified as of the Closing Date by the
corporate secretary or an assistant secretary of such Person as being in
full force and effect without modification or amendment;
(iv) Signature and incumbency certificates of the officers of such
Person executing the Loan Documents to which it is a party;
(v) Executed originals of this Agreement, the Notes (duly executed
in accordance with subsection 2.1E, drawn to the order of each Lender and
Swing Line Lender and with appropriate insertions) and the other Loan
Documents to be executed on the Closing Date, including without limitation
the Master Assignment Agreement, substantially in the form of Exhibit XIV
-----------
annexed hereto, executed by the Company and
81
the Acknowledgement and Consent, substantially in the form of Exhibit XIII
------------
annexed hereto, executed by the Company and each of the other Loan Parties;
and
(vi) Such other documents as Agent may reasonably request.
B. NO MATERIAL ADVERSE EFFECT. Since December 31, 1997, no Material
Adverse Effect (in the collective opinion of Agent and Syndication Agent) shall
have occurred.
C. EXISTING CREDIT AGREEMENTS PAYMENTS AND ASSIGNMENTS.
(1) With respect to the Existing Credit Agreements, Company shall
have paid to BTCC, as agent under the Existing Credit Agreements, for
distribution to lenders and issuing lenders, as applicable, under the Existing
Credit Agreements all unpaid accrued interest on all loans, all unpaid accrued
commitment fees and all unpaid accrued fees on all Letters of Credit, in each
case through but excluding the Closing Date.
(2) On or before the Effective Date, Company, ▇▇▇▇▇ I Lenders, ▇▇▇▇▇
II Lenders, BTCC, as agent under the Existing Credit Agreements, each Lender and
Agent under this Agreement shall have executed and delivered the Master
Assignment Agreement, substantially in the form of Exhibit XIV annexed hereto,
-----------
and on the Effective Date, each such lender, BTCC, Lenders and Agent shall have
sold, purchased and/or assigned such loans and/or revolving loan commitments
pursuant to the Master Assignment Agreement such that each Lender's Pro Rata
Share of the Loans and/or Revolving Loan Commitments upon consummation of the
closing shall be as set forth on Schedule 2.1 annexed hereto.
------------
D. REPAYMENT OF CERTAIN EXISTING INDEBTEDNESS. On the Closing Date,
Company and its Subsidiaries shall have repaid in full approximately $15,500,000
of the Company's existing mortgages and irrevocably called for redemption not
less than 35% of the outstanding Subordinated Notes, and delivered to Agent all
documents or instruments necessary to release all Liens securing such
Indebtedness or other obligations of Company and its Subsidiaries thereunder.
E. CAPITALIZATION, ETC.
(i) The organizational and ownership structure of Company and of
Holdings (and their respective Subsidiaries) shall be as set forth in
Schedule 5.1 annexed hereto and satisfactory to the Agent and the Lenders
------------
for all respects. Agent shall have received copies and shall be satisfied
with the form and substance of any and all employment contracts with senior
management of Holdings and of Company;
(ii) On or before the Closing Date, Holdings shall have provided
evidence satisfactory to Agent regarding its payment to Company of the Net
Equity Securities
82
Proceeds (as defined in subsection 2.4B(iii)(d)) in an amount not less than
$68,000,000; and
(iii) On the Closing Date, Company shall have delivered to Agent an
Officers' Certificate demonstrating that after giving effect to the Loans
made under this Agreement, Company's Consolidated Fixed Charge Coverage
Ratio (as defined in the Subordinated Note Indenture) will be greater than
2.25 to 1.00.
F. NO DISRUPTION OF FINANCIAL AND CAPITAL MARKETS. There shall have been
no material adverse change after May 8, 1998, to the syndication markets for
credit facilities similar in nature to the credit facilities provided herein and
there shall not have occurred and be continuing a material disruption of or
material adverse change in financial, banking or capital markets that would have
an adverse effect on such syndication market, in each case as determined by
Agent and Syndication Agent in their sole discretion.
G. CLOSING DATE MORTGAGES; CLOSING DATE MORTGAGE POLICIES; ETC. Agent
and Syndication Agent shall have received from Company and each applicable
Subsidiary Guarantor:
(i) Closing Date Mortgages. To the extent not received by BTCC under
----------------------
the Existing Credit Agreements, fully executed and notarized Mortgages
(each a "CLOSING DATE MORTGAGE" and, collectively, the "CLOSING DATE
MORTGAGES"), in proper form for recording in all appropriate places in all
applicable jurisdictions, encumbering each Real Property Asset so
identified in Schedule 5.5 annexed hereto (each a "CLOSING DATE MORTGAGED
------------
PROPERTY" and, collectively, the "CLOSING DATE MORTGAGED PROPERTIES");
(ii) Opinions of Local Counsel. An opinion of counsel (which counsel
-------------------------
shall be reasonably satisfactory to Agent) in each state in which a Closing
Date Mortgaged Property is located with respect to the enforceability of
the form(s) of Closing Date Mortgages to be recorded in such state and such
other matters as Agent may reasonably request, in each case in form and
substance reasonably satisfactory to Agent;
(iii) Title Insurance. (a) ALTA mortgagee title insurance policies or
---------------
unconditional commitments therefor (the "CLOSING DATE MORTGAGE POLICIES")
issued by the title company with respect to the Closing Date Mortgaged
Properties so identified in Schedule 5.5 annexed hereto, in amounts not
------------
less than the respective amounts designated therein with respect to any
particular Closing Date Mortgaged Properties, insuring fee simple title to,
or a valid leasehold interest in, each such Closing Date Mortgaged Property
vested in such Loan Party and assuring Agent that the applicable Closing
Date Mortgages create valid and enforceable First Priority mortgage Liens
on the respective Closing Date Mortgaged Properties encumbered thereby,
subject only to a standard survey exception, which Closing Date Mortgage
Policies (1) shall include an endorsement for mechanics' liens, for future
advances under this Agreement and for
83
any other matters reasonably requested by Agent and (2) shall provide for
affirmative insurance and such reinsurance as Agent may reasonably request,
all of the foregoing in form and substance reasonably satisfactory to
Agent; and (b) evidence satisfactory to Agent that such Loan Party has (i)
delivered to the title company all certificates and affidavits required by
the title company in connection with the issuance of the Closing Date
Mortgage Policies and (ii) paid to the title company or to the appropriate
governmental authorities all expenses and premiums of the title company in
connection with the issuance of the Closing Date Mortgage Policies and all
recording and stamp taxes (including mortgage recording and intangible
taxes) payable in connection with recording the Closing Date Mortgages in
the appropriate real estate records;
(iv) Title Reports. With respect to each Closing Date Mortgaged
-------------
Property so identified in Schedule 5.5 annexed hereto, a title report
------------
issued by the title company with respect thereto, dated not more than 30
days prior to the Closing Date and satisfactory in form and substance to
Agent;
(v) Copies of Documents Relating to Title Exceptions. Copies of all
------------------------------------------------
recorded documents listed as exceptions to title or otherwise referred to
in the Closing Date Mortgage Policies or in the title reports delivered
pursuant to subsection 4.1G(iv);
(vi) Matters Relating to Flood Hazard Properties. (a) Evidence, which
-------------------------------------------
may be in the form of a letter from an insurance broker or a municipal
engineer, as to whether (1) any Closing Date Mortgaged Property is a Flood
Hazard Property and (2) the community in which any such Flood Hazard
Property is located is participating in the National Flood Insurance
Program, (b) if there are any such Flood Hazard Properties, such Loan
Party's written acknowledgement of receipt of written notification from
Agent (1) as to the existence of each such Flood Hazard Property and (2) as
to whether the community in which each such Flood Hazard Property is
located is participating in the National Flood Insurance Program, and (c)
in the event any such Flood Hazard Property is located in a community that
participates in the National Flood Insurance Program, evidence that Company
has obtained flood insurance in respect of such Flood Hazard Property to
the extent required under the applicable regulations of the Board of
Governors of the Federal Reserve System; and
(vii) Environmental Indemnity. If requested by Agent or Syndication
-----------------------
Agent, an environmental indemnity agreement, satisfactory in form and
substance to Agent and Syndication Agent and their counsel, with respect to
the indemnification of Agent and Lenders for any liabilities that may be
imposed on or incurred by any of them as a result of any Hazardous
Materials Activity.
H. EXISTING MORTGAGES; ENDORSEMENTS; ETC. Agent and Syndication Agent
shall have received from Company and each applicable Subsidiary Guarantor:
84
(i) Existing Mortgages. Fully executed and notarized amendments to
------------------
each existing mortgage delivered pursuant to the Existing Credit Agreements
(each an "EXISTING MORTGAGE" and, collectively, the "EXISTING MORTGAGES"),
in proper form for recording in all appropriate places in all applicable
jurisdictions, encumbering each Real Property Asset so identified in
Schedule 5.5 annexed hereto (each an "EXISTING MORTGAGED PROPERTY" and,
------------
collectively, the "EXISTING MORTGAGED PROPERTIES");
(ii) Opinions of Local Counsel. An opinion of counsel (which counsel
-------------------------
shall be reasonably satisfactory to Agent) in each state in which an
Existing Mortgaged Property is located with respect to the enforceability
of the form(s) of amendments to the Existing Mortgages to be recorded in
such state and such other matters as Agent may reasonably request, in each
case in form and substance reasonably satisfactory to Agent;
(iii) Title Insurance. (a) CLTA 110.5 (or local state equivalents
---------------
satisfactory to Agent and Syndication Agent) endorsements or unconditional
commitments therefor along with such additional title endorsements, in form
and substance satisfactory to Agent and Syndication Agent, as they may
require (the "ENDORSEMENTS"), insuring fee simple title to, or a valid
leasehold interest in, each such Existing Mortgaged Property, as amended by
the amendments, are vested in such Loan Party and assuring Agent that the
applicable Existing Mortgages, as amended, are valid and enforceable First
Priority Mortgage Liens on the respective Closing Date Mortgaged Properties
encumbered thereby; and (b) evidence satisfactory to Agent that such Loan
Party has (i) delivered to the title company all certificates and
affidavits required by the title company in connection with the issuance of
the Endorsements and (ii) paid to the title company or to the appropriate
governmental authorities all expenses and premiums of the title company in
connection with the issuance of the Endorsements and all recording and
stamp taxes (including mortgage recording and intangible taxes) payable in
connection with recording the amendments to the Existing Mortgages in the
appropriate real estate records;
(iv) Title Reports. With respect to each Existing Mortgaged Property
-------------
so identified in Schedule 5.5 annexed hereto, a title report issued by the
------------
title company with respect thereto, dated not more than 30 days prior to
the Closing Date and satisfactory in form and substance to Agent;
(v) Copies of Documents Relating to Title Exceptions. Copies of all
------------------------------------------------
recorded documents listed as exceptions to title or otherwise referred to
in the Endorsements or in the title reports delivered pursuant to
subsection 4.1H(iv);
(vi) Matters Relating to Flood Hazard Properties. (a) Evidence, which
-------------------------------------------
may be in the form of a letter from an insurance broker or a municipal
engineer, as to whether (1) any Existing Mortgaged Property is a Flood
Hazard Property and (2) the
85
community in which any such Flood Hazard Property is located is
participating in the National Flood Insurance Program, (b) if there are any
such Flood Hazard Properties, such Loan Party's written acknowledgement of
receipt of written notification from Agent (1) as to the existence of each
such Flood Hazard Property and (2) as to whether the community in which
each such Flood Hazard Property is located is participating in the National
Flood Insurance Program, and (c) in the event any such Flood Hazard
Property is located in a community that participates in the National Flood
Insurance Program, evidence that Company has obtained flood insurance in
respect of such Flood Hazard Property to the extent required under the
applicable regulations of the Board of Governors of the Federal Reserve
System; and
(vii) Environmental Indemnity. If requested by Agent, an
-----------------------
environmental indemnity agreement, satisfactory in form and substance to
Agent and its counsel, with respect to the indemnification of Agent and
Lenders for any liabilities that may be imposed on or incurred by any of
them as a result of any Hazardous Materials Activity.
(viii) Landlord Consents. With respect to each Material Leasehold, the
-----------------
consent of the landlord to the amendment of the Existing Mortgages.
I. SECURITY INTERESTS IN PERSONAL AND MIXED PROPERTY. To the extent not
otherwise satisfied pursuant to subsection 4.1G or 4.1H or under any of the
Existing Credit Agreements, Agent shall have received evidence satisfactory to
it that Holdings, Company and Subsidiary Guarantors shall have taken or caused
to be taken all such actions, executed and delivered or caused to be executed
and delivered all such agreements, documents and instruments, and made or caused
to be made all such filings and recordings (other than the filing or recording
of items described in clauses (iii), (iv) and (v) below) that may be necessary
or, in the opinion of Agent, desirable in order to create in favor of Agent, for
the benefit of Lenders, a valid and (upon such filing and recording) perfected
First Priority security interest in the entire personal and mixed property
Collateral. Such actions shall include the following:
(i) Schedules to Collateral Documents. Delivery to Agent of
---------------------------------
accurate and complete schedules to all of the applicable Collateral
Documents.
(ii) Stock Certificates and Instruments. Delivery to Agent of (a)
----------------------------------
certificates (which certificates shall be accompanied by irrevocable
undated stock powers, duly endorsed in blank and otherwise satisfactory in
form and substance to Agent) representing all capital stock pledged
pursuant to the Holdings Pledge Agreement, the Company Pledge Agreement and
the Subsidiary Pledge Agreements and (b) all promissory notes or other
instruments (duly endorsed, where appropriate, in a manner satisfactory to
Agent) evidencing any Collateral;
(iii) Lien Searches and UCC Termination Statements. Delivery to Agent
--------------------------------------------
of (a) the results of a recent search, by a Person satisfactory to Agent,
of all effective
86
UCC or PPSA financing statements and fixture filings and all judgment and
tax lien filings which may have been made with respect to any personal or
mixed property of any Loan Party, together with copies of all such filings
disclosed by such search, and (b) UCC or PPSA termination statements duly
executed by all applicable Persons for filing in all applicable
jurisdictions as may be necessary to terminate any effective UCC or PPSA
financing statements or fixture filings disclosed in such search (other
than any such financing statements or fixture filings in respect of Liens
permitted to remain outstanding pursuant to the terms of this Agreement).
(iv) UCC Financing Statements and Fixture Filings. Delivery to Agent
--------------------------------------------
of UCC or PPSA financing statements and, where appropriate, fixture
filings, duly executed by each applicable Loan Party with respect to all
personal and mixed property Collateral of such Loan Party, for filing in
all jurisdictions as may be necessary or, in the opinion of Agent,
desirable to perfect the security interests created in such Collateral
pursuant to the Collateral Documents;
(v) PTO Cover Sheets, Etc. Delivery to Agent of all cover sheets or
---------------------
other documents or instruments required to be filed with the PTO in order
to create or perfect Liens in respect of any IP Collateral;
(vi) Certificates of Title, Etc. Delivery to Agent of certificates of
--------------------------
title with respect to all motor vehicles and other rolling stock of Loan
Parties and the taking of all actions necessary to cause Agent to be noted
as lienholder thereon or otherwise necessary to perfect the First Priority
Lien granted to Agent on behalf of Lenders in such rolling stock; and
(vii) Opinions of Local Counsel. Delivery to Agent of an opinion of
-------------------------
counsel (which counsel shall be reasonably satisfactory to Agent) under the
laws of each jurisdiction in which any Loan Party or any personal or mixed
property Collateral is located with respect to the creation and perfection
of the security interests in favor of Agent in such Collateral and such
other matters governed by the laws of such jurisdiction regarding such
security interests as Agent may reasonably request, in each case in form
and substance reasonably satisfactory to Agent.
J. EVIDENCE OF INSURANCE. Agent shall have received a certificate from
Company's insurance broker satisfactory in form and substance to Agent outlining
all material insurance coverage maintained by Company, including without
limitation directors and officers insurance coverages and all insurance required
to be maintained pursuant to subsection 6.4. Agent on behalf of Lenders shall
have been named as additional insured and/or loss payee thereunder to the extent
required under subsection 6.4.
J. FINANCIAL STATEMENTS. Agent and Syndication Agent shall have received
on behalf of Lenders (a) audited financial statements of Company and its
Subsidiaries for the fiscal
87
years ended December 31, 1997, 1996 and 1995, all in reasonable detail and
certified by the chief financial officer of Company that they fairly present the
financial condition of Company and its Subsidiaries as at the dates indicated
and the results of their operations and their cash flows for the periods
indicated, subject to changes resulting from audit and normal year-end
adjustments, (b) unaudited financial statements of Company and its Subsidiaries
for the fiscal periods most recently ended prior to the Closing Date (including
without limitation monthly financial statements for any such period of less than
three months), (c) a pro forma balance sheet as of the Closing Date for Company
and its Subsidiaries, prepared in accordance with GAAP (except as otherwise
noted therein) and giving effect to the transactions contemplated by this
Agreement, and (d) projected financial statements (including balance sheets and
statements of operations and cash flows) of Company and its Subsidiaries for the
five-year period after the Closing Date prepared on a monthly basis through
December 31, 1999, all of the foregoing to be (x) substantially consistent with
any financial statements for the same periods delivered to the Agent prior to
December 31, 1997, and in the case of any such financial statements for
subsequent periods, substantially consistent with any projected financial
results for such periods delivered to the Agent prior to such date and (y)
otherwise in form and substance satisfactory to the Agent and Syndication Agent
and the Lenders.
L. OPINIONS OF BORROWER'S COUNSEL. Lenders shall have received
originally executed copies of one or more favorable written opinions of ▇▇▇▇▇▇▇▇
& ▇▇▇▇▇, U.S. counsel for Borrowers, and of Canadian counsel for Borrowers, in
form and substance reasonably satisfactory to Agent and its counsel, dated as of
the Closing Date and setting forth substantially the matters in the opinions
designated in Exhibit VII annexed hereto and as to such other matters as Agent
-----------
acting on behalf of Lenders may reasonably request.
M. OPINIONS OF AGENT'S COUNSEL. Lenders shall have received originally
executed copies of one or more favorable written opinions of O'Melveny & ▇▇▇▇▇
LLP, counsel to Agent, dated as of the Closing Date, substantially in the form
of Exhibit VIII annexed hereto and as to such other matters as Agent acting on
------------
behalf of Lenders may reasonably request.
N. AUDITOR'S LETTER. Agent shall have received an executed Auditor's
Letter.
O. FEES. Company shall have paid to Agent, for distribution (as
appropriate) to Agent and Lenders, the fees payable on the Closing Date referred
to in subsection 2.3.
P. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF AGREEMENTS. Company
shall have delivered to Agent an Officers' Certificate, in form and substance
satisfactory to Agent, to the effect that the representations and warranties in
Section 5 hereof are true, correct and complete in all material respects on and
as of the Closing Date to the same extent as though made on and as of that date
(or, to the extent such representations and warranties specifically relate to an
earlier date, that such representations and warranties were true, correct and
complete in all material respects on and as of such earlier date) and that
Company shall have performed in all material respects all agreements and
satisfied all conditions which this
88
Agreement provides shall be performed or satisfied by it on or before the
Closing Date except as otherwise disclosed to and agreed to in writing by Agent
and Requisite Lenders.
Q. COMPLETION OF PROCEEDINGS. All corporate and other proceedings taken
or to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Agent, acting on
behalf of Lenders, and its counsel shall be satisfactory in form and substance
to Agent and such counsel, and Agent and such counsel shall have received all
such counterpart originals or certified copies of such documents as Agent may
reasonably request.
[R. COMPLETION OF PRICE WATERHOUSE YEAR 2000 COMPLIANCE CERTIFICATE.]
Language to come].
4.2 CONDITIONS TO ALL LOANS.
-----------------------
The obligations of Lenders to make Loans on each Funding Date are
subject to the following further conditions precedent:
A. Agent shall have received before that Funding Date, in
accordance with the provisions of subsection 2.1B, an originally executed Notice
of Borrowing, in each case signed by the chief executive officer, the chief
financial officer or the treasurer of Company or by any executive officer of
Company designated by any of the above-described officers on behalf of Company
in a writing delivered to Agent.
B. As of that Funding Date:
(i) The representations and warranties contained herein and in the
other Loan Documents shall be true, correct and complete in all material
respects on and as of that Funding Date to the same extent as though made
on and as of that date, except to the extent such representations and
warranties specifically relate to an earlier date, in which case such
representations and warranties shall have been true, correct and complete
in all material respects on and as of such earlier date;
(ii) No event shall have occurred and be continuing or would result
from the consummation of the borrowing contemplated by such Notice of
Borrowing that would constitute an Event of Default or a Potential Event of
Default;
(iii) Each Loan Party shall have performed in all material respects
all agreements and satisfied all conditions which this Agreement provides
shall be performed or satisfied by it on or before that Funding Date;
89
(iv) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender from
making the Loans to be made by it on that Funding Date;
(v) The making of the Loans requested on such Funding Date shall not
violate any law including Regulation T, Regulation U or Regulation X of the
Board of Governors of the Federal Reserve System; and
(vi) There shall not be pending or, to the knowledge of Company,
threatened, any action, suit, proceeding, governmental investigation or
arbitration against or affecting Company or any of its Subsidiaries or any
property of Company or any of its Subsidiaries that has not been disclosed
by Company in writing pursuant to subsection 5.6 or 6.1(x) prior to the
making of the last preceding Loans (or, in the case of the initial Loans,
prior to the execution of this Agreement), and there shall have occurred no
development not so disclosed in any such action, suit, proceeding,
governmental investigation or arbitration so disclosed, that, in either
event, in the opinion of Agent or of Requisite Lenders, would be expected
to have a Material Adverse Effect; and no injunction or other restraining
order shall have been issued and no hearing to cause an injunction or other
restraining order to be issued shall be pending or noticed with respect to
any action, suit or proceeding seeking to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief as a result of,
the transactions contemplated by this Agreement or the making of Loans
hereunder.
4.3 CONDITIONS TO ACQUISITION LOANS.
-------------------------------
The obligations of Lenders to make the Acquisition Loans on each
Funding Date are, in addition to the conditions precedent specified in
subsections 4.1 and 4.2, subject to prior or concurrent satisfaction of the
following conditions:
Agent shall have received prior to that Funding Date an Officers'
Certificate certifying that:
(i) The contemplated acquisition shall neither be contested nor
hostile nor opposed by the board of directors of the targeted company or
business;
(ii) After giving effect to such acquisition and Indebtedness
incurred in connection therewith, Company is in pro forma compliance with
its financial covenants as set forth on a Compliance Certificate attached
to such Officers' Certificate;
(iii) Upon consummation of such acquisition, Company will be in
compliance with the provisions of subsections 6.9 and 6.10 with respect to
any Subsidiary so acquired;
90
(iv) In the event such acquisition or series of related acquisitions
involves a total consideration in excess of $25,000,000, Company has
obtained Agent's and Requisite Lenders' consents thereto and has delivered
to Agent and Lenders such historical and pro forma projected financial
statements, sources and uses analysis, pro forma covenant calculations and
such other due diligence information as was requested by Agent or Lenders;
and
(v) Company and its Subsidiaries will not incur or assume in
connection with any such contemplated acquisition any material
environmental or other material contingent liability.
4.4 CONDITIONS TO LETTERS OF CREDIT.
-------------------------------
The issuance of any Letter of Credit hereunder (whether or not the
applicable Issuing Lender is obligated to issue such Letter of Credit) is
subject to the following conditions precedent:
A. On or before the date of issuance of the initial Letter of Credit
pursuant to this Agreement, the initial Loans shall have been made.
B. On or before the date of issuance of such Letter of Credit, Agent
shall have received, in accordance with the provisions of subsection 3.1B(i), an
originally executed Request for Issuance of Letter of Credit, in each case
signed by the chief executive officer, the chief financial officer or the
treasurer of Company or by any executive officer of Company designated by any of
the above-described officers on behalf of Company in a writing delivered to
Agent, together with all other information specified in subsection 3.1B(i) and
such other documents or information as the applicable Issuing Lender may
reasonably require in connection with the issuance of such Letter of Credit.
C. On the date of issuance of such Letter of Credit, all conditions
precedent described in subsection 4.2B shall be satisfied to the same extent as
if the issuance of such Letter of Credit were the making of a Loan and the date
of issuance of such Letter of Credit were a Funding Date.
SECTION 5. BORROWERS' REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to make
the Loans, to induce Issuing Lenders to issue Letters of Credit and to induce
other Lenders to purchase participations therein, each Borrower represents and
warrants to each Lender, on the date of this Agreement, on each Funding Date and
on the date of issuance of each Letter of Credit, that the following statements
are true, correct and complete:
91
5.1 ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS AND
----------------------------------------------------------------
SUBSIDIARIES.
------------
A. ORGANIZATION AND POWERS. Each Loan Party is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. Each Loan Party has all requisite corporate power
and authority to own and operate its properties, to carry on its business as now
conducted and as proposed to be conducted, to enter into the Loan Documents to
which it is a party and to carry out the transactions contemplated thereby.
B. QUALIFICATION AND GOOD STANDING. Each Loan Party is qualified to do
business and in good standing in every jurisdiction where its assets are located
and wherever necessary to carry out its business and operations, except in
jurisdictions where the failure to be so qualified or in good standing has not
had and will not have a Material Adverse Effect.
C. CONDUCT OF BUSINESS. Holdings and Company and their respective
Subsidiaries are engaged only in the businesses permitted to be engaged in
pursuant to subsection 7.14.
D. SUBSIDIARIES. All of the Subsidiaries of Company are identified in
Schedule 5.1 annexed hereto, as said Schedule 5.1 may be supplemented from time
------------ ------------
to time pursuant to the provisions of subsection 6.1(xvii). The capital stock
of each of the Subsidiaries of Company identified in Schedule 5.1 annexed hereto
------------
(as so supplemented) is duly authorized, validly issued, fully paid and
nonassessable and none of such capital stock constitutes Margin Stock. Each of
the Subsidiaries of Company identified in Schedule 5.1 annexed hereto (as so
------------
supplemented) is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation set
forth therein, has all requisite corporate power and authority to own and
operate its properties and to carry on its business as now conducted and as
proposed to be conducted, and is qualified to do business and in good standing
in every jurisdiction where its assets are located and wherever necessary to
carry out its business and operations, in each case except where failure to be
so qualified or in good standing or a lack of such corporate power and authority
has not had and will not have a Material Adverse Effect. Schedule 5.1 annexed
------------
hereto (as so supplemented) correctly sets forth the ownership interest of
Holdings in Company and of Company in each of the Subsidiaries of Company
identified therein.
5.2 AUTHORIZATION OF BORROWING, ETC.
--------------------------------
A. AUTHORIZATION OF BORROWING. The execution, delivery and performance
of the Loan Documents have been duly authorized by all necessary corporate
action on the part of each Loan Party that is a party thereto.
B. NO CONFLICT. The execution, delivery and performance by any Loan
Party of the Loan Documents to which it is a party and the consummation of the
transactions contemplated by the Loan Documents do not and will not (i) violate
any provision of any law or any governmental rule or regulation applicable to
any Loan Party, the Certificate or Articles
92
of Incorporation or Bylaws of any Loan Party or any order, judgment or decree of
any court or other agency of government binding on any Loan Party, (ii) conflict
with, result in a breach of or constitute (with due notice or lapse of time or
both) a default under any Contractual Obligation of any Loan Party, (iii) result
in or require the creation or imposition of any Lien upon any of the properties
or assets of any Loan Party (other than any Liens created under any of the Loan
Documents in favor of Agent on behalf of Lenders), or (iv) require any approval
of stockholders or any approval or consent of any Person under any Contractual
Obligation of any Loan Party, except for such approvals or consents which will
be obtained on or before the Closing Date.
C. GOVERNMENTAL CONSENTS. The execution, delivery and performance by any
Loan Party of the Loan Documents to which it is a party and the consummation of
the transactions contemplated by the Loan Documents do not and will not require
any registration with, consent or approval of, or notice to, or other action to,
with or by, any federal, state or other governmental authority or regulatory
body, except for (i) filings which have been made, obtained, given or taken on
or before the Closing Date or such later date as may be required by federal or
state securities laws and (ii) such other registrations, consents, approvals,
notices or other actions which have been made, obtained, given or taken on or
before the Closing Date or such later date as may be required by the applicable
governmental authority or regulatory body.
D. BINDING OBLIGATION. Each of the Loan Documents has been duly executed
and delivered by each Loan Party that is a party thereto and is the legally
valid and binding obligation of such Loan Party, enforceable against such Loan
Party in accordance with its respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors' rights generally or by equitable principles relating to
enforceability.
E. VALID ISSUANCE OF COMPANY COMMON STOCK AND HOLDINGS COMMON STOCK.
(i) Company Common Stock. The Company Common Stock is duly and
--------------------
validly issued, fully paid and nonassessable. No stockholder of Company
has or will have any preemptive rights to subscribe for any additional
equity Securities of Company. The issuance and sale of Company Common
Stock has been registered or qualified under applicable federal and state
securities laws or is exempt therefrom.
(ii) Holdings Common Stock. All issued and outstanding shares of
---------------------
Holdings Common Stock have been duly and validly issued, fully paid and
nonassessable. Except as provided in the Stockholders Agreement, no
stockholder of Holdings has or will have any preemptive rights to subscribe
for any additional equity Securities of Holdings. Any issuance and sale of
Holdings Common Stock, upon such issuance and sale, will either (a) have
been registered or qualified under applicable federal and state securities
laws or (b) be exempt therefrom.
93
5.3 FINANCIAL CONDITION.
-------------------
Company has heretofore delivered to Lenders, at Lenders' request, the
financial statements and information described in subsection 4.1K. All such
statements were prepared in conformity with GAAP and fairly present, in all
material respects, the financial position (on a consolidated and, where
applicable, consolidating basis) of the entities described in such financial
statements as at the respective dates thereof and the results of operations and
cash flows (on a consolidated and, where applicable, consolidating basis) of the
entities described therein for each of the periods then ended, subject, in the
case of any such unaudited financial statements, to changes resulting from audit
and normal year-end adjustments. None of the Loan Parties has (and none of the
Loan Parties will have following the funding of the initial Loans) any
Contingent Obligation, contingent liability or liability for taxes, long-term
lease or unusual forward or long-term commitment that is not reflected in the
foregoing financial statements or the most recent financial statements delivered
pursuant to subsection 6.1 or the notes thereto and which in any such case is
material in relation to the business, operations, properties, assets, condition
(financial or otherwise) or prospects of Company and its Subsidiaries, taken as
a whole.
5.4 NO MATERIAL ADVERSE CHANGE; NO RESTRICTED JUNIOR PAYMENTS.
---------------------------------------------------------
Since December 31, 1997, no event or change has occurred that has
caused or evidences, either in any case or in the aggregate, a Material Adverse
Effect. Neither Company nor any of its Subsidiaries has directly or indirectly
declared, ordered, paid or made, or set apart any sum or property for, any
Restricted Junior Payment or agreed to do so except as permitted by subsection
7.5.
5.5 TITLE TO PROPERTIES; LIENS.
--------------------------
Holdings, Company and Company's Subsidiaries have (i) good, sufficient
and legal title to (in the case of fee interests in real property), (ii) valid
leasehold interests in (in the case of leasehold interests in real or personal
property), or (iii) good title to (in the case of all other personal property),
all of their respective properties and assets reflected in the financial
statements referred to in subsection 5.3 or in the most recent financial
statements delivered pursuant to subsection 6.1 in each case, except for assets
disposed of since the date of such financial statements in the ordinary course
of business or as otherwise permitted under subsection 7.7. Except as permitted
by this Agreement, all such properties and assets are free and clear of Liens.
Schedule 5.5 annexed hereto sets forth all of the Real Property Assets of
------------
Company and its Subsidiaries as of the Closing Date.
5.6 LITIGATION; ADVERSE FACTS.
-------------------------
There are no actions, suits, proceedings, arbitrations or governmental
investigations (whether or not purportedly on behalf of Holdings, Company or
any of Company's
95
Subsidiaries) at law or in equity or before or by any federal, state, municipal
or other govern mental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, pending or, to the knowledge of any
Borrower, threatened against or affecting Holdings, Company or any of Company's
Subsidiaries or any property of Holdings, Company or any of Company's
Subsidiaries that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect. Neither Holdings nor Company
nor any of Company's Subsidiaries is (i) in violation of any applicable laws
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect or (ii) subject to or in default with respect to
any final judgments, writs, injunctions, decrees, rules or regulations of any
court or any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.
5.7 PAYMENT OF TAXES.
----------------
Except to the extent permitted by subsection 6.4, all tax returns and
reports of Holdings, Company and Company's Subsidiaries required to be filed by
any of them have been timely filed, and all taxes, assessments, fees and other
governmental charges upon Holdings, Company and Company's Subsidiaries and upon
their respective properties, assets, income, businesses and franchises which are
due and payable have been paid when due and payable. None of the Borrowers
knows of any proposed tax assessment against Holdings, Company or any of
Company's Subsidiaries which is not being actively contested by Company or such
Subsidiary in good faith and by appropriate proceedings; provided that such
--------
reserves or other appropriate provisions, if any, as shall be required in
conformity with GAAP shall have been made or provided therefor.
5.8 PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE AGREEMENTS; MATERIAL
------------------------------------------------------------------
CONTRACTS.
---------
A. Neither Holdings nor Company nor any of Company's Subsidiaries is
in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any of its Contractual
Obligations, and no condition exists that, with the giving of notice or the
lapse of time or both, would constitute such a default, except where the
consequences, direct or indirect, of such default or defaults, if any, would not
have a Material Adverse Effect.
B. Neither Holdings nor Company nor any of Company's Subsidiaries is
a party to or is otherwise subject to any agreements or instruments or any
charter or other internal restrictions which, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect.
C. All Material Contracts are in full force and effect and no
material defaults currently exist thereunder.
95
5.9 GOVERNMENTAL REGULATION.
-----------------------
Neither Holdings nor Company nor any of Company's Subsidiaries is
subject to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Interstate Commerce Act or the Investment Company Act of
1940 or under any other federal or state statute or regulation which may limit
its ability to incur Indebtedness or which may otherwise render all or any
portion of the Obligations unenforceable.
5.10 SECURITIES ACTIVITIES.
---------------------
A. Neither Holdings nor Company nor any of Company's Subsidiaries is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any Margin Stock.
B. Following application of the proceeds of each Loan, not more than
25% of the value of the assets (either of any Borrower only or of Company and
its Subsidiaries on a consolidated basis) subject to the provisions of
subsection 7.2 or 7.7 or subject to any restriction contained in any agreement
or instrument, between any Borrower and any Lender or any Affiliate of any
Lender, relating to Indebtedness and within the scope of subsection 8.2, will be
Margin Stock.
5.11 EMPLOYEE BENEFIT PLANS.
----------------------
A. Company and each of its ERISA Affiliates are in compliance in all
material respects with all applicable provisions and requirements of ERISA and
the regulations and published interpretations thereunder and the terms of each
Employee Benefit Plan, and have performed all their material obligations under
each Employee Benefit Plan.
B. No ERISA Event has occurred or is reasonably expected to occur
which could result in any material liability to Company or any of its ERISA
Affiliates.
C. Except to the extent required under Section 4980B of the Internal
Revenue Code, no Employee Benefit Plan provides health or welfare benefits
(through the purchase of insurance or otherwise) for any retired or former
employees of Company or any of its ERISA Affiliates.
D. In accordance with the most recent actuarial valuation for any
Pension Plan, the amount of unfunded benefit liabilities (as defined in Section
4001(a)(18) of ERISA), individually or in the aggregate for all Pension Plans
(excluding for purposes of such computation any Pension Plans with respect to
which assets exceed benefit liabilities), does not exceed $250,000.
96
5.12 CERTAIN FEES.
------------
No broker's or finder's fee or commission will be payable with respect
to this Agreement or any of the transactions contemplated hereby, and each
Borrower hereby indemnifies Lenders against, and agrees that it will hold
Lenders harmless from, any claim, demand or liability for any such broker's or
finder's fees alleged to have been incurred in connection herewith or therewith
and any expenses (including reasonable fees, expenses and disbursements of
counsel) arising in connection with any such claim, demand or liability.
5.13 ENVIRONMENTAL PROTECTION.
------------------------
(i) The operations of Company and each of its Subsidiaries
(including, without limitation, all operations and conditions at or in the
Facilities) comply with all Environmental Laws except for any such
noncompliance which would not reasonably be expected to have a Material
Adverse Effect;
(ii) Company and each of its Subsidiaries have obtained all
Governmental Authorizations under Environmental Laws necessary to their
respective operations, and all such Governmental Authorizations are being
maintained in good standing, and Company and each of its Subsidiaries are
in compliance with such Governmental Authorizations except for any such
failure to obtain, maintain or comply which would not reasonably be
expected to have a Material Adverse Effect;
(iii) neither Company nor any of its Subsidiaries has received (a) any
notice or claim to the effect that it is or may be liable to any Person as
a result of or in connection with any Hazardous Materials or (b) any letter
or request for information under Section 104 of the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. (S)
9604) or comparable state laws, and, to the best of the Borrower's
knowledge, none of the operations of Company or any of its Subsidiaries is
the subject of any federal or state investigation relating to or in
connection with any Hazardous Materials at any Facility or at any other
location except for such of the foregoing which would not reasonably be
expected to have a Material Adverse Effect;
(iv) none of the operations of Company or any of its Subsidiaries is
subject to any judicial or administrative proceeding alleging the violation
of or liability under any Environmental Laws which if adversely determined
could reasonably be expected to have a Material Adverse Effect;
(v) neither Company nor any of its Subsidiaries nor any of their
respective Facilities or operations are subject to any outstanding written
order or agreement with any governmental authority or private party
relating to (a) any actual or potential violation of or liability under
Environmental Laws or (b) any Environmental Claims
97
except for such of the foregoing which would not reasonably be expected to
have a Material Adverse Effect;
(vi) neither Company nor any of its Subsidiaries has any contingent
liability in connection with any Release of any Hazardous Materials by
Company or any of its Subsidiaries except for such of the foregoing which
would not reasonably be expected to have a Material Adverse Effect;
(vii) neither Company nor any of its Subsidiaries nor, to the best
knowledge of the Borrower, any predecessor of Company or any of its
Subsidiaries has filed any notice under any Environmental Law indicating
past or present treatment, storage or disposal of hazardous waste, as
defined under 40 C.F.R. Parts 260-270 or any state equivalent except for
such of the foregoing which would not reasonably be expected to have a
Material Adverse Effect;
(viii) no Hazardous Materials exist on, under or about any Facility in
a manner that would reasonably be expected to give rise to an Environmental
Claim having a Material Adverse Effect, and neither Company nor any of its
Subsidiaries has filed any notice or report of a Release of any Hazardous
Materials that would reasonably be expected to give rise to an
Environmental Claim having a Material Adverse Effect;
(ix) neither Company nor any of its Subsidiaries nor, to the best
knowledge of Company, any of their respective predecessors has disposed of
any Hazardous Materials in a manner that would reasonably be expected to
give rise to an Environmental Claim having a Material Adverse Effect;
(x) to the best knowledge of Company, no underground storage tanks
or surface impoundments are on or at any Facility that would reasonably be
expected to give rise to an Environmental Claim having a Material Adverse
Effect; and
(xi) no Lien in favor of any Person relating to or in connection
with any Environmental Claim has been filed or has been attached to any
Facility except for any such Lien which would not reasonably be expected to
have a Material Adverse Effect.
Notwithstanding anything in this subsection 5.13 to the contrary, no
event or condition has occurred with respect to the Loan Parties relating to any
Environmental Laws or any Release of Hazardous Materials at any Facility or any
other location which, individually or in the aggregate, has had, or could
reasonably be expected to have, a Material Adverse Effect.
98
5.14 EMPLOYEE MATTERS.
----------------
There is no strike or work stoppage in existence or threatened
involving Company or any of its Subsidiaries that could reasonably be expected
to have a Material Adverse Effect.
5.15 SOLVENCY.
--------
Company and each of its Subsidiaries is and, upon the incurrence of
any Obligations by any Borrower on any date on which this representation is
made, will be, Solvent.
5.16 DISCLOSURE.
----------
No representation or warranty of Company or any of its Subsidiaries
contained in any Loan Document or in any other document, certificate or written
statement furnished to Lenders by or on behalf of Company or any of its
Subsidiaries for use in connection with the transactions contemplated by this
Agreement contains any untrue statement of a material fact or omits to state a
material fact (known to any Borrower, in the case of any document not furnished
by it) necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances in which the same were made. Any
projections and pro forma financial information contained in such materials are
based upon good faith estimates and assumptions believed by the Borrower to be
reasonable at the time made, it being recognized by Lenders that such
projections as to future events are not to be viewed as facts and that actual
results during the period or periods covered by any such projections may differ
from the projected results. There are no facts known (or which should upon the
reasonable exercise of diligence be known) to the Borrower (other than matters
of a general economic nature) that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect and that have not
been disclosed herein or in such other documents, certificates and statements
furnished to Lenders for use in connection with the transactions contemplated
hereby.
5.17 MATTERS RELATING TO COLLATERAL.
------------------------------
A. CREATION, PERFECTION AND PRIORITY OF LIENS. The execution and
delivery of the Collateral Documents by Loan Parties, together with (i) the
actions taken on or prior to the date hereof pursuant to subsections 4.1G-I and
(ii) the delivery to Agent of any Pledged Collateral not delivered to Agent at
the time of execution and delivery of the applicable Collateral Document (all of
which Pledged Collateral has been so delivered) are effective to create in favor
of Agent for the benefit of Lenders, as security for the respective Secured
Obligations (as defined in the applicable Collateral Document in respect of any
Collateral), a valid and perfected First Priority Lien on all of the Collateral,
and all filings and other actions necessary or desirable to perfect and maintain
the perfection and First Priority status of such
99
Liens have been duly made or taken and remain in full force and effect, other
than the filing of any UCC or PPSA financing statements delivered to Agent for
filing (but not yet filed) and the periodic filing of UCC or PPSA continuation
statements in respect of UCC or PPSA financing statements filed by or on behalf
of Agent.
B. GOVERNMENTAL AUTHORIZATIONS. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the pledge or grant by any Loan Party
of the Liens purported to be created in favor of Agent pursuant to any of the
Collateral Documents or (ii) the exercise by Agent of any rights or remedies in
respect of any Collateral (whether specifically granted or created pursuant to
any of the Collateral Documents or created or provided for by applicable law),
except for filings or recordings contemplated by subsection 5.17A and except as
may be required, in connection with the disposition of any Pledged Collateral,
by laws generally affecting the offering and sale of securities.
C. ABSENCE OF THIRD-PARTY FILINGS. Except such as may have been filed in
favor of Agent as contemplated by subsection 5.17A and as set forth on Schedule
--------
7.2 annexed hereto, (i) no effective UCC or PPSA financing statement, fixture
---
filing or other instrument similar in effect covering all or any part of the
Collateral is on file in any filing or recording office and (ii) no effective
filing covering all or any part of the IP Collateral is on file in the PTO.
D. MARGIN REGULATIONS. The pledge of the Pledged Collateral pursuant to
the Collateral Documents does not violate Regulation T, U or X of the Board of
Governors of the Federal Reserve System.
E. INFORMATION REGARDING COLLATERAL. All information supplied to Agent
by or on behalf of any Loan Party with respect to any of the Collateral (in each
case taken as a whole with respect to any particular Collateral) is accurate and
complete in all material respects.
[5.18 YEAR 2000 COMPLIANCE.
--------------------
On the basis of a comprehensive review and assessment of the systems
and equipment of Company and its Subsidiaries and inquiry made of their material
suppliers, vendors and customers, Company's management is of the view that the
"Year 2000 problem" (that is, the inability of computers, as well as embedded
microchips in non-computing devices, to perform properly date-sensitive
functions with respect to certain dates prior to and after December 31, 1999),
including costs of remediation, will not result in a Material Adverse Effect in
the operations, business, properties, condition (financial or otherwise) or
prospects of Company or its Subsidiaries. Company has developed feasible
contingency plans that adequately ensure uninterrupted and unimpaired business
operation in the event of failure of its own or a third party's systems or
equipment due to the Year 2000 problem, including those of
100
vendors, customers, and suppliers, as well as a general failure of or
interruption in its communications and delivery infrastructure.]
5.19 WATER AVAILABILITY.
------------------
Sufficient water is available and is projected to be available, from
verifiable surface and ground water sources sufficient to conduct operations as
described in the most recent financial plan submitted by the Company to Agent.
SECTION 6. BORROWERS' AFFIRMATIVE COVENANTS
Each Borrower covenants and agrees that, so long as any of the
Commitments hereunder shall remain in effect and until payment in full of all of
the Loans and other Obligations and the cancellation or expiration of all
Letters of Credit, unless Requisite Lenders shall otherwise give prior written
consent, such Borrower shall perform, and shall cause each of its Subsidiaries
to perform, all covenants in this Section 6.
6.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
--------------------------------------
Each Borrower will maintain, and cause each of its Subsidiaries to
maintain, a system of accounting established and administered in accordance with
sound business practices to permit preparation of financial statements in
conformity with GAAP. Company will deliver to Agent and Lenders:
(i) Monthly Financials: as soon as available and in any event within
------------------
30 days after the end of each month ending after the Closing Date, (a) the
consolidated and consolidating balance sheets of Company and its
Subsidiaries and of Canadian Borrowers and their Subsidiaries as at the end
of such month and the related consolidated and consolidating statements of
income, stockholders' equity and cash flows of Company and its Subsidiaries
and of Canadian Borrowers and their Subsidiaries for such month and for the
period from the beginning of the then current Fiscal Year to the end of
such month, setting forth in each case in comparative form the
corresponding figures for the corresponding periods of the previous Fiscal
Year and the corresponding figures from the Financial Plan for the current
Fiscal Year, to the extent prepared on a monthly basis, all in reasonable
detail and certified by the chief financial officer of Company that they
fairly present, in all material respects, the financial condition of
Company and its Subsidiaries and of Canadian Borrowers and their
Subsidiaries as at the dates indicated and the results of their operations
and their cash flows for the periods indicated, subject to changes
resulting from audit and normal year-end adjustments, and (b) a narrative
report describing the operations of Company and its Subsidiaries and of
Canadian Borrowers and their Subsidiaries in the form prepared for
101
presentation to senior management for such month and for the period from
the beginning of the then current Fiscal Year to the end of such month;
(ii) Quarterly Financials: as soon as available and in any event
--------------------
within 45 days after the end of each Fiscal Quarter, (a) the consolidated
and consolidating balance sheets of Company and its Subsidiaries and of
Canadian Borrowers and their Subsidiaries as at the end of such Fiscal
Quarter and the related consolidated and consolidating statements of
income, stockholders' equity and cash flows of Company and its Subsidiaries
and of Canadian Borrowers and their Subsidiaries for such Fiscal Quarter
and for the period from the beginning of the then current Fiscal Year to
the end of such Fiscal Quarter, setting forth in each case in comparative
form the corresponding figures for the corresponding periods of the
previous Fiscal Year and the corresponding figures from the Financial Plan
for the current Fiscal Year, all in reasonable detail and certified by the
chief financial officer of Company that they fairly present, in all
material respects, the financial condition of Company and its Subsidiaries
and of Canadian Borrowers and their Subsidiaries as at the dates indicated
and the results of their operations and their cash flows for the periods
indicated, subject to changes resulting from audit and normal year-end
adjustments, and (b) a narrative report describing the operations of
Company and its Subsidiaries and of Canadian Borrowers and their
Subsidiaries in the form prepared for presentation to senior management for
such Fiscal Quarter and for the period from the beginning of the then
current Fiscal Year to the end of such Fiscal Quarter;
(iii) Year-End Financials: as soon as available and in any event
-------------------
within 90 days after the end of each Fiscal Year, (a) the consolidated and
consolidating balance sheets of Company and its Subsidiaries and of
Canadian Borrowers and their Subsidiaries as at the end of such Fiscal Year
and the related consolidated and consolidating statements of income,
stockholders' equity and cash flows of Company and its Subsidiaries and of
Canadian Borrowers and their Subsidiaries for such Fiscal Year, setting
forth in each case in comparative form the corresponding figures for the
previous Fiscal Year and the corresponding figures from the Financial Plan
for the Fiscal Year covered by such financial statements, all in reasonable
detail and certified by the chief financial officer of Company that they
fairly present, in all material respects, the financial condition of
Company and its Subsidiaries and of Canadian Borrowers and their
Subsidiaries as at the dates indicated and the results of their operations
and their cash flows for the periods indicated, (b) a narrative report
describing the operations of Company and its Subsidiaries and of Canadian
Borrowers and their Subsidiaries in the form prepared for presentation to
senior management for such Fiscal Year, and (c) in the case of such
consolidated financial statements of Company and its Subsidiaries, (1) a
report thereon of a nationally recognized independent accounting firm,
which report shall be unqualified as to the scope of the audit, shall
express no doubts about the ability of Company and its Subsidiaries to
continue as a going concern, and shall state that such consolidated
financial statements
102
fairly present, in all material respects, the consolidated financial
position of Company and its Subsidiaries as at the dates indicated and the
results of their operations and their cash flows for the periods indicated
in conformity with GAAP applied on a basis consistent with prior years
(except as otherwise disclosed in such financial statements) and that the
examination by such accountants in connection with such consolidated
financial statements has been made in accordance with generally accepted
auditing standards and (2) a letter from such accounting firm,
substantially in the form of Exhibit X annexed hereto with such changes as
---------
are approved by Agent, acknowledging that Lenders will receive such
consolidated financial statements in such report and will use such
financial statements and report in their credit analyses of Company and its
Subsidiaries;
(iv) Officers' and Compliance Certificates: together with each
-------------------------------------
delivery of financial statements of Company and its Subsidiaries pursuant
to subdivisions (ii) and (iii) above, (a) an Officers' Certificate of
Company stating that the signers have reviewed the terms of this Agreement
and have made, or caused to be made under their supervision, a review in
reasonable detail of the transactions and condition of Company and its
Subsidiaries during the accounting period covered by such financial
statements and that such review has not disclosed the existence during or
at the end of such accounting period, and that the signers do not have
knowledge of the existence as at the date of such Officers' Certificate, of
any condition or event that constitutes an Event of Default or Potential
Event of Default, or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action
Borrower has taken, is taking and proposes to take with respect thereto;
and (b) a Compliance Certificate demonstrating in reasonable detail
compliance during and at the end of the applicable accounting periods with
the restrictions contained in Section 7 and calculating the Consolidated
Leverage Ratio as of the last day such immediately preceding Fiscal Quarter
for purposes of determining the Applicable Base Rate Margin and the
Applicable Eurodollar Rate Margin;
(v) Reconciliation Statements: if, as a result of any change in
-------------------------
accounting principles and policies from those in effect on the Closing
date, the consolidated financial statements of Company and its Subsidiaries
delivered pursuant to subdivisions (i), (ii), (iii) or (xiii) of this
subsection 6.1 will differ in any material respect from the consolidated
financial statements that would have been delivered pursuant to such
subdivisions had no such change in accounting principles and policies been
made, then (a) together with the first delivery of financial statements
pursuant to subdivision (i), (ii), (iii) or (xiii) of this subsection 6.1
following such change, consolidated financial statements of Company and its
Subsidiaries for (y) the current Fiscal Year to the effective date of such
change and (z) the two full Fiscal Years immediately preceding the Fiscal
Year in which such change is made, in each case prepared on a pro forma
basis as if such change had been in effect during such periods, and (b)
together with each delivery of financial statements pursuant to subdivision
(i), (ii), (iii) or (xiii) of
103
this subsection 6.1 following such change, a written statement of the chief
accounting officer or chief financial officer of Company setting forth the
differences (including without limitation any differences that would affect
any calculations relating to the financial covenants set forth in
subsection 7.6) which would have resulted if such financial statements had
been prepared without giving effect to such change;
(vi) Accountants' Certification: together with each delivery of
--------------------------
consolidated financial statements of Company and its Subsidiaries pursuant
to subdivision (iii) above, a written statement by the independent
certified public accountants giving the report thereon (a) stating that
their audit examination has included a review of the terms of this
Agreement and the other Loan Documents as they relate to accounting
matters, (b) stating whether, in connection with their audit examination,
any condition or event that constitutes an Event of Default or Potential
Event of Default has come to their attention and, if such a condition or
event has come to their attention, specifying the nature and period of
existence thereof; provided that such accountants shall not be liable by
--------
reason of any failure to obtain knowledge of any such Event of Default or
Potential Event of Default that would not be disclosed in the course of
their audit examination, and (c) stating that based on their audit
examination nothing has come to their attention that causes them to believe
either or both that the information contained in the certificates delivered
therewith pursuant to subdivision (iv) above is not correct or that the
matters set forth in the Compliance Certificates delivered therewith
pursuant to clause (b) of subdivision (iv) above for the applicable Fiscal
Year are not stated in accordance with the terms of this Agreement;
(vii) Accountants' Reports: promptly upon receipt thereof, copies of
--------------------
all reports submitted to Company by independent certified public
accountants in connection with each annual, interim or special audit of the
financial statements of Company and its Subsidiaries made by such
accountants, including, without limitation, any comment letter submitted by
such accountants to management in connection with their annual audit;
(viii) SEC Filings and Press Releases: promptly upon their becoming
------------------------------
available, copies of (a) all financial statements, reports, notices and
proxy statements sent or made available generally by Company to its
security holders or by any Subsidiary of Company to its security holders
other than Company or another Subsidiary of Company, (b) all regular and
periodic reports and all registration statements (other than on Form S-8 or
a similar form) and prospectuses, if any, filed by Company or any of its
Subsidiaries with any securities exchange or with the Securities and
Exchange Commission or any governmental or private regulatory authority,
and (c) all press releases and other statements made available generally by
Company or any of its Subsidiaries to the public concerning material
developments in the business of Company or any of its Subsidiaries;
104
(ix) Events of Default, etc.: promptly upon any officer of any
-----------------------
Borrower obtaining knowledge (a) of any condition or event that constitutes
an Event of Default or Potential Event of Default, or becoming aware that
any Lender has given any notice (other than to Agent) or taken any other
action with respect to a claimed Event of Default or Potential Event of
Default, (b) that any Person has given any notice to Company or any
of its Subsidiaries or taken any other action with respect to a claimed
default or event or condition of the type referred to in subsection 8.2,
(c) of any condition or event that would be required to be disclosed in a
current report filed by Company with the Securities and Exchange Commission
on Form 8-K (Items 1, 2, 4, 5 and 6 of such Form as in effect on the date
hereof) if Company were required to file such reports under the Exchange
Act, and (d) of the occurrence of any event or change that has caused or
evidences, either in any case or in the aggregate, a Material Adverse
Effect, an Officers' Certificate specifying the nature and period of
existence of such condition, event or change, or specifying the notice
given or action taken by any such Person and the nature of such claimed
Event of Default, Potential Event of Default, default, event or condition,
and what action Borrower has taken, is taking and proposes to take with
respect thereto;
(x) Litigation or Other Proceedings: (a) promptly upon any officer
-------------------------------
of any Borrower obtaining knowledge of (X) the institution of, or non-
frivolous threat of, any action, suit, proceeding (whether administrative,
judicial or otherwise), governmental investigation or arbitration against
or affecting Company or any of its Subsidiaries or any property of Company
or any of its Subsidiaries (collectively, "PROCEEDINGS") not previously
disclosed in writing by Company to Lenders or (Y) any material development
in any Proceeding that, in any case:
(1) if adversely determined, has a reasonable possibility of
giving rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the consummation of, or
to recover any damages or obtain relief as a result of, the
transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to any Borrower to enable Lenders and their counsel to
evaluate such matters; and (b) within twenty days after the end of each
Fiscal Quarter, a schedule of all Proceedings involving an alleged
liability of, or claims against or affecting, Company or any of its
Subsidiaries equal to or greater than $500,000, and promptly after request
by Agent such other information as may be reasonably requested by Agent to
enable Agent and its counsel to evaluate any of such Proceedings;
(xi) ERISA Events: promptly upon becoming aware of the occurrence of
------------
or forthcoming occurrence of any ERISA Event, a written notice specifying
the nature
105
thereof, what action Company or any of its ERISA Affiliates has taken, is
taking or proposes to take with respect thereto and, when known, any action
taken or threatened by the Internal Revenue Service, the Department of
Labor or the PBGC with respect thereto;
(xii) ERISA Notices: with reasonable promptness, copies of (a) each
-------------
Schedule B (Actuarial Information) to the annual report (Form 5500 Series)
----------
filed by Company or any of its ERISA Affiliates with the Internal Revenue
Service with respect to each Pension Plan; (b) all notices received by
Company or any of its ERISA Affiliates from a Multiemployer Plan sponsor
concerning an ERISA Event; and (c) such other documents or governmental
reports or filings relating to any Employee Benefit Plan as Agent shall
reasonably request;
(xiv) Financial Plans: as soon as practicable and in any event no
---------------
later than 30 days after the beginning of each Fiscal Year, a consolidated
and consolidating plan and financial forecast for such Fiscal Year (the
"FINANCIAL PLAN" for such Fiscal Year) and a consolidated and consolidating
plan and financial forecast for each succeeding Fiscal Year through the
term of this Agreement, including without limitation (a) a forecasted
consolidated and consolidating balance sheet and forecasted consolidated
and consolidating statements of income and cash flows of Company and its
Subsidiaries for such Fiscal Years, together with a pro forma Compliance
--- -----
Certificate for such Fiscal Years and an explanation of the assumptions on
which such forecasts are based, and (b) forecasted consolidated and
consolidating statements of income and cash flows of Company and its
Subsidiaries for each month of the first such Fiscal Year, together with an
explanation of the assumptions on which such forecasts are based;
(xiv) Insurance: as soon as practicable and in any event by the last
---------
day of each Fiscal Year, a report in form and substance satisfactory to
Agent outlining all material insurance coverage maintained as of the date
of such report by Company and its Subsidiaries including without limitation
directors and officers insurance and all material insurance coverage
planned to be maintained by Company and its Subsidiaries in the immediately
succeeding Fiscal Year and confirming the status of Agent as loss payee
under all such insurance to the extent required by subsection 6.4;
(xv) Environmental Audits and Reports: as soon as practicable
--------------------------------
following receipt thereof, copies of all environmental audits and reports,
whether prepared by personnel of Company or any of its Subsidiaries or by
independent consultants, with respect to significant environmental matters
at any Facility or which relate to an Environmental Claim in either case
which could reasonably be expected to result in a Material Adverse Effect;
(xvi) Board of Directors: with reasonable promptness, written notice
------------------
of any change in the Board of Directors of Company;
106
(xvii) New Subsidiaries: promptly upon any Person becoming a
----------------
Subsidiary of Company, a written notice setting forth with respect to such
Person (a) the date on which such Person became a Subsidiary of Company and
(b) all of the data required to be set forth in Schedule 5.1 annexed hereto
------------
with respect to all Subsidiaries of Company (it being understood that such
written notice shall be deemed to supplement Schedule 5.1 annexed hereto
------------
for all purposes of this Agreement);
(xviii) Material Contracts: promptly, and in any event within 10
------------------
Business Days after any Material Contract of any Borrower or any of its
Subsidiaries is terminated or amended in a manner that is materially
adverse to Borrower or such Subsidiary, as the case may be, or any new
Material Contract is entered into, a written statement describing such
event with copies of such material amendments or new contracts, and an
explanation of any actions being taken with respect thereto; and
(xix) UCC Search Report: As promptly as practicable after the date
-----------------
of delivery to Agent of any UCC (or PPSA) financing statement executed by
any Loan Party pursuant to subsection 4.1I(iv), copies of completed UCC (or
PPSA) searches evidencing the proper filing, recording and indexing of all
such UCC (or PPSA) financing statement and listing all other effective
financing statements that name such Loan Party as debtor, together with
copies of all such other financing statements not previously delivered to
Agent by or on behalf of Company or such Loan Party; and
(xx) Other Information: with reasonable promptness, such other
-----------------
information and data with respect to Company or any of its Subsidiaries as
from time to time may be reasonably requested by any Lender, [including
without limitation a copy of Company's plan, timetable and budget to
address the Year 2000 problem, together with quarterly updates thereof, as
well as expenses incurred to date, any third party assessment of Company's
Year 2000 remediation efforts, and any year 2000 contingency plans] and, at
such times as Agent may request, to deliver to Agent a certificate stating
that the amount of water available and projected to be available is
sufficient to conduct operations as described in the Company's most recent
financial plan submitted by the Company to Agent.
6.2 CORPORATE EXISTENCE, ETC.
-------------------------
Except as permitted under subsection 7.7, each Borrower will, and will
cause each of its Subsidiaries to, at all times preserve and keep in full force
and effect its corporate existence and all rights and franchises material to its
business.
6.3 PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION.
----------------------------------------------
A. Each Borrower will, and will cause each of its Subsidiaries to,
pay all taxes, assessments and other governmental charges imposed upon it or any
of its properties or
107
assets or in respect of any of its income, businesses or franchises before any
penalty accrues thereon, and all claims (including, without limitation, claims
for labor, services, materials and supplies) for sums that have become due and
payable and that by law have or may become a Lien upon any of its properties or
assets, prior to the time when any material penalty or fine shall be incurred
with respect thereto; provided that no such charge or claim need be paid if
--------
being contested in good faith by appropriate proceedings promptly instituted and
diligently conducted and if such reserve or other appropriate provision, if any,
as shall be required in conformity with GAAP shall have been made therefor.
B. None of the Borrowers will and will not permit any of its
Subsidiaries to, file or consent to the filing of any consolidated income tax
return with any Person (other than Company or any of its Subsidiaries).
6.4 MAINTENANCE OF PROPERTIES; INSURANCE.
------------------------------------
Each Borrower will, and will cause each of its Subsidiaries to,
maintain or cause to be maintained in good repair, working order and condition,
ordinary wear and tear excepted, all of their respective material properties
used or useful in the business of Company and its Subsidiaries (including,
without limitation, Intellectual Property) and from time to time will make or
cause to be made all appropriate repairs, renewals and replacements thereof.
Each Borrower will maintain or cause to be maintained, with financially sound
and reputable insurers, insurance with respect to its properties and business
and the properties and businesses of its Subsidiaries against loss or damage of
the kinds customarily carried or maintained under similar circumstances by
corporations of established reputation engaged in similar businesses. Without
limiting the generality of the foregoing, each Borrower will maintain or cause
to be maintained (i) flood insurance with respect to each Additional Flood
Hazard Property (as defined in subsection 6.10A), in each case to the extent
such Initial Flood Hazard Property or Additional Flood Hazard Property is
located in a community that participates in the National Flood Insurance Program
and (ii) public liability insurance, third party property damage insurance and
replacement value insurance on the Collateral (other than growing crops) under
such policies of insurance, with such insurance companies, in such amounts and
covering such risks as are at all times satisfactory to Agent in its
commercially reasonable judgment. Each such policy of insurance that insures
against loss or damage with respect to any Collateral or against losses due to
business interruption shall name Agent for the benefit of Lenders as the loss
payee thereunder for any covered loss in excess of $500,000 and shall provide
for at least 30 days (15 days in the event of non-payment of premium) prior
written notice to Agent of any modification or cancellation of such policy.
Upon receipt by Agent of any insurance proceeds as loss payee (i) in respect of
any such business interruption insurance, (a) Agent shall, so long as no Event
of Default or Potential Event of Default shall have occurred and be continuing,
deliver such insurance proceeds to Company, and (b) if an Event of Default or
Potential Event of Default shall have occurred and be continuing, Agent shall,
and each Borrower hereby authorizes Agent to, apply such Net
Insurance/Condemnation Proceeds to prepay the Loans as provided in subsection
2.4B(iii)(b) and (ii) in respect of any such insurance against loss or
108
damage with respect to any Collateral, (a) to the extent that any Borrower or
any of its Subsidiaries intends to use any such insurance proceeds to repair,
restore or replace the assets of such Borrower or Subsidiary in respect of which
such insurance proceeds were received, Agent shall, so long as no Event of
Default or Potential Event of Default shall have occurred and be continuing, (A)
in the event the aggregate amount of such insurance proceeds in respect of any
covered loss does not exceed $1,000,000, deliver such insurance proceeds to such
Borrower, and such Borrower shall, or shall cause such Subsidiary to, use such
insurance proceeds to effect such repair, restoration or replacement, and (B) in
the event the aggregate amount of such insurance proceeds exceeds $1,000,000,
hold such proceeds in a cash collateral account and so long as Company or any of
its Subsidiaries proceeds to repair, restore or replace the assets of Company or
such Subsidiary in respect of which such insurance proceeds were received, Agent
shall from time to time disburse to Company or such Subsidiary amounts necessary
to pay the cost of such repair, restoration or replacement after the receipt by
Agent of invoices or other documentation reasonably satisfactory to Agent
describing the amount of costs so incurred; provided however that if in the
-------- -------
reasonable good faith belief of Agent, Company or such Subsidiary is not
proceeding diligently with the repair, restoration or replacement, Agent shall,
and each Borrower hereby authorizes Agent to, apply such Net
Insurance/Condemnation Proceeds to prepay the Loans as provided in subsection
2.4B(iii)(b) and (b) if an Event of Default or Potential Event of Default shall
have occurred and be continuing or to the extent that neither Company nor any of
its Subsidiaries intends to use any such insurance proceeds to repair, restore
or replace assets of Company or any of its Subsidiaries as described above,
Agent shall, and each Borrower hereby authorizes Agent to, apply such Net
Insurance/Condemnation Proceeds to prepay the Loans as provided in subsection
2.4B(iii)(b).
6.5 INSPECTION; LENDER MEETING.
--------------------------
Each Borrower shall, and shall cause each of its Subsidiaries to,
permit any authorized representatives designated by any Lender to visit and
inspect any of the properties of Company or any of its Subsidiaries, including
its and their financial and accounting records, and to make copies and take
extracts therefrom, and to discuss its and their affairs, finances and accounts
with its and their officers and independent public accountants (provided that
Company may, if it so chooses, be present at or participate in any such
discussion). Without in any way limiting the foregoing, Company will, upon the
request of Agent or Requisite Lenders, participate in a meeting of Agent and
Lenders once during each Fiscal Year to be held at Company's corporate offices
(or such other location as may be agreed to by Company and Agent) at such time
as may be agreed to by Company and Agent.
6.6 COMPLIANCE WITH LAWS, ETC.
--------------------------
Each Borrower shall, and shall cause each of its Subsidiaries to,
comply with the requirements of all applicable laws, rules, regulations and
orders of any governmental
109
authority, noncompliance with which could reasonably be expected to cause,
individually or in the aggregate at any time, a Material Adverse Effect.
6.7 ENVIRONMENTAL DISCLOSURE AND INSPECTION.
---------------------------------------
A. Each Borrower shall, and shall cause each of its Subsidiaries to,
exercise all due diligence in order to comply in all material respects and cause
(i) all tenants under any leases or occupancy agreements affecting any portion
of the Facilities and (ii) all other Persons on or occupying such property, to
comply in all material respects with all Environmental Laws.
B. Each Borrower agrees that Agent may, from time to time and in its
reasonable discretion, retain, at Company's expense, an independent professional
consultant to review any report relating to Hazardous Materials prepared by or
for Company and, upon a reasonable belief that any Borrower has breached any
covenant or representation with respect to environmental matters or that there
has been a material violation of Environmental Laws at any Facility or by any
Borrower, to conduct its own reasonable investigation of such matter at any
Facility currently owned, leased, operated or used by Company or any of its
Subsidiaries, and Company agrees to use its best efforts to obtain permission
for Agent's professional consultant to conduct its own investigation of any such
matter at any Facility previously owned, leased, operated or used by Company or
any of its Subsidiaries. Company hereby grants to Agent and its agents,
employees, consultants and contractors the right to enter into or on to the
Facilities currently owned, leased, operated or used by Company or any of its
Subsidiaries upon reasonable notice to Borrower to perform such assessments on
such property as are reasonably necessary to conduct such a review and/or
investigation. Any such investigation of any Facility shall be conducted,
unless otherwise agreed to by Company and Agent, during normal business hours
and, to the extent reasonably practicable, shall be conducted so as not to
interfere with the ongoing operations at any such Facility or to cause any
damage or loss to any property at such Facility. Borrower and Agent hereby
acknowledge and agree that any report of any investigation conducted at the
request of Agent pursuant to this subsection 6.7B will be obtained and shall be
used by Agent and Lenders for the purposes of Lenders' internal credit
decisions, to monitor and police the Loans and to protect Lenders' security
interests, if any, created by the Loan Documents. Agent agrees to deliver a
copy of any such report to Company with the understanding that each Borrower
acknowledges and agrees that (i) it will indemnify and hold harmless Agent and
each Lender from any costs, losses or liabilities relating to such Borrower's
use of or reliance on such report, (ii) neither Agent nor any Lender makes any
representation or warranty with respect to such report, and (iii) by delivering
such report to Company, neither Agent nor any Lender is requiring or
recommending the implementation of any suggestions or recommendations contained
in such report.
C. Each Borrower shall promptly advise Lenders in writing and in
reasonable detail of (i) any material Release of any Hazardous Materials
required to be reported to any federal, state or local governmental or
regulatory agency under any applicable Environmental Laws, (ii) any and all
written communications with respect to any Environmental Claims that have a
110
reasonable possibility of giving rise to a Material Adverse Effect or with
respect to any material Release of Hazardous Materials required to be reported
to any federal, state or local governmental or regulatory agency, (iii) any
remedial action taken by such Borrower or any other Person in response to (x)
any Hazardous Materials on, under or about any Facility, the existence of which
has a reasonable possibility of resulting in an Environmental Claim having a
Material Adverse Effect, or (y) any Environmental Claim that could have a
Material Adverse Effect, (iv) such Borrower's discovery of any occurrence or
condition on any real property adjoining or in the vicinity of any Facility that
could cause such Facility or any part thereof to be subject to any material
restrictions on the ownership, occupancy, transferability or use thereof under
any Environmental Laws, and (v) any request for information from any
governmental agency that suggests such agency is investigating whether such
Borrower or any of its Subsidiaries may be potentially responsible for a Release
of Hazardous Materials.
D. Each Borrower shall promptly notify Lenders of (i) any proposed
acquisition of stock, assets, or property by Company or any of its Subsidiaries
that could reasonably be expected to expose Company or any of its Subsidiaries
to, or result in, Environmental Claims that could reasonably be expected to have
a Material Adverse Effect or that could reasonably be expected to have a
material adverse effect on any Governmental Authorization then held by Company
or any of its Subsidiaries and (ii) any proposed action to be taken by Company
or any of its Subsidiaries to commence manufacturing, industrial or other
operations that could reasonably be expected to subject Company or any of its
Subsidiaries to material additional obligations or requirements under
Environmental Laws.
E. Each Borrower shall, at its own expense, provide copies of such
documents or information as Agent may reasonably request in relation to any
matters disclosed pursuant to this subsection 6.7.
6.8 COMPANY'S REMEDIAL ACTION REGARDING HAZARDOUS MATERIALS.
-------------------------------------------------------
Company shall promptly take, and shall cause each of its Subsidiaries
promptly to take, any and all remedial action in connection with the presence,
storage, use, disposal, transportation or Release of any Hazardous Materials on,
under or about any Facility in order to comply in all material respects with all
applicable Environmental Laws and Governmental Authorizations. In the event
Company or any of its Subsidiaries undertakes any remedial action with respect
to any Hazardous Materials on, under or about any Facility, Company or such
Subsidiary shall conduct and complete such remedial action in compliance in all
material respects with all applicable Environmental Laws, and in accordance with
the policies, orders and directives of all federal, state and local governmental
authorities except when, and only to the extent that, Company's or such
Subsidiary's liability for such presence, storage, use, disposal, transportation
or discharge of any Hazardous Materials is being contested in good faith by
Company or such Subsidiary.
111
6.9 EXECUTION OF GUARANTIES AND COLLATERAL DOCUMENTS BY FUTURE SUBSIDIARIES.
-----------------------------------------------------------------------
A. EXECUTION OF DOMESTIC SUBSIDIARY GUARANTY AND COLLATERAL
DOCUMENTS. In the event that any Person becomes a Domestic Subsidiary of Company
after the date hereof, Company will promptly notify Agent of that fact and cause
such Subsidiary to execute and deliver to Agent a counterpart of the Domestic
Subsidiary Guaranty and a Domestic Subsidiary Pledge Agreement, a Domestic
Subsidiary Security Agreement, a Domestic Subsidiary Trademark Security
Agreement (if required by Agent), a Domestic Subsidiary Patent Security
Agreement (if required by Agent) and (if applicable) Additional Mortgages and to
take all such further action and execute all such further documents and
instruments as may be reasonably required to grant and perfect in favor of
Agent, for the benefit of Lenders, a first-priority security interest in all of
the shares of capital stock of such Subsidiary and all of the Real Property
Assets and all of the personal property assets of such Subsidiary described in
the applicable Collateral Documents.
B. EXECUTION OF CANADIAN SUBSIDIARY GUARANTY AND COLLATERAL
DOCUMENTS. In the event that any Person becomes a Canadian Subsidiary of Company
after the date hereof, Company will promptly notify Agent of that fact and cause
such Subsidiary to execute and deliver to Agent a counterpart of the Canadian
Subsidiary Guaranty and a Canadian Subsidiary Pledge Agreement, a Canadian
Subsidiary Security Agreement, a Canadian Subsidiary Trademark Security
Agreement, a Canadian Subsidiary Patent Security Agreement and (if applicable)
Additional Mortgages and to take all such further action and execute all such
further documents and instruments as may be reasonably required to grant and
perfect in favor of Agent, for the benefit of Lenders, a first-priority security
interest in all (if such Canadian Subsidiary is owned by a Canadian Subsidiary)
or not less than two-thirds (if such Canadian Subsidiary is owned by a Domestic
Subsidiary) of the shares of capital stock of such Subsidiary and all of the
Real Property Assets and all of the personal property assets of such Subsidiary
described in the applicable Collateral Documents. After the Closing Date, any
Canadian Subsidiary acquired by Company shall be a direct Subsidiary of Company
or a Domestic Subsidiary.
C. SUBSIDIARY CHARTER DOCUMENTS, LEGAL OPINIONS, ETC. Company shall
deliver to Agent, together with the applicable Guaranty and such Collateral
Documents, (i) certified copies of such Subsidiary's Articles or Certificate of
Incorporation, together with a good standing certificate from the Secretary of
State of the jurisdiction of its incorporation, each to be dated a recent date
prior to their delivery to Agent, (ii) a copy of such Subsidiary's Bylaws,
certified by its corporate secretary or an assistant corporate secretary as of a
recent date prior to their delivery to Agent, (iii) a certificate executed by
the secretary or an assistant secretary of such Subsidiary as to (a) the
incumbency and signatures of the officers of such Subsidiary executing such
Guaranty and the Collateral Documents to which such Subsidiary is a party and
(b) the fact that the attached resolutions of the Board of Directors of such
Subsidiary authorizing the execution, delivery and performance of such Guaranty
and such Collateral Documents are in full force and effect and have not been
modified or rescinded, and
112
(iv) a favorable opinion of counsel to such Subsidiary, in form and substance
satisfactory to Agent and its counsel, as to (a) the due organization and good
standing of such Subsidiary, (b) the due authorization, execution and delivery
by such Subsidiary of such Guaranty and such Collateral Documents, (c) the
enforceability of such Guaranty and such Collateral Documents against such
Subsidiary, and (d) such other matters as Agent may reasonably request, all of
the foregoing to be satisfactory in form and substance to Agent and its counsel.
6.10 ADDITIONAL MORTGAGES.
--------------------
A. From and after the Closing Date, in the event that (i) any
Borrower or any of its Subsidiaries acquires any Fee Property or any Material
Leasehold (each a "COVERED REAL PROPERTY ASSET") or (ii) at the time any Person
becomes a Subsidiary of any Borrower, such Person owns or holds any Covered Real
Property Asset, such Borrower or such Subsidiary shall, as soon as practicable
after the acquisition of such Covered Real Property Asset or such Person's
becoming a Subsidiary of any Borrower, as the case may be, deliver (a) fully
executed counterparts of Mortgages (each an "ADDITIONAL MORTGAGE" and
collectively, the "ADDITIONAL MORTGAGES") encumbering such Covered Real Property
Asset, together with evidence that counterparts of such Additional Mortgages
have been recorded in all places to the extent necessary or desirable, in the
reasonable judgment of Agent, so as to effectively create a valid and
enforceable first priority lien (or such other priority lien as may be specified
in the applicable Additional Mortgage), subject to Permitted Encumbrances, on
such Covered Real Property Asset in favor of Agent (or such other trustee as may
be required or desired under local law) for the benefit of Lenders; (b) a title
report obtained by Company in respect of any such Covered Real Property Asset
located in the United States (a "U.S. COVERED REAL PROPERTY ASSET"); (c) with
respect to U.S. Covered Real Property Assets only, if required by Agent, an
opinion of counsel (which counsel shall be reasonably satisfactory to Agent) in
the state in which such U.S. Covered Real Property Asset is located with respect
to the enforceability of the form of Additional Mortgage recorded in such state
and such other matters as Agent may reasonably request, in form and substance
reasonably satisfactory to Agent; (d) in the case of each such Covered Real
Property Asset consisting of a Material Leasehold, Borrower or its Subsidiary
shall use reasonable best efforts to obtain such estoppel letters from the
landlord on such Material Leasehold as may be reasonably requested by Agent, in
form and substance reasonably satisfactory to Agent; (e) unless waived by Agent,
in the case of each such Covered Real Property Asset consisting of a Fee
Property or a Material Leasehold, environmental audits prepared by professional
consultants mutually acceptable to Company and Agent, in form, scope and
substance satisfactory to Agent in its reasonable discretion; (f) with respect
to U.S. Covered Real Property Assets only, if required by Agent, in the case of
each such U.S. Covered Real Property Asset consisting of a Fee Property or a
Material Leasehold, a Title Policy; (g) with respect to U.S. Covered Real
Property Assets only, evidence, which may be in the form of a letter from an
insurance broker, a municipal engineer, title company or national flood
certification form, as to whether (1) such U.S. Covered Real Property Asset (an
"ADDITIONAL FLOOD HAZARD PROPERTY") is in an area designated by the Federal
Emergency Management Agency as having special flood or mud
113
slide hazards and (2) the community in which such U.S. Covered Real Property
Asset (if it is an Additional Flood Hazard Property) is located is participating
in the National Flood Insurance Program; and (h) if such U.S. Covered Real
Property Asset is an Additional Flood Hazard Property, Company's written
acknowledgement of receipt of written notification from Agent (1) as to the
existence of such Additional Flood Hazard Property and (2) as to whether the
community in which such Flood Hazard Property is located is participating in the
National Flood Insurance Program.
B. Each Borrower shall, and shall cause each of its Subsidiaries
to, permit any authorized representatives designated by Agent, upon reasonable
notice, to visit and inspect any Covered Real Property Asset for the purpose of
obtaining an appraisal of value, conducted by consultants retained by Agent in
compliance with all applicable banking regulations, with respect to such Covered
Real Property Asset.
6.11 ASSIGNABILITY AND RECORDING OF LEASE AGREEMENTS.
-----------------------------------------------
From and after the Closing Date, in the event that any Borrower or
any of its Subsidiaries enters into any lease that is a Material Leasehold, such
Borrower shall, or shall cause such Subsidiary to, (i) obtain lease terms
permitting (or not expressly prohibiting) the encumbrancing of such Material
Leasehold pursuant to an Additional Mortgage and the assignment of such Material
Leasehold interest to the successful bidder at a foreclosure or similar sale
(and to a subsequent third party assignee by Agent or any Lender to the extent
Agent or such Lender is the successful bidder at such sale) in the event of a
foreclosure or similar action pursuant to such Additional Mortgage and (ii)
cause a memorandum of lease with respect thereto, or other evidence of such
lease in form and substance reasonably satisfactory to Agent, to be recorded in
all places to the extent necessary or desirable, in the reasonable judgment of
Agent, so as to enable an Additional Mortgage encumbering such Material
Leasehold to effectively create a valid and enforceable first priority lien
(subject to Permitted Encumbrances) on such Material Leasehold in favor of Agent
(or such other Person as may be required or desired under local law) for the
benefit of Lenders.
SECTION 7. BORROWERS' NEGATIVE COVENANTS
Each Borrower covenants and agrees that, so long as any of the
Commitments hereunder shall remain in effect and until payment in full of all of
the Loans and other Obligations and the cancellation or expiration of all
Letters of Credit, unless Requisite Lenders shall otherwise give prior written
consent, such Borrower shall perform, and shall cause each of its Subsidiaries
to perform, all covenants in this Section 7.
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7.1 INDEBTEDNESS.
------------
Each Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, assume or guaranty, or otherwise
become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(i) Borrower may become and remain liable with respect to the
Obligations;
(ii) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations permitted by subsection 7.4 and, upon any
matured obligations actually arising pursuant thereto, the Indebtedness
corresponding to the Contingent Obligations so extinguished;
(iii) Company and its Subsidiaries may become and remain liable with
respect to Indebtedness in respect of Capital Leases; provided that such
--------
Capital Leases are permitted under the terms of subsection 7.9;
[(iv) Company may become and remain liable with respect to
Indebtedness to any of its wholly-owned Subsidiaries, and any wholly-owned
Subsidiary of Company may become and remain liable with respect to
Indebtedness to Company or any other wholly-owned Subsidiary of Company;
provided that (a) all such intercompany Indebtedness shall be evidenced by
--------
promissory notes that are pledged to Agent pursuant to the terms of the
applicable Collateral Document, (b) all such intercompany Indebtedness owed
by any Borrower to any of its Subsidiaries shall be subordinated in right
of payment to the payment in full of the Obligations pursuant to the terms
of the applicable promissory notes or an intercompany subordination
agreement, and (c) any payment by any Subsidiary of any Borrower under any
guaranty of the Obligations shall result in a pro tanto reduction of the
--- -----
amount of any intercompany Indebtedness owed by such Subsidiary to such
Borrower or to any of its Subsidiaries for whose benefit such payment is
made; provided, further, that the aggregate amount of all such intercompany
-------- -------
Indebtedness owing at any time from all Canadian Subsidiaries to Company or
any Domestic Subsidiary shall not exceed [$__________];]
(v) Company and its Subsidiaries, as applicable, may remain liable
with respect to Indebtedness described in Schedule 7.1 annexed hereto;
------------
(vi) Company may become and remain liable with respect to
Indebtedness evidenced by the Subordinated Notes;
(vii) Company and its Subsidiaries may become and remain liable with
respect to Indebtedness acquired or assumed in connection with an
acquisition permitted under subsection 7.7(v) in an aggregate amount not to
exceed $5,000,000 for all such
115
assumed or acquired Indebtedness at any time outstanding; provided that
--------
such Indebtedness was not incurred in connection with such acquisition; and
(viii) Company and its Subsidiaries may become and remain liable with
respect to other Indebtedness in an aggregate principal amount not to
exceed $5,000,000 at any time outstanding.
7.2 LIENS AND RELATED MATTERS.
-------------------------
A. PROHIBITION ON LIENS. Each Borrower shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, create, incur, assume or
permit to exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of such Borrower or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the Uniform Commercial Code of any State or under the Personal
Property Security Act of any province in Canada or under any similar recording
or notice statute, except:
(i) Permitted Encumbrances;
(ii) Liens granted pursuant to the Collateral Documents;
(iii) Liens described in Schedule 7.2 annexed hereto;
------------
(iv) Liens securing Indebtedness permitted under subsection 7.1(vii)
which Liens existed prior to the time such acquisition was made; provided
--------
that such Liens were not incurred in connection with, or in contemplation
of, such acquisition and such Liens extend to or cover only the property
and assets or covered by such Liens prior to such acquisition; and
(v) Other Liens securing Indebtedness in an aggregate amount not to
exceed $5,000,000 at any time outstanding.
B. EQUITABLE LIEN IN FAVOR OF LENDERS. If any Borrower or any of its
Subsidiaries shall create or assume any Lien upon any of its properties or
assets, whether now owned or hereafter acquired, other than Liens excepted by
the provisions of subsection 7.2A, it shall make or cause to be made effective
provision whereby the Obligations will be secured by such Lien equally and
ratably with any and all other Indebtedness secured thereby as long as any such
Indebtedness shall be so secured; provided that, notwithstanding the foregoing,
--------
this covenant shall not be construed as a consent by Requisite Lenders to the
creation or assumption of any such Lien not permitted by the provisions of
subsection 7.2A.
116
C. NO FURTHER NEGATIVE PLEDGES. Except with respect to specific property
encumbered to secure payment of particular Indebtedness or to be sold pursuant
to an executed agreement with respect to an Asset Sale, none of the Borrowers or
any of their respective Subsidiaries shall enter into any agreement (other than
the Subordinated Note Indenture) prohibiting the creation or assumption of any
Lien upon any of its properties or assets, whether now owned or hereafter
acquired.
D. NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO BORROWERS OR OTHER
SUBSIDIARIES. Except as provided herein, each Borrower will not, and will not
permit any of its Subsidiaries to, create or otherwise cause or suffer to exist
or become effective any consensual encumbrance or restriction of any kind on the
ability of any such Subsidiary to (i) pay dividends or make any other
distributions on any of such Subsidiary's capital stock owned by such Borrower
or any other Subsidiary of such Borrower, (ii) repay or prepay any Indebtedness
owed by such Subsidiary to such Borrower or any other Subsidiary of such
Borrower, (iii) make loans or advances to such Borrower or any other Subsidiary
of such Borrower, or (iv) transfer any of its property or assets to such
Borrower or any other Subsidiary of such Borrower.
7.3 INVESTMENTS; JOINT VENTURES.
---------------------------
Each Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, make or own any Investment in any Person, including
any Joint Venture, except:
(i) Company and its Subsidiaries may make and own Investments in
Cash Equivalents;
(ii) Company and its Subsidiaries may continue to own the
Investments owned by them as of the Closing Date in any Subsidiaries of
Company;
(iii) Company and its Subsidiaries may make intercompany loans to the
extent permitted under subsection 7.1(iv);
(iv) Company and its Subsidiaries may make Consolidated Capital
Expenditures permitted by subsection 7.8;
(v) Company and its Subsidiaries may make acquisitions to the
extent permitted under 7.7(v);
(vi) Company and its Subsidiaries may continue to own the
Investments owned by them and described in Schedule 7.3 annexed hereto;
------------
and
(vii) Company and its Subsidiaries may make and own other Investments
in an aggregate amount not to exceed at any time $5,000,000.
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7.4 CONTINGENT OBLIGATIONS.
----------------------
Each Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create or become or remain liable with respect to
any Contingent Obligation, except:
(i) Company may become and remain liable with respect to Contingent
Obligations in respect of Letters of Credit;
(ii) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations arising under their respective
Guaranties;
(iii) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of customary indemnification
and purchase price adjustment obligations incurred in connection with Asset
Sales or other sales of assets;
(iv) Company may become and remain liable with respect to Contingent
Obligations arising under Interest Rate Agreements;
(v) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of any Indebtedness of Company
or any of its Subsidiaries permitted by subsection 7.1;
(vi) Company may become and remain liable with respect to Contingent
Obligations under Currency Agreements pursuant to which Company obtains
foreign currency from another Person (the "COUNTERPARTY") in exchange for
Dollars; provided that (a) the aggregate notional amount for all such
--------
Currency Agreements outstanding at any one time shall not exceed the
equivalent of $20,000,000, (b) the aggregate amount of foreign currency
required to be delivered on any one day by one or more Counterparties under
all such Currency Agreements outstanding at any one time shall not exceed
the equivalent of $5,000,000; (c) the tenor of any such Currency Agreement
shall not exceed twenty-four (24) months, and (d) the expiration date of
any such Currency Agreement under which any Lender or any Lender or any of
its Affiliates is the counterparty shall not be later than the date of
termination of the Working Capital Revolving Loan Commitments;
(vii) Company's Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of guaranties under the
Subordinated Note Indenture; and
(viii) Company and its Subsidiaries may become and remain liable with
respect to other Contingent Obligations; provided that the maximum
--------
aggregate liability,
118
contingent or otherwise, of Company and its Subsidiaries in respect of all
such Contingent Obligations shall at no time exceed $2,500,000.
7.5 RESTRICTED JUNIOR PAYMENTS.
--------------------------
Each Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, declare, order, pay, make or set apart any sum for
any Restricted Junior Payment; provided that (i) Company may make payments of
--------
regularly scheduled interest in respect of the Subordinated Note Indenture in
accordance with the terms of and to the extent required by (and subject to the
subordination provisions contained in) the Subordinated Note Indenture, and (ii)
Company may redeem or prepay the Subordinated Notes in an aggregate principal
amount not exceeding $42,000,000 and may pay a redemption premium not exceeding
109.2% of the principal amount thereof plus accrued and unpaid interest thereon;
and provided, further that, so long as no Event of Default or Potential Event of
-------- -------
Default shall have occurred and be continuing or shall be caused thereby,
Company may make Restricted Junior Payments to Holdings (X) in an aggregate
principal amount not to exceed $500,000 in any Fiscal Year in order to permit
Holdings to pay customary and usual general administrative costs and expenses,
(Y) in an aggregate principal amount not to exceed in the aggregate $1,000,000
in any Fiscal Year or $3,000,000 during the term of this Agreement in order to
permit Holdings to purchase Holdings Common Stock from management officers and
employees of Company and its Subsidiaries in accordance with the terms of any
subscription or employment agreements or other stock option, stock incentive,
purchase, retirement, savings or similar plans, and (Z) in an amount necessary
to permit Holdings to discharge the consolidated tax liabilities of Holdings and
its Subsidiaries.
7.6 FINANCIAL COVENANTS.
-------------------
A. MINIMUM INTEREST COVERAGE RATIO. Company shall not permit the ratio
of (i) Consolidated EBITDA to (ii) Consolidated Interest Expense (which ratio
shall be calculated on a pro forma basis as if the Transactions had occurred on
the first day of such period) for any four-Fiscal Quarter period ending during
any of the periods set forth below to be less than the correlative ratio
indicated:
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MINIMUM
PERIOD INTEREST COVERAGE RATIO
------------------ -----------------------
3rd Fiscal Quarter, 1998 2.50:1.00
4th Fiscal Quarter, 1998 2.50:1.00
1st Fiscal Quarter, 1999 2.50:1.00
2nd Fiscal Quarter, 1999 2.50:1.00
3rd Fiscal Quarter, 1999 2.50:1.00
4th Fiscal Quarter, 1999 2.50:1.00
1st Fiscal Quarter, 2000 2.50:1.00
2nd Fiscal Quarter, 2000 2.75:1.00
3rd Fiscal Quarter, 2000 2.75:1.00
4th Fiscal Quarter, 2000 2.75:1.00
1st Fiscal Quarter, 2001 2.75:1.00
2nd Fiscal Quarter, 2001 3.00:1.00
3rd Fiscal Quarter, 2001 3.00:1.00
4th Fiscal Quarter, 2001 3.00:1.00
1st Fiscal Quarter, 2002 3.25:1.00
2nd Fiscal Quarter, 2002 3.25:1.00
3rd Fiscal Quarter, 2002 3.25:1.00
4th Fiscal Quarter, 2002 3.25:1.00
120
1st Fiscal Quarter, 2003 3.75:1.00
2nd Fiscal Quarter, 2003 3.75:1.00
B. MAXIMUM CONSOLIDATED LEVERAGE RATIO. Company shall not permit its
Consolidated Leverage Ratio as of the last day of any Fiscal Quarter ending
during any of the periods set forth below to exceed the correlative ratio
indicated:
PERIOD CONSOLIDATED LEVERAGE RATIO
---------------------------- -------------------------------
3rd Fiscal Quarter, 1998 4.00:1.00
4th Fiscal Quarter, 1998 4.00:1.00
1st Fiscal Quarter, 1999 4.00:1.00
2nd Fiscal Quarter, 1999 3.90:1.00
3rd Fiscal Quarter, 1999 3.80:1.00
4th Fiscal Quarter, 1999 3.75:1.00
1st Fiscal Quarter, 2000 3.75:1.00
2nd Fiscal Quarter, 2000 3.75:1.00
3rd Fiscal Quarter, 2000 3.50:1.00
4th Fiscal Quarter, 2000 3.50:1.00
1st Fiscal Quarter, 2001 3.50:1.00
2nd Fiscal Quarter, 2001 3.25:1.00
3rd Fiscal Quarter, 2001 3.25:1.00
4th Fiscal Quarter, 2001 3.00:1.00
1st Fiscal Quarter, 2002 3.00:1.00
2nd Fiscal Quarter, 2002 2.75:1.00
3rd Fiscal Quarter, 2002 2.75:1.00
4th Fiscal Quarter, 2002 2.75:1.00
1st Fiscal Quarter, 2003 2.75:1.00
2nd Fiscal Quarter, 2003 2.75:1.00
121
C. MINIMUM CONSOLIDATED NET WORTH. Company shall not permit Consolidated
Net Worth at any time during any of the periods set forth below to be less than
the correlative amount indicated:
MINIMUM
CONSOLIDATED
PERIOD NET WORTH
-------------------------------------- ------------
One day after the Closing Date through
3rd Fiscal Quarter, 1998 $ 80,000,000
3rd Fiscal Quarter, 1998 through
4th Fiscal Quarter, 1998 $ 77,500,000
4th Fiscal Quarter, 1998 through
1st Fiscal Quarter, 1999 $ 75,000,000
1st Fiscal Quarter, 1999 through
2nd Fiscal Quarter, 1999 $ 85,000,000
2nd Fiscal Quarter, 1999 through
3rd Fiscal Quarter, 1999 $ 85,000,000
3rd Fiscal Quarter, 1999 through
4th Fiscal Quarter, 1999 $ 85,000,000
4th Fiscal Quarter, 1999 through
1st Fiscal Quarter, 2000 $ 85,000,000
1st Fiscal Quarter, 2000 through
2nd Fiscal Quarter, 2000 $ 90,000,000
2nd Fiscal Quarter, 2000 through
3rd Fiscal Quarter, 2000 $ 95,000,000
3rd Fiscal Quarter, 2000 through
4th Fiscal Quarter, 2000 $100,000,000
4th Fiscal Quarter, 2000 through
1st Fiscal Quarter, 2001 $100,000,000
1st Fiscal Quarter, 2001 through
2nd Fiscal Quarter, 2001 $115,000,000
2nd Fiscal Quarter, 2001 through
3rd Fiscal Quarter, 2001 $115,000,000
3rd Fiscal Quarter, 2001 through
4th Fiscal Quarter, 2001 $115,000,000
4th Fiscal Quarter, 2001 through
1st Fiscal Quarter, 2002 $115,000,000
1st Fiscal Quarter, 2002 through
2nd Fiscal Quarter, 2002 $130,000,000
2nd Fiscal Quarter, 2002 through
3rd Fiscal Quarter, 2002 $130,000,000
3rd Fiscal Quarter, 2002 through
122
4th Fiscal Quarter, 2002 $130,000,000
4th Fiscal Quarter, 2002 through
1st Fiscal Quarter, 2003 $130,000,000
1st Fiscal Quarter, 2003 through
2nd Fiscal Quarter, 2003 $150,000,000
7.7 RESTRICTION ON FUNDAMENTAL CHANGES; ASSET SALES AND ACQUISITIONS.
----------------------------------------------------------------
Each Borrower shall not, and shall not permit any of its Subsidiaries
to, alter the corporate, capital or legal structure of Company or any of its
Subsidiaries, or enter into any transaction of merger or consolidation, or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease or sub-lease (as lessor or sub-lessor),
transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business, property or fixed assets, whether
now owned or hereafter acquired, or acquire by purchase or otherwise all or
substantially all the business, property or fixed assets of, or stock or other
evidence of beneficial ownership of, any Person or any division or line of
business of any Person, except:
(i) any Subsidiary of Company may be merged with or into Company
or any wholly-owned Subsidiary of Company, or may be liquidated, wound up
or dissolved, or all or any part of its business, property or assets may be
conveyed, sold, leased, transferred or otherwise disposed of, in one
transaction or a series of transactions, to Company or any wholly-owned
Subsidiary of Company;
(ii) Company and its Subsidiaries may make Consolidated Capital
Expenditures permitted under subsection 7.8;
(iii) Company and its Subsidiaries may sell or otherwise dispose of
assets in transactions that do not constitute Asset Sales; provided that
--------
the consideration received for such assets shall be in an amount at least
equal to the fair market value thereof (as reasonably determined by the
Board of Directors of Company);
(iv) subject to subsection 7.13, Company and its Subsidiaries may
make Asset Sales of assets having a fair market value not in excess of
$1,000,000; provided that (x) the consideration received for such assets
--------
shall be in an amount at least equal to the fair market value thereof (as
reasonably determined by the Board of Directors of Company); (y) the sole
consideration received shall be cash; and (z) the proceeds of such Asset
Sales shall be applied as required by subsection 2.4B(iii)(a); and Company
and its Subsidiaries may make transfers of any of their properties or
assets to another Person in transactions in which the Company or its
Subsidiaries receive in exchange therefor like properties or assets that
will be used in the business of the Company or its Subsidiaries; provided
--------
that (i) the aggregate fair market value (as determined in good
123
faith by the Board of Directors of Company) of the property or assets being
transferred by Company or such Subsidiary is not greater than the aggregate
fair market value (as determined in good faith by the Board of Directors of
Company), of the like property or assets received by Company or such
Subsidiary in such exchange and (ii) such aggregate fair market value of
all property or assets transferred by Company and any of its Subsidiaries
in connection with such exchanges shall not exceed $5,000,000; and
(v) Company and its Subsidiaries may acquire the business,
property or fixed assets of, or all of the stock or other evidence of
beneficial ownership of any Person engaged in the nursery business, the
peat or potting soil or mix business or businesses reasonably related
thereto; provided that (a) the contemplated acquisition is neither
--------
contested nor hostile nor opposed by the board of directors of the targeted
company or business; (b) no Event of Default or Potential Event of Default
has occurred and is then continuing; (c) after giving effect (including,
without limitation, any limitation on any assumed or acquired Indebtedness)
to such acquisition and Indebtedness incurred in connection therewith,
Company is in pro forma compliance with its financial covenants; provided
--------
that for purposes of calculating the Consolidated Leverage Ratio, the
aggregate earnings attributable to acquired businesses or companies whose
financials are unreviewed and unaudited shall not exceed 20% of
Consolidated EBITDA before giving effect to the consolidation with such
acquired businesses or companies and that Company delivers to Agent and
Lenders prior to the consummation of such acquisition a Compliance
Certificate demonstrating such pro forma covenant compliance; (d) the
provisions of subsections 6.9 and 6.10 of this Agreement are complied with
with respect to any Subsidiary so acquired; (e) Company obtains Agent's and
Requisite Lenders' consents to any acquisition or series of related
acquisitions in excess of $25,000,000 and, to the extent such consent is
required, shall have delivered to Agent and Lenders, on a timely basis
prior to the consummation of such acquisition, such historical and pro
forma projected financial statements (which projected financial statements
shall be prepared on a quarterly basis for the succeeding twelve-month
period and on an annual basis for the period commencing after such twelve-
month period and concluding on the date of the final maturity of the
Loans), sources and uses analysis, pro forma covenant calculations and such
other due diligence information as may be reasonably requested by Agent or
Lenders. Subject to completion of such due diligence to the reasonable
satisfaction of Agent and Requisite Lenders, Agent and Requisite Lenders
hereby agree to approve or disapprove acquisitions as soon as reasonably
practicable but in any event within ten Business Days of receipt of such
information; and (f) Company and its Subsidiaries will not incur or assume
in connection with any such contemplated acquisition any material
environmental or other material contingent liability.
124
7.8 CONSOLIDATED CAPITAL EXPENDITURES.
---------------------------------
Each Borrower shall not, and shall not permit its Subsidiaries to,
make or incur Consolidated Capital Expenditures, in any period indicated below,
in an aggregate amount in excess of the corresponding amount (the "MAXIMUM
CONSOLIDATED CAPITAL EXPENDITURES AMOUNT") set forth below opposite such period;
provided that the Maximum Consolidated Capital Expenditures Amount for any
--------
period shall be increased by an amount equal to the excess (the "CARRY FORWARD
AMOUNT"), if any, (provided however, that in no event shall the Carry Forward
--------
Amount exceed 10% of the Maximum Consolidated Capital Expenditures Amount for
such previous period) of the Maximum Consolidated Capital Expenditures Amount
for the previous period over the actual amount of Consolidated Capital
Expenditures for such previous period:
MAXIMUM CONSOLIDATED
PERIOD CAPITAL EXPENDITURES
-------------------------------------- --------------------
Fiscal Year, 1998 $19,000,000
Fiscal Year, 1999 $29,100,000
Fiscal Year, 2000 $21,200,000
Fiscal Year, 2001 $21,100,000
Fiscal Year, 2002 $17,400,000
Fiscal Year, 2003 (1st Fiscal Quarter) $21,700,000
Fiscal Year, 2003 (2nd Fiscal Quarter) $17,500,000
; provided, however, that the Maximum Consolidated Capital Expenditures Amount
-------- -------
set forth above for any period shall be increased by an amount (the "INCREMENTAL
ACQUISITION CAPITAL EXPENDITURE AMOUNT") equal to 5% of the revenues
attributable to permitted acquisitions made pursuant to subsection 7.7(v) for
the consecutive twelve-month period immediately preceding the date of such
acquisition; provided further that with respect to the Fiscal Year in which such
-------- -------
acquisition is made, the Incremental Acquisition Capital Expenditure Amount
shall be pro-rated for the remaining portion of such Fiscal Year.
7.9 RESTRICTION ON LEASES.
---------------------
Each Borrower shall not, and shall not permit any of its Subsidiaries
to, (i) become liable in any way, whether directly or by assignment or as a
guarantor or other surety, for the obligations of the lessee under any lease,
whether an Operating Lease or a Capital Lease (other than intercompany leases
between or among Company and its wholly-owned Subsidiaries), or (ii) cause or
permit the liability of such Borrower or Subsidiary under or in respect of such
lease to increase by any material amount, in each case unless, immediately after
giving effect to such incurrence of or increase in liability with respect to
such lease, the Consolidated Rental Payments at the time in effect during the
then current or any future period of 12 consecutive calendar months shall not
exceed $10,000,000.
125
7.10 SALES AND LEASE-BACKS
---------------------
Each Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, become or remain liable as lessee or as a guarantor
or other surety with respect to any lease, whether an Operating Lease or a
Capital Lease, of any property (whether real, personal or mixed), whether now
owned or hereafter acquired, (i) which Company or any of its Subsidiaries has
sold or transferred or is to sell or transfer to any other Person (other than
Company or any of its Subsidiaries) or (ii) which Company or any of its
Subsidiaries intends to use for substantially the same purpose as any other
property which has been or is to be sold or transferred by Company or any of its
Subsidiaries to any Person (other than Company or any of its Subsidiaries) in
connection with such lease; provided that Company and its Subsidiaries may
--------
become and remain liable as lessee, guarantor or other surety with respect to
any such lease if and to the extent that Company or any of its Subsidiaries
would be permitted to enter into, and remain liable under, such lease under
subsection 7.9.
7.11 SALE OR DISCOUNT OF RECEIVABLES.
-------------------------------
Each Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, sell with recourse, or discount or otherwise sell
for less than the face value thereof, any of its notes or accounts receivable.
7.12 TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES.
---------------------------------------------
Each Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, enter into or permit to exist any transaction
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any holder of 5% or more of any
class of equity Securities of Company or with any Affiliate of Company or of any
such holder, on terms that are less favorable to Company or that Subsidiary, as
the case may be, than those that might be obtained at the time from Persons who
are not such a holder or Affiliate; provided that the foregoing restriction
--------
shall not apply to (i) any transaction between Company and any of its wholly-
owned Subsidiaries or between any of its wholly-owned Subsidiaries, or (ii)
reasonable and customary fees paid to members of the Boards of Directors of
Company and its Subsidiaries.
7.13 DISPOSAL OF SUBSIDIARY STOCK.
----------------------------
Except pursuant to the Collateral Documents and except for any sale of
all of the capital stock or other equity Securities of any of its Subsidiaries
owned by any Borrower and its Subsidiaries in compliance with the provisions of
subsection 7.7(iv), each Borrower shall not:
126
(i) directly or indirectly sell, assign, pledge or otherwise
encumber or dispose of any shares of capital stock or other equity
Securities of any of its Subsidiaries, except to qualify directors if
required by applicable law; or
(ii) permit any of its Subsidiaries directly or indirectly to
sell, assign, pledge or otherwise encumber or dispose of any shares of
capital stock or other equity Securities of any of its Subsidiaries
(including such Subsidiary), except to Company, another Subsidiary of
Company, or to qualify directors if required by applicable law.
7.14 CONDUCT OF BUSINESS.
-------------------
From and after the Closing Date, each Borrower shall not, and shall
not permit any of its Subsidiaries to, engage in any business other than (i) the
businesses engaged in by such Borrower and its Subsidiaries on the Closing Date
and similar or related businesses and (ii) such other lines of business as may
be consented to by Requisite Lenders. Holdings shall not engage in any business
other than owning the capital stock of Company and its Subsidiaries and entering
into and performing its obligations under and in accordance with the Loan
Documents to which it is a party. Holdings shall not directly engage in any
business or activities other than those activities necessary to discharge its
obligations as a holding company for Company.
7.15 AMENDMENTS OF CERTAIN DOCUMENTS; DESIGNATION OF DESIGNATED SENIOR DEBT.
----------------------------------------------------------------------
A. Each Borrower shall not, and shall not permit any of its Subsidiaries
to, amend or otherwise change the terms of any Subordinated Indebtedness or any
agreement related thereto or any guaranty entered into by any Loan Party in
connection with any Subordinated Indebtedness (collectively, the "RESTRICTED
AGREEMENTS"), or make any payment consistent with an amendment thereof or change
thereto, if the effect of such amendment or change is to increase the interest
rate on such Subordinated Indebtedness or any such Restricted Agreement, change
any dates upon which payments of principal or interest are due thereon, change
any of the covenants with respect thereto in a manner which is more restrictive
to Company or any of its Subsidiaries, change any event of default or condition
to an event of default with respect thereto, change the redemption, prepayment
or defeasance provisions thereof, change the subordination provisions thereof
(or of any guaranty thereof), or change any collateral therefor (other than to
release such collateral), or if the effect of such amendment or change, together
with all other amendments or changes made, is to increase the obligations of the
obligor thereunder or to confer any additional rights on the holders of such
Subordinated Indebtedness or any such Restricted Agreement (or a trustee or
other representative on their behalf) which would be adverse to any Loan Party
or Lenders.
B. Each Borrower shall not, and shall not permit any of its Subsidiaries
to, designate any Indebtedness as "Designated Senior Debt" (as defined in the
Subordinated Note Indenture) without the prior written consent of Requisite
Lenders.
127
7.16 FISCAL YEAR.
-----------
Each Borrower shall not change its Fiscal Year-end from December 31.
SECTION 8. EVENTS OF DEFAULT
If any of the following conditions or events ("Events of Default")
shall occur:
8.1 FAILURE TO MAKE PAYMENTS WHEN DUE.
---------------------------------
Failure by any Borrower to pay any installment of principal of or
interest on any Loan when due, whether at stated maturity, by acceleration, by
notice of voluntary prepayment, by mandatory prepayment or otherwise; failure by
any Borrower to pay when due any amount payable to an Issuing Lender in
reimbursement of any drawing under a Letter of Credit; or failure by any
Borrower to pay any fee or any other amount due under this Agreement within five
days after the date due; or
8.2 DEFAULT IN OTHER AGREEMENTS.
---------------------------
Failure of any Borrower or any of its Subsidiaries to pay when due
any principal of or interest on one or more items of Indebtedness (other
than Indebtedness referred to in subsection 8.1) or Contingent Obligations
in an individual principal amount of $1,000,000 or more or with an
aggregate principal amount of $2,000,000 or more, in each case beyond the
end of any grace period provided therefor; or (ii) breach or default by any
Borrower or any of its Subsidiaries with respect to any other material term
of (a) one or more items of Indebtedness or Contingent Obligations in the
individual or aggregate principal amounts referred to in clause (i) above
or (b) any loan agreement, mortgage, indenture or other agreement relating
to such item(s) of Indebtedness or Contingent Obligation(s), if the effect
of such breach or default is to cause, or to permit the holder or holders
of that Indebtedness or Contingent Obligation(s) (or a trustee on behalf of
such holder or holders) to cause, that Indebtedness or Contingent
Obligation(s) to become or be declared due and payable prior to its stated
maturity or the stated maturity of any underlying obligation, as the case
may be (upon the giving or receiving of notice, lapse of time, both, or
otherwise); or
8.3 BREACH OF CERTAIN COVENANTS.
---------------------------
Failure of any Borrower to perform or comply with any term or
condition contained in subsection 2.5 or 6.2 or Section 7 of this Agreement; or
128
8.4 BREACH OF WARRANTY.
------------------
Any representation, warranty, certification or other statement made
by any Borrower or any of its Subsidiaries in any Loan Document or in any
statement or certificate at any time given by any Borrower or any of its
Subsidiaries in writing pursuant hereto or thereto or in connection herewith or
therewith shall be false in any material respect on the date as of which made;
or
8.5 OTHER DEFAULTS UNDER LOAN DOCUMENTS.
-----------------------------------
Any Borrower or any of its Subsidiaries shall default in the
performance of or compliance with any term contained in this Agreement or any of
the other Loan Documents, other than any such term referred to in any other
subsection of this Section 8, and such default shall not have been remedied or
waived within 15 days after the earlier of (i) an officer of any Borrower
becoming aware of such default or (ii) receipt by any Borrower of notice from
Agent or any Lender of such default; or
8.6 INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
-----------------------------------------------------
(i) A court having jurisdiction in the premises shall enter a decree
or order for relief in respect of any Borrower or any of its Subsidiaries
in an involuntary case under the Bankruptcy Code or under any other
Insolvency Laws which decree or order is not stayed; or any other similar
relief shall be granted under any applicable Insolvency Laws; or (ii) an
involuntary case shall be commenced against any Borrower or any of its
Subsidiaries under the Bankruptcy Code or under any other Insolvency Laws;
or a decree or order of a court having jurisdiction in the premises for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over any Borrower or any of its
Subsidiaries, or over all or a substantial part of its property, shall have
been entered; or there shall have occurred the involuntary appointment of
an interim receiver, trustee or other custodian of any Borrower or any of
its Subsidiaries for all or a substantial part of its property; or a
warrant of attachment, execution or similar process shall have been issued
against any substantial part of the property of any Borrower or any of its
Subsidiaries, and any such event described in this clause (ii) shall
continue for 60 days unless dismissed, bonded or discharged; or
8.7 VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
---------------------------------------------------
(i) Any Borrower or any of its Subsidiaries shall have an order for
relief entered with respect to it or commence a voluntary case under the
Bankruptcy Code or under any other Insolvency Laws, or shall consent to the
entry of an order for relief in an involuntary case, or to the conversion
of an involuntary case to a voluntary case, under any such law, or shall
consent to the appointment of or taking possession by a
129
receiver, trustee or other custodian for all or a substantial part of its
property; or Company or any of its Subsidiaries shall make any assignment
for the benefit of creditors; or (ii) any Borrower or any of its
Subsidiaries shall be unable, or shall fail generally, or shall admit in
writing its inability, to pay its debts as such debts become due; or the
Board of Directors of any Borrower or any of its Subsidiaries (or any
committee thereof) shall adopt any resolution or otherwise authorize any
action to approve any of the actions referred to in clause (i) above or
this clause (ii); or
8.8 JUDGMENTS AND ATTACHMENTS.
-------------------------
Any money judgment, writ or warrant of attachment or similar process
involving (i) in any individual case an amount in excess of $1,000,000 or (ii)
in the aggregate at any time an amount in excess of $2,000,000 (in either case
not adequately covered by insurance as to which a solvent and unaffiliated
insurance company has acknowledged coverage) shall be entered or filed against
any Borrower or any of its Subsidiaries or any of their respective assets and
shall remain undischarged, unvacated, unbonded or unstayed for a period of 60
days (or in any event later than five days prior to the date of any proposed
sale thereunder); or
8.9 DISSOLUTION.
-----------
Any order, judgment or decree shall be entered against any Borrower
or any of its Subsidiaries decreeing the dissolution or split up of any Borrower
or that Subsidiary and such order shall remain undischarged or unstayed for a
period in excess of 30 days; or
8.10 EMPLOYEE BENEFIT PLANS.
----------------------
There shall occur one or more ERISA Events which individually or in
the aggregate results in or might reasonably be expected to result in liability
of any Borrower or any of its ERISA Affiliates in excess of $1,000,000 during
the term of this Agreement; or there shall exist an amount of unfunded benefit
liabilities (as defined in Section 4001(a)(18) of ERISA), individually or in the
aggregate for all Pension Plans (excluding for purposes of such computation any
Pension Plans with respect to which assets exceed benefit liabilities), which
exceeds $2,000,000; or
8.11 MATERIAL ADVERSE EFFECT.
-----------------------
Any event or change shall occur that has caused or evidences, either
in any case or in the aggregate, a Material Adverse Effect; or
130
8.12 CHANGE IN CONTROL.
-----------------
(i) A change shall occur in the Board of Directors of Holdings so
that a majority of the Board of Directors of Holdings ceases to consist of
the individuals who constituted the Board of Directors of Holdings on the
Closing Date (or individuals whose election or nomination for election was
approved by a vote of at least 75% of the directors then in office who
either were directors of Holdings on the Closing Date or whose election or
nomination for election previously was so approved); or
(ii) any Person or Group (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission), other than MDCP and its Affiliates,
shall become or be the owner, directly or indirectly, beneficially or of
record, of shares representing more than 30% of the aggregate ordinary
voting power represented by the issued and outstanding capital stock of
Holdings on a fully diluted basis, unless MDCP and its Affiliates shall own
and continue to so own capital stock representing not less than a majority
of such aggregate ordinary voting power; or
(iii) MDCP shall cease to own, directly or indirectly, beneficially
or of record, at least 30% of each of the Holdings Common Stock and any
other class of voting stock of Holdings; or
(iv) Holdings shall cease to beneficially own and control 100% of
the issued and outstanding shares of capital stock of Company or shall
cease to have the ability to elect all of the Board of Directors of
Company; or
(v) Company shall cease to beneficially own and control, directly
or indirectly, 100% of the issued and outstanding shares of capital stock
of any other Borrower or Company shall cease to have the ability to elect
all of the Board of Directors of any other Borrower; or
(vi) any "Change of Control" (as defined in the Subordinated Note
Indenture) shall occur; or
8.13 INVALIDITY OF ANY GUARANTY.
--------------------------
Any Guaranty for any reason, other than the satisfaction in full of
all Obligations, ceases to be in full force and effect (other than in accordance
with its terms) or is declared to be null and void, or any Loan Party denies
that it has any further liability, including without limitation with respect to
future advances by Lenders, under any Loan Document to which it is a party, or
gives notice to such effect; or
131
8.14 FAILURE OF SECURITY.
-------------------
Any Collateral Document shall, at any time, cease to be in full force
and effect (other than by reason of a release of Collateral in accordance with
the terms thereof) or shall be declared null and void, or the validity or
enforceability thereof shall be contested by any Loan Party, or Agent shall not
have or cease to have a valid and perfected first priority security interest in
the Collateral purported to be covered (excluding Collateral having a fair
market value in the aggregate of up to $100,000);
THEN (i) upon the occurrence of any Event of Default described in
subsection 8.6 or 8.7, each of (a) the unpaid principal amount of and accrued
interest on the Loans, (b) an amount equal to the maximum amount that may at any
time be drawn under all Letters of Credit then outstanding (whether or not any
beneficiary under any such Letter of Credit shall have presented, or shall be
entitled at such time to present, the drafts or other documents or certificates
required to draw under such Letter of Credit), and (c) all other Obligations
shall automatically become immediately due and payable, without presentment,
demand, protest or other requirements of any kind, all of which are hereby
expressly waived by each Borrower, and the obligation of each Lender to make any
Loan, the obligation of Agent to issue any Letter of Credit and the right of any
Lender to issue any Letter of Credit hereunder shall thereupon terminate, and
(ii) upon the occurrence and during the continuation of any other Event of
Default, Agent shall, upon the written request or with the written consent of
Requisite Lenders, by written notice to each Borrower, declare all or any
portion of the amounts described in clauses (a) through (c) above to be, and the
same shall forthwith become, immediately due and payable, and the obligation of
each Lender to make any Loan, the obligation of Agent to issue any Letter of
Credit and the right of any Lender to issue any Letter of Credit hereunder shall
thereupon terminate; provided that the foregoing shall not affect in any way the
--------
obligations of Lenders under subsection 3.3C(i) or the obligations of Lenders to
purchase participations in any unpaid Swing Line Loans as provided in subsection
2.1A(v).
Any amounts described in clause (b) above, when received by Agent,
shall be held by Agent pursuant to the terms of the Collateral Account Agreement
and shall be applied as therein provided.
Notwithstanding anything contained in the second preceding paragraph,
if at any time within 60 days after an acceleration of the Loans pursuant to
such paragraph each Borrower shall pay all arrears of interest and all payments
on account of principal which shall have become due otherwise than as a result
of such acceleration (with interest on principal and, to the extent permitted by
law, on overdue interest, at the rates specified in this Agreement) and all
Events of Default and Potential Events of Default (other than non-payment of the
principal of and accrued interest on the Loans, in each case which is due and
payable solely by virtue of acceleration) shall be remedied or waived pursuant
to subsection 10.6, then Requisite Lenders, by written notice to each Borrower,
may at their option rescind and annul such acceleration and its consequences;
but such action shall not affect any subsequent Event of
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Default or Potential Event of Default or impair any right consequent thereon.
The provisions of this paragraph are intended merely to bind Lenders to a
decision which may be made at the election of Requisite Lenders and are not
intended to benefit any Borrower and do not grant any Borrower the right to
require Lenders to rescind or annul any acceleration hereunder, even if the
conditions set forth herein are met.
SECTION 9. AGENT
9.1 APPOINTMENT.
-----------
BTCo and BT Canada are hereby appointed Agent and Canadian Agent
hereunder and under the other Loan Documents and each Lender hereby authorizes
Agent and Canadian Agent, as the case may be, to act as its agent in accordance
with the terms of this Agreement and the other Loan Documents. Agent agrees to
act upon the express conditions contained in this Agreement and the other Loan
Documents, as applicable. The provisions of this Section 9 are solely for the
benefit of Agent, Syndication Agent and Lenders and Borrowers shall have no
rights as a third party beneficiary of any of the provisions thereof. In
performing its functions and duties under this Agreement, Agent shall act solely
as an agent of Lenders and does not assume and shall not be deemed to have
assumed any obligation towards or relationship of agency or trust with or for
any Borrower or any of its Subsidiaries. None of Agent, Syndication Agent or
Documentation Agent shall have any duties or responsibilities under this
Agreement or any other Loan Document to any Person, other than as a Lender
hereunder or thereunder.
9.2 POWERS AND DUTIES; GENERAL IMMUNITY.
-----------------------------------
▇. ▇▇▇▇▇▇; DUTIES SPECIFIED. Each Lender irrevocably authorizes Agent to
take such action on such Lender's behalf and to exercise such powers, rights and
remedies hereunder and under the other Loan Documents as are specifically
delegated or granted to Agent by the terms hereof and thereof, together with
such powers, rights and remedies as are reasonably incidental thereto. Agent
shall have only those duties and responsibilities that are expressly specified
in this Agreement and the other Loan Documents. Agent may exercise such powers,
rights and remedies and perform such duties by or through its agents or
employees. Agent shall not have, by reason of this Agreement or any of the
other Loan Documents, a fiduciary relationship in respect of any Lender; and
nothing in this Agreement or any of the other Loan Documents, expressed or
implied, is intended to or shall be so construed as to impose upon Agent any
obligations in respect of this Agreement or any of the other Loan Documents
except as expressly set forth herein or therein.
B. NO RESPONSIBILITY FOR CERTAIN MATTERS. Agent shall not be responsible
to any Lender for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any other
Loan Document or for any representations,
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warranties, recitals or statements made herein or therein or made in any written
or oral statements or in any financial or other statements, instruments, reports
or certificates or any other documents furnished or made by Agent to Lenders or
by or on behalf of any Borrower to Agent or any Lender in connection with the
Loan Documents and the transactions contemplated thereby or for the financial
condition or business affairs of any Borrower or any other Person liable for the
payment of any Obligations, nor shall Agent be required to ascertain or inquire
as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained in any of the Loan Documents or as
to the use of the proceeds of the Loans or the use of the Letters of Credit or
as to the existence or possible existence of any Event of Default or Potential
Event of Default. Anything contained in this Agreement to the contrary not
withstanding, Agent shall not have any liability arising from confirmations of
the amount of outstanding Loans or the Letter of Credit Usage or the component
amounts thereof.
C. EXCULPATORY PROVISIONS. Neither Agent nor any of its officers,
directors, employees or agents shall be liable to Lenders for any action taken
or omitted by Agent under or in connection with any of the Loan Documents except
to the extent caused by Agent's gross negligence or willful misconduct. If
Agent shall request instructions from Lenders with respect to any act or action
(including the failure to take an action) in connection with this Agreement or
any of the other Loan Documents, Agent shall be entitled to refrain from such
act or taking such action unless and until Agent shall have received
instructions from Requisite Lenders. Without prejudice to the generality of the
foregoing, (i) Agent shall be entitled to rely, and shall be fully protected in
relying, upon any communication, instrument or document believed by it to be
genuine and correct and to have been signed or sent by the proper person or
persons, and shall be entitled to rely and shall be protected in relying on
opinions and judgments of attorneys (who may be attorneys for Company and its
Subsidiaries), accountants, experts and other professional advisors selected by
it; and (ii) no Lender shall have any right of action whatsoever against Agent
as a result of Agent acting or (where so instructed) refraining from acting
under this Agreement or any of the other Loan Documents in accordance with the
instructions of Requisite Lenders. Agent shall be entitled to refrain from
exercising any power, discretion or authority vested in it under this Agreement
or any of the other Loan Documents unless and until it has obtained the
instructions of Requisite Lenders.
D. AGENT ENTITLED TO ACT AS LENDER. The agency hereby created shall in
no way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, Agent in its individual capacity as a Lender hereunder. With
respect to its participation in the Loans and the Letters of Credit, Agent shall
have the same rights and powers hereunder as any other Lender and may exercise
the same as though it were not performing the duties and functions delegated to
it hereunder, and the term "Lender" or "Lenders" or any similar term shall,
unless the context clearly otherwise indicates, include Agent in its individual
capacity. Agent and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of banking, trust, financial advisory or other
business with any Borrower or any of its Affiliates as if it were not performing
the duties specified herein, and may accept fees and
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other consideration from any Borrower for services in connection with this
Agreement and otherwise without having to account for the same to Lenders.
9.3 REPRESENTATIONS AND WARRANTIES; NO RESPONSIBILITY FOR APPRAISAL OF CREDIT
--------------------------------------------------------------------------
WORTHINESS.
----------
Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of each
Borrower and its Subsidiaries in connection with the making of the Loans and the
issuance of Letters of Credit hereunder and that it has made and shall continue
to make its own appraisal of the creditworthiness of each Borrower and its
Subsidiaries. Agent shall not have any duty or responsibility, either initially
or on a continuing basis, to make any such investigation or any such appraisal
on behalf of Lenders or to provide any Lender with any credit or other
information with respect thereto, whether coming into its possession before the
making of the Loans or at any time or times thereafter, and Agent shall not have
any responsibility with respect to the accuracy of or the completeness of any
information provided to Lenders.
9.4 RIGHT TO INDEMNITY.
------------------
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify Agent, to the extent that Agent shall not have been reimbursed by
Borrowers, for and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses (including,
without limitation, counsel fees and disbursements) or disbursements of any kind
or nature whatsoever which may be imposed on, incurred by or asserted against
Agent in exercising its powers, rights and remedies or performing its duties
hereunder or under the other Loan Documents or otherwise in its capacity as
Agent in any way relating to or arising out of this Agreement or the other Loan
Documents; provided that no Lender shall be liable for any portion of such
--------
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from Agent's gross negligence or
willful misconduct. If any indemnity furnished to Agent for any purpose shall,
in the opinion of Agent, be insufficient or become impaired, Agent may call for
additional indemnity and cease, or not commence, to do the acts indemnified
against until such additional indemnity is furnished.
9.5 SUCCESSOR AGENT AND SWING LINE LENDER.
-------------------------------------
A. SUCCESSOR AGENT. Agent may resign at any time by giving 30 days'
prior written notice thereof to Lenders and each Borrower, and Agent may be
removed at any time with or without cause by an instrument or concurrent
instruments in writing delivered to each Borrower and Agent and signed by
Requisite Lenders. Upon any such notice of resignation or any such removal,
Requisite Lenders shall have the right, upon five Business Days' notice to each
Borrower, to appoint a successor Agent. Upon the acceptance of any
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appointment as Agent hereunder by a successor Agent, that successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring or removed Agent and the retiring or removed Agent
shall be discharged from its duties and obligations under this Agreement. After
any retiring or removed Agent's resignation or removal hereunder as Agent, the
provisions of this Section 9 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement.
B. SUCCESSOR SWING LINE LENDER. Any resignation or removal of Agent
pursuant to subsection 9.5A shall also constitute the resignation or removal of
BTCo or its successor as Swing Line Lender, and any successor Agent appointed
pursuant to subsection 9.5A shall, upon its acceptance of such appointment,
become the successor Swing Line Lender for all purposes hereunder. In such event
(i) Company shall prepay any outstanding Swing Line Loans made by the retiring
or removed Agent in its capacity as Swing Line Lender, (ii) upon such
prepayment, the retiring or removed Agent and Swing Line Lender shall surrender
any Swing Line Note held by it to Company for cancellation, and (iii) if so
requested by the successor Agent and Swing Line Lender in accordance with
subsection 2.1E, Company shall issue a new Swing Line Note to the successor
Agent and Swing Line Lender substantially in the form of Exhibit IV-E annexed
------------
hereto, in the principal amount of the Swing Line Loan Commitment then in effect
and with other appropriate insertions.
9.6 COLLATERAL DOCUMENTS AND GUARANTIES.
-----------------------------------
Each Lender hereby further authorizes Agent to enter into each
Collateral Document as secured party on behalf of and for the benefit of Lenders
and agrees to be bound by the terms of each Collateral Document; provided that,
--------
subject to any provision of subsection 10.6 requiring the consent of any
additional Lenders, Agent shall not enter into or consent to any amendment,
modification, termination or waiver of any provision contained in any Collateral
Document or any Guaranty without the prior consent of Requisite Lenders, but
Agent may (i) release any Lien covering any items of Collateral that are the
subject of a sale or other disposition of assets permitted by this Agreement or
to which Requisite Lenders have consented and (ii) release any Guarantor (other
than any Borrower or Holdings) from its Guaranty if all of the capital stock of
such Guarantor is sold to a Person that is not any Affiliate of Company pursuant
to a sale or other disposition permitted hereunder or to which Requisite Lenders
have consented. Anything contained in any of the Loan Documents to the contrary
notwithstanding, each Lender agrees that no Lender shall have any right
individually to realize upon any of the Collateral under any Collateral Document
or to enforce any of the Guaranties, it being understood and agreed that all
rights and remedies under the Collateral Documents and the Guaranties may be
exercised solely by Agent for the benefit of Lenders in accordance with the
terms thereof.
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SECTION 10. MISCELLANEOUS
10.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS AND LETTERS OF CREDIT.
-------------------------------------------------------------
A. GENERAL. Subject to subsection 10.1B, each Lender shall have the
right at any time to (i) sell, assign or transfer to any Eligible Assignee, or
(ii) sell participations to any Person in, all or any part of its Commitments or
any Loan or Loans made by it or its Letters of Credit or participations therein
or any other interest herein or in any other Obligations owed to it; provided
--------
that no such sale, assignment, transfer or participation shall, without the
consent of Company, require Company to file a registration statement with the
Securities and Exchange Commission or apply to qualify such sale, assignment,
transfer or participation under the securities laws of any state; provided,
--------
further that no such sale, assignment or transfer described in clause (i) above
-------
shall be effective unless and until an Assignment Agreement effecting such sale,
assignment or transfer shall have been accepted by Agent and recorded in the
Register as provided in subsection 10.1B(ii); and provided, further that no such
-------- -------
sale, assignment, transfer or participation of any Letter of Credit or any
participation therein may be made separately from a sale, assignment, transfer
or participation of a corresponding interest in the Working Capital Revolving
Loan Commitment and the Working Capital Revolving Loans of the Lender effecting
such sale, assignment, transfer or participation. Except as otherwise provided
in this subsection 10.1, no Lender shall, as between Borrowers and such Lender,
be relieved of any of its obligations hereunder as a result of any sale,
assignment or transfer of, or any granting of participations in, all or any part
of its Commitments or the Loans, the Letters of Credit or participations
therein, or the other Obligations owed to such Lender.
B. ASSIGNMENTS.
(i) Amounts and Terms of Assignments. Each Commitment, Loan, Letter
--------------------------------
of Credit or participation therein, or other Obligation may (a) be assigned
in any amount to another Lender, or to an Affiliate of the assigning Lender
or another Lender, with the giving of notice to Company and Agent or (b) be
assigned in an aggregate amount of not less than $5,000,000 (or such lesser
amount as shall constitute the aggregate amount of the Commitments, Loans,
Letters of Credit and participations therein, and other Obligations of the
assigning Lender) to any other Eligible Assignee with the consent of
Company and Agent (which consent of Company and Agent shall not be
unreasonably withheld); provided that any such assignment (x) by a Domestic
--------
Lender in accordance with either clause (a) or (b) above shall effect a pro
rata assignment (based on the respective principal amounts thereof then
outstanding or in effect) of each of the Domestic Term Loan Commitment and
the Domestic Term Loans, the Acquisition Revolving Loan Commitment and the
Acquisition Loans, the Working Capital Revolving Loan Commitment and the
Working Capital Revolving Loans of the assigning Domestic Lender, and (y)
by a Canadian Lender in accordance with either clause (a) or (b) above
shall effect a pro rata assignment (based on the respective
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principal amounts thereof then outstanding or in effect) of both the Sun
Gro Canada Term Loan Commitment and the Sun Gro Canada Term Loans and the
Lakeland Canada Term Loan Commitment and the Lakeland Canada Term Loans. To
the extent of any such assignment in accordance with either clause (a) or
(b) above, the assigning Lender shall be relieved of its obligations with
respect to its Commitments, Loans, Letters of Credit or participations
therein, or other Obligations or the portion thereof so assigned. The
parties to each such assignment shall execute and deliver to Agent, for its
acceptance and recording in the Register, an Assignment Agreement, together
with, except in connection with an assignment pursuant to subsection 2.8B,
a processing and recordation fee of $3,500 and such forms, certificates or
other evidence, if any, with respect to United States federal income tax
withholding matters as the assignee under such Assignment Agreement may be
required to deliver to Agent pursuant to subsection 2.7B(iii)(a). Upon such
execution, delivery, acceptance and recordation, from and after the
effective date specified in such Assignment Agreement, (y) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment
Agreement, shall have the rights and obligations of a Lender hereunder and
(z) the assigning Lender thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment
Agreement, relinquish its rights and be released from its obligations under
this Agreement (and, in the case of an Assignment Agreement covering all or
the remaining portion of an assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto; provided
--------
that, anything contained in any of the Loan Documents to the contrary
notwithstanding, if such Lender is the Issuing Lender with respect to any
outstanding Letters of Credit such Lender shall continue to have all rights
and obligations of an Issuing Lender with respect to such Letters of Credit
until the cancellation or expiration of such Letters of Credit and the
reimbursement of any amounts drawn thereunder). The Commitments hereunder
shall be modified to reflect the Commitment of such assignee and any
remaining Commitment of such assigning Lender and, if any such assignment
occurs after the issuance of the Notes hereunder, the assigning Lender
shall, upon the effectiveness of such assignment or as promptly thereafter
as practicable, surrender its applicable Notes to Agent for cancellation,
and thereupon new Notes shall be issued to the assignee and/or to the
assigning Lender, substantially in the form of Exhibit IV-A, Exhibit IV-B,
------------ ------------
Exhibit IV-C, Exhibit IV-D or Exhibit IV-E annexed hereto, as the case may
------------ ------------ ------------
be, with appropriate insertions, to reflect the new Commitments and/or
outstanding Term Loans, as the case may be, of the assignee and/or the
assigning Lender.
(ii) Acceptance by Agent; Recordation in Register. Upon its receipt
--------------------------------------------
of an Assignment Agreement executed by an assigning Lender and an assignee
representing that it is an Eligible Assignee, together with the processing
and recordation fee referred to in subsection 10.1B(i) and any forms,
certificates or other evidence with respect to United States federal income
tax withholding matters that such assignee may be
138
required to deliver to Agent pursuant to subsection 2.7B(iii)(a), Agent
shall, if Agent and Company have consented to the assignment evidenced
thereby (in each case to the extent such consent is required pursuant to
subsection 10.1B(i)), (a) accept such Assignment Agreement by executing a
counterpart thereof as provided therein (which acceptance shall evidence
any required consent of Agent to such assignment), (b) record the
information contained therein in the Register, and (c) give prompt notice
thereof to Company. Agent shall maintain a copy of each Assignment
Agreement delivered to and accepted by it as provided in this subsection
10.1B(ii).
C. PARTICIPATIONS. The holder of any participation, other than an
Affiliate of the Lender granting such participation, shall not be entitled to
require such Lender to take or omit to take any action hereunder except action
directly affecting (i) the extension of the scheduled final maturity date of any
Loan allocated to such participation or (ii) a reduction of the principal amount
of or the rate of interest payable on any Loan allocated to such participation,
and all amounts payable by Borrowers hereunder (including without limitation
amounts payable to such Lender pursuant to subsections 2.6D, 2.7 and 3.6) shall
be determined as if such Lender had not sold such participation. Each Borrower
and each Lender hereby acknowledges and agrees that, solely for purposes of
subsections 10.4 and 10.5, (a) any participation will give rise to a direct
obligation of such Borrower to the participant and (b) the participant shall be
considered to be a "Lender".
D. ASSIGNMENTS TO FEDERAL RESERVE BANKS. In addition to the assignments
and participations permitted under the foregoing provisions of this subsection
10.1, any Lender may assign and pledge all or any portion of its Loans, the
other Obligations owed to such Lender, and its Notes to any Federal Reserve Bank
as collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any operating circular issued by such Federal Reserve
Bank; provided that (i) no Lender shall, as between any Borrower and such
--------
Lender, be relieved of any of its obligations hereunder as a result of any such
assignment and pledge and (ii) in no event shall such Federal Reserve Bank be
considered to be a "Lender" or be entitled to require the assigning Lender to
take or omit to take any action hereunder.
E. INFORMATION. Each Lender may furnish any information concerning
Company and its Subsidiaries in the possession of that Lender from time to time
to assignees and participants (including prospective assignees and
participants), subject to subsection 10.19.
10.2 EXPENSES.
--------
Whether or not the transactions contemplated hereby shall be
consummated, each Borrower agrees to pay promptly (i) all the actual and
reasonable costs and expenses of preparation of the Loan Documents and any
consents, amendments, waivers or other modifications thereto; (ii) all the costs
of furnishing all opinions by counsel for any Borrower (including any opinions
requested by Lenders as to any legal matters arising hereunder) and of
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any Borrower's performance of and compliance with all agreements and conditions
on its part to be performed or complied with under this Agreement and the other
Loan Documents including with respect to confirming compliance with
environmental, insurance and solvency requirements; (iii) the reasonable fees,
expenses and disbursements of counsel to Agent (including allocated costs of
internal counsel) in connection with the negotiation, preparation, execution and
administration of the Loan Documents and any consents, amendments, waivers or
other modifications thereto and any other documents or matters requested by any
Borrower; (iv) all the actual costs and reasonable expenses of creating and
perfecting Liens in favor of Agent on behalf of Lenders pursuant to any
Collateral Document, including filing and recording fees, expenses and taxes,
stamp or documentary taxes, search fees, title insurance premiums, and
reasonable fees, expenses and disbursements of counsel to Agent and of counsel
providing any opinions that Agent or Requisite Lenders may request in respect of
the Collateral Documents or the Liens created pursuant thereto; (v) all the
actual costs and reasonable expenses of obtaining and reviewing any appraisals
provided for under this Agreement and any environmental audits or reports
provided for under this Agreement; (vi) the custody or preservation of any of
the Collateral; (vii) all other actual and reasonable costs and expenses
incurred by Agent in connection with the syndication of the Commitments and the
negotiation, preparation and execution of the Loan Documents and any consents,
amendments, waivers or other modifications thereto and the transactions
contemplated thereby; and (viii) after the occurrence of an Event of Default,
all costs and expenses, including reasonable attorneys' fees (including
allocated costs of internal counsel) and costs of settlement, incurred by Agent
and Lenders in enforcing any Obligations of or in collecting any payments due
from any Loan Party hereunder or under the other Loan Documents by reason of
such Event of Default (including in connection with the sale of, collection
from, or other realization upon any of the Collateral or the enforcement of the
Guaranties) or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a "work-out" or
pursuant to any insolvency or bankruptcy proceedings.
10.3 INDEMNITY.
---------
In addition to the payment of expenses pursuant to subsection 10.2,
whether or not the transactions contemplated hereby shall be consummated, each
Borrower agrees to defend, indemnify, pay and hold harmless Agent and Lenders,
and the officers, directors, employees, agents and affiliates of Agent and
Lenders (collectively called the "INDEMNITEES"), from and against any and all
Indemnified Liabilities (as hereinafter defined); provided that each Borrower
--------
shall not have any obligation to any Indemnitee hereunder with respect to any
Indemnified Liabilities to the extent such Indemnified Liabilities arise solely
from the gross negligence or willful misconduct of that Indemnitee as determined
by a final judgment of a court of competent jurisdiction.
As used herein, "INDEMNIFIED LIABILITIES" means, collectively, any and
all liabilities, obligations, losses, damages (including natural resource
damages), penalties, actions, judgments, suits, claims (including Environmental
Claims), costs (including the costs
140
of any investigation, study, sampling, testing, abatement, cleanup, removal,
remediation or other response action necessary to remove, remediate, clean up or
▇▇▇▇▇ any Hazardous Materials Activity), expenses and disbursements of any kind
or nature whatsoever (including the reasonable fees and disbursements of counsel
for Indemnitees in connection with any investigative, administrative or
judicial proceeding commenced or threatened by any Person, whether or not any
such Indemnitee shall be designated as a party or a potential party thereto, and
any fees or expenses incurred by Indemnitees in enforcing this indemnity),
whether direct, indirect or consequential and whether based on any federal,
state or foreign laws, statutes, rules or regulations (including securities and
commercial laws, statutes, rules or regulations and Environmental Laws), on
common law or equitable cause or on contract or otherwise, that may be imposed
on, incurred by, or asserted against any such Indemnitee, in any manner relating
to or arising out of (i) this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby (including Lenders' agreement to
make the Loans hereunder or the use or intended use of the proceeds thereof or
the issuance of Letters of Credit hereunder or the use or intended use of any
thereof, or any enforcement of any of the Loan Documents (including any sale of,
collection from, or other realization upon any of the Collateral or the
enforcement of the Guaranties), (ii) the statements contained in the commitment
letter delivered by any Lender to any Borrower with respect thereto, or (iii)
any Environmental Claim or any Hazardous Materials Activity relating to or
arising from, directly or indirectly, any past or present activity, operation,
land ownership, or practice of any Borrower or any of its Subsidiaries.
To the extent that the undertakings to defend, indemnify, pay and hold
harmless set forth in this subsection 10.3 may be unenforceable in whole or in
part because they are violative of any law or public policy, each Borrower shall
contribute the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by Indemnitees or any of them.
10.4 SET-OFF; SECURITY INTEREST IN DEPOSIT ACCOUNTS.
----------------------------------------------
In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, upon the occurrence of any
Event of Default each Lender is hereby authorized by each Borrower at any time
or from time to time, without notice to any Borrower or to any other Person, any
such notice being hereby expressly waived, to set off and to appropriate and to
apply any and all deposits (general or special, including Indebtedness
evidenced by certificates of deposit, whether matured or unmatured, but not
including trust accounts) and any other Indebtedness at any time held or owing
by that Lender to or for the credit or the account of such Borrower against and
on account of the obligations and liabilities of such Borrower to that Lender
under this Agreement, the Letters of Credit and participations therein and the
other Loan Documents, including all claims of any nature or description arising
out of or connected with this Agreement, the Letters of Credit and
participations therein or any other Loan Document, irrespective of whether or
not (i) that Lender shall have made any demand hereunder or (ii) the principal
of or the interest on the
141
Loans or any amounts in respect of the Letters of Credit or any other amounts
due hereunder shall have become due and payable pursuant to Section 8 and
although said obligations and liabilities, or any of them, may be contingent or
unmatured. Each Borrower hereby further grants to Agent and each Lender a
security interest in all deposits and accounts maintained with Agent or such
Lender as security for the Obligations.
10.5 RATABLE SHARING.
---------------
A. AMOUNTS OWED BY COMPANY. Domestic Lenders hereby agree among
themselves that if any of them shall, whether by voluntary payment (other than a
voluntary prepayment of Loans made and applied in accordance with the terms of
this Agreement), by realization upon security, through the exercise of any right
of set-off or banker's lien, by counterclaim or cross action or by the
enforcement of any right under the Loan Documents or otherwise, or as adequate
protection of a deposit treated as cash collateral under the Bankruptcy Code,
receive payment or reduction of a proportion of the aggregate amount of
principal, interest, amounts payable in respect of Letters of Credit, fees and
other amounts then due and owing to that Domestic Lender hereunder or under the
other Loan Documents (collectively, the "AGGREGATE AMOUNTS DUE" to such
Domestic Lender) which is greater than the proportion received by any other
Domestic Lender in respect of the Aggregate Amounts Due to such other Domestic
Lender, then the Domestic Lender receiving such proportionately greater payment
shall (i) notify Agent and each other Domestic Lender of the receipt of such
payment and (ii) apply a portion of such payment to purchase participations
(which it shall be deemed to have purchased from each seller of a participation
simultaneously upon the receipt by such seller of its portion of such payment)
in the Aggregate Amounts Due to the other Domestic Lenders so that all such
recoveries of Aggregate Amounts Due shall be shared by all Domestic Lenders in
proportion to the Aggregate Amounts Due to them; provided that if all or part of
--------
such proportionately greater payment received by such purchasing Domestic Lender
is thereafter recovered from such Domestic Lender upon the bankruptcy or
reorganization of Company or otherwise, those purchases shall be rescinded and
the purchase prices paid for such participations shall be returned to such
purchasing Domestic Lender ratably to the extent of such recovery, but without
interest. Company expressly consents to the foregoing arrangement and agrees
that any holder of a participation so purchased may exercise any and all rights
of banker's lien, set-off or counterclaim with respect to any and all monies
owing by Company to that holder with respect thereto as fully as if that holder
were owed the amount of the participation held by that holder.
B. AMOUNTS OWED BY CANADIAN BORROWERS. Canadian Lenders hereby agree
among themselves that if any of them shall, whether by voluntary payment, by
realization upon security, through the exercise of any right of set-off or
banker's lien, by counterclaim or cross action or by the enforcement of any
right under the Loan Documents or otherwise, or as adequate protection of a
deposit treated as cash collateral under any applicable Insolvency Laws, receive
payment or reduction of a proportion of the aggregate amount of principal,
interest, fees and other amounts then due and owing to that Lender hereunder or
142
under the other Loan Documents from Canadian Borrowers (collectively, the
"AGGREGATE AMOUNTS DUE FROM CANADIAN BORROWERS" to such Lender) which is greater
than the proportion received by any other Canadian Lender in respect of the
Aggregate Amounts Due From Canadian Borrowers to such other Canadian Lender,
then the Canadian Lender receiving such proportionately greater payment shall
(i) notify Agent and each other Canadian Lender of the receipt of such payment
and (ii) apply a portion of such payment to purchase participations (which it
shall be deemed to have purchased from each seller of a participation
simultaneously upon the receipt by such seller of its portion of such payment)
in the Aggregate Amounts Due From Canadian Borrowers to the other Lenders so
that all such recoveries of Aggregate Amounts Due From Canadian Borrowers shall
be shared by all Canadian Lenders in proportion to the Aggregate Amounts Due
From Canadian Borrowers to them (as calculated prior to such recovery); provided
--------
that if all or part of such proportionately greater payment received by such
purchasing Lender is thereafter recovered from such Canadian Lender upon the
bankruptcy or reorganization of a Canadian Borrower or otherwise, those
purchases shall be rescinded and the purchase prices paid for such
participations shall be returned to such purchasing Lender ratably to the extent
of such recovery, but without interest. Each Canadian Borrower expressly
consents to the foregoing arrangement and agrees that any holder of a
participation so purchased may exercise any and all rights of banker's lien,
set-off or counterclaim with respect to any and all monies owing by such
Canadian Borrower to that holder with respect thereto as fully as if that holder
were owed the amount of the partic ipation held by that holder.
10.6 AMENDMENTS AND WAIVERS.
----------------------
No amendment, modification, termination or waiver of any provision of
this Agreement or of the Notes, and no consent to any departure by any Borrower
therefrom, shall in any event be effective without the written concurrence of
Requisite Lenders; provided that any such amendment, modification, termination,
--------
waiver or consent which: increases the amount of any of the Commitments or
reduces the principal amount of any of the Loans; changes in any manner the
definition of "Pro Rata Share" or the definition of "Requisite Lenders"; changes
in any manner any provision of this Agreement which, by its terms, expressly
requires the approval or concurrence of all Lenders; postpones the scheduled
final maturity date (but not the date of any scheduled installment of principal)
of any of the Loans; postpones the date on which any interest or any fees are
payable; decreases the interest rate borne by any of the Loans (other than any
waiver of any increase in the interest rate applicable to any of the Loans
pursuant to subsection 2.2E) or the amount of any fees payable hereunder;
increases the maximum duration of Interest Periods permitted hereunder; reduces
the amount or postpones the due date of any amount payable in respect of, or
extends the required expiration date of, any Letter of Credit; changes in any
manner the obligations of Lenders relating to the purchase of participations in
Letters of Credit; releases any Lien granted in favor of Agent with respect to
all or substantially all of the Collateral; releases Holdings from its
obligations under the Holdings Guaranty or releases any Subsidiary Guarantor
from its obligations under the Subsidiary Guaranty, in each case other than in
accordance with the terms of the Loan
143
Documents; or changes in any manner the provisions contained in subsection 8.1
or this subsection 10.6 shall be effective only if evidenced by a writing signed
by or on behalf of all Lenders. In addition, (i) any amendment, modification,
termination or waiver of any of the provisions contained in Section 4 shall be
effective only if evidenced by a writing signed by or on behalf of Agent and
Requisite Lenders, (ii) no amendment, modification, termination or waiver of any
provision of any Note shall be effective without the written concurrence of the
Lender which is the holder of that Note, (iii) no amendment, modification,
termination or waiver of any provision of subsection 2.1A(v) or of any other
provision of this Agreement relating to the Swing Line Loan Commitment or the
Swing Line Loans shall be effective without the written concurrence of Swing
Line Lender, (iv) no amendment, modification, termination or waiver of any
provision of Section 9 or of any other provision of this Agreement which, by its
terms, expressly requires the approval or concurrence of Agent shall be
effective without the written concurrence of Agent, and (v) no amendment,
modification, termination or waiver of any provision of subsection 2.4 which has
the effect of changing any interim scheduled payments, voluntary or mandatory
prepayments, or Commitment reductions applicable to either Class (the "AFFECTED
CLASS") in a manner that disproportionately disadvantages such Class relative to
the other Class shall be effective without the written concurrence of Requisite
Class Lenders of the Affected Class (it being understood and agreed that any
amendment, modification, termination or waiver of any such provision which only
postpones or reduces any interim scheduled payment, voluntary or mandatory
prepayment, or Commitment reduction from those set forth in subsection 2.4 with
respect to one Class but not the other Class shall be deemed to
disproportionately disadvantage such one Class but not to disproportionately
disadvantage such other Class for purposes of this clause (v)). Agent may, but
shall have no obligation to, with the concurrence of any Lender, execute
amendments, modifications, waivers or consents on behalf of that Lender. Any
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which it was given. No notice to or demand on any Borrower
in any case shall entitle such Borrower to any other or further notice or demand
in similar or other circumstances. Any amendment, modification, termination,
waiver or consent effected in accordance with this subsection 10.6 shall be
binding upon each Lender at the time outstanding, each future Lender and, if
signed by any Borrower, on such Borrower.
10.7 INDEPENDENCE OF COVENANTS.
-------------------------
All covenants hereunder shall be given independent effect so that
if a particular action or condition is not permitted by any of such covenants,
the fact that it would be permitted by an exception to, or would otherwise be
within the limitations of, another covenant shall not avoid the occurrence of an
Event of Default or Potential Event of Default if such action is taken or
condition exists.
144
10.8 NOTICES.
-------
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States or
Canadian mail or courier service and shall be deemed to have been given when
delivered in person or by courier service, upon receipt of telefacsimile or
telex, or three Business Days after depositing it in the United States or
Canadian mail with postage prepaid and properly addressed; provided that notices
--------
to Agent shall not be effective until received. For the purposes hereof, the
address of each party hereto shall be as set forth under such party's name on
the signature pages hereof or (i) as to Borrowers and Agent, such other address
as shall be designated by such Person in a written notice delivered to the other
parties hereto and (ii) as to each other party, such other address as shall be
designated by such party in a written notice delivered to Agent.
10.9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
------------------------------------------------------
A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the Loans
and the issuance of the Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or implied by law to
the contrary, the agreements of Borrowers set forth in subsections 2.6D, 2.7,
3.5A, 3.6, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in
subsections 9.2C, 9.4 and 10.5 shall survive the payment of the Loans, the
cancellation or expiration of the Letters of Credit and the reimbursement of any
amounts drawn thereunder, and the termination of this Agreement.
10.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
-----------------------------------------------------
No failure or delay on the part of Agent or any Lender in the exercise
of any power, right or privilege hereunder or under any other Loan Document
shall impair such power, right or privilege or be construed to be a waiver of
any default or acquiescence therein, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other power, right or privilege. All rights and remedies existing under
this Agreement and the other Loan Documents are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
10.11 MARSHALLING; PAYMENTS SET ASIDE.
-------------------------------
Neither Agent nor any Lender shall be under any obligation to marshal
any assets in favor of any Borrower or any other party or against or in payment
of any or all of the Obligations. To the extent that any Borrower makes a
payment or payments to Agent or Lenders (or to Agent for the benefit of
Lenders), or Agent or Lenders enforce any security interests or exercise their
rights of setoff, and such payment or payments or the proceeds of
145
such enforcement or setoff or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, any
other state or federal law, common law or any equitable cause, then, to the
extent of such recovery, the obligation or part thereof originally intended to
be satisfied, and all Liens, rights and remedies therefor or related thereto,
shall be revived and continued in full force and effect as if such payment or
payments had not been made or such enforcement or setoff had not occurred.
10.12 SEVERABILITY.
------------
In case any provision in or obligation under this Agreement or the
Notes shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
10.13 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS.
----------------------------------------------------------
The obligations of Lenders hereunder are several and no Lender shall
be responsible for the obligations or Commitments of any other Lender hereunder.
Nothing contained herein or in any other Loan Document, and no action taken by
Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for such purpose.
10.14 HEADINGS.
--------
Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
10.15 APPLICABLE LAW.
--------------
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES.
146
10.16 SUCCESSORS AND ASSIGNS.
----------------------
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of Lenders (it being understood that
Lenders' rights of assignment are subject to subsection 10.1). None of the
Borrowers' rights or obligations hereunder nor any interest therein may be
assigned or delegated by any Borrower without the prior written consent of all
Lenders.
10.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
----------------------------------------------
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY BORROWER ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS
THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇. BY EXECUTING AND
DELIVERING THIS AGREEMENT, EACH BORROWER, FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY
SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO COMPANY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH
SUBSECTION 10.8;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER COMPANY IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST COMPANY IN
THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 10.17 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND
147
ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL
OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.
10.18 WAIVER OF JURY TRIAL.
--------------------
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver
is intended to be all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including
contract claims, tort claims, breach of duty claims and all other common law and
statutory claims. Each party hereto acknowledges that this waiver is a material
inducement to enter into a business relationship, that each has already relied
on this waiver in entering into this Agreement, and that each will continue to
rely on this waiver in their related future dealings. Each party hereto further
warrants and represents that it has reviewed this waiver with its legal counsel
and that it knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN
WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION 10.18 AND EXECUTED BY EACH OF
THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS
MADE HEREUNDER. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
10.19 CONFIDENTIALITY.
---------------
Each Lender shall hold all non-public information obtained pursuant to
the requirements of this Agreement which has been identified as confidential by
any Borrower in accordance with such Lender's customary procedures for handling
confidential information of this nature and in accordance with safe and sound
banking practices, it being understood and agreed by each Borrower that in any
event a Lender may make disclosures to Affiliates of such Lender or disclosures
reasonably required by any bona fide assignee, transferee or participant in
connection with the contemplated assignment or transfer by such Lender of any
Loans or any participations therein or disclosures required or requested by any
governmental agency or representative thereof or pursuant to legal process;
provided that, unless specifically prohibited by applicable law or court order,
--------
each Lender shall notify Company of any request by any governmental agency or
representative thereof (other than any such request in connection with any
examination of the financial condition of such Lender by such governmental
agency) for
148
disclosure of any such non-public information prior to disclosure of such
information; and provided, further that in no event shall any Lender be
-------- -------
obligated or required to return any materials furnished by Company or any of its
Subsidiaries.
10.20 JUDGMENT CURRENCY.
-----------------
(a) If, for the purposes of obtaining judgment in any court, it is
necessary to convert a sum due hereunder in any currency (the "ORIGINAL
CURRENCY") into another currency (the "OTHER CURRENCY"), the parties hereto
agree, to the fullest extent permitted by law, that the rate of exchange used
shall be that at which in accordance with normal banking procedures the Agent
could purchase the Original Currency with the Other Currency on the Business Day
immediately preceding the day on which any such judgment, or any relevant part
thereof, is paid or otherwise satisfied.
(b) The obligations of each Borrower in respect of any sum due from it
to the Lenders hereunder shall, notwithstanding any judgment in such Other
Currency, be discharged only to the extent that on the Business Day following
receipt by the Agent of any sum adjudged to be so due in the Other Currency the
Agent may in accordance with normal banking procedures purchase the Original
Currency with the Other Currency; if the Original Currency so purchased is less
than the sum originally due to the Lenders in the Original Currency, such
Borrower agrees, as a separate obligation and notwithstanding any such judgment,
to indemnify the Lenders against such loss, and if the amount of the Original
Currency so purchased exceeds the sum originally due to the Lenders in the
Original Currency, the Lenders shall remit such excess to such Borrower.
10.21 COUNTERPARTS; EFFECTIVENESS.
---------------------------
This Agreement and any amendments, waivers, consents or supplements
hereto or in connection herewith may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by each Borrower
and Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
[Remainder of page intentionally left blank]
149
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
BORROWERS:
▇▇▇▇▇ NURSERIES, INC.
By: _______________________________________
Title: _______________________________________
Notice Address:
▇▇▇▇▇ Nurseries, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Telecopy No.:
SUN GRO HORTICULTURE CANADA LTD.
By: _______________________________________
Title: _______________________________________
Notice Address:
Sun Gro Horticulture Canada Ltd.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Telecopy No.:
▇-▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LTD.
By: _______________________________________
Title: _______________________________________
Notice Address:
Lakeland Canada Ltd.
_____________________
_____________________
_____________________
Attention:
Telecopy No.:
S-2
LENDERS:
BANKERS TRUST COMPANY,
as a Domestic Lender, Administrative Agent
and Issuing Lender
By: ____________________________________________
Title: ____________________________________________
Notice Address:
Bankers Trust Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
Bankers Trust Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
S-3
BT BANK OF CANADA,
as a Canadian Lender and Canadian Agent
By: _____________________________________________
Title: _____________________________________________
Notice Address:
BT Bank of Canada
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
Royal Bank Plaza, North Tower
Toronto, Ontario M5J 2J2
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
S-4
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
as a Domestic Lender and Syndication Agent
By: _____________________________________________
Title: _____________________________________________
Notice Address:
_____________________________________________
_____________________________________________
_____________________________________________
_____________________________________________
Attention:
Telecopy No.:
▇▇▇▇▇▇ TRUST AND SAVINGS BANK,
as a Domestic Lender and Documentation Agent
By: _____________________________________________
Title: _____________________________________________
Notice Address:
_____________________________________________
_____________________________________________
_____________________________________________
_____________________________________________
Attention:
S-5
Telecopy No.:
______________________________
By: _____________________________________________
Title: _____________________________________________
Notice Address:
_____________________________________________
_____________________________________________
_____________________________________________
_____________________________________________
Attention:
Telecopy No.:
S-6