EXHIBIT 10.5
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EXECUTION
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AXEL(SM*) CREDIT AGREEMENT
DATED AS OF DECEMBER 18, 1997
AMONG
SEALY MATTRESS COMPANY,
AS BORROWER,
SEALY CORPORATION,
AS GUARANTOR,
THE LENDERS LISTED HEREIN,
AS LENDERS,
▇▇▇▇▇▇▇ ▇▇▇▇▇ CREDIT PARTNERS L.P.,
AS ARRANGER AND SYNDICATION AGENT,
▇▇▇▇▇▇ GUARANTY TRUST COMPANY OF NEW YORK,
AS ADMINISTRATIVE AGENT,
AND
BANKERS TRUST COMPANY,
AS DOCUMENTATION AGENT
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* AXEL is a registered service ▇▇▇▇ of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
SEALY MATTRESS COMPANY
AXEL CREDIT AGREEMENT
TABLE OF CONTENTS
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Page
SECTION 1.
DEFINITIONS................................ 2
1.1 Certain Defined Terms.................................................. 2
1.2 Accounting Terms; Utilization of GAAP for Purposes
of Calculations Under Agreement........................................ 49
1.3 Other Definitional Provisions and Rules of
Construction........................................................... 49
1.4 Changes in GAAP........................................................ 50
SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS................. 50
2.1 Commitments; Making of Loans; the Register; Notes...................... 50
2.2 Interest on the Loans.................................................. 54
2.3 Fees................................................................... 58
2.4 Repayments and Prepayments; General Provisions Regarding
Payments; Application of Proceeds of Collateral and Payments Under
Guaranties............................................................. 58
2.5 Use of Proceeds........................................................ 71
2.6 Special Provisions Governing Eurodollar Rate Loans..................... 72
2.7 Increased Costs; Taxes; Capital Adequacy............................... 74
2.8 Obligation of Lenders to Mitigate...................................... 78
2.9 Removal or Replacement of a Lender..................................... 78
SECTION 3.
CONDITIONS TO LOANS............................ 80
3.1 Conditions to Loans.................................................... 80
SECTION 4.
HOLDINGS' AND COMPANY'S REPRESENTATIONS AND WARRANTIES........... 90
4.1 Organization, Powers, Qualification, Good Standing, Business and
Subsidiaries........................................................... 90
4.2 Authorization of Borrowing, etc........................................ 91
4.3 Financial Condition.................................................... 93
4.4 No Material Adverse Change............................................. 93
4.5 Title to Properties; Liens; Real Property.............................. 93
4.6 Litigation; Adverse Facts.............................................. 94
4.7 Payment of Taxes....................................................... 94
4.8 Performance of Agreements; Materially Adverse Agreements............... 95
4.9 Governmental Regulation................................................ 95
(i)
Page
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4.10 Securities Activities................................................. 95
4.11 Employee Benefit Plans................................................ 95
4.12 Certain Fees.......................................................... 96
4.13 Environmental Protection.............................................. 96
4.14 Employee Matters...................................................... 97
4.15 Solvency.............................................................. 97
4.16 Matters Relating to Collateral........................................ 97
4.17 Related Agreements.................................................... 98
4.18 Disclosure............................................................ 99
4.19 Subordination of Seller Notes and Shareholder
Subordinated Notes.................................................... 99
SECTION 5.
HOLDINGS' AND COMPANY'S AFFIRMATIVE COVENANTS............... 99
5.1 Financial Statements and Other Reports................................ 100
5.2 Corporate Existence, etc.............................................. 105
5.3 Payment of Taxes and Claims; Tax Consolidation........................ 105
5.4 Maintenance of Properties; Insurance; Application of Net
Insurance/Condemnation Proceeds....................................... 106
5.5 Inspection Rights; Audits of Inventory and Accounts Receivable;
Lender Meeting........................................................ 107
5.6 Compliance with Laws, etc............................................. 108
5.7 Environmental Review and Investigation, Disclosure, Etc.; Company's
Actions Regarding Hazardous Materials Activities, Environmental
Claims and Violations of Environmental Laws........................... 108
5.8 Execution of Subsidiary Guaranty and Personal Property Collateral
Documents by Future Subsidiaries...................................... 111
5.9 Conforming Leasehold Interests; Matters Relating to Additional Real
Property Collateral................................................... 112
5.10 Interest Rate Protection.............................................. 114
5.11 Additional Foreign Subsidiary Collateral.............................. 115
SECTION 6.
COMPANY'S NEGATIVE COVENANTS........................ 115
6.1 Restricted Payments................................................... 116
6.2 Dividend and Other Payment Restrictions Affecting
Subsidiaries.......................................................... 119
6.3 Incurrence of Indebtedness and Issuance of Preferred Stock............ 120
6.4 Asset Sales........................................................... 123
6.5 Transactions with Affiliates.......................................... 123
6.6 Liens................................................................. 125
6.7 Conduct of Business................................................... 126
6.8 Consolidation, Merger and Sale of Assets.............................. 126
6.9 Successor Corporation................................................. 127
(ii)
Page
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6.10 Amendments or Waivers of Certain Agreements; Amendments of
Documents Relating to Subordinated Indebtedness; Designation of
"Designated Senior Debt".............................................. 127
SECTION 7.
EVENTS OF DEFAULT............................. 128
7.1 Failure to Make Interest Payments When Due............................ 128
7.2 Failure to Make Principal Payments When Due........................... 128
7.3 Other Defaults Under Loan Documents; Breach of Warranty............... 129
7.4 Default in Other Agreements........................................... 129
7.5 Judgments and Attachments............................................. 129
7.6 Voluntary Bankruptcy; Appointment of Receiver, etc.................... 130
7.7 Involuntary Bankruptcy; Appointment of Receiver, etc.................. 130
7.8 Change in Control..................................................... 130
7.9 Invalidity of Guaranties; Failure of Security; Repudiation of
Obligations........................................................... 131
SECTION 8.
AGENTS................................... 132
8.1 Appointment........................................................... 132
8.2 Powers and Duties; General Representations and Warranties; No
Immunity.............................................................. 134
8.3 Responsibility For Appraisal of Creditworthiness...................... 135
8.4 Right to Indemnity.................................................... 135
8.5 Successor Administrative Agent........................................ 136
8.6 Collateral Documents and Guaranty..................................... 136
SECTION 9.
MISCELLANEOUS............................... 137
9.1 Assignments and Participations in Loans............................... 137
9.2 Expenses.............................................................. 140
9.3 Indemnity............................................................. 141
9.4 Set-Off; Security Interest in Deposit Accounts........................ 142
9.5 Ratable Sharing....................................................... 143
9.6 Amendments and Waivers................................................ 143
9.7 Independence of Covenants............................................. 144
9.8 Notices............................................................... 145
9.9 Survival of Representations, Warranties and Agreements................ 145
9.10 Failure or Indulgence Not Waiver; Remedies Cumulative................. 145
9.11 Marshalling; Payments Set Aside....................................... 145
9.12 Severability.......................................................... 146
9.13 Obligations Several; Independent Nature of Lenders' Rights............ 146
9.14 Headings.............................................................. 146
(iii)
Page
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9.15 Applicable Law........................................................ 146
9.16 Successors and Assigns................................................ 146
9.17 Consent to Jurisdiction and Service of Process........................ 147
9.18 Waiver of Jury Trial.................................................. 147
9.19 Confidentiality....................................................... 148
9.20 Counterparts; Effectiveness........................................... 148
Signature pages S-1
(iv)
EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III [INTENTIONALLY OMITTED]
IV FORM OF AXEL SERIES B NOTE
V FORM OF AXEL SERIES C NOTE
VI FORM OF AXEL SERIES D NOTE
VII FORM OF COMPLIANCE CERTIFICATE
VIII FORM OF OPINIONS OF COUNSEL TO LOAN PARTIES
IX FORM OF OPINION OF O'MELVENY & ▇▇▇▇▇ LLP
X FORM OF ASSIGNMENT AGREEMENT
XI FORM OF CERTIFICATE RE NON-BANK STATUS
XII FORM OF FINANCIAL CONDITION CERTIFICATE
XIII FORM OF INTERCREDITOR AGREEMENT
XIV FORM OF COMPANY PLEDGE AGREEMENT
XV FORM OF COMPANY SECURITY AGREEMENT
XVI FORM OF COMPANY PATENT AND TRADEMARK SECURITY AGREEMENT
XVII FORM OF SUBSIDIARY GUARANTY
XVIII FORM OF SUBSIDIARY PLEDGE AGREEMENT
XIX FORM OF SUBSIDIARY SECURITY AGREEMENT
XX FORM OF SUBSIDIARY PATENT AND TRADEMARK SECURITY AGREEMENT
XXI FORM OF HOLDINGS GUARANTY
XXII FORM OF HOLDINGS PLEDGE AGREEMENT
XXIII FORM OF HOLDINGS SECURITY AGREEMENT
XXIV FORM OF MORTGAGE
XXV FORM OF COLLATERAL ACCESS AGREEMENT
XXVI FORM OF SUBORDINATION PROVISIONS
(v)
SCHEDULES
1.1(i) ADDBACKS TO EBITDA
1.1(ii) RECAPITALIZATION TRANSACTIONS
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
3.1C CORPORATE AND CAPITAL STRUCTURE; OWNERSHIP
3.1F CERTAIN EXISTING INDEBTEDNESS
3.1I CLOSING DATE MORTGAGED PROPERTIES
3.1K CLOSING DATE ENVIRONMENTAL REPORTS
4.1 SUBSIDIARIES OF COMPANY
4.5 REAL PROPERTY
4.12 CERTAIN FEES
4.13 ENVIRONMENTAL MATTERS
5.12 POST-CLOSING DELIVERIES
(vi)
SEALY MATTRESS COMPANY
AXEL(SM)* CREDIT AGREEMENT
This AXEL CREDIT AGREEMENT is dated as of December 18, 1997 and entered
into by and among SEALY MATTRESS COMPANY, an Ohio corporation ("Company"),
SEALY CORPORATION, a Delaware corporation ("Holdings"), ▇▇▇▇▇▇▇ ▇▇▇▇▇ CREDIT
PARTNERS L.P. ("GSCP"), as arranger and syndication agent (in such capacity,
"Syndication Agent"), THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE
PAGES HEREOF (each individually referred to herein as a "Lender" and
collectively as "Lenders"), ▇▇▇▇▇▇ GUARANTY TRUST COMPANY OF NEW YORK
("▇▇▇▇▇▇ Guaranty"), as administrative agent for Lenders (in such capacity,
"Administrative Agent"), and BANKERS TRUST COMPANY ("BTCo."), as
documentation agent (in such capacity, "Documentation Agent").
R E C I T A L S
- - - - - - - -
WHEREAS, ▇▇▇▇ and the Other Investors have formed Sandman Merger
Corporation, a Delaware corporation ("Merger Corp."), for the purpose of
engaging with Holdings and Company in a series of Recapitalization Transactions,
including the Merger (capitalized terms used herein having the meanings assigned
to those terms in subsection 1.1), whereby ▇▇▇▇ and the Other Investors will
acquire not less than 75% of the aggregate voting power of all outstanding
capital stock of Holdings;
WHEREAS, Company, a wholly owned subsidiary of Holdings, has requested
Lenders to extend, and Lenders have agreed to extend, certain credit facilities
in an aggregate principal amount of $330,000,000 to Company, the proceeds of
which will be used, together with (i) the proceeds of $130,400,000 in aggregate
principal amount of borrowings under the Revolving Credit Agreement, (ii)
$128,700,000 in proceeds of the Equity Contribution, (iii) not less than
$125,000,000 in cash proceeds of the issuance and sale of the Senior
Subordinated Notes, (iv) not less than $75,000,000 in cash proceeds of the
issuance and sale of the Discount Notes, and (v) the issuance of $25,000,000 in
aggregate principal amount of Junior Subordinated Seller Notes, to permit
consummation of the Merger, to refinance certain existing Indebtedness of
Holdings, to repurchase certain existing Indebtedness of Holdings pursuant to
the Debt Tender Offer, and to pay related fees and expenses;
WHEREAS, pursuant to the Recapitalization Transactions, (i) Merger Corp.
will merge with and into Holdings, with Holdings being the surviving corporation
and the owner of 100% of the outstanding capital stock of Company, and (ii) the
capital stock of each direct Subsidiary
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* AXEL is a registered service ▇▇▇▇ of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
of Holdings (other than Company) immediately prior to the Closing Date will be
contributed to the capital of Company so that following such contribution,
Company shall be the only direct Subsidiary of Holdings;
WHEREAS, Company desires to secure all of the Obligations hereunder and
under the other Loan Documents by granting to Administrative Agent, on behalf of
Lenders, a First Priority Lien on substantially all of its real, personal and
mixed property, including a pledge of all of the capital stock of each of its
Domestic Subsidiaries and 65% of the capital stock of each of its Foreign
Subsidiaries which is directly owned by Company; and
WHEREAS, Holdings and all Subsidiaries of Company other than the Excluded
Subsidiaries desire to guarantee the Obligations hereunder and under the other
Loan Documents and to secure their guaranties by granting to Administrative
Agent, on behalf of Lenders, a First Priority Lien on substantially all of their
respective real, personal and mixed property, including (i) a pledge of all of
the capital stock of Company and (ii) a pledge of all of the capital stock of
each Domestic Subsidiary and 65% of the capital stock of each Foreign Subsidiary
which is directly owned by a Subsidiary Guarantor:
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Company, Holdings, Lenders and Agents
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:
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted
Subsidiary of Company or that is assumed by Company or any of its
Restricted Subsidiaries in connection with the acquisition of assets from
such Person, in each case excluding any Indebtedness incurred by such
Person in connection with, or in anticipation or contemplation of, such
Person becoming a Restricted Subsidiary of Company or such acquisition.
"Acquired Subsidiary Debt" means Indebtedness of Company or any
Subsidiary of Company incurred or assumed in connection with a Permitted
Acquisition existing at the time of acquisition by Company or a Subsidiary
of a Subsidiary or assets pursuant to a Permitted Acquisition, provided
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that (i) such Indebtedness was not incurred in connection with or in
anticipation of such Permitted Acquisition, (ii) such Indebtedness does not
constitute debt for borrowed money (other than debt for borrowed money
incurred in connection with industrial revenue or industrial development
bond financings), it being understood and agreed that Capital Lease
Obligations and purchase
2
money Indebtedness shall not constitute debt for borrowed money for
purposes of this definition, and (iii) at the time of such Permitted
Acquisition such Indebtedness does not exceed 10% of the total value of the
assets of the Subsidiary so acquired, or of the assets so acquired, as the
case may be.
"Additional Mortgage" has the meaning assigned to that term in
subsection 5.9.
"Additional Mortgaged Property" has the meaning assigned to that
term in subsection 5.9.
"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 arithmetic average
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(rounded upward to the nearest 1/16 of one percent) of the offered
quotations, if any, to first class banks in the interbank Eurodollar market
by Reference Lenders for U.S. dollar deposits of amounts in same day funds
comparable to the respective principal amounts of the Eurodollar Rate Loans
of Reference Lenders for which the Adjusted Eurodollar Rate is then being
determined (which principal amount shall be deemed to be $1,000,000 in the
case of any Reference Lender not making, converting to or continuing such a
Eurodollar Rate Loan) 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 stated
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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); provided
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that if any Reference Lender fails to provide Administrative Agent with its
aforementioned quotation then the Adjusted Eurodollar Rate shall be
determined based on the quotation(s) provided to Administrative Agent by
the other Reference Lender(s).
"Administrative Agent" has the meaning assigned to that term in the
introduction to this Agreement and also means and includes any successor
Administrative Agent appointed pursuant to subsection 8.5.
"Affected Lender" has the meaning assigned to that term in
subsection 2.6C.
"Affiliate" means a Person who directly or indirectly through one or
more intermediaries controls, or controlled by, or is under common control
with, such Person. The term "control" means the possession directly or
indirectly of the power to direct or cause the direction of the management
and policies of a Person whether through the ownership of voting
securities, by contract or otherwise. Notwithstanding the foregoing, no
Person (other than Company or any Subsidiary of Company) in whom a
Securitization Entity makes an Investment in connection with a Qualified
Securitization Transaction shall be deemed to be an Affiliate of Company or
any of its Subsidiaries solely by reason of such Investment.
3
"Agent" means, individually, each of Syndication Agent, Administrative
Agent and Documentation Agent, and for the purposes of Section 8 only
(except as expressly noted), Collateral Agent, and "Agents" means
Syndication Agent, Administrative Agent and Documentation Agent, and for
the purposes of Section 8 only (except as expressly noted), Collateral
Agent, collectively.
"Agreement" means this AXEL Credit Agreement dated as of December
18, 1997, as it may be amended, supplemented or otherwise modified from
time to time.
"Applicable Leverage Ratio" means, with respect to any date of
determination, the Leverage Ratio set forth in the Pricing Certificate (as
defined below) in effect for the Pricing Period (as defined below) in which
such date of determination occurs. For purposes of this definition, (i)
"Pricing Certificate" means an Officer's Certificate of Company
certifying as to the Leverage Ratio as of the last day of any Fiscal
Quarter and setting forth the calculation of such Leverage Ratio in
reasonable detail, which Officer's Certificate may be delivered to
Administrative Agent at any time on or after the date of delivery by
Company of the Compliance Certificate (the "Related Compliance
Certificate") with respect to the period ending on the last day of such
Fiscal Quarter pursuant to subsection 5.1(iv), and (ii) "Pricing Period"
means each period commencing on the first Business Day after the delivery
to Administrative Agent of a Pricing Certificate and ending on the first
Business Day after the next Pricing Certificate is delivered to
Administrative Agent; provided that, anything contained in this definition
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to the contrary notwithstanding, (a) the first Pricing Period for purposes
of calculating the Applicable Leverage Ratio shall commence no earlier than
the date which is nine months after the Closing Date, and the Pricing
Certificate in respect of such first Pricing Period may be delivered at any
time on or after such nine-month anniversary date and shall relate to the
most recent financial statements delivered by Company to Administrative
Agent prior to such date pursuant to subsection 5.1(ii) or 5.1(iii), (b)
the Applicable Leverage Ratio for the period from the Closing Date to but
excluding the date of commencement of such first Pricing Period shall be
deemed to be 6.4:1.00 for purposes of making the relevant calculation
referred to above, and (c) in the event that, after the commencement of
such first Pricing Period, (X) Company fails to deliver a Pricing
Certificate to Administrative Agent setting forth the Leverage Ratio as of
the last day of any Fiscal Quarter on or before the last day on which
Company is required to deliver the Related Compliance Certificate (such
last day being the "Cutoff Date") and (Y) Administrative Agent determines
(each such determination being an "Agent Determination") on or after the
Cutoff Date (on the basis of the Related Compliance Certificate or a
Pricing Certificate delivered after the Cutoff Date) that the Applicable
Leverage Ratio that would have been in effect if Company had delivered a
Pricing Certificate on the Cutoff Date is greater than the Leverage Ratio
set forth in the most recent Pricing Certificate actually delivered by
Company, then (1) the Applicable Leverage Ratio in effect for purposes of
making the relevant calculation referred to above for the period from the
Cutoff Date to the date of delivery by Company of the next Pricing
Certificate (or, if earlier, the next date on which an Agent Determination
is made) shall be the Leverage Ratio determined pursuant to the Agent
Determination and
4
(2) on the first Business Day after Administrative Agent delivers written
notice to Company of any Agent Determination, Company shall pay to
Administrative Agent, for distribution (as appropriate) to Lenders, an
aggregate amount equal to the additional interest, letter of credit fees
and commitment fees Company would have been required to pay in respect of
all applicable Loans, Letters of Credit or Commitments in respect of which
any interest or fees have been paid by Company during the period from the
Cutoff Date to the date such notice is given by Administrative Agent to
Company if the amount of such interest and fees had been calculated using
the Applicable Leverage Ratio based on such Agent Determination.
"Applicable Base Rate Margin" means (a) for the period from the
Closing Date up to (but excluding) the date of commencement of the first
Pricing Period, 1.50% per annum for AXELs Series B, 1.75% per annum for
AXELs Series C and 2.00% per annum for AXELs Series D, and (b) for any date
thereafter, a rate per annum equal to the percentage set forth below
opposite the Applicable Leverage Ratio in effect as of such date of
determination, any change in any such Applicable Base Rate Margin to be
effective on the date of any corresponding change in the Applicable
Leverage Ratio.
==========================================================
APPLICABLE APPLICABLE APPLICABLE APPLICABLE
LEVERAGE BASE RATE BASE RATE BASE RATE
RATIO MARGIN FOR MARGIN FOR MARGIN
AXELS AXELS FOR AXELS
SERIES B SERIES C SERIES D
==========================================================
greater than or 1.50% 1.75% 2.00%
equal to
5.75:1.00
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less than 1.25% 1.50% 1.75%
5.75:1.00 but
greater than or
equal to
5.25:1.00
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less than 1.00% 1.25% 1.50%
5.25:1.00
==========================================================
"Applicable Eurodollar Rate Margin" means (a) for the period from
the Closing Date up to (but excluding) the date of commencement of the
first Pricing Period, 2.50% per annum for AXELs Series B, 2.75% per annum
for AXELs Series C and 3.00% per annum for AXELs Series D, and (b) for any
date thereafter, a rate per annum equal to the percentage set forth below
opposite the Applicable Leverage Ratio in effect as of such date of
determination, any change in any such Applicable Eurodollar Rate
5
Margin to be effective on the date of any corresponding change in the
Applicable Leverage Ratio.
=============================================================
APPLICABLE APPLICABLE APPLICABLE APPLICABLE
LEVERAGE EURO- EURO- EURO-
RATIO DOLLAR DOLLAR DOLLAR
RATE RATE RATE
MARGIN FOR MARGIN FOR MARGIN
AXELS AXELS FOR AXELS
SERIES B SERIES C SERIES D
=============================================================
greater than or 2.50% 2.75% 3.00%
equal to
5.75:1.00
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less than 2.25% 2.50% 2.75%
5.75:1.00 but
greater than or
equal to
5.25:1.00
-------------------------------------------------------------
less than 2.00% 2.25% 2.50%
5.25:1.00
=============================================================
"Asset Acquisition" means (a) an Investment by Company or any
Restricted Subsidiary of Company in any other Person if, as a result of
such Investment, such Person shall become a Restricted Subsidiary of
Company, or shall be merged with or into Company or any Restricted
Subsidiary of Company, or (b) the acquisition by Company or any Restricted
Subsidiary of Company of all or substantially all of the assets of any
other Person or any division or line of business of any other Person.
"Asset Sale" means the sale by Holdings or any of its Subsidiaries
to any Person other than Holdings or any of its wholly owned Subsidiaries
of (i) any of the stock of any of Holdings' Subsidiaries, (ii)
substantially all of the assets of any division or line of business of
Holdings or any of its Subsidiaries, or (iii) any other assets (whether
tangible or intangible) of Holdings 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 fair market value of such
assets (at the time of sale thereof) sold in any single transaction or
related series of transactions is equal to $500,000 or less); provided,
--------
however, that Asset Sales shall not include (1) any sale or discount, in
-------
each case without recourse, of accounts receivable arising in the ordinary
course of business, but only in connection with the compromise or
collection thereof, (2) any sale or exchange of specific items of
equipment, so long as the purpose of each such sale or exchange is to
acquire (and
6
results within 90 days of such sale or exchange in the acquisition of)
replacement items of equipment which are the functional equivalent of the
item of equipment so sold or exchanged, (3) the leasing (pursuant to
operating leases in the ordinary course of business) or licensing of real
or personal property, including intellectual property, or (4) disposals of
obsolete, uneconomical, negligible, worn out or surplus property in the
ordinary course of business.
Notwithstanding the foregoing, for purposes of Section 6 only (and any
other defined terms as and to the extent used in Section 6), "Asset Sale"
means any direct or indirect sale, issuance, conveyance, transfer, lease
(other than operating leases entered into in the ordinary course of
business), assignment or other transfer for value by Company or any of its
Restricted Subsidiaries to any Person other than Company or a Restricted
Subsidiary of Company of (a) any Capital Stock of any Restricted Subsidiary
of Company or (b) any other property or assets of Company or any Restricted
Subsidiary of Company other than in the ordinary course of business;
provided, however, that Asset Sales shall not include (i) a transaction or
series of related transactions for which Company or its Restricted
Subsidiaries receive aggregate consideration of less than $1,000,000, (ii)
the sale, lease, conveyance, disposition or other transfer of all
substantially all of the assets of Company as permitted by subsection 6.8
hereof or any disposition that constitutes a Change of Control, (iii) the
sale or discount, in each case without recourse, of accounts receivable
arising in the ordinary course of business, but only in connection with the
compromise or collection thereof, (iv) the factoring of accounts receivable
arising in the ordinary course of business pursuant to arrangements
customary in the industry, (v) the licensing of intellectual property, (vi)
disposals or replacements of obsolete, uneconomical, negligible, worn out
or surplus property in the ordinary course of business, (vii) the sale,
lease conveyance, disposition or other transfer by Company or any
Restricted Subsidiary of assets or property to one or more Restricted
Subsidiaries in connection with Investments permitted by subsection 6.1
hereof, and (viii) sales of accounts receivable, equipment and related
assets (including contract rights) of the type specified in the definition
of "Qualified Securitization Transaction" to a Securitization Entity for
the fair market value thereof, including cash in an amount at least equal
to 75% of the fair market value thereof. For the purposes of clause
(viii), Purchase Money Notes shall be deemed to be cash.
"Assignment Agreement" means an Assignment Agreement in
substantially the form of Exhibit X annexed hereto.
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"AXEL Series B" means a Loan made by a Lender to Company as an
amortization extended loan pursuant to subsection 2.1A(i), and "AXELs
Series B" means any such Loan or Loans, collectively.
"AXEL Series B Commitment" means the commitment of a Lender to make
an AXEL Series B to Company pursuant to subsection 2.1A(i), and "AXEL
Series B Commitments" means such commitments of all Lenders in the
aggregate.
7
"AXEL Series B Exposure" means, with respect to any Lender as of any
date of determination (i) prior to the funding of the AXELs Series B, that
Lender's AXEL Series B Commitment and (ii) after the funding of the AXELs
Series B, the outstanding principal amount of the AXEL Series B of that
Lender.
"AXEL Series B Lender" means a Lender holding an outstanding AXEL
Series B or having an AXEL Series B Commitment, and "AXEL Series B
Lenders" means any such Lender or Lenders, collectively.
"AXEL Series B Notes" means any promissory notes of Company issued
pursuant to subsection 2.1E to evidence the AXELs Series B of any Lenders,
substantially in the form of Exhibit IV annexed hereto, as they may be
----------
amended, supplemented or otherwise modified from time to time.
"AXEL Series C" means a Loan made by a Lender to Company as an
amortization extended loan pursuant to subsection 2.1A(ii), and "AXELs
Series C" means any such Loan or Loans, collectively.
"AXEL Series C Commitment" means the commitment of a Lender to make
an AXEL Series C to Company pursuant to subsection 2.1A(ii), and "AXEL
Series C Commitments" means such commitments of all Lenders in the
aggregate.
"AXEL Series C Exposure" means, with respect to any Lender as of any
date of determination (i) prior to the funding of the AXELs Series C, that
Lender's AXEL Series C Commitment and (ii) after the funding of the AXELs
Series C, the outstanding principal amount of the AXEL Series C of that
Lender.
"AXEL Series C Lender" means a Lender holding an outstanding AXEL
Series C or having an AXEL Series C Commitment, and "AXEL Series C
Lenders" means any such Lender or Lenders, collectively.
"AXEL Series C Notes" means any promissory notes of Company issued
pursuant to subsection 2.1E to evidence the AXELs Series C of any Lenders,
substantially in the form of Exhibit V annexed hereto, as they may be
---------
amended, supplemented or otherwise modified from time to time.
"AXEL Series D" means a Loan made by a Lender to Company as an
amortization extended loan pursuant to subsection 2.1A(iii), and "AXELs
Series D" means any such Loan or Loans, collectively.
"AXEL Series D Commitment" means the commitment of a Lender to make
an AXEL Series D to Company pursuant to subsection 2.1A(iii), and "AXEL
Series D Commitments" means such commitments of all Lenders in the
aggregate.
8
"AXEL Series D Exposure" means, with respect to any Lender as of any
date of determination (i) prior to the funding of the AXELs Series D, that
Lender's AXEL Series D Commitment and (ii) after the funding of the AXELs
Series D, the outstanding principal amount of the AXEL Series D of that
Lender.
"AXEL Series D Lender" means a Lender holding an outstanding AXEL
Series D or having an AXEL Series D Commitment, and "AXEL Series D
Lenders" means any such Lender or Lenders, collectively.
"AXEL Series D Notes" means any promissory notes of Company issued
pursuant to subsection 2.1E to evidence the AXELs Series D of any Lenders,
substantially in the form of Exhibit VI annexed hereto, as they may be
----------
amended, supplemented or otherwise modified from time to time.
"Bain" means ▇▇▇▇ Capital, Inc. and/or one or more of its
Affiliates.
"Bain Advisory Services Agreement" means that certain Advisory
Services Agreement by and among Company, Holdings and Bain, in the form
delivered to Syndication Agent and Administrative Agent prior to the
Closing Date and as such agreement may thereafter be amended, supplemented
or otherwise modified from time to time to the extent permitted under
subsection 6.10A.
"Bain Management Fees" means the fees (including one-time fees
payable in connection with acquisitions, divestitures and financings) and
expenses payable by Holdings to Bain pursuant to the Bain Advisory Services
Agreement.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"Bankruptcy Law" means the Bankruptcy Code or any similar federal or
state law for the relief of debtors.
"Base Rate" means a fluctuating interest rate per annum in effect
from time to time, which rate per annum shall at all times be equal to the
higher of:
(i) the rate of interest announced publicly by ▇▇▇▇▇▇ Guaranty
in New York, New York, from time to time, as ▇▇▇▇▇▇ Guaranty's base
rate; and
(ii) 1/2 of 1% per annum above the Federal Funds Effective Rate.
"Base Rate Loans" means Loans bearing interest at rates determined
by reference to the Base Rate as provided in subsection 2.2A.
"Board of Directors" means the Board of Directors of the Company or
any authorized committee of the Board of Directors.
9
"BTCo." has the meaning assigned to that term in the introduction to
this Agreement.
"Business Day" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of New York or is a
day on which banking institutions located in such state are authorized or
required by law or other governmental action to close, and (ii) with
respect to all notices, determinations, fundings and payments in connection
with the Adjusted Eurodollar Rate or any Eurodollar Rate Loans, any day
that is a Business Day described in clause (i) above and that is also a day
for trading by and between banks in Dollar deposits in the London interbank
market.
"Capital Lease", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee that,
in conformity with GAAP, would be required to be accounted for as a capital
lease on the balance sheet of that Person.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a Capital
Lease that would at such time be required to be capitalized on a balance
sheet in accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or
limited liability company, partnership or membership interests (whether
general or limited) and (iv) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses
of, or distributions of assets of, the issuing Person.
"Carryforward" has the meaning assigned to that term in the
Revolving Credit Agreement.
"Cash" means money, currency or a credit balance in a Deposit
Account.
"Cash Equivalents" means: (i) marketable direct obligations issued
by, or unconditionally guaranteed by, the United States Government or
issued by any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within one year from the date of
acquisition thereof; (ii) marketable direct obligations issued by any state
of the United States of America or any political subdivision of any such
state or any public instrumentality thereof maturing within one year from
the date of acquisition thereof and, at the time of acquisition, having one
of the two highest ratings obtainable from either Standard & Poor's Ratings
Group ("S&P") or ▇▇▇▇▇'▇ Investors Service, Inc. ("Moody's"); (iii)
commercial paper maturity no more than one year from the date of creation
thereof and at the time of acquisition, having a rating of at least A-l
from S&P or at least P-1 from Moody's; (iv) certificates of deposit or
bankers' acceptances (or, with respect to foreign banks, similar
instruments) maturing
10
within one year from the date of acquisition thereof issued by any bank
organized under the laws of the United States of America or any state
thereof or the District of Columbia, Japan or any member of the European
Economic Community or any U.S. branch of a foreign bank having at the date
of acquisition thereof combined capital and surplus of not less than
$200,000,000; (v) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clause (i) above
entered into with any bank meeting the qualifications specified in clause
(iv) above; and (vi) investments in money market funds which invest
substantially all of their assets in securities of the types described in
clauses (i) through (v) above.
"Certificate of Merger" means the Certificate of Merger dated as of
December 18, 1997 by and between Merger Corp. and Holdings, in the form
delivered to Syndication Agent, Administrative Agent and Lenders prior to
or concurrently with their execution of this Agreement and as such
Certificate of Merger may be amended from time to time thereafter to the
extent permitted under subsection 6.10A.
"Certificate re Non-Bank Status" means a certificate substantially
in the form of Exhibit XI annexed hereto delivered by a Lender to
----------
Administrative Agent pursuant to subsection 2.7B(iii).
"Class" means, as applied to Lenders, each of the following classes
of Lenders: (i) Lenders having AXEL Series B Exposure, (ii) Lenders having
AXEL Series C Exposure, and (iii) Lenders having AXEL Series D Exposure.
"Closing Date" means the date on or before February 16, 1998, on
which the initial Loans are made.
"Closing Date Mortgage" has the meaning assigned to that term in
subsection 3.1I.
"Closing Date Mortgaged Property" has the meaning assigned to that
term in subsection 3.1I.
"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 XXV
-----------
annexed hereto with such changes thereto as may be agreed to by
Administrative Agent in the reasonable exercise of its discretion.
11
"Collateral Agent" means ▇▇▇▇▇▇ Guaranty acting in its capacity as
collateral agent under the applicable Collateral Documents on behalf of the
Lenders and the Persons party to the Intercreditor Agreement (other than
Holdings and its Subsidiaries), and also means and includes any successor
collateral agent appointed pursuant to the Intercreditor Agreement.
"Collateral Documents" means the Holdings Security Agreement, the
Holdings Pledge Agreement, the Company Pledge Agreement, the Company
Security Agreement, the Company Patent and Trademark Security Agreement,
the Intercreditor Agreement, the Subsidiary Pledge Agreement, the
Subsidiary Security Agreement, the Subsidiary Patent and Trademark Security
Agreement, the Mortgages and all other instruments or documents delivered
by any Loan Party pursuant to this Agreement or any of the other Loan
Documents in order to grant to Collateral Agent, on behalf of Lenders, a
Lien on any real, personal or mixed property of that Loan Party as security
for the Obligations.
"Commercial Letter of Credit" means any letter of credit or similar
instrument issued for the purpose of providing the primary payment
mechanism in connection with the purchase of any materials, goods or
services by Company or any of its Subsidiaries in the ordinary course of
business of Company or such Subsidiary.
"Commitments" means the commitments of Lenders to make Loans as set
forth in subsection 2.1A.
"Company" has the meaning assigned to such term in the introduction
to this Agreement.
"Company Patent and Trademark Security Agreement" means the Company
Patent and Trademark Security Agreement executed and delivered by Company
and Collateral Agent on the Closing Date, substantially in the form of
Exhibit XVI annexed hereto, as such Company Patent and Trademark Security
-----------
Agreement may thereafter be amended, supplemented or otherwise modified
from time to time as permitted thereunder and hereunder.
"Company Pledge Agreement" means the Company Pledge Agreement
executed and delivered by Company and Collateral Agent on the Closing Date,
substantially in the form of Exhibit XIV annexed hereto, as such Company
-----------
Pledge Agreement may thereafter be amended, supplemented or otherwise
modified from time to time as permitted thereunder and hereunder.
"Company Security Agreement" means the Company Security Agreement
executed and delivered by Company and Collateral Agent on the Closing Date,
substantially in the form of Exhibit XV annexed hereto, as such Company
----------
Security Agreement may thereafter be amended, supplemented or otherwise
modified from time to time as permitted thereunder and hereunder.
12
"Compliance Certificate" means a certificate substantially in the
form of Exhibit X annexed hereto delivered to Administrative Agent by
---------
Company pursuant to subsection 5.1(iv).
"Confidential Information Memorandum" means that certain
Confidential Information Memorandum prepared by ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. and ▇▇
▇▇▇▇▇▇ relating to the Loans, the Tranche A Term Loans and Revolving Loans
dated November 1997.
"Conforming Leasehold Interest" means any Recorded Leasehold
Interest as to which the lessor has substantially agreed in writing for the
benefit of Administrative Agent (which writing has been delivered to
Administrative Agent), whether under the terms of the applicable lease,
under the terms of a Landlord Consent and Estoppel, or otherwise, to the
matters described in the definition of "Landlord Consent and Estoppel,"
which interest, if a subleasehold or sub-subleasehold interest, is not
subject to any contrary restrictions contained in a superior lease or
sublease.
"Consent Solicitation" means the solicitation by Holdings, from the
holders of outstanding Existing Subordinated Notes, of consents to certain
amendments to the Existing Subordinated Note Indenture in accordance with
the terms of the Debt Tender Offer Materials.
"Consolidated Capital Expenditures" means, for any period, the sum
of (i) the aggregate of all expenditures (whether paid in cash or other
consideration or accrued as a liability and including that portion of
Capital Leases which is capitalized on the consolidated balance sheet of
Holdings and its Subsidiaries) by Holdings and its Subsidiaries during that
period that, in conformity with GAAP, are included in "purchases of
property, plant or equipment" or comparable items reflected in the
consolidated statement of cash flows of Holdings and its Subsidiaries;
provided, however, that the following shall in any event be excluded from
-------- -------
the definition of Consolidated Capital Expenditures: (a) any such
expenditures made with, or subsequently reimbursed out of, the proceeds of
insurance, condemnation awards (or payments in lieu thereof), indemnity
payments or payments in respect of judgments or settlements received from
third parties for purposes of replacing or repairing the assets in respect
of which such proceeds, awards or payments were received, so long as such
expenditures are commenced within 270 days of the later of the occurrence
of the damage to or loss of the assets being replaced or repaired and the
receipt of such proceeds, awards or payments in respect thereof and (b) any
such expenditures constituting the reinvestment of proceeds from the sales
of assets in equipment or other productive assets of Company and its
Subsidiaries, so long as such expenditures are commenced within 270 days of
the receipt of such proceeds; and provided further, however, that
-------- ------- -------
Consolidated Capital Expenditures shall not include any expenditures made
by Company or any of its Subsidiaries to acquire in a Permitted Acquisition
the business, property or fixed assets of any Person, or the stock or other
evidence of beneficial ownership of any Person that, as a result of such
acquisition, becomes a Subsidiary of Company or a Joint Venture to which
Company or any of its Subsidiaries is a party.
13
"Consolidated Cash Interest Expense" means, for any period, IR
Consolidated Interest Expense for such period excluding, however, any
--------- -------
interest expense not payable in Cash (including interest expense paid in
kind and amortization of discount, of deferred financing fees, of premiums
paid on Hedge Agreements and of debt issuance costs).
"Consolidated Current Assets" means, as at any date of
determination, the total assets of Holdings and its Subsidiaries on a
consolidated basis which may properly be classified as current assets in
conformity with GAAP, excluding Cash, Cash Equivalents and deferred income
taxes to the extent otherwise included in current assets.
"Consolidated Current Liabilities" means, as at any date of
determination, the total liabilities of Holdings and its Subsidiaries on a
consolidated basis which may properly be classified as current liabilities
in conformity with GAAP, excluding the current portions of Funded Debt
---------
(including accrued but unpaid interest) and any Revolving Loans and
deferred income taxes to the extent otherwise included in current
liabilities.
"Consolidated EBITDA" means, with respect to any Person, for any
period, the sum (without duplication) of such Person's (i) Consolidated Net
Income and (ii) to the extent Consolidated Net Income has been reduced
thereby, (A) all income taxes and foreign withholding taxes of such Person
and its Restricted Subsidiaries paid or accrued in accordance with GAAP for
such period, (B) Consolidated Interest Expense, (C) Consolidated Noncash
Charges, (D) all one-time cash compensation payments made in connection
with the Recapitalization Transactions, (E) any payments related to
addressing the Company's or any Restricted Subsidiary's "Year 2000"
information systems issue, (F) all bad debt and factoring losses incurred
specifically with respect to the bankruptcy of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ and (G) EITF
97-13 Expenditures.
"Consolidated Excess Cash Flow" means, for any period, an amount (if
positive) equal to (i) the sum, without duplication, of the amounts for
such period of (a) IR Consolidated Adjusted EBITDA, (b) the Consolidated
Working Capital Adjustment and (c) payments made to Holdings or any of its
Subsidiaries as an adjustment to purchase price after the Closing Date
under the Recapitalization Agreement, minus (ii) the sum, without
-----
duplication, of the amounts for such period (to the extent not financed
with the proceeds of related financings) of (a) voluntary and scheduled
repayments of IR Consolidated Total Debt (excluding repayments of the
Revolving Loans except to the extent the Revolving Loan Commitments are
permanently reduced in connection with such repayments), (b) Consolidated
Capital Expenditures (net of any proceeds of any related financings with
respect to such expenditures) plus (or minus, if negative), so long as the
---- -----
Revolving Credit Agreement is in effect, the Carryforward for such period
to be carried forward to the next period less the Carryforward (if any) for
----
the preceding period carried forward to the current period, (c)
Consolidated Cash Interest Expense, (d) payments made by Holdings and its
Subsidiaries as an adjustment to purchase price after the Closing Date
under the Recapitalization Agreement, (e) any payments made during such
period with respect to items set forth on Schedule 1.1(i)
---------------
14
annexed hereto, and (f) the provision for current taxes based on income of
Holdings and its Subsidiaries and payable in cash with respect to such
period, including taxes payable in cash within 90 days following the end of
such period, (g) non-cash charges added in calculating Consolidated
Adjusted EBITDA in a prior period to the extent such non-cash charges are
paid in cash in the current period, and (h) to the extent not otherwise
deducted in determining Consolidated Excess Cash Flow, tender payments,
fees and expenses paid during such period in connection with the exchange
of the Senior Subordinated Notes and the Discount Notes, cash payments made
during such period with respect to non-current liabilities and cash
payments made during such period with respect to restructuring reserves and
expenditures with respect to Permitted Acquisitions.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to
any Person, the ratio of Consolidated EBITDA of such Person during the most
recent four full fiscal quarters for which internal financial statements
are available (the "Four-Quarter Period") ending on or prior to the date of
the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed
Charges of such Person for the Four-Quarter Period. In addition to and
without limitation of the foregoing, for purposes of this definition,
Consolidated EBITDA and Consolidated Fixed Charges shall be calculated
after giving effect on a pro forma basis for the period of such calculation
to (i) the incurrence of any Indebtedness or the issuance of any preferred
stock of such Person or any of its Restricted Subsidiaries (and the
application of the proceeds thereof) and any repayment of other
Indebtedness or redemption of other preferred stock occurring during the
Four-Quarter Period or at any time subsequent to the last day of the Four-
Quarter Period and on or prior to the Transaction Date, as if such
incurrence, repayment, issuance or redemption, as the case may be (and the
application of the proceeds thereof), occurred on the first day of the
Four-Quarter Period and (ii) any Asset Sale or Asset Acquisition
(including, without limitation, any Asset Acquisition giving rise to the
need to make such calculation as a result of such Person or one of its
Restricted Subsidiaries (including any Person who becomes a Restricted
Subsidiary as a result of the Asset Acquisition) incurring, assuming or
otherwise being liable for Acquired Indebtedness and also including any
Consolidated EBITDA (including any Pro Forma Cost Savings associated with
any such Asset Acquisition) occurring during the Four-Quarter Period or at
any time subsequent to the last day of the Four-Quarter Period and on or
prior to the Transaction Date, as if such Asset Sale or Asset Acquisition
(including the incurrence of, or assumption of or liability for, any such
Indebtedness or Acquired Indebtedness) occurred on the first day of the
Four-Quarter Period. If such Person or any of its Restricted Subsidiaries
directly or indirectly Guarantees Indebtedness of a third Person, the
preceding sentence shall give effect to the incurrence of such guaranteed
Indebtedness as if such Person or any Restricted Subsidiary of such Person
had directly incurred or otherwise assumed such guaranteed Indebtedness.
Furthermore, in calculating Consolidated Fixed Charges for purposes of
determining the denominator (but not the numerator) of this Consolidated
Fixed Charge Coverage Ratio, (1) interest on outstanding Indebtedness
determined on a fluctuating basis as of the Transaction Date and which will
continue to be so determined thereafter shall be deemed to have accrued at
a fixed rate per annum equal to the rate of
15
interest on such Indebtedness in effect on the Transaction Date; (2) if
interest on any Indebtedness actually incurred on the Transaction Date may
optionally be determined at an interest rate based upon a factor of a prime
or similar rate, a eurocurrency interbank offered rate, or other rates,
then the interest rate in effect on the Transaction Date will be deemed to
have been in effect during the Four-Quarter Period; and (3) notwithstanding
clause (1) above, interest on Indebtedness determined on a fluctuating
basis, to the extent such interest is covered by agreements relating to
Interest Swap Obligations, shall be deemed to accrue at the rate per annum
resulting after giving effect to the operation of such agreements.
"Consolidated Fixed Charges" means, with respect to any Person for
any period, the sum, without duplication, of (i) Consolidated Interest
Expense (before amortization or write-off of debt issuance costs) plus (ii)
the amount of all cash dividend payments on any series of preferred stock
of such Person plus (iii) the amount of all dividend payments on any series
of Permitted Foreign Subsidiary Preferred Stock or Permitted Domestic
Subsidiary Preferred Stock; provided that with respect to any series of
preferred stock that was not paid cash dividends during such period but
that is eligible to be paid cash dividends during any period prior to the
maturity date of the Senior Subordinated Notes and the Discount Notes, cash
dividends shall be deemed to have been paid with respect to such series of
preferred stock during such period for purposes of clause (ii) of this
definition.
"Consolidated Interest Expense" means, with respect to any Person
for any period, the sum of, without duplication, (i) the aggregate of all
cash and non-cash interest expense with respect to all outstanding
Indebtedness of such Person and its Restricted Subsidiaries, including the
net costs associated with Interest Swap Obligations, for such period
determined on a consolidated basis in conformity with GAAP, (ii) the
consolidated interest expense of such Person and its Restricted
Subsidiaries that was capitalized during such period, and (iii) the
interest component of Capital Lease Obligations paid, accrued and/or
scheduled to be paid or accrued by such Person and its Restricted
Subsidiaries during such period as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Income" of Company means, for any period, the
aggregate net income (or loss) of Company and its Restricted Subsidiaries
for such period on a consolidated basis, determined in accordance with
GAAP, provided that there shall be excluded therefrom (a) gains and losses
from Asset Sales (without regard to the $1,000,000 limitation set forth in
the definition thereof) or abandonments or reserves relating thereto and
the related tax effects according to GAAP, (b) gains and losses due solely
to fluctuations in currency values and the related tax effects according to
GAAP, (c) items classified as a cumulative effect accounting change or
extraordinary, unusual or nonrecurring gains and losses (including, without
limitation, severance, relocation and other restructuring costs), and the
related tax effects according to GAAP, (d) the net income (or loss) of any
Person acquired in a pooling of interests transaction accrued prior to the
date it becomes a Restricted Subsidiary of Company or is merged or
consolidated with Company or any Restricted Subsidiary of Company, (e) the
net income of any
16
Restricted Subsidiary of Company to the extent that the declaration of
dividends or similar distributions by that Restricted Subsidiary of Company
of that income is restricted by contract, operation, operation of law or
otherwise, (f) the net loss of any Person, other than a Restricted
Subsidiary of Company, (g) the net income of any Person, other than a
Restricted Subsidiary of Company, except to the extent of cash dividends or
distributions paid to Company or a Restricted Subsidiary of Company by such
Person, (h) only for purposes of clause (c)(i) of the first paragraph of
subsection 6.1, any amounts included pursuant to clause (c)(iii) of the
first paragraph of subsection 6.1, and (i) one time non-cash compensation
charges, including any arising from existing stock options resulting from
any merger or recapitalization transaction. For purposes of clause (c)(i)
of the first paragraph of subsection 6.1, Consolidated Net Income shall be
reduced by any cash dividends paid with respect to any series of Designated
Preferred Stock.
"Consolidated Noncash Charges" means, with respect to any Person for
any period, the aggregate depreciation, amortization and other non-cash
expenses of such Person and its Restricted Subsidiaries reducing
Consolidated Net Income of such Person for such period, determined on a
consolidated basis in accordance with GAAP excluding any such non-cash
charge constituting an extraordinary item or loss or any such non-cash
charge which requires an accrual of or a reserve for cash charges for any
future period.
"Consolidated Working Capital" means, as at any date of determination,
the excess of Consolidated Current Assets over Consolidated Current
Liabilities.
"Consolidated Working Capital Adjustment" means, for any period on a
consolidated basis, the amount (which may be a negative number) by which
Consolidated Working Capital as of the beginning of such period exceeds (or
is less than) Consolidated Working Capital as of the end of such period.
"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
17
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 (A) the amount of the obligation so guaranteed or otherwise supported
or, if less, the amount to which such Contingent Obligation is specifically
limited, or (B) if neither amount in clause (A) is stated or determinable,
the maximum reasonably anticipated liability in respect thereof (assuming
such Person is required to perform) as determined by such Person in good
faith. Contingent Obligations shall not include standard contractual
indemnities entered into in the ordinary course of business.
"Continuing Director" shall mean, as of any date of determination,
any member of the Board of Directors of Company who (i) was a member of
such Board of Directors on the Closing Date or (ii) was nominated for
election or elected to such Board of Directors with the affirmative vote of
▇▇▇▇ and the Other Investors.
"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.
"Credit Facilities" means one or more debt facilities (including
this Agreement and the Revolving Credit Agreement) or commercial paper
facilities with banks or other institutional lenders providing for
revolving credit loans, term loans, receivables financing (including
through the sale of receivables to such lenders or to special purpose
entities formed to borrow from such lenders against such receivables)
and/or letters of credit.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to
protect Company or any Restricted Subsidiary of Company against
fluctuations in currency values.
"Debt Tender Offer" means the offer by Holdings to repurchase up to
100% of its outstanding Existing Subordinated Notes pursuant to the Debt
Tender Offer Materials.
"Debt Tender Offer Materials" means the Offer to Purchase and Consent
Solicitation Statement dated November 18, 1997 relating to the Debt Tender
Offer and the accompanying Consent and Letter of Transmittal.
"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.
18
"Designated Noncash Consideration" means any non-cash consideration
received by the Company or one of its Restricted Subsidiaries in connection
with an Asset Sale that is so designated as Designated Noncash
Consideration pursuant to an Officers' Certificate executed by the
principal executive officer and the principal financial officer of the
Company or such Restricted Subsidiary. Such Officers' Certificate shall
state the basis of such valuation, which shall be a report of a nationally
recognized investment banking firm with respect to the receipt in one or a
series of related transactions of Designated Noncash Consideration with a
fair market value in excess of $10,000,000.
"Designated Preferred Stock" means Preferred Stock that is so
designated as Designated Preferred Stock, pursuant to an Officers'
Certificate executed by the principal executive officer and the principal
financial officer of the Company, on the issuance date thereof, the cash
proceeds of which are excluded from the calculation set forth in clause
(iii) of the first paragraph of subsection 6.1.
"Discount Note Indenture" means the indenture pursuant to which the
Discount Notes are issued, as such indenture may be amended from time to
time to the extent permitted under subsection 6.10B.
"Discount Notes" means the $128,000,000 in aggregate principal
amount of 10-7/8% Senior Subordinated Discount Notes due December 15, 2007
of Company issued pursuant to the Discount Note Indenture.
"Disqualified Stock" means any Capital Stock that, by its terms (or
by the terms of any security into which it is convertible, or for which it
is exchangeable, at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the
holder thereof, in whole or in part, on or prior to the date that is 91
days after the date on which the Senior Subordinated Notes mature;
provided, however, that any Capital Stock that would constitute
Disqualified Stock solely because the holders thereof have the right to
require Company to repurchase such Capital Stock upon the occurrence of a
Change of Control (as defined in the New Sub Debt Indentures) or an Asset
Sale shall not constitute Disqualified Stock if the terms of such Capital
Stock provide that Company may not repurchase or redeem any such Capital
Stock pursuant to such provisions unless such repurchase or redemption
complies with subsection 6.1.
"Documentation Agent" has the meaning assigned to that term in the
introduction to this Agreement.
"Dollars" and the sign "$" mean the lawful money of the United
States of America.
"Domestic Subsidiary" means any Subsidiary of Company which is
organized under the laws of the United States or any state thereof.
19
"EITF 97-13 Expenditures" means expenses associated with reengineering
efforts in connection with Company's MIS projects.
"Eligible Assignee" means (A) (i) a commercial bank organized under
the laws of the United States or any state thereof; (ii) a savings and loan
association or savings bank organized under the laws of the United States
or any state thereof; (iii) a commercial bank organized under the laws of
any other country or a political subdivision thereof; provided that (x)
--------
such bank is acting through a branch or agency located in the United States
or (y) such bank is organized under the laws of a country that is a member
of the Organization for Economic Cooperation and Development or a political
subdivision of such country; and (iv) any other entity which is an
"accredited investor" (as defined in Regulation D under the Securities
Act) which extends credit or buys loans as one of its businesses including
insurance companies, funds, investment companies and lease financing
companies; and (B) any Lender, any Affiliate of any Lender and, with
respect to any Lender that is an investment fund that invests in commercial
loans, any other investment fund that invests in commercial loans and that
is managed or advised by the same investment advisor as such Lender or by
an Affiliate of such investment advisor; provided that no Affiliate of
--------
Holdings shall be an Eligible Assignee.
"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 Holdings, any of its Subsidiaries or any of their respective ERISA
Affiliates.
"Employment Agreement" means the Employment Agreement between
Company and ▇▇▇ ▇▇▇▇▇ providing for his exclusive employment by Company, in
the form provided to Syndication Agent and Administrative Agent pursuant to
subsection 3.1C on or prior to the Closing Date.
"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, 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 from environmental hazards (including
Hazardous Materials), in any manner applicable to Holdings 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.),
-- ---
20
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.
"Equity Contribution" means, collectively, (i) the contribution by
▇▇▇▇ and the Other Investors to Merger Corp. of cash in exchange for all of
the outstanding common stock of Merger Corp. and (ii) the rollover equity
contribution by the Management Investors, in the aggregate amount of
$128,700,000.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that
is convertible into, or exchangeable for, Capital Stock).
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor thereto, and the
regulations promulgated and rulings issued thereunder.
"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 Holdings or any of its Subsidiaries shall continue to be
considered an ERISA Affiliate of Holdings or such Subsidiary within the
meaning of this definition with respect to the period such entity was an
ERISA Affiliate of Holdings or such Subsidiary and with respect to
liabilities arising after such period for which Holdings 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
21
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 Holdings, 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 Holdings, 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
Holdings, 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 Holdings, 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 Holdings or
any of its Subsidiaries 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 Holdings or any of its
Subsidiaries 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) 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 7.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.
"Excluded Subsidiaries" means, collectively, (i) all Foreign
Subsidiaries which are not Subsidiary Guarantors and (ii) Advanced Sleep
Products, a California corporation, Sealy Components--Pads, Inc., a
Delaware corporation, Sealy Mattress
22
Company of San Diego, a California corporation, Sealy Connecticut, Inc., a
Connecticut corporation, and Sealy Mattress Company of S.W. Virginia, a
Virginia corporation; provided, however, that no Domestic Subsidiary shall
-------- -------
be an Excluded Subsidiary if, after the Closing Date, it acquires assets
with a fair market value in excess of $1,000,000 in the aggregate.
"Existing Credit Agreement" means that certain Second Restated
Credit Agreement dated as of February 25, 1997, by and among Holdings, as
borrower, certain financial institutions, Banque Paribas, as documentation
agent, Nationsbank, N.A., as syndication agent, and Bank of America
Illinois, as administrative agent, as amended prior to the Closing Date.
"Existing Subordinated Note Indenture" means the indenture pursuant
to which the Existing Subordinated Notes were issued, as amended pursuant
to the Consent Solicitation and as such indenture may be further amended
from time to time to the extent permitted under subsection 6.10B.
"Existing Subordinated Notes" means Holdings's $200,000,000 in
aggregate principal amount of 10-1/4% Senior Subordinated Notes due 2003.
"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 Holdings 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 Administrative
Agent from three Federal funds brokers of recognized standing selected by
Administrative Agent.
"Financial Plan" has the meaning assigned to that term in subsection
5.1(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 on such Collateral (other than
Liens permitted under subsection 6.6(iii) or 6.6(iv)) and (ii) such Lien is
the only Lien (other than Permitted Encumbrances and Liens permitted
pursuant to subsection 6.6) to which such Collateral is subject.
"Fiscal Quarter" means a fiscal quarter of any Fiscal Year.
23
"Fiscal Year" means the fiscal year of Holdings and its Subsidiaries
ending on the Sunday nearest to November 30th of each calendar year. For
purposes of this Agreement, any particular Fiscal Year shall be designated
by reference to the calendar year in which such Fiscal Year ends.
"Flood Hazard Property" means a Mortgaged Property located in an area
designated by the Federal Emergency Management Agency as having special
flood or mud slide hazards.
"Foreign Subsidiary" means a Subsidiary of Company other than a
Domestic Subsidiary.
"Four-Quarter Period" has the meaning specified in the definition of
Consolidated Fixed Charge Coverage Ratio.
"Funded Debt", as applied to any Person, means all Indebtedness of
that Person which by its terms or by the terms of any instrument or
agreement relating thereto matures more than one year from, or is directly
renewable or extendable at the option of that Person to a date more than
one year from (including an option of that Person under a revolving credit
or similar agreement obligating the lender or lenders to extend credit over
a period of one year or more from), the date of the creation thereof.
"Funding and Payment Office" means (i) the office of Administrative
Agent located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ or (ii) such
other office of Administrative Agent as may from time to time hereafter be
designated as such in a written notice delivered by Administrative Agent to
Company and each Lender.
"GAAP" means, subject to the limitations on the application thereof
set forth in subsections 1.2 and 1.4, 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.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, by way of a pledge
of assets or through letters of credit or reimbursement agreements in
respect thereof), of all or any part of any Indebtedness.
"Guaranties" means the Holdings Guaranty and the Subsidiary Guaranty.
24
"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.
"GSCP" has the meaning assigned to that term in the introduction to
this Agreement.
"Harvard Advisory Services Agreement" means that certain Management
Services Agreement by and between Holdings and Harvard Private Capital
Holdings, Inc., in the form delivered to Syndication Agent and
Administrative Agent prior to on the Closing Date and as such agreement may
thereafter be amended, supplemented or otherwise modified from time to time
to the extent permitted under subsection 6.10A.
"Harvard Management Fees" means the fees and expenses payable by
Holdings to Harvard Private Capital Holdings, Inc. pursuant to the Harvard
Advisory Services Agreement.
"Hazardous Materials" means (i) any chemical, material or substance at
any time defined in any statute or regulation as or included in the
definition in any statute or regulation 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 meaning and regulatory
effect 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) polychlorinated biphenyls, including any oil or
dielectric fluid containing polychlorinated biphenyls; (ix) pesticides; and
(x) any other chemical, material or substance which 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, present or future
activity, event or occurrence involving any Hazardous Materials, including
the use, manufacture, possession, storage, holding, migration, Release,
threatened Release, discharge, placement, generation, transportation,
processing, treatment, abatement, removal, remediation, disposal,
disposition or handling of any Hazardous Materials, and any corrective
action or response action with respect to any of the foregoing.
25
"Hedge Agreement" means an Interest Rate Agreement or a Currency
Agreement designed to hedge against fluctuations in interest rates or
currency values, respectively.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements (including
Interest Swap Obligations) and (ii) other agreements or arrangements
designed to protect such Person against fluctuations in interest rates
(including Currency Agreements).
"Holdings" has the meaning assigned to that term in the recitals of
this Agreement.
"Holdings Common Stock" means, collectively, (i) the Class A Common
Stock of Holdings, par value $.01 per share, (ii) the Class B Common Stock
of Holdings, par value $.01 per share, (iii) the Class L Common Stock of
Holdings, par value $.01 per share, and (iv) the Class M Common Stock of
Holdings, par value $.01 per share.
"Holdings Guaranty" means the Holdings Guaranty executed and delivered
by Holdings on the Closing Date, substantially in the form of Exhibit XXI
-----------
annexed hereto, as such Holdings Guaranty may thereafter be amended,
supplemented or otherwise modified from time to time as permitted
thereunder and hereunder.
"Holdings Pledge Agreement" means the Holdings Pledge Agreement
executed and delivered by Holdings and Collateral Agent on the Closing
Date, substantially in the form of Exhibit XXII annexed hereto, as such
------------
Holdings Pledge Agreement may thereafter be amended, supplemented or
otherwise modified from time to time as permitted thereunder and hereunder.
"Holdings Security Agreement" means the Holdings Security Agreement
executed and delivered by Holdings and Collateral Agent on the Closing
Date, substantially in the form of Exhibit XXIII annexed hereto, as such
-------------
Holdings Security Agreement may thereafter be amended, supplemented or
otherwise modified from time to time as permitted thereunder and hereunder.
"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 and any accrued expenses or trade
payables), (a) which obligation in accordance with GAAP would be shown as a
liability on the balance sheet of such Person or (b) which purchase price
is 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
26
Person regardless of whether the indebtedness secured thereby shall have
been assumed by that Person or is nonrecourse to the credit of that Person.
The amount of any Indebtedness which is non-recourse to the obligor
thereunder or to any other obligor and for which recourse is limited to an
identified asset or assets shall be equal to the lesser of (1) the stated
amount of such obligation and (2) fair market value of such asset or
assets. Obligations under Interest Rate Agreements and Currency Agreements
constitute (X) in the case of Hedge Agreements, Contingent Obligations, and
(Y) in all other cases, Investments, and in neither case constitute
Indebtedness.
Notwithstanding the foregoing, for purposes of Section 6 only (and any
other defined terms as and to the extent used in Section 6), "Indebtedness"
means, with respect to any Person, any indebtedness of such Person, whether
or not contingent, in respect of borrowed money or evidenced by bonds,
notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid
of the purchase price of any property or representing any Hedging
Obligations, except any such balance that constitutes an accrued expense or
trade payable, if and to the extent any of the foregoing (other than
letters of credit and Hedging Obligations) would appear as a liability upon
a balance sheet of such Person prepared in accordance with GAAP, as well as
all Indebtedness of others secured by a Lien on any asset of such Person
(whether or not such Indebtedness is assumed by such Person) and, to the
extent not otherwise included, the guarantee by such Person of any
indebtedness of any other Person. The amount of any Indebtedness
outstanding as of any date shall be (i) the accreted value thereof, in the
case of any Indebtedness issued with original issue discount, and (ii) the
principal amount thereof, together with any interest thereon that is more
than 30 days past due, in the case of any other Indebtedness. For purposes
of calculating the amount of Indebtedness of a Securitization Entity
outstanding as of any date, the face or notional amount of any interest in
receivables or equipment that is outstanding as of such date shall be
deemed to be Indebtedness but any such interests held by Affiliates of such
Securitization Entity shall be excluded for purposes of such calculation.
"Indemnitee" has the meaning assigned to that term in subsection 9.3.
"Independent Public Accountant" means any of the five largest public
accounting firms in the United States selected by Holdings.
"Initial Period" means the period commencing on and including the
Closing Date and ending on (but excluding) the earlier of (i) the date on
which Syndication Agent notifies Company that it has concluded its primary
syndication of the Loans and Commitments and (ii) the date which is 30 days
after the Closing Date.
"Initial Public Offering" means the first underwritten public offering
of Qualified Capital Stock by either Holdings or Company pursuant to a
registration statement filed with the Securities and Exchange Commission in
accordance with the
27
Securities Act for aggregate net cash proceeds of a least $50,000,000;
provided that in the event the Initial Public Offering is consummated by
Holdings, Holdings contributes to the common equity capital of Company at
least $50,000,000 of the net cash proceeds of the Initial Public Offering.
"Intellectual Property" means all patents, trademarks, tradenames,
copyrights, technology, know-how and processes which are used in the
conduct of the business of Holdings and its Subsidiaries as currently
conducted that are material to the condition (financial or otherwise),
business or operations of Holdings and its Subsidiaries, taken as a whole.
"Intercreditor Agreement" means that certain Intercreditor Agreement
executed and delivered by Administrative Agent, ▇▇▇▇▇▇ Guaranty, as
administrative agent for lenders under the Revolving Credit Agreement, and
Collateral Agent on the Closing Date, substantially in the form of Exhibit
-------
XIII annexed hereto, as such Intercreditor Agreement may thereafter be
----
amended, supplemented or otherwise modified from time to time as permitted
thereunder and hereunder.
"Interest Payment Date" means (i) with respect to any Base Rate
Loan, each February 28, May 31, August 31 and November 30 of each year,
commencing on the first such date to occur after the Closing Date, and (ii)
with respect to any Eurodollar Rate Loan, the last day of each Interest
Period applicable to such Loan; provided that in the case of each Interest
--------
Period of longer than three months, "Interest Payment Date" shall also
include each date that is three months, or an integral multiple thereof,
after the commencement of such Interest Period.
"Interest Period" has the meaning assigned to that term in subsection
2.2B.
"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other
similar agreement or arrangement to which Holdings or any of its
Subsidiaries is a party.
"Interest Rate Determination Date" means, with respect to any Interest
Period, the second Business Day prior to the first day of such Interest
Period.
"Interest Swap Obligation" means the obligations of any Person,
pursuant to any arrangement with any other Person, whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of
interest on a stated notional amount in exchange for periodic payments made
by such other Persons calculated by applying a fixed or a floating rate of
interest on the same notional amount.
"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, and the regulations promulgated by the Internal Revenue
Service thereunder.
28
"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.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct
or indirect loans (including guarantees of Indebtedness or other
obligations), advances or capital contributions (excluding commission,
travel and similar advances to officers and employees made in the ordinary
course of business), purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities, together with all items
that are or would be classified as investments on a balance sheet prepared
in accordance with GAAP. If Company or any Subsidiary of Company sells or
otherwise disposes of any Equity Interests of any direct or indirect
Subsidiary of Company such that, after giving effect to any such sale or
disposition, such Person is no longer a Subsidiary of Company, Company
shall be deemed to have made an Investment on the date of any such sale or
disposition equal to the fair market value of the Equity Interests of such
Subsidiary not sold or disposed of in an amount determined as provided in
the final paragraph of subsection 6.1.
"IP Collateral" means, collectively, the Collateral under the Company
Patent and Trademark Security Agreement and the Subsidiary Patent and
Trademark Security Agreement.
"IR Consolidated Adjusted EBITDA" means, for any period, the sum of
the amounts for such period of (i) IR Consolidated Net Income, (ii) IR
Consolidated Interest Expense, together with any non-cash interest expense
with respect to the Junior Subordinated Seller Notes not included in IR
Consolidated Interest Expense, (iii) provisions for taxes based on income
(including, without duplication, foreign withholding taxes), (iv) total
depreciation expense, (v) total amortization expense, (vi) other non-cash
items reducing IR Consolidated Net Income less other non-cash items
----
increasing IR Consolidated Net Income, (vii) to the extent deducted in
determining IR Consolidated Net Income, those items described on Schedule
--------
1.1(i) annexed hereto, and (viii) the cumulative effect of accounting
------
changes to the extent such changes result in a reduction of IR Consolidated
Net Income less the cumulative effect of accounting changes to the extent
----
such changes result in an increase in IR Consolidated Net Income, all of
the foregoing as determined on a consolidated basis for Holdings and its
Subsidiaries in conformity with GAAP.
"IR Consolidated Interest Expense" means, for any period, total cash
and non-cash interest expense (including that portion attributable to
Capital Leases in accordance with GAAP and capitalized interest) of
Holdings and its Subsidiaries on a consolidated basis in accordance with
GAAP with respect to all outstanding Indebtedness of Holdings and its
Subsidiaries, including all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing, net costs under Interest Rate Agreements, commitment fees
accrued under subsection 2.3A and any
29
administrative agent's fees payable to Administrative Agent, but excluding,
---------
however, any amounts referred to in subsection 2.3 payable to Agents and
-------
Lenders on or before the Closing Date and any non-cash interest expense
with respect to the Junior Subordinated Seller Notes.
"IR Consolidated Net Income" means, for any period, the net income
(or loss) of Holdings 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 Holdings) in which any other Person
(other than Holdings or any of its Subsidiaries) has a joint interest,
except to the extent of the amount of dividends or other distributions
actually paid to Holdings 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 Holdings or is merged into or consolidated
with Holdings or any of its Subsidiaries or that Person's assets are
acquired by Holdings or any of its Subsidiaries, (iii) the income of any
Subsidiary of Holdings 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 extraordinary
losses.
"IR Consolidated Total Debt" means, as at any date of determination,
the aggregate stated balance sheet amount of all Indebtedness of Holdings
and its Subsidiaries, determined on a consolidated basis in accordance with
GAAP, excluding, however, the principal amount (including paid-in-kind
--------- -------
interest) of the Junior Subordinated Seller Notes.
"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.
"Junior Subordinated Seller Notes" means the Junior Subordinated
Seller Notes issued in the initial principal amount of $25,000,000 on the
Closing Date by Holdings in favor of ▇▇▇▇, and any additional amount of
such notes as are permitted to be issued hereunder, as such notes may be
amended from time to time to the extent permitted under subsection 6.10C.
"Landlord Consent and Estoppel" means, with respect to any Leasehold
Property, a letter, certificate or other instrument in writing from the
lessor under the related lease, reasonably satisfactory in form and
substance to Administrative Agent, pursuant to which such lessor
substantially agrees, for the benefit of Administrative Agent, (i) that
without any further consent of such lessor or any further action on the
part
30
of the Loan Party holding such Leasehold Property, such Leasehold Property
may be encumbered pursuant to a Mortgage and may be assigned to the
purchaser at a foreclosure sale or in a transfer in lieu of such a sale
(and to a subsequent third party assignee if Administrative Agent, any
Lender, or an Affiliate of either so acquires such Leasehold Property),
(ii) that such lessor shall not terminate such lease as a result of a
default by such Loan Party thereunder without first giving Administrative
Agent notice of such default and at least 60 days (or, if such default
cannot reasonably be cured by Administrative Agent within such period, such
longer period as may reasonably be required) to cure such default, (iii) to
the matters contained in a Collateral Access Agreement, and (iv) to such
other matters relating to such Leasehold Property as Administrative Agent
may reasonably request; provided, however, that Administrative Agent may
-------- -------
determine in its reasonable discretion that any one or more of the
agreements set forth in clauses (i) through (iv) are not required to be
included in a Landlord Consent and Estoppel with respect to a particular
Leasehold Property.
"Leasehold Property" means any leasehold interest of any Loan Party
as lessee under any lease of real property, other than any such leasehold
interest designated from time to time by Administrative Agent in its
reasonable discretion as not being required to be included in the
Collateral.
"Lender" and "Lenders" means the persons identified as "Lenders"
and listed on the signature pages of this Agreement, together with their
successors and permitted assigns pursuant to subsection 9.1; provided that
--------
the term "Lenders", when used in the context of a particular Commitment,
shall mean Lenders having that Commitment.
"Leverage Ratio" means the ratio of (i) IR Consolidated Total Debt
as of the last day of any Fiscal Quarter to (ii) IR Consolidated Adjusted
EBITDA for the four-Fiscal Quarter period then ended, in each case as set
forth in the most recent Compliance Certificate delivered by Company to
Administrative Agent pursuant to clause (iv) of subsection 5.1.; provided,
--------
however, that with respect to any period during which a Permitted
-------
Acquisition occurs, for purposes of calculating the Leverage Ratio, IR
Consolidated Adjusted EBITDA shall, for purposes of this definition, (i) be
calculated with respect to such four-Fiscal Quarter period and the acquired
New Business on a pro forma basis (including pro forma adjustments arising
out of events which are directly attributable to a specific transaction,
are factually supportable and are expected to have a continuing impact, in
each case determined on a basis consistent with Article 11 of Regulation S-
X promulgated under the Securities Act, as interpreted by the staff of the
Securities and Exchange Commission as of January 1, 1997, which would
include cost savings resulting from head count reduction, closure of
facilities and similar restructuring charges whether (x) resulting from
decisions made by Company or (y) implemented by the management of the New
Business within the six-month period immediately preceding the closing of
such Permitted Acquisition (provided that the cost savings described in
--------
clause (y) are supportable and quantifiable by the underlying accounting
records of such business), which pro forma adjustments shall be certified
by the principal financial officer or principal accounting officer of
Company) using the historical financial statements of
31
all entities or assets so acquired or to be acquired, which shall be
reformulated (a) as if such acquisition and any Indebtedness or other
liabilities incurred in connection with such acquisition had been
consummated or incurred at the beginning of such period (and assuming that
such Indebtedness bears interest during any portion of the applicable
measurement period prior to the relevant acquisition at the weighted
average of the interest rates applicable to outstanding Loans during such
period), and (b) otherwise in conformity with certain procedures to be
agreed upon between Administrative Agent and Company, all such calculations
to be in form and substance reasonably satisfactory to Administrative
Agent, and (ii) be calculated with respect to such New Business as if all
references to Holdings and its Subsidiaries in the definitions of IR
Consolidated Adjusted EBITDA and its components were references to such New
Business for such period; provided, however, that any cost savings which
-------- -------
would otherwise be given effect as a result of the foregoing shall not be
given effect until such cost savings are actually realized.
"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 AXELs Series B, AXELs
Series C or AXELs Series D or any combination thereof.
"Loan Documents" means this Agreement, the Notes, the Guaranties and
the Collateral Documents.
"Loan Party" means each of Holdings, Company and any of Company's
Subsidiaries from time to time executing a Loan Document, and "Loan
Parties" means all such Persons, collectively.
"Management Investors" means certain management officers and
employees of Holdings and its Subsidiaries disclosed to Syndication Agent
and Administrative Agent.
"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.
"Marketable Securities" means publicly traded debt or equity
securities that are listed for trading on a national securities exchange
and that were issued by a corporation whose debt securities are rated in
one of the three highest rating categories by either S&P or ▇▇▇▇▇'▇.
"Material Adverse Effect" means (i) a material adverse effect upon
the business, operations, properties, assets, condition (financial or
otherwise) or prospects of Holdings and its Subsidiaries, taken as a whole,
or (ii) the impairment of the ability
32
of any Loan Party to perform, or of Administrative Agent, Collateral Agent
or Lenders to enforce, the Obligations; provided that consummation of the
--------
Recapitalization Transactions in accordance with the terms of the
Recapitalization Agreement shall not be deemed to have a Material Adverse
Effect for purposes of subsection 4.4.
"Material Contract" means any contract or arrangement to which
Holdings or any of its Subsidiaries is a party (other than the Loan
Documents) for which breach, nonperformance, cancellation or failure to
renew would reasonably be expected to have a Material Adverse Effect.
"Material Leasehold Property" means a Leasehold Property reasonably
determined by Administrative Agent to be of material value as Collateral or
of material importance to the operations of Holdings or any of its
Subsidiaries; provided, however, that, excepting any such Leasehold
-------- -------
Properties set forth on Schedule 4.1I annexed hereto, no Leasehold Property
-------------
with respect to which the aggregate amount of all rents payable during any
one Fiscal Year never exceeds $250,000 shall be a "Material Leasehold
Property".
"Merger" means the merger of Merger Corp. with and into Holdings in
accordance with the terms of the Recapitalization Agreement and the
Certificate of Merger, with Holdings being the surviving corporation in
such merger.
"Merger Corp." has the meaning assigned to that term in the recitals
of this Agreement.
"MIS Upgrade Expenditures" means expenditures relating to the
upgrade of Company's MIS systems to the extent these expenditures would
have been capitalized by Holdings and its Subsidiaries in accordance with
their accounting policies in effect on the Closing Date.
"▇▇▇▇▇▇ Guaranty" has the meaning assigned to that term in the
introduction to this Agreement.
"Mortgage" means (i) a security instrument (whether designated as a
deed of trust or a mortgage or by any similar title) executed and delivered
by any Loan Party, substantially in the form of Exhibit XXIV annexed hereto
------------
or in such other form as may be approved by Administrative Agent in its
reasonable discretion, in each case with such changes thereto as may be
recommended by Administrative Agent's local counsel based on local laws or
customary local mortgage or deed of trust practices, or (ii) at
Administrative Agent's option, in the case of an Additional Mortgaged
Property, an amendment to an existing Mortgage, in form reasonably
satisfactory to Administrative Agent, adding such Additional Mortgaged
Property to the Real Property Assets encumbered by such existing Mortgage,
in either case as such security instrument or amendment may be amended,
supplemented or otherwise modified from time to time.
33
"Mortgages" means all such instruments, including the Closing Date
Mortgages and any Additional Mortgages, collectively.
"Mortgaged Property" means a Closing Date Mortgaged Property or an
Additional Mortgaged Property.
"Multiemployer Plan" means any Employee Benefit Plan which is a
"multiemployer plan" as defined in Section 3(37) of ERISA.
"NAIC" means the National Association of Insurance Commissioners.
"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 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 interest on any
Indebtedness (other than the Loans) that is secured by a Lien on the stock
or assets in question and that is repaid as a result of such Asset Sale.
"Net Insurance/Condemnation Proceeds" means any Cash payments or
proceeds received by Holdings 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 Holdings
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 documented costs incurred by Holdings or any of its
Subsidiaries in connection with the adjustment or settlement of any claims
of Holdings or such Subsidiary in respect thereof.
"New Business" means any assets or business acquired by Company or
any of its Subsidiaries in a Permitted Acquisition.
"New Sub Debt Indentures" means, collectively, the Senior
Subordinated Note Indenture and the Discount Note Indenture.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
Company nor any of its Restricted Subsidiaries (a) provides credit support
of any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a
guarantor or otherwise), or (c) constitutes the lender; and (ii) no default
with respect to which (including any rights that the holders thereof may
have to take enforcement action against an Unrestricted Subsidiary) would
permit (upon notice, lapse of time or both) any holder of any other
Indebtedness of the
34
Company or any of its Restricted Subsidiaries to declare a default on such
other Indebtedness or cause the payment thereof to be accelerated or
payable prior to its stated maturity; and (iii) as to which the lenders
have been notified in writing that they will not have any recourse to the
stock or assets of the Company or any of its Restricted Subsidiaries.
"Notes" means one or more of the AXEL Series B Notes, AXEL Series C
Notes or AXEL Series D Notes or any combination thereof.
"Notice of Borrowing" means a notice substantially in the form of
Exhibit I annexed hereto delivered by Company to Administrative Agent
---------
pursuant to subsection 2.1B with respect to a proposed borrowing.
"Notice of Conversion/Continuation" means a notice substantially in
the form of Exhibit II annexed hereto delivered by Company to
----------
Administrative Agent pursuant to subsection 2.2D with respect to a proposed
conversion or continuation of the applicable basis for determining the
interest rate with respect to the Loans specified therein.
"Obligations" means all obligations of every nature of each Loan
Party from time to time owed to Agents, Lenders or their respective
Affiliates or any of them under the Loan Documents, whether for principal,
interest, fees, expenses, indemnification or otherwise.
"Officers' Certificate" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its chairman of the
board (if an officer) or its president or one of its vice presidents and by
its principal financial officer or principal accounting 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.
"Other Investors" means Harvard Private Capital Holdings, Inc.,
BancBoston Investments, Inc., Chase Equity Associates, L.P. and CIBC WG
Argosy Merchant Fund 2, L.L.C..
35
"Other MIS Expenditures" means all expenditures, other than MIS
Upgrade Expenditures, EITF 97-13 Expenditures and Year 2000 Expenditures,
relating to Holdings' and its Subsidiaries' MIS systems.
"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 Acquisition" has the meaning assigned to that term in the
Revolving Credit Agreement; provided, however, that after the Revolving
-------- -------
Credit Agreement ceases to be in effect, "Permitted Acquisition" shall
mean any acquisition of a business or all or substantially all of the
assets of a business permitted at the time of such acquisition under the
Revolving Credit Agreement and any acquisition thereafter permitted under
this Agreement.
"Permitted Business" means any business that derives a majority of
its revenues from the manufacture, distribution and sale of mattresses,
foundation and other bedding products and activities that are reasonably
similar, ancillary or related to, or a reasonable extension, development or
expansion of, the businesses in which the Company and its Restricted
Subsidiaries are engaged on the date of this Agreement.
"Permitted Domestic Subsidiary Preferred Stock" means any series of
Preferred Stock of a domestic Restricted Subsidiary of Company that
constitutes Qualified Capital Stock and has a fixed dividend rate, the
liquidation value of all series of which, when combined with the aggregate
amount of Indebtedness of Company and its Restricted Subsidiaries incurred
pursuant to clause (xvi) of subsection 6.4 does not exceed $30,000,000;
provided that such amount shall increase to $50,000,000 upon consummation
of an Initial Public Offering.
"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 5.3;
(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)
36
for amounts that are overdue and that (in the case of any such amounts
overdue for a period in excess of 5 days) are being contested in good
faith by appropriate proceedings, so long as (1) such reserves or
other appropriate provisions, if any, as shall be required by GAAP
shall have been made for any such contested amounts, and (2) in the
case of a Lien with respect to any portion of the Collateral, such
contest proceedings conclusively operate to stay the sale of any
portion of the Collateral on account of such Lien;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, trade contracts,
performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money), so long
as no foreclosure, sale or similar proceedings have been commenced
with respect to any portion of the Collateral on account thereof;
(iv) any attachment or judgment Lien not constituting (a) an
Event of Default under subsection 8.8 of the Revolving Credit
Agreement or (b) after the Revolving Credit Agreement ceases to be in
full force and effect, an Event of Default hereunder;
(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 Holdings 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 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 Holdings 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 the Revolving Credit Agreement or, after the
Revolving Credit Agreement ceases to be in full force and effect, by
this Agreement, (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;
37
(ix) Liens in favor of customs and revenue authorities arising
as a matter of law to secure payment of customs duties in connection
with the importation of goods;
(x) any zoning or similar law or right reserved to or vested
in any governmental office or agency to control or regulate the use of
any real property;
(xi) Liens securing obligations (other than obligations
representing Indebtedness for borrowed money) under operating,
reciprocal easement or similar agreements entered into in the ordinary
course of business of Holdings and its Subsidiaries;
(xii) licenses of patents, trademarks and other intellectual
property rights granted by Holdings 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 Holdings or such
Subsidiary; and
(xiii) Liens existing on the Closing Date and described in the
Closing Date Mortgage Policies.
"Permitted Foreign Subsidiary Preferred Stock" means any series of
Preferred Stock of a foreign Restricted Subsidiary of Company that
constitutes Qualified Capital Stock and has a fixed dividend rate, the
liquidation value of all series of which, when combined with the aggregate
amount of Indebtedness of foreign Restricted Subsidiaries of Company
incurred pursuant to clause (iii) of the definition of Permitted
Indebtedness, does not exceed $15,000,000; provided that such amount shall
--------
increase to $30,000,000 million upon consummation of an Initial Public
Offering.
"Permitted Investments" means (i) Investments by Company or any
Restricted Subsidiary of Company in any Restricted Subsidiary of Company
(whether existing on the date of this Indenture or created thereafter) or
in any other Person (including by means of any transfer of cash or other
property) if as a result of such Investment such Person shall become a
Restricted Subsidiary of Company that is a Subsidiary Guarantor or a
Foreign Subsidiary and Investments in Company by any Restricted Subsidiary
of Company, (ii) cash and Cash Equivalents, (iii) Investments existing on
the date hereof, (iv) loans and advances to employees and officers of
Company and its Restricted Subsidiaries in the ordinary course of business,
(v) accounts receivable created or acquired in the ordinary course of
business, (vi) Currency Agreements and Interest Swap Obligations entered
into in the ordinary course of Company's businesses and otherwise in
compliance with this Agreement, (vii) Investments in Unrestricted
Subsidiaries in an amount at any one time outstanding not to exceed
$20,000,000; (viii) Investments in securities of trade creditors or
customers received pursuant to any plan of reorganization or similar
arrangement upon the bankruptcy or insolvency of such trade creditors or
customers, (ix) guarantees by Company of Indebtedness otherwise permitted
to be incurred by Restricted Subsidiaries of Company under this Agreement,
(x) additional
38
Investments having an aggregate fair market value, taken together with all
other Investments made pursuant to this clause (x) that are at that time
outstanding, not to exceed 5% of Total Assets at the time of such
Investment (with the fair market value of each Investment being measured at
the time made and without giving effect to subsequent changes in value),
(xi) any Investment by Company or a Subsidiary of Company in a
Securitization Entity or any Investment by a Securitization Entity in any
other Person in connection with a Qualified Securitization Transaction;
provided that any Investment in a Securitization Entity is in the form of a
Purchase Money Note or an equity interest, (xii) any transaction to the
extent it constitutes an Investment that is permitted by, and made in
accordance with, clause (b) of subsection 6.5 (other than transactions
described in clause (v) of such clause (b)), (xiii) Investments the payment
for which consists exclusively of Qualified Capital Stock of Company and
(xiv) Investments received by Company or its Restricted Subsidiaries as
consideration for asset sales, including Asset Sales; provided that in the
case of an Asset Sale, such Asset Sale is effected in compliance with
subsection 6.4.
"Permitted Seller Note" means any promissory note of Company or any
of its Subsidiaries constituting a "Permitted Seller Note" under the
Revolving Credit Agreement.
"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 Agreement.
"Potential Event of Default" means a condition or event that, after
notice or lapse of time or both, would constitute an Event of Default.
"Preferred Stock" of a Person means Capital Stock of such Person of
any class or series (however designated) that ranks prior, as to payment of
dividends or as to the distribution of assets upon any voluntary or
involuntary liquidation, dissolution or winding up of such Person, to
shares of Capital Stock of any other class or series of such Person.
"Principals" means ▇▇▇▇ and any other stockholder of Holdings that
owns at least 10% of the outstanding Equity Interests of Holdings as of the
date hereof.
"Pro Forma Cost Savings" means, with respect to any period, the
reduction in costs that occurred during the Four-Quarter Period or after
the end of the Four-Quarter
39
Period and on or prior to the Transaction Date that were (i) directly
attributable to an Asset Acquisition and calculated on a basis that is
consistent with Regulation S-X under the Securities Act as in effect and
applied as of January 1, 1997 or (ii) implemented by the business that was
the subject any such Asset Acquisition within six months of the date of the
Asset Acquisition and that are supportable and quantifiable by the
underlying accounting records of such business, as if, in the case of each
of clause (i) and (ii), all such reductions in costs had been effected as
of the beginning of such period.
"Pro Rata Share" means (i) with respect to all payments,
computations and other matters relating to the AXEL Series B Commitment or
the AXEL Series B of any Lender, the percentage obtained by dividing (x)
--------
the AXEL Series B Exposure of that Lender by (y) the aggregate AXEL Series
--
B Exposure of all Lenders, (ii) with respect to all payments, computations
and other matters relating to the AXEL Series C Commitment or the AXEL
Series C of any Lender, the percentage obtained by dividing (x) the AXEL
--------
Series C Exposure of that Lender by (y) the aggregate AXEL Series C
--
Exposure of all Lenders, (iii) with respect to all payments, computations
and other matters relating to the AXEL Series D Commitment or the AXEL
Series D of any Lender, the percentage obtained by dividing (x) the AXEL
--------
Series D Exposure of that Lender by (y) the aggregate AXEL Series D
--
Exposure of all Lenders, and (iv) for all other purposes with respect to
each Lender, the percentage obtained by dividing (x) the sum of the AXEL
--------
Series B Exposure of that Lender plus the AXEL Series C Exposure of that
----
Lender plus the AXEL Series D Exposure of that Lender by (y) the sum of the
---- --
aggregate AXEL Series B Exposure of all Lenders plus the aggregate AXEL
----
Series C Exposure of all Lenders plus the aggregate AXEL Series D Exposure
----
of all Lenders, in any such case as the applicable percentage may be
adjusted by assignments permitted pursuant to subsection 9.1. The initial
Pro Rata Share of each Lender for purposes of each of clauses (i), (ii),
(iii) and (iv) 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 in order to
create or perfect Liens on any IP Collateral.
"Purchase Money Note" means a promissory note of a Securitization
Entity evidencing a line of credit, which may be irrevocable, from Company
or any Restricted Subsidiary of Company in connection with a Qualified
Securitization Transaction, which note shall be repaid from cash available
to the Securitization Entity, other than amounts required to be established
as reserves pursuant to agreements, amounts paid to investors in respect of
interest, principal and other amounts owing to such investors and amounts
paid in connection with the purchase of newly generated receivables or
newly acquired equipment.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Stock.
40
"Qualified Securitization Transaction" means any transaction or
series of transactions pursuant to which Company or any of its Restricted
Subsidiaries may sell, convey or otherwise transfer to (a) a Securitization
Entity (in the case of a transfer by Company or any of its Restricted
Subsidiaries) and (b) any other Person (in case of a transfer by a
Securitization Entity), or may grant a security interest in, any accounts
receivable or equipment (whether now existing or arising or acquired in the
future) of Company or any of its Restricted Subsidiaries, and any assets
related thereto including, without limitation, all collateral securing such
accounts receivable and equipment, all contracts and contract rights and
all Guarantees or other obligations in respect of such accounts receivable
and equipment, proceeds of such accounts receivable and equipment and other
assets (including contract rights) which are customarily transferred or in
respect of which security interests are customarily granted in connection
with asset securitization transactions involving accounts receivable and
equipment.
"Real Property Asset" means, at any time of determination, any
interest then owned by any Loan Party in any real property.
"Recapitalization Agreement" means that certain Agreement and Plan
of Merger dated as of October 30, 1997, by and among Holdings, Merger Corp.
and ▇▇▇▇, in the form delivered to Syndication Agent, Administrative Agent
and Lenders prior to their execution of this Agreement and as such
agreement may be amended from time to time thereafter to the extent
permitted under subsection 6.10A.
"Recapitalization Financing Requirements" means the aggregate of all
amounts necessary to finance the Recapitalization Transactions.
"Recapitalization Revolving Loans" has the meaning assigned to that
term in subsection 2.5A.
"Recapitalization Transactions" means the series of transactions
described in Schedule 1.1(ii) annexed hereto, together with (i) the
----------------
contribution by Holdings to Company of the capital stock of each of the
Subsidiaries of Holdings indicated on such Schedule, (ii) the repurchase of
the Existing Subordinated Notes pursuant to the Debt Tender Offer and the
repayment of all amounts outstanding under the Existing Credit Agreement,
(iii) the amendment of the Existing Subordinated Note Indenture pursuant to
the Consent Solicitation, (iv) the Merger, and (v) the payment of
Transaction Costs and the other transactions contemplated by the
Recapitalization Agreement.
"Recorded Leasehold Interest" means a Leasehold Property with
respect to which a Record Document (as hereinafter defined) has been
recorded in all places necessary or desirable, in Administrative Agent's
reasonable judgment, to give constructive notice of such Leasehold Property
to third-party purchasers and encumbrancers of the affected real property.
For purposes of this definition, the term "Record Document" means, with
respect to any Leasehold Property, (a) the lease evidencing such Leasehold
Property or a memorandum thereof, executed and
41
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 Administrative Agent.
"Reference Lenders" means ▇▇▇▇▇▇ Guaranty and BTCo.
"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.
"Related Agreements" means, collectively, the Recapitalization
Agreement, the Certificate of Merger, the Stockholders Agreement, the
Junior Subordinated Seller Notes, the New Sub Debt Indentures, the Discount
Notes, the Senior Subordinated Notes, the Existing Subordinated Note
Indenture, the Existing Subordinated Notes and the Debt Tender Offer
Materials.
"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 migration of any Hazardous Materials through the air, soil,
surface water or groundwater.
"Requisite Class Lenders" means, at any time of determination (i)
for the Class of Lenders having AXEL Series B Exposure, Lenders having or
holding at least 51% of the aggregate AXEL Series B Exposure of all
Lenders, (ii) for the Class of Lenders having AXEL Series C Exposure,
Lenders having or holding at least 51% of the aggregate AXEL Series C
Exposure of all Lenders, and (iii) for the Class of Lenders having AXEL
Series D Exposure, Lenders having or holding at least 51% of the aggregate
AXEL Series D Exposure of all Lenders.
"Requisite Lenders" means Lenders having or holding more than 50% of
the sum of the aggregate AXEL Series B Exposure of all Lenders plus the
----
aggregate AXEL Series C Exposure of all Lenders plus the aggregate AXEL
----
Series D Exposure of all Lenders.
"Responsible Officer" means any of the chairman of the board (if an
officer), the president, any senior or executive vice president, the
general counsel, its principal financial officer or principal accounting
officer, the secretary or the treasurer of Holdings or, as applicable, any
Subsidiary of Holdings.
42
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Junior Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
stock of Holdings or 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 Holdings or Company now or hereafter
outstanding, (iii) any payment made to retire, or to obtain the surrender
of, any outstanding warrants, options or other rights to acquire shares of
any class of stock of Holdings or 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.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"Revolving Credit Agreement" means that certain Credit Agreement
dated as of even date herewith, by and among Company, Holdings, GSCP, as
arranger and syndication agent, ▇▇▇▇▇▇ Guaranty, as administrative agent,
and BTCo., as documentation agent, as such Credit Agreement may be amended,
supplemented, refinanced, renewed, extended or otherwise modified from time
to time to the extent permitted under subsection 6.10C.
"Revolving Credit Documents" means the Revolving Credit Agreement,
the promissory notes issued thereunder and each other document executed in
connection with the Revolving Credit Agreement.
"Revolving Loan Commitments" has the meaning assigned to that term
in the Revolving Credit Agreement.
"Revolving Loans" means the senior secured revolving loans of
Company made from time to time under the Revolving Credit Agreement.
"Secured Parties" has the meaning assigned to that term in the
Intercreditor Agreement.
"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 indebted ness, secured or
unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates of interest,
shares or
43
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.
"Securitization Entity" means a Wholly Owned Subsidiary of Company
(or another Person in which Company or any Subsidiary of Company makes an
Investment and to which Company or any Subsidiary of Company transfers
accounts receivable or equipment and related assets) that engages in no
activities other than in connection with the financing of accounts
receivable or equipment and that is designated by the Board of Directors
(as provided below) as a Securitization Entity (a) no portion of the
Indebtedness or any other Obligations (contingent or otherwise) of which
(i) is guaranteed by Company or any Restricted Subsidiary of Company
(excluding guarantees of Obligations (other than the principal of, and
interest on, Indebtedness)) pursuant to Standard Securitization
Undertakings, (ii) is recourse to or obligates Company or any Restricted
Subsidiary of Company in any way other than pursuant to Standard
Securitization Undertakings or (iii) subjects any property or asset of
Company or any Restricted Subsidiary of Company, directly or indirectly,
contingently or otherwise, to the satisfaction thereof, other than pursuant
to Standard Securitization Undertakings, (B) with which neither Company nor
any Restricted Subsidiary of Company has any material contract, agreement,
arrangement or understanding other than on terms no less favorable to
Company or such Restricted Subsidiary than those that might be obtained at
the time from Persons that are not Affiliates of Company, other than fees
payable in the ordinary course of business in connection with servicing
receivables of such entity, and (c) to which neither Company nor any
Restricted Subsidiary of Company has any obligation to maintain or preserve
such entity's financial condition or cause such entity to achieve certain
levels of operating results. Any such designation by the Board of
Directors shall be evidenced to Administrative Agent by filing with
Administrative Agent a certified copy of the resolution of the Board of
Directors giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions.
"Senior Subordinated Note Indenture" means the indenture pursuant to
which the Senior Subordinated Notes are issued, as such indenture may be
amended from time to time to the extent permitted under subsection 6.10B.
"Senior Subordinated Notes" means the $125,000,000 in aggregate
principal amount of 9-7/8% Senior Subordinated Notes due December 15, 2007
of Company issued pursuant to the Senior Subordinated Note Indenture.
"Shareholder Subordinated Note" means any promissory note of
Holdings or Company constituting a "Shareholder Subordinated Note" under
the Revolving Credit Agreement.
44
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article I, Rule 1-02 of Regulation
S-X, promulgated pursuant to the Securities Act, as such Regulation is in
effect on the date of this Agreement.
"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
(sold as a going concern) 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 the facts and
circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by Company or any
Subsidiary of Company that are reasonably customary in an accounts
receivable or equipment transactions.
"Stockholders Agreement" means that certain Stockholders Agreement
by and among Holdings, ▇▇▇▇, the Other Investors, ▇▇▇▇ and the Management
Investors, in the form delivered to Syndication Agent, Administrative Agent
and Lenders prior to their execution of this Agreement and as such
agreement may be amended from time to time thereafter to the extent
permitted under subsection 6.10A.
"Subordinated Indebtedness" means (i) the Indebtedness of Company
evidenced by the Senior Subordinated Notes and the Discount Notes, (ii) the
Indebtedness of Holdings evidenced by the Junior Subordinated Seller Notes
and any Existing Subordinated Notes not tendered pursuant to the Debt
Tender Offer, (iii) the Indebtedness of Company evidenced by any Permitted
Seller Notes and Shareholder Subordinated Notes, and (iv) any other
Indebtedness of Holdings, Company or any of their Subsidiaries 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 reasonably satisfactory to Administrative Agent and Requisite
Lenders.
"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
45
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.
"Subsidiary Guarantor" means any Subsidiary of Holdings, other than
Company, that executes and delivers a counterpart of the Subsidiary
Guaranty on the Closing Date or from time to time thereafter pursuant to
subsection 5.8.
"Subsidiary Guaranty" means the Subsidiary Guaranty executed and
delivered by all Subsidiaries of Holdings (other than Company and the
Excluded Subsidiaries) on the Closing Date and to be executed and delivered
by additional Subsidiaries of Holdings from time to time thereafter in
accordance with subsection 5.8, substantially in the form of Exhibit XVII
------------
annexed hereto, as such Subsidiary Guaranty may hereafter be amended,
supplemented or otherwise modified from time to time as permitted
thereunder and hereunder.
"Subsidiary Patent and Trademark Security Agreement" means each
Subsidiary Patent and Trademark Security Agreement executed and delivered
by each existing Subsidiary Guarantor and Collateral Agent on the Closing
Date and executed and delivered by any additional Subsidiary Guarantor from
time to time thereafter in accordance with subsection 5.8, substantially in
the form of Exhibit XX annexed hereto, as such Subsidiary Patent and
----------
Trademark Security Agreement may be amended, supplemented or otherwise
modified from time to time as permitted thereunder and hereunder.
"Subsidiary Pledge Agreement" means the Subsidiary Pledge Agreement
executed and delivered by each existing Subsidiary Guarantor and Collateral
Agent on the Closing Date and executed and delivered by any additional
Subsidiary Guarantor from time to time thereafter in accordance with
subsection 5.8, substantially in the form of Exhibit XVIII annexed hereto,
-------------
as such Subsidiary Pledge Agreement may be amended, supplemented or
otherwise modified from time to time as permitted thereunder and hereunder.
"Subsidiary Security Agreement" means the Subsidiary Security
Agreement executed and delivered by each existing Subsidiary Guarantor and
Collateral Agent on the Closing Date or executed and delivered by any
additional Subsidiary Guarantor from time to time thereafter in accordance
with subsection 5.8, substantially in the form of Exhibit XIX annexed
-----------
hereto, as such Subsidiary Security Agreement may be amended, supplemented
or otherwise modified from time to time as permitted thereunder and
hereunder.
"Supplemental Collateral Agent" has the meaning assigned to that
term in subsection 8.1D.
46
"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).
"Tax Allocation Agreement" means that certain tax allocation
agreement entered into by Company and the other Persons named therein,
dated as of December 18, 1997.
"Title Company" means, collectively, Chicago Title Insurance Company
and/or one or more other title insurance companies reasonably satisfactory
to Syndication Agent and Administrative Agent.
"Tranche A Term Loans" means the senior secured term loans made as
Tranche A Term Loans under the Revolving Credit Agreement, in the initial
aggregate principal amount of $120,000,000.
"Transaction Costs" means the fees, costs and expenses payable by
Holdings and Company in connection with the transactions contemplated by
the Loan Documents, the Revolving Credit Documents and the Related
Agreements.
"UCC" means the Uniform Commercial Code (or any similar or
equivalent legislation) as in effect in any applicable jurisdiction.
"Unrestricted Subsidiary" means any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary pursuant to a
resolution of the Board of Directors, but only to the extent that such
Subsidiary: (a) has no Indebtedness other than Non-Recourse Debt; (b) is
not party to any agreement, contract, arrangement or understanding with
Company or any Restricted Subsidiary of Company unless the terms of any
such agreement, contract, arrangement or understanding are no less
favorable to Company or such Restricted Subsidiary than those that might be
obtained at the time from Persons who are not Affiliates of Company; (c) is
a Person with respect to which neither Company nor any of its Restricted
Subsidiaries has any direct or indirect obligation (x) to subscribe for
additional Equity Interests or (y) to maintain or preserve such Person's
financial condition or to cause such Person to achieve any specified levels
of operating results; (d) has not guaranteed or otherwise directly or
indirectly provided
47
credit support for any Indebtedness of Company or any of its Restricted
Subsidiaries; and (e) has at least one director on its board of directors
that is not a director or executive officer of Company or any of its
Restricted Subsidiaries and has at least one executive officer that is not
a director or executive officer of Company or any of its Restricted
Subsidiaries. Any such designation by the Board of Directors shall be
evidenced to Administrative Agent by filing with the Administrative Agent a
certified copy of the resolution of the Board of Directors giving effect to
such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions and was permitted by
subsection 6.1. If, at any time, any Unrestricted Subsidiary would fail to
meet the foregoing requirements as an Unrestricted Subsidiary, it shall
thereafter cease to be an Unrestricted Subsidiary for purposes of this
Agreement and any Indebtedness of such Subsidiary shall be deemed to be
incurred by a Restricted Subsidiary of Company as of such date (and, if
such Indebtedness is not permitted to be incurred as of such date under
subsection 6.1, Company shall be in default of such covenant). The Board
of Directors may at any time designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that such designation shall be deemed to be
an incurrence of Indebtedness by a Restricted Subsidiary of Company of any
outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall only be permitted if (i) such Indebtedness is permitted
under subsection 6.1, calculated on a pro forma basis as if such
designation had occurred at the beginning of the four-quarter reference
period, (ii) such Subsidiary shall comply with subsection 6.8 and (iii) no
Potential Event of Default or Event of Default would be in existence
following such designation.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the
sum of the products obtained by multiplying (a) the amount of each then
remaining installment, sinking fund, serial maturity or other required
payments of principal, including payment at final maturity, in respect
thereof, by (b) the number of years (calculated to the nearest one-twelfth)
that will elapse between such date and the making of such payment, by (ii)
the then outstanding principal amount of such Indebtedness.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned
by such Person or by one or more Wholly Owned Subsidiaries of such Person
and one or more Wholly Owned Subsidiaries of such Person.
"Year 2000 Expenditures" means expenditures related to addressing
Holdings' and its Subsidiaries' Year 2000 Manbase software systems issues.
48
"▇▇▇▇" means ▇▇▇▇/Chilmark Fund, L.P.
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 5.1 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 5.1(v)). Calculations in connection with
the definitions, covenants and other provisions of this Agreement shall utilize
accounting principles and policies in conformity with those used to prepare the
financial statements referred to in subsection 4.3. Notwithstanding the
foregoing, except as otherwise specifically provided herein, all computations
determining compliance with subsection 2.4 and Section 7, including the
definitions used therein, shall utilize accounting principles and policies in
effect at the time of the preparation of, and in conformity with those used to
prepare, the November 30, 1996 financial statements of Holdings and its
Subsidiaries delivered to the Lenders, but shall not give effect to purchase
accounting adjustments required or permitted by APB 16 and its interpretations
(including non-cash write-ups and non-cash charges relating to inventory, fixed
assets and in-process research and development, in each case arising in
connection with any Permitted Acquisitions) and APB 17 and its interpretations
(including non-cash charges relating to intangibles and goodwill arising in
connection with any Permitted Acquisitions).
1.3 Other Definitional Provisions and Rules of Construction.
-------------------------------------------------------
A. Any of the terms defined herein may, unless the context otherwise
requires, be used in the singular or the plural, depending on the reference.
B. References to "Sections" and "subsections" shall be to Sections
and subsections, respectively, of this Agreement unless otherwise specifically
provided.
C. The use herein of the word "include" or "including", when
following any general statement, term or matter, shall not be construed to limit
such statement, term or matter to the specific items or matters set forth
immediately following such word or to similar items or matters, whether or not
nonlimiting language (such as "without limitation" or "but not limited to"
or words of similar import) is used with reference thereto, but rather shall be
deemed to refer to all other items or matters that fall within the broadest
possible scope of such general statement, term or matter.
D. Each reference to a "Fiscal Quarter period" of a specified number of
Fiscal Quarters shall be a reference to a period of consecutive Fiscal Quarters
of such number.
1.4 Changes in GAAP.
---------------
49
In the event that a change in GAAP or other accounting principles and
policies after the date hereof affects in any material respect the calculations
of the compliance by Holdings and its Subsidiaries with the covenants contained
herein, Lenders, Company and Holdings agree to negotiate in good faith to amend
the affected covenants (and related definitions) to compensate for the effect of
such changes so that the restrictions, limitations and performance standards
effectively imposed by such covenants, as so amended, are substantially
identical to the restrictions, limitations and performance standards imposed by
such covenants as in effect on the date hereof; provided that if Requisite
--------
Lenders, Company and Holdings fail to reach agreement with respect to such
amendment within a reasonable period of time following the date of effectiveness
of any such change, calculation of compliance by Holdings and its Subsidiaries
with the covenants contained herein shall be determined in accordance with GAAP
as in effect immediately prior to such change.
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 Holdings and Company
herein set forth, each Lender hereby severally agrees to make the Loans
described in subsections 2.1A(i), 2.1A(ii) and 2.1A(iii).
(i) AXELs Series B. Each Lender severally agrees to lend to Company
--------------
on the Closing Date an amount not exceeding its Pro Rata Share of the
aggregate amount of the AXEL Series B Commitments to be used for the
purposes identified in subsection 2.5A. The amount of each Lender"s AXEL
Series B Commitment is set forth opposite its name on Schedule 2.1 annexed
------------
hereto and the aggregate amount of the AXEL Series B Commitments is
$125,000,000; provided that the AXEL Series B Commitments of Lenders shall
--------
be adjusted to give effect to any assignments of the AXEL Series B
Commitments pursuant to subsection 9.1B. Each Lender's AXEL Series B
Commitment shall expire immediately and without further action on February
16, 1998 if the AXELs Series B are not made on or before that date.
Company may make only one borrowing under the AXEL Series B Commitments.
Amounts borrowed under this subsection 2.1A(i) and subsequently repaid or
prepaid may not be reborrowed.
(ii) AXELs Series C. Each Lender severally agrees to lend to Company
--------------
on the Closing Date an amount not exceeding its Pro Rata Share of the
aggregate amount of the AXEL Series C Commitments to be used for the
purposes identified in subsection 2.5A. The amount of each Lender's AXEL
Series C Commitment is set forth opposite its name on Schedule 2.1 annexed
------------
hereto and the aggregate amount of the AXEL Series C Commitments is
$90,000,000; provided that the AXEL Series C Commitments of Lenders shall
--------
be adjusted to give effect to any assignments of the AXEL Series C
Commitments pursuant to subsection 9.1B. Each Lender's AXEL Series C
Commitment
50
shall expire immediately and without further action on February 16, 1998 if
the AXELs Series C are not made on or before that date. Company may make
only one borrowing under the AXEL Series C Commitments. Amounts borrowed
under this subsection 2.1A(ii) and subsequently repaid or prepaid may not
be reborrowed.
(iii) AXELs Series D. Each Lender severally agrees to lend to
--------------
Company on the Closing Date an amount not exceeding its Pro Rata Share of
the aggregate amount of the AXEL Series D Commitments to be used for the
purposes identified in subsection 2.5A. The amount of each Lender's AXEL
Series D Commitment is set forth opposite its name on Schedule 2.1 annexed
------------
hereto and the aggregate amount of the AXEL Series D Commitments is
$115,000,000; provided that the AXEL Series D Commitments of Lenders shall
--------
be adjusted to give effect to any assignments of the AXEL Series D
Commitments pursuant to subsection 9.1B. Each Lender's AXEL Series D
Commitment shall expire immediately and without further action on February
16, 1998 if the AXELs Series D are not made on or before that date.
Company may make only one borrowing under the AXEL Series D Commitments.
Amounts borrowed under this subsection 2.1A(iii) and subsequently repaid or
prepaid may not be reborrowed.
B. Borrowing Mechanics. Loans shall be in an aggregate minimum amount of
$500,000 and integral multiples of $100,000 in excess of that amount; provided
--------
that Loans made as Eurodollar Rate Loans with a particular Interest Period shall
be in an aggregate minimum amount of $1,000,000 and integral multiples of
$100,000 in excess of that amount. Company shall deliver to Administrative
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 Closing Date. The Notice
of Borrowing shall specify (i) the proposed Closing Date (which shall be a
Business Day), (ii) the amount of each type of Loan requested, (iii) whether
such Loans shall be Base Rate Loans or Eurodollar Rate Loans, and (iv) in the
case of any Loans requested to be made as Eurodollar Rate Loans, the initial
Interest Period requested therefor. Loans may be continued as or converted into
Base Rate Loans and Eurodollar Rate Loans in the manner provided in subsection
2.2D. In lieu of delivering the above-described Notice of Borrowing, Company
may give Administrative Agent telephonic notice by the required time of the
proposed borrowing under this subsection 2.1B; provided that such notice shall
--------
be promptly confirmed in writing by delivery of a Notice of Borrowing to
Administrative Agent on or before the Closing Date.
Neither Administrative Agent nor any Lender shall incur any liability to
Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow on behalf of Company 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 Company shall have effected Loans hereunder.
Company shall notify Administrative Agent prior to the funding of the Loans
in the event that any of the matters to which Company is required to certify in
the applicable Notice of Borrowing is no longer true and correct as of the
Closing Date, and the acceptance by Company
51
of the proceeds of any Loans shall constitute a re-certification by Company, as
of the Closing Date, as to the matters to which Company is required to certify
in the Notice of Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice
of Borrowing for a Eurodollar Rate Loan (or telephonic notice in lieu thereof)
shall be irrevocable on and after the related Interest Rate Determination Date,
and Company shall be bound to make a borrowing in accordance therewith.
C. Disbursement of Funds. All Loans under this Agreement shall be made
by Lenders simultaneously and proportionately to their respective Pro Rata
Shares, it being under stood 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 hereun der.
Promptly after receipt by Administrative Agent of the Notice of Borrowing
pursuant to subsection 2.1B (or telephonic notice in lieu thereof),
Administrative Agent shall notify each Lender of the proposed borrowing. Each
Lender shall make the amount of its Loan available to Administrative Agent not
later than 1:00 P.M. (New York City time) on the Closing Date, in same day funds
in Dollars, at the Funding and Payment Office. Upon satisfaction or waiver of
the conditions precedent specified in subsection 3.1, Administrative Agent shall
make the proceeds of such Loans available to Company on the Closing Date by
causing an amount of same day funds in Dollars equal to the proceeds of all such
Loans received by Administrative Agent from Lenders, to be credited to the
account of Company at the Funding and Payment Office.
Unless Administrative Agent shall have been notified by any Lender prior to
the Closing Date that such Lender does not intend to make available to
Administrative Agent the amount of such Lender's Loan requested on the Closing
Date, Administrative Agent may assume that such Lender has made such amount
available to Administrative Agent on the Closing Date and Administrative Agent
may, in its sole discretion, but shall not be obligated to, make available to
Company a corresponding amount on the Closing Date. If such corresponding
amount is not in fact made available to Administrative Agent by such Lender,
Administrative Agent shall be entitled to recover such corresponding amount on
demand from such Lender together with interest thereon, for each day from the
Closing Date until the date such amount is paid to Administrative Agent, at the
customary rate set by Administrative Agent for the correction of errors among
banks for three Business Days and thereafter at the Base Rate. If such Lender
does not pay such corresponding amount forthwith upon Administrative Agent's
demand therefor, Administrative Agent shall promptly notify Company and Company
shall immediately pay such corresponding amount to Administrative Agent together
with interest thereon, for each day from the Closing Date until the date such
amount is paid to Administrative Agent, at the rate payable under this Agreement
for Base Rate Loans. Nothing in this subsection 2.1C shall be deemed to relieve
any Lender from its obligation to fulfill its Commitments hereunder or to
prejudice any rights that Company may have against any Lender as a result of any
default by such Lender hereunder.
52
D. The Register.
(i) Administrative Agent shall maintain, at its address referred to
in subsection 9.8, 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 Company or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(ii) Administrative Agent shall record in the Register the AXEL
Series B Commitment, AXEL Series C Commitment and AXEL Series D Commitment
and the AXEL Series B, AXEL Series C, AXEL Series D from time to time of
each Lender, and each repayment or prepayment in respect of the principal
amount of the AXEL Series B, AXEL Series C or AXEL Series D of each Lender.
Any such recordation shall be conclusive and binding on Company and each
Lender, absent manifest error; provided that failure to make any such
--------
recordation, or any error in such recordation, shall not affect any
Lender's Commitments or Company's Obligations in respect of any applicable
Loans.
(iii) Each Lender shall record on its internal records (including
the Notes held by such Lender) the amount of any AXEL Series B, AXEL Series
C and AXEL Series D made by it and each payment in respect thereof. Any
such recordation shall be conclusive and binding on Company, absent
manifest error; provided that failure to make any such recordation, or any
--------
error in such recordation, shall not affect any Lender's Commitments or
Company's Obligations in respect of any applicable Loans; and provided,
--------
further that in the event of any inconsistency between the Register and any
-------
Lender's records, the recordations in the Register shall govern and be
conclusive and binding on such Lender, absent manifest error.
(iv) Company, Administrative Agent and Lenders shall deem and treat
the Persons listed as Lenders in the Register as the holders and owners of
the corresponding Commitments and Loans listed therein for all purposes
hereof, and no assignment or transfer of any such Commitment or Loan shall
be effective, in each case unless and until an Assignment Agreement
effecting the assignment or transfer thereof shall have been accepted by
Administrative Agent and recorded in the Register as provided in subsection
9.1B(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) Company hereby designates ▇▇▇▇▇▇ Guaranty to serve as Company's
agent solely for purposes of maintaining the Register as provided in this
subsection 2.1D, and Company hereby agrees that, to the extent ▇▇▇▇▇▇
Guaranty serves in such capacity,
53
▇▇▇▇▇▇ Guaranty and its officers, directors, employees, agents and
affiliates shall constitute Indemnitees for all purposes under subsection
9.3.
E. Optional Notes. If so requested by any Lender by written notice to
Company (with a copy to Administrative Agent) at least two Business Days prior
to the Closing Date or at any time thereafter, Company shall execute and deliver
to such Lender (and/or, if applicable and if so specified in such notice, to any
Person who is an assignee of such Lender pursuant to subsection 9.1) on the
Closing Date (or, if such notice is delivered after the Closing Date, promptly
after Company's receipt of such notice) a promissory note or promissory notes to
evidence such Lender's AXEL Series B, AXEL Series C or AXEL Series D,
substantially in the form of Exhibit IV, Exhibit V or Exhibit VI annexed hereto,
---------- --------- ----------
respectively, with appropriate insertions.
2.2 Interest on the Loans.
---------------------
A. Rate of Interest. Subject to the provisions of subsections 2.6 and
2.7, each Loan shall bear interest on the unpaid principal amount thereof from
the date made through maturity (whether by acceleration or otherwise) at a rate
determined by reference to the Base Rate or the Adjusted Eurodollar Rate. The
basis for determining the interest rate with respect to any Loan may be changed
from time to time pursuant to subsection 2.2D. If on any day a Loan is
outstanding with respect to which notice has not been delivered to
Administrative Agent in accordance with the terms of this Agreement specifying
the applicable basis for determining the rate of interest, then for that day
that Loan shall bear interest determined by reference to the Base Rate.
(i) Subject to the provisions of subsections 2.2E and 2.7, the AXELs
Series B shall bear interest through maturity as follows:
(a) if a Base Rate Loan, then at the sum of the Base Rate plus
----
the Applicable Base Rate Margin for AXELs Series B; or
(b) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate plus the Applicable Eurodollar Rate Margin for AXELs
----
Series B.
(ii) Subject to the provisions of subsections 2.2E and 2.7, the AXELs
Series C shall bear interest through maturity as follows:
(a) if a Base Rate Loan, then at the sum of the Base Rate plus
----
the Applicable Base Rate Margin for AXELs Series C; or
(b) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate plus the Applicable Eurodollar Rate Margin for AXELs
----
Series C.
54
(iii) Subject to the provisions of subsections 2.2E and 2.7, the
AXELs Series D shall bear interest through maturity as follows:
(a) if a Base Rate Loan, then at the sum of the Base Rate plus
----
the Applicable Base Rate Margin for AXELs Series D; or
(b) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate plus the Applicable Eurodollar Rate Margin for AXELs
----
Series D.
B. Interest Periods. In connection with each Eurodollar Rate Loan,
-----------------
Company may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, select an interest period (each an "Interest Period")
to be applicable to such Loan, which Interest Period shall be, at Company"s
option, either a one-, two-, three- or six-month period or, if deposits in the
interbank Eurodollar market are generally available for such period (as
determined by each Lender making, converting to or continuing such Eurodollar
Rate Loan), a two-week or twelve-month period; provided that:
--------
(i) the initial Interest Period for any Eurodollar Rate Loan shall
commence on the Closing Date, in the case of a Loan initially made as a
Eurodollar Rate Loan, or on the date specified in the applicable Notice of
Conversion/Continuation, in the case of a Loan converted to a Eurodollar
Rate Loan;
(ii) in the case of immediately successive Interest Periods
applicable to a Eurodollar Rate Loan continued as such pursuant to a Notice
of 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 AXELs
Series B shall extend beyond December 15, 2004, no Interest Period with
respect to any portion of the AXELs Series C shall extend beyond December
15, 2005, and no Interest Period with respect to any portion of the AXELs
Series D shall extend beyond December 15, 2006;
55
(vi) no Interest Period with respect to any portion of the AXELs
Series B, AXELs Series C or AXELs Series D shall extend beyond a date on
which Company is required to make a scheduled payment of principal of the
AXELs Series B, AXELs Series C or AXELs Series D, as the case may be,
unless the sum of (a) the aggregate principal amount of AXELs Series B,
AXELs Series C or AXELs Series D, as the case may be, that are Base Rate
Loans plus (b) the aggregate principal amount of AXELs Series B, AXELs
----
Series C or AXELs Series D as the case may be, that are Eurodollar Rate
Loans with Interest Periods expiring on or before such date equals or
exceeds the principal amount required to be paid on the AXELs Series B,
AXELs Series C or AXELs Series D, as the case may be, on such date;
(vii) Company shall not select an Interest Period of longer than one
month prior to the end of the Initial Period;
(viii) there shall be no more than twelve (12) Interest Periods
outstanding at any time; and
(ix) in the event Company fails to specify an Interest Period for
any Eurodollar Rate Loan in the applicable Notice of Borrowing or Notice of
Conversion/Continuation, Company 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).
D. Conversion or Continuation. Subject to the provisions of subsection
2.6, Company shall have the option (i) to convert at any time all or any part of
its outstanding Loans equal to $500,000 and integral multiples of $100,000 in
excess of that amount from Loans bearing interest at a rate determined by
reference to one basis to Loans bearing interest at a rate determined by
reference to an alternative basis or (ii) upon the expiration of any Interest
Period applicable to a Eurodollar Rate Loan, to continue all or any portion of
such Loan equal to $1,000,000 and integral multiples of $100,000 in excess of
that amount as a Eurodollar Rate Loan; provided, however, that a Eurodollar Rate
-------- -------
Loan may only be converted into a Base Rate Loan on the expiration date of an
Interest Period applicable thereto; and provided further, however, that Loans
-------- ------- -------
may not be continued as or converted to Eurodollar Rate Loans with an Interest
Period longer than one month prior to the end of the Initial Period.
Company shall deliver a Notice of Conversion/Continuation at any time after
the Closing Date to Administrative Agent no later than 12:00 Noon (New York City
time) at least one Business Day in advance of the proposed conversion date (in
the case of a conversion to a Base Rate Loan) and at least three Business Days
in advance of the proposed conversion/continuation date (in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan). A Notice of
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,
56
(iii) the nature of the proposed conversion/continuation, (iv) in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan, the requested
Interest Period, and (v) in the case of a conversion to, or a continuation of, a
Eurodollar Rate Loan, that no Potential Event of Default or Event of Default has
occurred and is continuing. In lieu of delivering the above-described Notice of
Conversion/Continuation, Company may give Administrative Agent telephonic notice
by the required time of any proposed conversion/continuation under this
subsection 2.2D; provided that such notice shall be promptly confirmed in
--------
writing by delivery of a Notice of Conversion/Continuation to Administrative
Agent on or before the proposed conversion/continuation date. Upon receipt of
written or telephonic notice of any proposed conversion/continuation under this
subsection 2.2D, Administrative Agent shall promptly transmit such notice by
telefacsimile or telephone to each Lender.
Neither Administrative Agent nor any Lender shall incur any liability to
Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to act on behalf of Company 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 Company 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 telephonic notice in lieu thereof) shall be irrevocable on and
after the related Interest Rate Determination Date, and Company shall be bound
to effect a conversion or continuation in accordance therewith.
E. Post-Maturity Interest. Any principal payments on the Loans not paid
when due and, to the extent permitted by applicable law, any interest payments
on the Loans or any fees or other amounts owed hereunder not paid when due, in
each case whether at stated maturity, by notice of prepayment, by acceleration
or otherwise, shall, if Requisite Lenders so elect in writing, thereafter bear
interest (including post-petition interest in any proceeding under the
Bankruptcy Code or other applicable bankruptcy laws) payable on demand at a rate
which is 2% per annum in excess of the interest rate otherwise payable at
maturity under this Agreement with respect to the applicable Loans (or, in the
case of any such fees and other amounts, at a rate which is 2% per annum in
excess of the interest rate otherwise payable under this Agreement for Base Rate
Loans); provided that, in the case of Eurodollar Rate Loans, upon the expiration
--------
of the Interest Period in effect at the time any such increase in interest rate
is effective such Eurodollar Rate Loans shall thereupon become Base Rate Loans
and shall thereafter bear interest payable upon demand at a rate which is 2% per
annum in excess of the interest rate otherwise payable under this Agreement for
Base Rate Loans. Payment or acceptance of the increased rates of interest
provided for in this subsection 2.2E is not a permitted alternative to timely
payment and shall not constitute a waiver of any Event of Default or otherwise
prejudice or limit any rights or remedies of Administrative Agent or any Lender.
57
F. Computation of Interest. Interest on the Loans shall be computed (i)
in the case of Base Rate Loans, on the basis of a 365-day or 366-day year, as
the case may be, and (ii) in the case of Eurodollar Rate Loans, on the basis of
a 360-day year, in each case for the actual number of days elapsed in the period
during which it accrues. In computing interest on any Loan, the date of the
making of such Loan or the first day of an Interest Period applicable to such
Loan or, with respect to a Base Rate Loan being converted from a Eurodollar Rate
Loan, the date of conversion of such Eurodollar Rate Loan to such Base Rate
Loan, as the case may be, shall be included, and the date of payment of such
Loan or the expiration date of an Interest Period applicable to such Loan or,
with respect to a Base Rate Loan being converted to a Eurodollar Rate Loan, the
date of conversion of such Base Rate Loan to such Eurodollar Rate Loan, as the
case may be, shall be excluded; provided that if a Loan is repaid on the same
--------
day on which it is made, one day's interest shall be paid on that Loan.
2.3 Fees.
----
Company agrees to pay to Syndication Agent and Administrative Agent such
fees in the amounts and at the times separately agreed upon between Company,
Syndication Agent and Administrative Agent.
2.4 Repayments and Prepayments; General Provisions Regarding Payments;
------------------------------------------------------------------
Application of Proceeds of Collateral and Payments Under Guaranties.
-------------------------------------------------------------------
A. Scheduled Payments of Loans.
(i) Scheduled Payments of AXELs Series B. Company shall make
------------------------------------
principal payments on the AXELs Series B in installments on the dates and
in the amounts set forth below:
=========================================
SCHEDULED REPAYMENT
DATE OF AXELS SERIES B
==================================================
March 15, 1998 $ 150,000
--------------------------------------------------
June 15, 1998 $ 150,000
--------------------------------------------------
September 15, 1998 $ 150,000
--------------------------------------------------
December 15, 1998 $ 150,000
--------------------------------------------------
March 15, 1999 $ 150,000
--------------------------------------------------
June 15, 1999 $ 150,000
--------------------------------------------------
September 15, 1999 $ 150,000
--------------------------------------------------
December 15, 1999 $ 150,000
--------------------------------------------------
March 15, 2000 $ 150,000
--------------------------------------------------
June 15, 2000 $ 150,000
--------------------------------------------------
58
==================================================
SCHEDULED REPAYMENT
DATE OF AXELS SERIES B
September 15, 2000 $ 150,000
==================================================
December 15, 2000 $ 150,000
--------------------------------------------------
March 15, 2001 $ 150,000
--------------------------------------------------
June 15, 2001 $ 150,000
--------------------------------------------------
September 15, 2001 $ 150,000
--------------------------------------------------
December 15, 2001 $ 150,000
--------------------------------------------------
March 15, 2002 $ 150,000
--------------------------------------------------
June 15, 2002 $ 150,000
--------------------------------------------------
September 15, 2002 $ 150,000
--------------------------------------------------
December 15, 2002 $ 150,000
--------------------------------------------------
March 15, 2003 $ 7,500,000
--------------------------------------------------
June 15, 2003 $ 7,500,000
--------------------------------------------------
September 15, 2003 $ 7,500,000
--------------------------------------------------
December 15, 2003 $ 7,500,000
--------------------------------------------------
March 15, 2004 $23,000,000
--------------------------------------------------
June 15, 2004 $23,000,000
--------------------------------------------------
September 15, 2004 $23,000,000
--------------------------------------------------
December 15, 2004 $23,000,000
==================================================
; provided that the scheduled installments of principal of the AXELs Series
--------
B set forth above shall be reduced in connection with any voluntary or
mandatory prepayments of the AXELs Series B in accordance with subsection
2.4B(iii); and provided, further that the AXELs Series B and all other
-------- -------
amounts owed hereunder with respect to the AXELs Series B shall be paid in
full no later than December 15, 2004, and the final installment payable by
Company in respect of the AXELs Series B 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 AXELs Series B.
(ii) Scheduled Payments of AXELs Series C. Company shall make
------------------------------------
principal payments on the AXELs Series C in installments on the dates and
in the amounts set forth below:
59
================================================
SCHEDULED REPAYMENT
DATE OF AXELS SERIES C
================================================
March 15, 1998 $ 100,000
------------------------------------------------
June 15, 1998 $ 100,000
------------------------------------------------
September 15, 1998 $ 100,000
------------------------------------------------
December 15, 1998 $ 100,000
------------------------------------------------
March 15, 1999 $ 100,000
------------------------------------------------
June 15, 1999 $ 100,000
------------------------------------------------
September 15, 1999 $ 100,000
------------------------------------------------
December 15, 1999 $ 100,000
------------------------------------------------
March 15, 2000 $ 100,000
------------------------------------------------
June 15, 2000 $ 100,000
------------------------------------------------
September 15, 2000 $ 100,000
------------------------------------------------
December 15, 2000 $ 100,000
------------------------------------------------
March 15, 2001 $ 100,000
------------------------------------------------
June 15, 2001 $ 100,000
------------------------------------------------
September 15, 2001 $ 100,000
------------------------------------------------
December 15, 2001 $ 100,000
------------------------------------------------
March 15, 2002 $ 100,000
------------------------------------------------
June 15, 2002 $ 100,000
------------------------------------------------
September 15, 2002 $ 100,000
------------------------------------------------
December 15, 2002 $ 100,000
------------------------------------------------
March 15, 2003 $ 100,000
------------------------------------------------
June 15, 2003 $ 100,000
------------------------------------------------
September 15, 2003 $ 100,000
------------------------------------------------
December 15, 2003 $ 100,000
------------------------------------------------
March 15, 2004 $ 100,000
------------------------------------------------
June 15, 2004 $ 100,000
------------------------------------------------
September 15, 2004 $ 100,000
------------------------------------------------
December 15, 2004 $ 100,000
------------------------------------------------
March 15, 2005 $21,800,000
------------------------------------------------
June 15, 2005 $21,800,000
------------------------------------------------
September 15, 2005 $21,800,000
------------------------------------------------
60
==================================================
SCHEDULED REPAYMENT
DATE IF AXELS SERIES C
==================================================
December 15, 2005 $21,800,000
==================================================
; provided that the scheduled installments of principal of the AXELs Series
--------
C set forth above shall be reduced in connection with any voluntary or
mandatory prepayments of the AXELs Series C in accordance with subsection
2.4B(iii); and provided, further that the AXELs Series C and all other
-------- -------
amounts owed hereunder with respect to the AXELs Series C shall be paid in
full no later than December 15, 2005, and the final installment payable by
Company in respect of the AXELs Series C 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 AXELs Series C.
(iii) Scheduled Payments of AXELs Series D. Company shall make
------------------------------------
principal payments on the AXELs Series D in installments on the dates and
in the amounts set forth below:
==================================================
SCHEDULED REPAYMENT
DATE OF AXELS SERIES D
==================================================
March 15, 1998 $ 125,000
--------------------------------------------------
June 15, 1998 $ 125,000
--------------------------------------------------
September 15, 1998 $ 125,000
--------------------------------------------------
December 15, 1998 $ 125,000
--------------------------------------------------
March 15, 1999 $ 125,000
--------------------------------------------------
June 15, 1999 $ 125,000
--------------------------------------------------
September 15, 1999 $ 125,000
--------------------------------------------------
December 15, 1999 $ 125,000
--------------------------------------------------
March 15, 2000 $ 125,000
--------------------------------------------------
June 15, 2000 $ 125,000
--------------------------------------------------
September 15, 2000 $ 125,000
--------------------------------------------------
December 15, 2000 $ 125,000
--------------------------------------------------
March 15, 2001 $ 125,000
--------------------------------------------------
June 15, 2001 $ 125,000
--------------------------------------------------
September 15, 2001 $ 125,000
--------------------------------------------------
December 15, 2001 $ 125,000
--------------------------------------------------
March 15, 2002 $ 125,000
--------------------------------------------------
June 15, 2002 $ 125,000
--------------------------------------------------
61
==================================================
SCHEDULED REPAYMENT
DATE OF AXELS SERIES D
==================================================
September 15, 2002 $ 125,000
--------------------------------------------------
December 15, 2002 $ 125,000
--------------------------------------------------
March 15, 2003 $ 125,000
--------------------------------------------------
June 15, 2003 $ 125,000
--------------------------------------------------
September 15, 2003 $ 125,000
--------------------------------------------------
December 15, 2003 $ 125,000
--------------------------------------------------
March 15, 2004 $ 125,000
--------------------------------------------------
June 15, 2004 $ 125,000
--------------------------------------------------
September 15, 2004 $ 125,000
--------------------------------------------------
December 15, 2004 $ 125,000
--------------------------------------------------
March 15, 2005 $ 125,000
--------------------------------------------------
June 15, 2005 $ 125,000
--------------------------------------------------
September 15, 2005 $ 125,000
--------------------------------------------------
December 15, 2005 $ 125,000
--------------------------------------------------
March 15, 2006 $27,750,000
--------------------------------------------------
June 15, 2006 $27,750,000
--------------------------------------------------
September 15, 2006 $27,750,000
--------------------------------------------------
December 15, 2006 $27,750,000
==================================================
; provided that the scheduled installments of principal of the AXELs Series
--------
D set forth above shall be reduced in connection with any voluntary or
mandatory prepayments of the AXELs Series D in accordance with subsection
2.4B(iii); and provided, further that the AXELs Series D and all other
-------- -------
amounts owed hereunder with respect to the AXELs Series D shall be paid in
full no later than December 15, 2006, and the final installment payable by
Company in respect of the AXELs Series D 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 AXELs Series D.
B. Prepayments.
(i) Voluntary Prepayments.
---------------------
(a) Notice of Prepayment. Company may, upon written or
--------------------
telephonic notice on the date of prepayment, in the case of Base Rate
Loans, and three Business Days prior written or telephonic notice, in
the case of Eurodollar Rate Loans, in each case given to
Administrative Agent by 12:00 Noon (New York
62
City time) on the date required and, if given by telephone, promptly
confirmed in writing to Administrative Agent (which original written
or telephonic notice Administrative Agent will promptly transmit by
telefacsimile or telephone to each Lender), at any time and from time
to time prepay any Loans 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. 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(iii).
(b) Prepayment Fees. If any portion of the AXELs Series B,
---------------
AXELs Series C or AXELs Series D is prepaid (1) pursuant to clause (a)
of subsection 2.4B(i), or (2) pursuant to clause (a), (b), (c), (d),
(e) or (g) of subsection 2.4B(ii), in any such case within eighteen
months after the Closing Date, Company shall pay to Administrative
Agent, for distribution to the holders of the Loans so prepaid, in
accordance with their applicable Pro Rata Shares, a fee equal to 1% of
the principal amount of Loans so prepaid during the period commencing
on the Closing Date and ending eighteen months after the Closing Date.
(ii) Mandatory Prepayments. The Loans shall be prepaid in the
---------------------
amounts and under the circumstances set forth below, all such prepayments
to be applied as set forth below or as more specifically provided in
subsection 2.4B(iii).
(a) Prepayments From Net Asset Sale Proceeds. No later than
----------------------------------------
the fifth Business Day following the date of receipt by Company or any
of its Subsidiaries of any Net Asset Sale Proceeds in respect of any
Asset Sale, Company shall prepay the Loans in an aggregate amount
equal to such Net Asset Sale Proceeds; provided, however, that upon
-------- -------
receipt by Company or any of its Subsidiaries of any such Net Asset
Sale Proceeds, so long as no Event of Default shall have occurred and
be continuing and to the extent that the aggregate amount of Net Asset
Sale Proceeds and Net Insurance/Condemnation Proceeds from the Closing
Date through the date of determination does not exceed $25,000,000,
Company may deliver to Administrative Agent an Officers' Certificate
setting forth (1) that portion of such Net Asset Sale Proceeds (such
portion being the "Proposed Asset Sale Reinvestment Proceeds") that
Company or such Subsidiary intends to reinvest (or enter into a
contract to reinvest) in equipment or other productive assets of the
general type used in the business (including capital stock of a
corporation engaged in such business) of Company and its Subsidiaries
(such equipment and other assets being "Eligible Assets") within
270 days of such date of receipt and (2) the proposed use of such
Proposed Asset Sale Reinvestment Proceeds and such other information
with respect to such reinvestment as Administrative Agent may
reasonably request, and Company shall, or shall cause one or more of
its Subsidiaries to, promptly and diligently
63
apply such Proposed Asset Sale Reinvestment Proceeds to such
reinvestment purposes; provided, however, that at Company's option,
-------- -------
such Proposed Asset Sale Reinvestment Proceeds may be applied to
prepay outstanding Revolving Loans (without a reduction in Revolving
Loan Commitments) to the full extent thereof. In addition, Company
shall, no later than 270 days after receipt of such Proposed Asset
Sale Reinvestment Proceeds that have not theretofore been applied to
the Obligations, make an additional prepayment of the Loans in the
full amount of all such Proposed Asset Sale Reinvestment Proceeds that
have not theretofore been so reinvested in Eligible Assets; provided
--------
that Company shall not be required to make any prepayment of the Loans
to the extent that the sum of Net Asset Sale Proceeds plus Net
----
Insurance/Condemnation Proceeds from the Closing Date through the date
of determination does not exceed $5,000,000. Notwithstanding the
foregoing, if at the time of any required prepayment under this
subsection the Leverage Ratio is not more than 4.0 to 1.0, Company
shall only be required to prepay 75% of the amount which it would
otherwise be required to prepay hereunder; provided, however, that if
-------- -------
Company is required to apply any portion of Net Asset Sale Proceeds to
prepay Indebtedness under the Revolving Credit Agreement or the Senior
Subordinated Notes or the Discount Notes (under the terms of the New
Sub Debt Indentures), then notwithstanding anything contained in this
Agreement to the contrary (but subject to subsection 2.4B(iii)(c)
hereof), Company shall apply such Net Asset Sale Proceeds to the
prepayment of the Tranche A Term Loans and the Loans pro rata
according to the respective outstanding principal amount, if any, of
each, then to the prepayment of Revolving Loans and/or the reduction
of Revolving Loan Commitments in accordance with the provisions of the
Revolving Credit Agreement, in each case so as to eliminate or
minimize any obligation to prepay any such Indebtedness evidenced by
the Senior Subordinated Notes or the Discount Notes.
(b) Prepayments from Net Insurance/Condemnation Proceeds. No
----------------------------------------------------
later than the tenth Business Day following the date of receipt by
Administrative Agent or by Company or any of its Subsidiaries of any
Net Insurance/Condemnation Proceeds that are required to be applied to
prepay the Loans pursuant to the provisions of subsection 5.4C,
Company shall prepay the Loans in an aggregate amount equal to the
amount of such Net Insurance/Condemnation Proceeds minus (if (1) no
-----
Event of Default shall have occurred and be continuing and (2) Company
shall have delivered to Administrative Agent, on or before such tenth
Business Day, the Officers' Certificate described in subsection
5.4C(ii)), any Proposed Insurance Reinvestment Proceeds; provided,
--------
however, that at Company's option, such Proposed Insurance
-------
Reinvestment Proceeds may be applied to prepay outstanding Revolving
Loans (without a reduction in Revolving Loan Commitments) to the full
extent thereof. In addition, no later than 270 days after receipt of
any Proposed Insurance Reinvestment Proceeds, Company shall prepay the
Loans in an amount equal to the amount of any such Proposed Insurance
Reinvestment Proceeds that have not theretofore been applied to the
costs of repairing, restoring or replacing the applicable assets of
Company or its
64
Subsidiaries or reinvested in Eligible Assets; provided that Company
--------
shall not be required to make any prepayment of the Loans to the
extent that the sum of Net Asset Sale Proceeds plus Net
----
Insurance/Condemnation Proceeds from the Closing Date through the date
of determination does not exceed $5,000,000. Notwithstanding the
foregoing, if at the time of any required prepayment under this
subsection the Leverage Ratio is not more than 4.0 to 1.0, Company
shall only be required to prepay 75% of the amount which it would
otherwise be required to prepay hereunder; provided, however, that if
-------- -------
Company is required to apply any portion of Net Insurance/Condemnation
Proceeds to prepay Indebtedness under the Revolving Credit Agreement
or the Senior Subordinated Notes or the Discount Notes (under the
terms of the New Sub Debt Indentures), then notwithstanding anything
contained in this Agreement to the contrary (but subject to
subsection 2.4B(iii)(c) hereof), Company shall apply such Net
Insurance/Condemnation Proceeds to the prepayment of the Tranche A
Term Loans and the Loans pro rata according to the respective
outstanding principal amount, if any, of each, then to the prepayment
of Revolving Loans and/or the reduction of Revolving Loan Commitments
in accordance with the provisions of the Revolving Credit Agreement,
in each case so as to eliminate or minimize any obligation to prepay
any such Indebtedness evidenced by the Senior Subordinated Notes or
the Discount Notes.
(c) Prepayments Due to Reversion of Surplus Assets of Pension
---------------------------------------------------------
Plans. On the date of reversion to Company or any of its Subsidiaries
-----
of any surplus assets of any pension plan of Company or any of its
Subsidiaries, Company shall prepay the Loans in an aggregate amount
(such amount being the "Net Pension Proceeds") equal to 100% of such
returned surplus assets, net of transaction costs and expenses
incurred in obtaining such return, including incremental taxes payable
as a result thereof. If Company is required to apply any portion of
Net Pension Proceeds to prepay Indebtedness under the Revolving Credit
Agreement or the Senior Subordinated Notes or the Discount Notes
(under the terms of the New Sub Debt Indentures), then notwithstanding
anything contained in this Agreement to the contrary (but subject to
subsection 2.4B(iii)(c) hereof), Company shall apply such Net Pension
Proceeds to the prepayment of the Tranche A Term Loans and the Loans
pro rata according to the respective outstanding principal amount, if
any, of each, then to the prepayment of Revolving Loans and/or the
reduction of Revolving Loan Commitments in accordance with the
provisions of the Revolving Credit Agreement, in each case so as to
eliminate or minimize any obligation to prepay any such Indebtedness
evidenced by the Senior Subordinated Notes or the Discount Notes.
(d) Prepayments Due to Issuance of Debt. On the date of
-----------------------------------
receipt by Holdings, Company or any of their respective Subsidiaries
of the Cash proceeds of any Indebtedness, including debt Securities of
Holdings, Company or any of their respective Subsidiaries (other than
the Loans and any other Indebtedness permitted under subsection 7.1 of
the Revolving Credit Agreement (such
65
proceeds, net of underwriting discounts and commissions and other
reasonable costs and expenses associated therewith, including
reasonable legal fees and expenses, being the "Net Indebtedness
Proceeds")), Company shall prepay the Loans in an aggregate amount
equal to such Net Indebtedness Proceeds; provided, however, that
-------- -------
payment or acceptance of the amounts provided for in this
subsection 2.4B(ii)(d) shall not constitute a waiver of any Event of
Default resulting from the incurrence of such Indebtedness or
otherwise prejudice any rights or remedies of Agents or Lenders. If
Company is required to apply any portion of Net Indebtedness Proceeds
to prepay Indebtedness under the Revolving Credit Agreement or the
Senior Subordinated Notes or the Discount Notes (under the terms of
the New Sub Debt Indentures), then notwithstanding anything contained
in this Agreement to the contrary (but subject to subsection
2.4B(iii)(c) hereof), Company shall apply such Net Indebtedness
Proceeds to the prepayment of the Tranche A Term Loans and the Loans
pro rata according to the respective outstanding principal amount, if
any, of each, then to the prepayment of Revolving Loans and/or the
reduction of Revolving Loan Commitments in accordance with the
provisions of the Revolving Credit Agreement, in each case so as to
eliminate or minimize any obligation to prepay any such Indebtedness
evidenced by the Senior Subordinated Notes or the Discount Notes.
(e) Prepayments Due to Issuance of Equity Securities. On the
------------------------------------------------
date of receipt by Holdings or Company of 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 Equity Proceeds")
from the issuance of any equity Securities of Holdings or Company
after the Closing Date (other than (A) capital contributions by
Holdings and Company, and (B) issuances of Holdings Common Stock
(x) to employees, officers, directors and consultants of Holdings and
its Subsidiaries to the extent such Holdings Common Stock constitutes
compensation to such individuals, (y) to ▇▇▇▇ or the Other Investors
to the extent the Cash proceeds thereof are not in excess of
$25,000,000, and (z) as payment of all or any portion of the purchase
price of a business or assets in a Permitted Acquisition), Company
shall prepay the Loans in an aggregate amount equal to: (i) 50% (or,
if the Leverage Ratio is not more than 4.0 to 1.0 on the date such Net
Equity Proceeds are received, 25%) of such Net Equity Proceeds if such
Net Equity Proceeds are derived from a non-public sale of equity
Securities of Holdings or Company or (ii) 75% (or, if the Leverage
Ratio is not more than 4.0 to 1.0 on the date such Net Equity Proceeds
are received, 50%) of such Net Equity Proceeds if such Net Equity
Proceeds are derived from the sale of equity Securities of Holdings or
Company through a public offering. If Company is required to apply any
portion of Net Equity Proceeds to prepay Indebtedness under the
Revolving Credit Agreement or the Senior Subordinated Notes or the
Discount Notes (under the terms of the New Sub Debt Indentures), then
notwithstanding anything contained in this Agreement to the contrary
(but subject to subsection 2.4B(iii)(c) hereof), Company shall apply
such Net Equity Proceeds to the prepayment of the Tranche
66
A Term Loans and the Loans pro rata according to the respective
outstanding principal amount, if any, of each, then to the prepayment
of Revolving Loans and/or the reduction of Revolving Loan Commitments
in accordance with the provisions of the Revolving Credit Agreement,
in each case so as to eliminate or minimize any obligation to prepay
any such Indebtedness evidenced by the Senior Subordinated Notes or
the Discount Notes.
(f) Prepayments from Consolidated Excess Cash Flow. In the
----------------------------------------------
event that there shall be Consolidated Excess Cash Flow for any Fiscal
Year (commencing with Fiscal Year 1998), Company shall, no later than
90 days after the end of such Fiscal Year, prepay the Loans in an
aggregate amount equal to 75% (or, if the Leverage Ratio is not more
than 4.0 to 1.0 on the last day of any such Fiscal Year, 50%) of such
Consolidated Excess Cash Flow. If Company is required to apply any
portion of Consolidated Excess Cash Flow to prepay Indebtedness under
the Revolving Credit Agreement or the Senior Subordinated Notes or the
Discount Notes (under the terms of the New Sub Debt Indentures), then
notwithstanding anything contained in this Agreement to the contrary
(but subject to subsection 2.4B(iii)(c) hereof), Company shall apply
such portion of Consolidated Excess Cash Flow first, to the prepayment
-----
of the Tranche A Term Loans to the full extent thereof, and second, to
------
the Loans pro rata according to the respective outstanding principal
amount, if any, of each, then to the prepayment of Revolving Loans
and/or the reduction of Revolving Loan Commitments in accordance with
the provisions of the Revolving Credit Agreement, in each case so as
to eliminate or minimize any obligation to prepay any such
Indebtedness evidenced by the Senior Subordinated Notes or the
Discount Notes.
(g) Calculations of Net Proceeds Amounts; Additional
------------------------------------------------
Prepayments Based on Subsequent Calculations. Concurrently with any
--------------------------------------------
prepayment of the Loans pursuant to subsections 2.4B(ii)(a)-(f),
Company shall deliver to Administrative Agent an Officers' Certificate
demonstrating the calculation of the amount (the "Net Proceeds
Amount") of the applicable Net Asset Sale Proceeds, Net
Insurance/Condemnation Proceeds, Net Pension Proceeds, Net
Indebtedness Proceeds or Net Equity Proceeds (as such terms are
defined in subsections 2.4B(ii)(a), (b), (c), (d) and (e),
respectively) or the applicable Consolidated Excess Cash Flow, as the
case may be, that gave rise to such prepayment and/or reduction. In
the event that Company shall subsequently determine that the actual
Net Proceeds Amount was greater than the amount set forth in such
Officers' Certificate, Company shall promptly make an additional
prepayment of the Loans in an amount equal to the amount of such
excess, and Company shall concurrently therewith deliver to
Administrative Agent an Officers' Certificate demonstrating the
derivation of the additional Net Proceeds Amount resulting in such
excess.
67
(iii) Application of Prepayments.
--------------------------
(a) Application of Voluntary Prepayments by Type of Loans and
---------------------------------------------------------
Order of Maturity. Any voluntary prepayments of the Loans pursuant to
-----------------
subsection 2.4B(i) shall be applied to prepay the AXELs Series B, the
AXELs Series C and the AXELs Series D on a pro rata basis (in
accordance with the respective outstanding principal amounts thereof)
and to reduce the scheduled installments of principal of the AXELs
Series B, the AXELs Series C and the AXELs Series D set forth in
subsections 2.4A(i), 2.4A(ii) and 2.4A(iii) on a pro rata basis (in
accordance with the respective outstanding principal amounts thereof);
provided, however, that so long as any Tranche A Term Loans are
-------- -------
outstanding, any prepayment of the Loans pursuant to subsection
2.4B(i) shall be applied to the repayment of the Tranche A Term Loans
and the Loans on a pro rata basis according to the respective
outstanding principal amounts thereof.
(b) Application of Mandatory Prepayments of Loans to AXELs
------------------------------------------------------
Series B, AXELs Series C and AXELs Series D and the Scheduled
-------------------------------------------------------------
Installments of Principal Thereof. Any mandatory prepayments of the
---------------------------------
Loans pursuant to subsection 2.4B(ii) shall be applied to prepay the
AXELs Series B, the AXELs Series C and the AXELs Series D on a pro
rata basis (in accordance with the respective outstanding principal
amounts thereof) and shall be applied on a pro rata basis (in
accordance with the respective outstanding principal amounts thereof)
to each scheduled installment of principal of the AXELs Series B, the
AXELs Series C or the AXELs Series D, as the case may be, set forth in
subsection 2.4A(i), 2.4A(ii) or 2.4A(iii), respectively, that is
unpaid at the time of such prepayment.
(c) Waiver of Certain Mandatory Prepayments. Anything
---------------------------------------
contained herein to the contrary notwithstanding, so long as any
Tranche A Term Loans are outstanding, in the event Company is required
to make any mandatory prepayment (a "Waivable Mandatory Prepayment")
of the AXELs Series B, AXELs Series C and/or AXELs Series D pursuant
to subsection 2.4B(ii), (X) not less than three Business Days prior to
the date (the "Required Prepayment Date") on which Company is
required to make such Waivable Mandatory Prepayment, Company shall
notify Administrative Agent of the amount of such prepayment, and
Administrative Agent will promptly thereafter notify each Lender
holding an outstanding AXEL Series B, AXEL Series C or AXEL Series D
of the amount of such Lender's Pro Rata Share of such Waivable
Mandatory Prepayment and such Lender's option to refuse such amount,
(Y) each such Lender may exercise such option by giving written notice
to Company and Administrative Agent of its election to do so on or
before the first Business Day (the "Cutoff Date") prior to the
Required Prepayment Date (it being understood that any Lender which
does not notify Company and Administrative Agent of its election to
exercise such option on or before the Cutoff Date shall be deemed to
have elected, as of the Cutoff Date, not to exercise such option), and
(Z) on the
68
Required Prepayment Date, Company shall pay to Administrative Agent
the amount of the Waivable Mandatory Prepayment, which amount shall be
applied (1) in an amount equal to that portion of the Waivable
Mandatory Prepayment payable to those Lenders that have elected not to
exercise such option, to prepay the AXELs Series B, AXELs Series C
and/or AXELs Series D of such Lenders (which prepayment shall be
applied to the scheduled installments of principal of the AXELs
Series B, AXELs Series C and AXELs Series D in accordance with
subsection 2.4B(iii)(b)) and (2) in an amount equal to that portion of
the Waivable Mandatory Prepayment otherwise payable to those Lenders
that have elected to exercise such option, to prepay the Tranche A
Term Loans in accordance with the terms of the Revolving Credit
Agreement.
(d) Application of Prepayments to Base Rate Loans and
-------------------------------------------------
Eurodollar Rate Loans. Considering AXELs Series B, AXELs Series C and
---------------------
AXELs Series D 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 Company of
--------------------------
principal, interest, fees and other Obligations hereunder and under the
Notes shall be made in Dollars in same day funds, without defense, setoff
or counterclaim, free of any restriction or condition, and delivered to
Administrative Agent not later than 1:00 P.M. (New York City time) on the
date due at the Funding and Payment Office for the account of Lenders;
funds received by Administrative Agent after that time on such due date
shall be deemed to have been paid by Company on the next succeeding
Business Day. Company hereby authorizes Administrative Agent to charge its
accounts with Administrative Agent in order to cause timely payment to be
made to Administrative Agent of all principal, interest, fees and expenses
due hereunder (subject to sufficient funds being available in its accounts
for that purpose).
(ii) Application of Payments to Principal and Interest. 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 the Loans shall be apportioned among all outstanding
Loans to which such payments relate, in each case proportionately to
Lenders' respective Pro Rata Shares. Administrative Agent shall promptly
distribute to each Lender, at its primary address set forth below its name
on the appropriate signature page hereof or at such other address as such
Lender may request, its Pro Rata Share of all such payments received by
69
Administrative Agent and the commitment fees of such Lender when received
by Administrative Agent pursuant to subsection 2.3. Notwithstanding the
foregoing provisions of this subsection 2.4C(iii), if, pursuant to the
provisions of subsection 2.6C, any Notice of Conversion/Continuation is
withdrawn as to any Affected Lender or if any Affected Lender makes Base
Rate Loans in lieu of its Pro Rata Share of any Eurodollar Rate Loans,
Administrative Agent shall give effect thereto in apportioning payments
received thereafter.
(iv) Payments on Business Days. Whenever any payment to be made
-------------------------
hereunder shall be stated to be due on a day that is not a Business Day,
such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of the payment of
interest hereunder or of the commitment fees hereunder, as the case may be.
(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
-------------------------------------
subsections 2.4B(ii)(a) and 2.4B(ii)(b) with respect to prepayments from
Net Asset Sale Proceeds and Net Insurance/Condemnation Proceeds, all
proceeds received by Administrative Agent in respect of any sale of,
collection from, or other realization upon all or any part of the
Collateral under any Collateral Document may, in the discretion of
Administrative Agent, be held by Administrative Agent as Collateral for,
and/or (then or at any time thereafter) applied in full or in part by
Administrative Agent against, the applicable Secured Obligations (as
defined in such Collateral Document) in the following order of priority:
(a) To the payment of all costs and expenses of such sale,
collection or other realization, including all expenses, liabilities
and advances made or incurred by Administrative Agent and its agents
and counsel in connection therewith, and all amounts for which
Administrative Agent is entitled to indemnification under such
Collateral Document and all advances made by Administrative Agent
thereunder for the account of the applicable Loan Party, and to the
payment of all costs and expenses paid or incurred by Administrative
Agent in connection with the exercise of any right or remedy under
such Collateral Document, all in accordance with the terms of this
Agreement and such Collateral Document;
70
(b) thereafter, to the extent of any excess such proceeds, to
the payment of all other such Secured Obligations then due and owing
for the ratable benefit of the holders thereof; and
(c) thereafter, to the extent of any excess such proceeds, to
the payment to or upon the order of such Loan Party or to whosoever
may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct.
(ii) Application of Payments Under Guaranties. All payments
----------------------------------------
received by Administrative Agent under either Guaranty shall be applied
promptly from time to time by Administrative Agent in the following order
of priority:
(a) To the payment of the costs and expenses of any
collection or other realization under such the Guaranty, including all
expenses, liabilities and advances made or incurred by Administrative
Agent and its agents and counsel in connection therewith, all in
accordance with the terms of this Agreement and 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.
2.5 Use of Proceeds.
---------------
A. Recapitalization Financing Requirements. The Loans, $120,000,000 in
principal amount of Tranche A Term Loans and up to $10,400,000 in aggregate
principal amount of Revolving Loans made under the Revolving Credit Agreement on
the Closing Date (the "Recapitalization Revolving Loans"), together with the
proceeds of the debt and equity capitalization of Holdings and Company described
in subsections 3.1D(i), (iii) and (iv) shall be applied by Holdings and Company
to fund the Recapitalization Financing Requirements.
B. Margin Regulations. No portion of the proceeds of any borrowing under
this Agreement shall be used by Holdings or any of its Subsidiaries in any
manner that might cause the borrowing or the application of such proceeds to
violate Regulation G, Regulation U, Regulation T or Regulation X of the Board of
Governors of the Federal Reserve System or any other regulation of such Board or
to violate the Exchange Act, in each case as in effect on the date or dates of
such borrowing and such use of proceeds.
71
2.6 Special Provisions Governing Eurodollar Rate Loans.
--------------------------------------------------
Notwithstanding any other provision of this Agreement to the contrary, the
following provisions shall govern with respect to Eurodollar Rate Loans as to
the matters covered:
A. Determination of Applicable Interest Rate. As soon as practicable
after 10:00 A.M. (New York City time) on each Interest Rate Determination Date,
Administrative Agent shall determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) the interest rate that
shall apply to the Eurodollar Rate Loans for which an interest rate is then
being determined for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to Company and
each Lender.
B. Inability to Determine Applicable Interest Rate. In the event that
Administrative Agent shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Eurodollar Rate Loans, that by reason of
circumstances affecting the 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, Administrative
Agent shall on such date give notice (by telefacsimile or by telephone confirmed
in writing) to Company and each Lender of such determination, whereupon (i) no
Loans may be made as, or converted to, Eurodollar Rate Loans until such time as
Administrative Agent notifies Company and Lenders that the circumstances giving
rise to such notice no longer exist and (ii) any Notice of
Conversion/Continuation given by Company with respect to the Loans in respect of
which such determination was made shall be deemed to be rescinded by Company.
C. Illegality or Impracticability of Eurodollar Rate Loans. In the event
that on any date any Lender shall have determined (which determination shall be
final and conclusive and binding upon all parties hereto but shall be made only
after consultation with Company and Administrative Agent) that the making,
maintaining or continuation of its Eurodollar Rate Loans (i) has become unlawful
as a result of compliance by such Lender in good faith with any law, treaty,
governmental rule, regulation, guideline or order (or would conflict with any
such treaty, governmental rule, regulation, guideline or order not having the
force of law even though the failure to comply therewith would not be unlawful)
or (ii) has become impracticable, or would cause such Lender material hardship,
as a result of contingencies occurring 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 Administrative Agent of such
determination (which notice Administrative Agent shall promptly transmit to each
other Lender). Thereafter (a) the obligation of the Affected Lender to make
Loans as, or to convert Loans to, Eurodollar Rate Loans shall be suspended until
such notice shall be withdrawn by the Affected Lender, (b) to the extent such
determination by the Affected Lender relates to a Eurodollar Rate Loan then
being requested by Company 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
72
may be) a Base Rate Loan, (c) the Affected Lender's obligation to maintain its
outstanding Eurodollar Rate Loans (the "Affected Loans") shall be terminated
at the earlier to occur of the expiration of the Interest Period then in effect
with respect to the Affected Loans or when required by law, and (d) the Affected
Loans shall automatically convert into Base Rate Loans on the date of such
termination. Notwithstanding the foregoing, to the extent a determination by an
Affected Lender as described above relates to a Eurodollar Rate Loan then being
requested by Company pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, Company shall have the option, subject to the
provisions of subsection 2.6D, to rescind such Notice of Borrowing or Notice of
Conversion/Continuation as to all Lenders by giving notice (by telefacsimile or
by telephone confirmed in writing) to Administrative Agent of such rescission on
the date on which the Affected Lender gives notice of its determination as
described above (which notice of rescission Administrative Agent shall promptly
transmit to each other Lender). Except as provided in the immediately preceding
sentence, nothing in this subsection 2.6C shall affect the obligation of any
Lender other than an Affected Lender to make or maintain Loans as, or to convert
Loans to, Eurodollar Rate Loans in accordance with the terms of this Agreement.
D. Compensation For Breakage or Non-Commencement of Interest Periods.
Company shall compensate each Lender, promptly 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 any interest paid
by that Lender to lenders of funds borrowed by it to make or carry its
Eurodollar Rate Loans and any loss, expense or liability sustained by that
Lender in connection with the liquidation or re-employment of such funds) which
that Lender may sustain: (i) if for any reason (other than a default by that
Lender) a borrowing of any Eurodollar Rate Loan does not occur on a date
specified therefor in a Notice of Borrowing or a telephonic request for
borrowing, or a conversion to or continuation of any Eurodollar Rate Loan does
not occur on a date specified therefor in a Notice of Conversion/Continuation or
a telephonic request for conversion or continuation, (ii) if any prepayment
(including any prepayment pursuant to subsection 2.4B(i)) or other principal
payment or any conversion of any of its Eurodollar Rate Loans occurs on a date
prior to the last day of an Interest Period applicable to that Loan, (iii) if
any prepayment of any of its Eurodollar Rate Loans is not made on any date
specified in a notice of prepayment given by Company, or (iv) as a consequence
of any other default by Company in the repayment of its Eurodollar Rate Loans
when required by the terms of this Agreement.
E. Booking of Eurodollar Rate Loans. Subject to its obligations under
subsection 2.8, any Lender may make, carry or transfer Eurodollar Rate Loans at,
to, or for the account of any of its branch offices or the office of an
Affiliate of that Lender.
F. Assumptions Concerning Funding of Eurodollar Rate Loans. Calculation
of all amounts payable to a Lender under this subsection 2.6 and under
subsection 2.7A shall be made as though that Lender had actually funded each of
its relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to clause (i) of the definition
of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar
Rate Loan and having a maturity comparable to the relevant Interest Period and
73
through the transfer of such Eurodollar deposit from an offshore office of that
Lender to a domestic office of that Lender in the United States of America;
provided, however, that each Lender may fund each of its Eurodollar Rate Loans
-------- -------
in any manner it sees fit and the foregoing assumptions shall be utilized only
for the purposes of calculating amounts payable under this subsection 2.6 and
under subsection 2.7A.
G. Eurodollar Rate Loans After Default. After the occurrence of and
during the continuation of an Event of Default, (i) Company may not elect to
have a Loan be made or maintained as, or converted to, a Eurodollar Rate Loan
after the expiration of any Interest Period then in effect for that Loan and
(ii) subject to the provisions of subsection 2.6D, any Notice of Borrowing or
Notice of Conversion/Continuation given by Company with respect to a requested
borrowing or conversion/continuation that has not yet occurred shall be deemed
to be rescinded by Company.
2.7 Increased Costs; Taxes; Capital Adequacy.
----------------------------------------
A. Compensation for Increased Costs and Taxes. Subject to the provisions
of subsection 2.7B (which shall be controlling with respect to the matters
covered thereby), in the event that any Lender shall determine (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) that any law, treaty or governmental rule, regulation
or order, or any change therein or in the interpretation, administration or
application thereof (including the introduction of any new law, treaty or
governmental rule, regulation or order), or any determination of a court or
governmental authority, in each case that becomes effective after the date
hereof, or compliance by such Lender with any guideline, request or directive
issued or made after the date hereof by any central bank or other governmental
or quasi-governmental authority (whether or not having the force of law):
(i) subjects such Lender (or its applicable lending office) to any
additional Tax (other than any Tax on the overall net income of such
Lender) with respect to this Agreement or any of its obligations hereunder
or any payments to such Lender (or its applicable lending office) of
principal, interest, fees or any other amount payable hereunder;
(ii) imposes, modifies or holds applicable any reserve (including
any marginal, emergency, supplemental, special or other reserve), special
deposit, compulsory loan, FDIC insurance or similar requirement against
assets held by, or deposits or other liabilities in or for the account of,
or advances or loans by, or other credit extended by, or any other
acquisition of funds by, any office of such Lender (other than any such
reserve or other requirements with respect to Eurodollar Rate Loans that
are reflected in the definition of Adjusted Eurodollar Rate); or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Lender (or its applicable lending office) or
its obligations hereunder or the interbank Eurodollar market;
74
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, Company 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 Company (with a copy to Administrative
Agent) a written statement, setting forth in reasonable detail the basis for
calculating the additional amounts owed to such Lender under this
subsection 2.7A, which statement shall be conclusive and binding upon all
parties hereto absent manifest error.
B. Withholding of Taxes.
(i) Payments to Be Free and Clear. All sums payable by Company
-----------------------------
under this Agreement and the other Loan Documents shall (except to the
extent required by law) be paid free and clear of, and without any
deduction or withholding on account of, any Tax (other than a Tax on the
overall net income of any Lender) imposed, levied, collected, withheld or
assessed by or within the United States of America or any political
subdivision in or of the United States of America or any other jurisdiction
from or to which a payment is made by or on behalf of Company or by any
federation or organization of which the United States of America or any
such jurisdiction is a member at the time of payment.
(ii) Grossing-up of Payments. If Company 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 Company to Administrative Agent or any
Lender under any of the Loan Documents:
(a) Company shall notify Administrative Agent of any such
requirement or any change in any such requirement as soon as Company
becomes aware of it;
(b) Company 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 Company) for its own account or (if that liability
is imposed on Administrative Agent or such Lender, as the case may be)
on behalf of and in the name of Administrative Agent or such Lender;
(c) the sum payable by Company in respect of which the
relevant deduction, withholding or payment is required shall be
increased to the extent necessary to ensure that, after the making of
that deduction, withholding or payment, Administrative Agent or such
Lender, as the case may be, receives on the due date a net sum equal
to what it would have received had no such deduction, withholding or
payment been required or made; and
75
(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, Company shall deliver to Administrative Agent
evidence satisfactory to the other affected parties of such deduction,
withholding or payment and of the remittance thereof to the relevant
taxing or other authority;
provided that no such additional amount shall be required to be paid to 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 U.S. Withholding Tax.
-----------------------------------------------
(a) Each Lender that is organized under the laws of any
jurisdiction other than the United States or any state or other
political subdivision thereof (for purposes of this subsection
2.7B(iii), a "Non-US Lender") shall deliver to Administrative Agent
for transmission to Company, on or prior to the Closing Date (in the
case of each Lender listed on the signature pages hereof) or on or
prior to the date of the Assignment Agreement pursuant to which it
becomes a Lender (in the case of each other Lender), and at such other
times as may be necessary in the determination of Company or
Administrative Agent (each in the reasonable exercise of its
discretion), (1) two original copies of Internal Revenue Service
Form 1001 or 4224 (or any successor forms), properly completed and
duly executed by such Lender, together with any other certificate or
statement of exemption required under the Internal Revenue Code or the
regulations issued thereunder to establish that such Lender is not
subject to deduction or withholding of United States federal income
tax with respect to any payments to such Lender of principal,
interest, fees or other amounts payable under any of the Loan
Documents or (2) if such Lender is not a "bank" or other Person
described in Section 881(c)(3) of the Internal Revenue Code and cannot
deliver either Internal Revenue Service Form 1001 or 4224 pursuant to
clause (1) above, a Certificate re Non-Bank Status together with two
original copies of Internal Revenue Service Form W-8 (or any successor
form), properly completed and duly executed by such Lender, together
with any other certificate or statement of exemption required under
the Internal Revenue Code or the regulations issued thereunder to
establish that such Lender is not subject to deduction or withholding
of United States federal income tax with respect to any payments to
such Lender of interest payable under any of the Loan Documents.
76
(b) Each Lender required to deliver any forms, certificates
or other evidence with respect to United States federal income tax
withholding matters pursuant to subsection 2.7B(iii)(a) hereby agrees,
from time to time after the initial delivery by such Lender of such
forms, certificates or other evidence, whenever a lapse in time or
change in circumstances renders such forms, certificates or other
evidence obsolete or inaccurate in any material respect, that such
Lender shall promptly (1) deliver to Administrative Agent for
transmission to Company two new original copies of Internal Revenue
Service Form 1001 or 4224, or a Certificate re Non-Bank Status and two
original copies of Internal Revenue Service Form W-8, as the case may
be, properly completed and duly executed by such Lender, together with
any other certificate or statement of exemption required in order to
confirm or establish that such Lender is not subject to deduction or
withholding of United States federal income tax with respect to
payments to such Lender under the Loan Documents or (2) notify
Administrative Agent and Company of its inability to deliver any such
forms, certificates or other evidence.
(c) Company 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)(1) 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 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 Company
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 or Commitments or other obligations hereunder with respect
to the Loans 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
77
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, Company 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 Administrative Agent) a written statement, setting forth in reasonable
detail the basis of the calculation of such additional amounts, which statement
shall be conclusive and binding upon all parties hereto absent manifest error.
2.8 Obligation of Lenders to Mitigate.
---------------------------------
Each Lender agrees that, as promptly as practicable after the officer of
such Lender responsible for administering the Loans of such Lender 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 to
receive payments under subsection 2.7, it will, to the extent not inconsistent
with the internal policies of such 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 of such Lender through another
lending office of such Lender, or (ii) take such other measures as such 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 pursuant to
subsection 2.7 would be materially reduced and if, as determined by such Lender
in its sole discretion, the making, issuing, funding or maintaining of such
Commitments or Loans through such other lending office or in accordance with
such other measures, as the case may be, would not otherwise materially
adversely affect such Commitments or Loans or the interests of such Lender;
provided that such Lender will not be obligated to utilize such other lending
--------
office pursuant to this subsection 2.8 unless Company agrees to pay all
incremental expenses incurred by such Lender as a result of utilizing such other
lending office as described in clause (i) above. A certificate as to the amount
of any such expenses payable by Company pursuant to this subsection 2.8 (setting
forth in reasonable detail the basis for requesting such amount) submitted by
such Lender to Company (with a copy to Administrative Agent) shall be conclusive
absent manifest error.
2.9 Removal or Replacement of a Lender.
----------------------------------
A. Anything contained in this Agreement to the contrary notwithstanding,
in the event that:
(i) (a) any Lender (an "Increased-Cost Lender") shall give
notice to Company that such Lender is an Affected Lender or that such
Lender is entitled to receive payments under subsection 2.7, (b) the
circumstances which have caused such Lender to be an Affected Lender or
which entitle such Lender to receive such payments shall remain in effect,
and (c) such Lender shall fail to withdraw such notice within five Business
Days after Company's request for such withdrawal; or
78
(ii) (a) in connection with any proposed amendment, modification,
termination, waiver or consent with respect to any of the provisions of
this Agreement as contemplated by clauses (i) through (v) of the first
provision to subsection 9.6A, the consent of Requisite Lenders shall have
been obtained but the consent of one or more of such other Lenders (each a
"Non-Consenting Lender") whose consent is required shall not have been
obtained, and (b) the failure to obtain Non-Consenting Lenders' consents
does not result solely from the exercise of Non-Consenting Lenders' rights
(and the withholding of any required consents by Non-Consenting Lenders)
pursuant to the second provision to subsection 9.6A;
then, and in each such case, Company shall have the right, at its option, to
remove or replace the applicable Increased-Cost Lender or Non-Consenting Lender
(the "Terminated Lender") to the extent permitted by subsection 2.9B.
B. Company may, by giving written notice to Administrative Agent and any
Terminated Lender of its election to do so:
(i) elect to prepay any outstanding Loans made by such Terminated
Lender, together with accrued and unpaid interest thereon and any other
amounts payable to such Terminated Lender hereunder pursuant to subsection
2.6 or subsection 2.7 or otherwise; provided that the written consent of
--------
Administrative Agent and Requisite Lenders (which consent shall not be
unreasonably withheld or delayed) shall be required in order for Company to
make the election set forth in this clause (i); or
(ii) elect to cause such Terminated Lender (and such Terminated
Lender hereby irrevocably agrees) to assign its outstanding Loans in full
to one or more Eligible Assignees (each a "Replacement Lender") in
accordance with the provisions of subsection 9.1B; provided that (a) on the
--------
date of such assignment, Company shall pay any amounts payable to such
Terminated Lender pursuant to subsection 2.6 or subsection 2.7 or otherwise
as if it were a prepayment and (b) in the event such Terminated Lender is a
Non-Consenting Lender, each Replacement Lender shall consent, at the time
of such assignment, to each matter in respect of which such Terminated
Lender was a Non-Consenting Lender;
provided that Company may not make either of the elections set forth in clauses
--------
(i) or (ii) above with respect to any Non-Consenting Lender unless Company also
makes one of such elections with respect to each other Terminated Lender which
is a Non-Consenting Lender.
C. Upon the prepayment of all amounts owing to any Terminated Lender
pursuant to clause (i) of subsection 2.9B, such Terminated Lender shall no
longer constitute a "Lender" for purposes of this Agreement; provided that any
--------
rights of such Terminated Lender to indemnification under this Agreement
(including under subsections 2.6D, 2.7, 9.2 and 9.3) shall survive as to such
Terminated Lender.
79
SECTION 3.
CONDITIONS TO LOANS
The obligations of Lenders to make Loans are subject to the satisfaction of
the following conditions.
3.1 Conditions to Loans.
-------------------
The obligations of Lenders to make the Loans are 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
Administrative Agent for Lenders 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 (except, with respect to Loan Parties other than Company, any
such other state or states in which failure to be qualified could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect (provided that no such state shall be a state in which real
--------
property of the applicable Loan Party is located)) and, to the extent
generally available, a certificate or other evidence of good standing as to
payment of any applicable franchise or similar taxes from the appropriate
taxing authority of each of such jurisdictions, each dated a recent date
prior to the Closing Date;
(ii) Copies of the Bylaws of such Person, certified as of the
Closing Date by such Person's corporate secretary or an assistant
secretary;
(iii) Resolutions of the Board of Directors of such Person
approving and authorizing the execution, delivery and performance of the
Loan Documents and Related Agreements to which it is a party, certified as
of the Closing Date by the corporate secretary or an assistant secretary of
such Person as being in full force and effect without modification or
amendment;
(iv) Signature and incumbency certificates of the officers of such
Person executing the Loan Documents to which it is a party;
(v) Executed originals of the Loan Documents to which such Person
is a party; and
80
(vi) Such other documents as Syndication Agent or Administrative
Agent may reasonably request.
B. No Material Adverse Effect. Since August 31, 1997, no Material
Adverse Effect (in the opinion of Syndication Agent and Administrative Agent)
shall have occurred.
C. Corporate and Capital Structure, Ownership, Management, Etc.
(i) Corporate Structure. The corporate organizational structure
--------------------
of Holdings and its Subsidiaries, after giving effect to the
Recapitalization Transactions, shall be as set forth on Schedule 4.1C
annexed hereto. -------------
(ii) Capital Structure and Ownership. The capital structure and
-------------------------------
ownership of Holdings and its Subsidiaries, after giving effect to the
Recapitalization Transactions, shall be reasonably satisfactory to
Syndication Agent and Administrative Agent in all respects and as set forth
on Schedule 4.1C annexed hereto.
-------------
(iii) Employment Agreement. Syndication Agent and Administrative
--------------------
Agent shall have received a duly executed copy of, and shall be reasonably
satisfied with the form and substance of, the Employment Agreement.
D. Proceeds of Debt and Equity Capitalization of Merger Corp., Holdings
and Company.
(i) Equity Capitalization. On or before the Closing Date, ▇▇▇▇,
----------------------
the Other Investors and the Management Investors shall have made the Equity
Contribution.
(ii) Tranche A Term Loans and Recapitalization Revolving Loans. On
----------------------------------------------------------
the Closing Date, Company shall have borrowed $120,000,000 in aggregate
principal amount of Tranche A Term Loans and $10,400,000 in aggregate
principal amount of Revolving Loans under the Revolving Credit Agreement.
(iii) Senior Subordinated Notes. On or before the Closing Date,
-------------------------
Company shall have issued and sold for Cash not less than $125,000,000 in
aggregate principal amount of Senior Subordinated Notes providing net Cash
proceeds to Company of not less than $125,000,000.
(iv) Discount Notes. On or before the Closing Date, Company shall
--------------
have issued and sold for Cash Discount Notes providing net Cash proceeds to
Company of not less than $75,000,000.
(v) Use of Proceeds. Company shall have provided evidence
----------------
reasonably satisfactory to Syndication Agent and Administrative Agent that
the proceeds of the debt and equity capitalization of Merger Corp. and
Company described in the immediately preceding clauses (i), (ii), (iii) and
(iv) have been irrevocably committed, prior to the
81
application of the proceeds of the Recapitalization Revolving Loans, to the
payment of a portion of the Recapitalization Financing Requirements.
E. Related Agreements; AXEL Credit Documents.
(i) The ▇▇▇▇ Advisory Services Agreement, the Harvard Advisory
Services Agreement and the Related Agreements shall each be reasonably
satisfactory in form and substance to Syndication Agent and Administrative
Agent.
(ii) Syndication Agent and Administrative Agent shall each have
received a fully executed or conformed copy of the ▇▇▇▇ Advisory Services
Agreement, the Harvard Advisory Services Agreement and each Related
Agreement and any documents executed in connection therewith, and the ▇▇▇▇
Advisory Services Agreement, the Harvard Advisory Services Agreement and
each Related Agreement shall be in full force and effect and no provision
thereof related to payments thereunder shall have been modified or waived
in any respect determined by Syndication Agent or Administrative Agent to
be material, in each case without the consent of Syndication Agent and
Administrative Agent.
(iii) Syndication Agent and Administrative Agent shall each have
received a fully executed or conformed copy of the Revolving Credit
Documents, including the Revolving Credit Agreement (and all exhibits and
schedules thereto), any promissory notes evidencing the Loans and the
Intercreditor Agreement, each of which shall be in form and substance
reasonably satisfactory to Syndication Agent and Administrative Agent, and
each such agreement and promissory note shall be in full force and effect.
F. Matters Relating to Existing Indebtedness of Holdings and its
Subsidiaries.
(i) Termination of Existing Credit Agreement and Related Liens;
-----------------------------------------------------------
Existing Letters of Credit. On the Closing Date, Holdings and its
--------------------------
Subsidiaries shall have (a) repaid in full all Indebtedness outstanding
under the Existing Credit Agreement, (b) terminated any commitments to lend
or make other extensions of credit thereunder, (c) delivered to Syndication
Agent and Administrative Agent all documents or instruments necessary to
release all Liens securing Indebtedness or other obligations of Holdings
and its Subsidiaries thereunder, and (d) made arrangements reasonably
satisfactory to Syndication Agent and Administrative Agent with respect to
the cancellation of any letters of credit outstanding thereunder or the
issuance of letters of credit under the Revolving Credit Agreement to
support the obligations of Holdings and its Subsidiaries with respect
thereto.
(ii) Consent Solicitation. Pursuant to the Consent Solicitation,
--------------------
Holdings shall have obtained all such consents and amendments with respect
to the Existing Subordinated Note Indenture as may be required to permit
the consummation of the Recapitalization Transactions, the related
financings (including the incurrence of the Obligations hereunder) and the
other transactions contemplated by the Loan Documents.
82
(iii) Consummation of Debt Tender Offer. Holdings shall have
----------------------------------
repurchased all of the Existing Subordinated Notes tendered in the Debt
Tender Offer for cash consideration in an aggregate amount not to exceed
$220,000,000 plus any accrued and unpaid interest on such Existing
----
Subordinated Notes.
(iv) No Existing Indebtedness to Remain Outstanding. Syndication
----------------------------------------------
Agent and Administrative Agent shall have received an Officers' Certificate
of Company stating that, after giving effect to the transactions described
in this subsection 3.1F, the Loan Parties shall have no Indebtedness
outstanding to Persons other than the Loan Parties other than Indebtedness
under the Loan Documents, the Senior Subordinated Notes, the Discount Notes
and the Junior Subordinated Seller Notes, Indebtedness with respect to
Existing Subordinated Notes not tendered in the Debt Tender Offer, and
Indebtedness set forth on Schedule 3.1F annexed hereto.
-------------
G. Necessary Governmental Authorizations and Consents; Expiration of
Waiting Periods, Etc. Holdings and Company shall have obtained all Governmental
Authorizations and all consents of other Persons, in each case that are
necessary in connection with the Recapitalization Transactions, the Merger and
the other transactions contemplated by the Loan Documents and the Related
Agreements, and the continued operation of the business conducted by Holdings
and its Subsidiaries in substantially the same manner as conducted prior to the
consummation of the Recapitalization Transactions and the Merger, and each of
the foregoing shall be in full force and effect, in each case other than those
the failure to obtain or maintain which, either individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
All applicable waiting periods shall have expired without any action being taken
or threatened by any competent authority which would restrain, prevent or
otherwise impose adverse conditions on the Recapitalization Transactions or the
Merger or the financing thereof. No action, request for stay, petition for
review or rehearing, reconsideration, or appeal with respect to any of the
foregoing shall be pending, and the time for any applicable agency to take
action to set aside its consent on its own motion shall have expired.
H. Consummation of Recapitalization Transactions and Merger.
(i) All conditions to the Recapitalization Transactions shall
have been satisfied pursuant to documentation, including, without
limitation, the Recapitalization Agreement and the Certificate of Merger,
reasonably satisfactory to Syndication Agent or the fulfillment of such
conditions shall have been waived with the consent of Syndication Agent,
such consent not to be unreasonably withheld;
(ii) The aggregate cash consideration paid to the holders of
equity interests in Holdings in respect of such equity interests in
connection with the Merger shall not exceed $415,100,000;
(iii) the Merger shall have become effective in accordance with the
terms of the Recapitalization Agreement, the Certificate of Merger and the
laws of the State of Delaware;
83
(iv) Holdings shall have issued not more than $25,000,000 in
aggregate principal amount of Junior Subordinated Seller Notes in exchange
for all preferred stock of Holdings outstanding immediately prior to the
Closing Date;
(v) Transaction Costs shall not exceed $32,000,000; and
(vi) Syndication Agent and Administrative Agent shall have
received an Officers' Certificate of Company and Holdings to the effect set
forth in clauses (i)-(v) above and stating that Company and Holdings will
proceed to consummate the Recapitalization Transactions immediately upon
the making of the initial Tranche A Term Loans.
I. Closing Date Mortgages; Closing Date Mortgage Policies; Etc. Agents
shall have received from Holdings, Company and each applicable Subsidiary
Guarantor:
(i) Closing Date Mortgages. Fully executed and notarized
-----------------------
Mortgages (each a "Closing Date Mortgage" and, collectively, the
"Closing Date Mortgages"), in proper form for recording in all
appropriate places in all applicable jurisdictions, encumbering each Real
Property Asset listed in Schedule 3.1I 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 Syndication Agent and
Administrative Agent) in each state in which a Closing Date Mortgaged
Property is located with respect to the enforceability of the form(s) of
Closing Date Mortgages to be recorded in such state and such other matters
as Syndication Agent and Administrative Agent may reasonably request, in
each case in form and substance reasonably satisfactory to Syndication
Agent and Administrative Agent; provided, however, that Syndication Agent
-------- -------
and Administrative Agent in their reasonable discretion that an opinion of
counsel in any one or more of such states shall not be required hereunder;
(iii) Landlord Consents and Estoppels; Recorded Leasehold
---------------------------------------------------
Interests. In the case of each Closing Date Mortgaged Property consisting
----------
of a Leasehold Property, (a) a Landlord Consent and Estoppel with respect
thereto and (b) evidence that such Leasehold Property is a Recorded
Leasehold Interest;
(iv) Title Insurance. (a) ALTA mortgagee title insurance policies
----------------
or unconditional commitments therefor (the "Closing Date Mortgage
Policies") issued by the Title Company with respect to the Closing Date
Mortgaged Properties listed in Part A of Schedule 3.1I annexed hereto, in
-------------
amounts not less than the respective amounts designated therein with
respect to any particular Closing Date Mortgaged Properties, insuring fee
simple title to, or a valid leasehold interest in, each such Closing Date
Mortgaged Property vested in such Loan Party and assuring Administrative
Agent that the applicable Closing Date Mortgages create valid and
enforceable First Priority mortgage Liens on the respective Closing Date
Mortgaged Properties encumbered
84
thereby, which Closing Date Mortgage Policies (1) shall include an
endorsement for mechanics' liens, for future advances (in each case, if
available) under this Agreement and for any other matters reasonably
requested by Syndication Agent or Administrative Agent and (2) shall
provide for affirmative insurance and such reinsurance as Administrative
Agent may reasonably request, all of the foregoing in form and substance
reasonably satisfactory to Syndication Agent and Administrative Agent; and
(b) evidence reasonably satisfactory to Syndication Agent and
Administrative Agent that such Loan Party has (i) delivered to the Title
Company all certificates and affidavits required by the Title Company in
connection with the issuance of the Closing Date Mortgage Policies and (ii)
paid to the Title Company or to the appropriate governmental authorities
all expenses and premiums of the Title Company in connection with the
issuance of the Closing Date Mortgage Policies and all recording and stamp
taxes (including mortgage recording and intangible taxes) payable in
connection with recording the Closing Date Mortgages in the appropriate
real estate records;
(v) 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 3.1I(iv); and
(vi) Matters Relating to Flood Hazard Properties. (a) Evidence,
--------------------------------------------
which may be in the form of a surveyor's note on a survey or a report from
a flood hazard search firm, as to whether (1) any Closing Date Mortgaged
Property is a Flood Hazard Property and (2) the community in which any such
Flood Hazard Property is located is participating in the National Flood
Insurance Program, (b) if there are any such Flood Hazard Properties, such
Loan Party's written acknowledgement of receipt of written notification
from Administrative Agent (1) as to the existence of each such Flood Hazard
Property and (2) as to whether the community in which each such Flood
Hazard Property is located is participating in the National Flood Insurance
Program, and (c) in the event any such Flood Hazard Property is located in
a community that participates in the National Flood Insurance Program,
evidence that 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.
J. Security Interests in Personal and Mixed Property. To the extent not
otherwise satisfied pursuant to subsection 3.1I, each of Syndication Agent and
Administrative 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 reasonable opinion of Syndication Agent and Administrative Agent,
desirable in order to create in favor of Administrative Agent, for the benefit
of Lenders, a valid and (upon such filing and recording) perfected First
Priority security interest in the entire personal and mixed property Collateral.
Such actions shall include the following:
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(i) Schedules to Collateral Documents. Delivery to Administrative
----------------------------------
Agent of accurate and complete schedules to all of the applicable
Collateral Documents.
(ii) Stock Certificates and Instruments. Delivery to
-----------------------------------
Administrative Agent of (a) certificates (which certificates shall be
accompanied by irrevocable undated stock powers, duly endorsed in blank and
otherwise satisfactory in form and substance to Administrative Agent)
representing all capital stock pledged pursuant to the Holdings Pledge
Agreement, Company Pledge Agreement and Subsidiary Pledge Agreement and (b)
all promissory notes or other instruments (duly endorsed, where
appropriate, in a manner satisfactory to Administrative Agent) evidencing
any Collateral;
(iii) Lien Searches and UCC Termination Statements. Delivery to
--------------------------------------------
Syndication Agent and Administrative Agent of (a) the results of a recent
search, by a Person reasonably satisfactory to Syndication Agent and
Administrative Agent, of all effective UCC financing statements and fixture
filings and all judgment and tax lien filings which may have been made with
respect to any personal or mixed property of any Loan Party, together with
copies of all such filings disclosed by such search, and (b) UCC
termination statements duly executed by all applicable Persons for filing
in all applicable jurisdictions as may be necessary to terminate any
effective UCC financing statements or fixture filings disclosed in such
search (other than any such financing statements or fixture filings in
respect of Liens permitted to remain outstanding pursuant to the terms of
this Agreement).
(iv) UCC Financing Statements and Fixture Filings. Delivery to
--------------------------------------------
Administrative Agent of UCC financing statements and, where appropriate,
fixture filings, duly executed by each applicable Loan Party with respect
to all personal and mixed property Collateral of such Loan Party, for
filing in all jurisdictions as may be necessary or, in the opinion of
Syndication Agent and Administrative Agent, desirable to perfect the
security interests created in such Collateral pursuant to the Collateral
Documents;
(v) PTO Cover Sheets, Etc. Delivery to Administrative Agent of
----------------------
all cover sheets or other documents or instruments required to be recorded
with the PTO in order to create or perfect Liens in respect of any U.S.
patents, federally registered trademarks or copyrights, or applications for
any of the foregoing, included among the IP Collateral; and
(vi) Opinions of Local Counsel. Delivery to Syndication Agent and
-------------------------
Administrative Agent of an opinion of counsel under the laws of each
jurisdiction for which an opinion is delivered under subsection 3.1I(ii)
and in which any Loan Party or any personal or mixed property Collateral is
located with respect to the creation and perfection of the security
interests in favor of Administrative Agent in such Collateral and such
other matters governed by the laws of such jurisdiction regarding such
security interests as Syndication Agent and Administrative Agent may
reasonably request, in each case in form and substance reasonably
satisfactory to Syndication Agent and Administrative Agent.
86
K. Environmental Reports. Syndication Agent and Administrative Agent
shall have received (i) a Phase I environmental assessment for each of the
Facilities listed in Schedule 3.1K annexed hereto (collectively, the "Phase I
-------------
Report") which (a) substantially complies with the ASTM Standard Practice for
Environmental Site Assessments: Phase I Environmental Site Assessment Process, E
1527, and (b) was conducted no more than six months prior to the Closing Date by
ENSR or one or more environmental consulting firms reasonably satisfactory to
Administrative Agent and (ii) a summary prepared by ENVIRON Corporation (or
another firm reasonably satisfactory to Administrative Agent) of all such Phase
I Reports.
L. Financial Statements; Pro Forma Balance Sheet. On or before the
Closing Date, Lenders shall have received from Company (i) audited consolidated
financial statements of Holdings and its Subsidiaries for Fiscal Years 1995 and
1996 and unaudited consolidated financial statements of Holding and its
Subsidiaries for Fiscal Year 1994, consisting of consolidated balance sheets and
the related consolidated statements of income, stockholders' equity and cash
flows for such Fiscal Years, (ii) unaudited consolidated financial statements of
Holdings and its Subsidiaries for each fiscal month and Fiscal Quarter ended
subsequent to the date of the most recent financial statements delivered
pursuant to clause (i), consisting of consolidated balance sheets and the
related consolidated statements of income, stockholders' equity and cash flows
for such periods (except for statements of cash flows for each such monthly
period), all in reasonable detail and certified by the principal financial
officer or principal accounting officer of Holdings that they fairly present, in
all material respects, the financial condition of Holdings and its Subsidiaries
as at the dates indicated and the results of their operations and their cash
flows for the periods indicated, subject to changes resulting from audit and
normal year-end adjustments and the absence of footnotes, and (iii) pro forma
consolidated balance sheets of Holdings and its Subsidiaries as at the date of
the most recent consolidated balance sheet delivered pursuant to clause (ii),
prepared in accordance with GAAP and reflecting the consummation of the
Recapitalization Transactions and the Merger, the related financings and the
other transactions contemplated by the Loan Documents and the Related Agreements
as if such transactions had occurred on such date, which pro forma financial
statements shall be in form and substance reasonably satisfactory to Lenders.
M. Financial Projections. Lenders shall have received financial
projections reasonably satisfactory in form and substance to Syndication Agent
and Lenders for Holdings and its Subsidiaries for the period from the Closing
Date through November 2007.
N. Solvency Assurances. On the Closing Date, Syndication Agent,
Administrative Agent and Lenders shall have received (i) a letter from Valuation
Research Corporation, dated the Closing Date and addressed to Syndication Agent,
Administrative Agent and Lenders, in form and substance reasonably satisfactory
to Syndication Agent and Administrative Agent and with appropriate attachments,
and (ii) a Financial Condition Certificate dated the Closing Date, substantially
in the form of Exhibit XII annexed hereto (with such changes thereto as shall be
-----------
approved by Administrative Agent and Syndication Agent in the exercise of their
reasonable discretion) and with appropriate attachments, in each case
demonstrating that, after giving effect to the consummation of the
Recapitalization Transactions and the Merger, the related financings
87
and the other transactions contemplated by the Loan Documents and the Related
Agreements, Holdings and its Subsidiaries will be Solvent.
O. Evidence of Insurance. Syndication Agent and Administrative Agent
shall have received a certificate from Company's insurance broker or other
evidence satisfactory to it that all insurance required to be maintained
pursuant to subsection 5.4 is in full force and effect and that Administrative
Agent on behalf of Lenders has been named as additional insured and/or loss
payee thereunder to the extent required under subsection 5.4.
P. Opinions of Counsel to Loan Parties. Lenders and their respective
counsel shall have received (i) originally executed copies of one or more
favorable written opinions of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, counsel for Loan Parties, and of
▇▇▇▇▇▇, Halter & ▇▇▇▇▇▇▇▇ LLP, special Ohio counsel for Loan Parties, in form
and substance reasonably satisfactory to Administrative Agent and Syndication
Agent and its counsel, dated as of the Closing Date and setting forth
substantially the matters in the opinions designated in Exhibit VIII annexed
------------
hereto and as to such other matters as or Syndication Agent and acting on behalf
of Lenders may reasonably request and (ii) evidence satisfactory to Syndication
Agent that Company has requested such counsel to deliver such opinions to
Lenders.
Q. Opinions of Syndication Agent's Counsel. Lenders shall have received
originally executed copies of one or more favorable written opinions of
O'Melveny & ▇▇▇▇▇ LLP, counsel to Syndication Agent, dated as of the Closing
Date, substantially in the form of Exhibit IX annexed hereto and as to such
----------
other matters as Syndication Agent may reasonably request.
R. Opinions of Counsel Delivered Under Related Agreements.
Administrative Agent and Syndication Agent and its counsel shall have received
copies of each of the opinions of counsel delivered to the parties under the
Related Agreements, together with a letter from each such counsel (to the extent
not inconsistent with such counsel's established internal policies) authorizing
Lenders to rely upon such opinion to the same extent as though it were addressed
to Lenders.
S. Fees and Expenses. Company shall have paid to Syndication Agent and
Administrative Agent, for distribution (as appropriate) to Syndication Agent,
Administrative Agent and Lenders, the fees payable on the Closing Date referred
to in subsection 2.3 and all reasonable expenses for which invoices have been
presented on or before the Closing Date.
T. Representations and Warranties; Performance of Agreements. Company
shall have delivered to Syndication Agent and Administrative Agent an Officers'
Certificate, in form and substance reasonably satisfactory to Syndication Agent
and Administrative Agent, to the effect that the representations and warranties
in Section 5 hereof are true, correct and complete in all material respects on
and as of the Closing Date to the same extent as though made on and as of that
date (or, to the extent such representations and warranties specifically relate
to an earlier date, that such representations and warranties were true, correct
and complete in all material respects on and as of such earlier date) and that
Holdings and Company shall have
88
performed in all material respects all agreements and satisfied all conditions
which this Agreement provides shall be performed or satisfied by them on or
before the Closing Date except as otherwise disclosed to and agreed to in
writing by Syndication Agent, Administrative Agent and Requisite Lenders.
U. Completion of Proceedings. All corporate and other proceedings taken
or to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Administrative
Agent, acting on behalf of Lenders, or Syndication Agent and its counsel shall
be reasonably satisfactory in form and substance to Administrative Agent and
Syndication Agent and such counsel, and Administrative Agent, Syndication Agent
and such counsel shall have received all such counterpart originals or certified
copies of such documents as Administrative Agent or Syndication Agent may
reasonably request.
V. Notice of Borrowing. Administrative Agent shall have received before
the Closing 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, principal financial officer, principal accounting officer or
the treasurer of Company or by any authorized employee of Company designated by
any of the above-described officers on behalf of Company in a writing delivered
to Administrative Agent.
W. Other Conditions. As of the Closing Date:
(i) 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;
(ii) 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 the Closing Date;
(iii) The making of the Loans requested on the Closing Date shall
not violate any law including Regulation G, Regulation T, Regulation U or
Regulation X of the Board of Governors of the Federal Reserve System; and
(iv) There shall not be pending or, to the knowledge of Holdings
or Company, threatened, any action, suit, proceeding, governmental
investigation or arbitration against or affecting Holdings or any of its
Subsidiaries or any property of Holdings or any of its Subsidiaries that
has not been disclosed by Holdings or Company in writing pursuant to
subsection 4.6 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 reasonable opinion
of Administrative Agent or of Requisite Lenders, would be expected to have
a Material Adverse Effect or be inconsistent with the financial statements,
balance sheets or financial projections delivered in accordance with
subsection 3.1L or
89
3.1M; 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.
Notwithstanding anything herein to the contrary, it is understood and
agreed that the documents and other items set forth on Schedule 5.12 annexed
-------------
hereto shall be delivered after the Closing Date in accordance with and to the
extent required under subsection 5.12.
Each Lender, by delivering its signature page to this Agreement and funding
its Commitments on the Closing Date, shall be deemed to have acknowledged
receipt of, and consented to and approved (as long as substantially in the form
delivered to Lenders including any changed pages thereto delivered to Lenders),
each Loan Document and each other document required to be approved by Requisite
Lenders or Lenders, as applicable.
SECTION 4.
HOLDINGS' AND COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to make the
Loans, Holdings and Company represent and warrant to each Lender, on the date of
this Agreement and on the Closing Date, that the following statements are true,
correct and complete:
4.1 Organization, Powers, Qualification, Good Standing, Business and
----------------------------------------------------------------
Subsidiaries.
------------
A. Organization and Powers. Each Loan Party is a corporation organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation as specified in Schedule 4.1 annexed hereto. Each Loan Party has
------------
all requisite corporate power and authority to own and operate its properties,
to carry on its business as now conducted and as proposed to be conducted, to
enter into the Loan Documents and Related Agreements to which it is a party and
to carry out the transactions contemplated thereby.
B. Qualification and Good Standing. Each Loan Party is qualified to do
business and in good standing in every jurisdiction where its assets are located
and wherever necessary to 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 its Subsidiaries are engaged only
in the businesses permitted to be engaged in pursuant to subsection 6.13.
D. Subsidiaries. All of the Subsidiaries of Holdings as of the Closing
Date are identified in Schedule 4.1 annexed hereto. The capital stock of each
------------
of Holdings' Subsidiaries any portion of the capital stock of which is pledged
under the Collateral Documents is duly authorized, validly issued, fully paid
and nonassessable and none of such capital stock constitutes
90
Margin Stock. Each of the Subsidiaries of Holdings is a corporation organized,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation, 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
--------
4.1 annexed hereto (as so supplemented) correctly sets forth, as of the Closing
---
Date, the ownership interest of Holdings and each of its Subsidiaries in each of
the Subsidiaries of Holdings identified therein.
4.2 Authorization of Borrowing, etc.
--------------------------------
A. Authorization of Borrowing. The execution, delivery and performance
of the Loan Documents and the Related Agreements have been duly authorized by
all necessary corporate action on the part of each Loan Party that is a party
thereto.
B. No Conflict. The execution, delivery and performance by Loan Parties
of the Loan Documents and the Related Agreements to which they are parties and
the consummation of the transactions contemplated by the Loan Documents and such
Related Agreements do not (i) violate any provision of any law or any
governmental rule or regulation applicable to Holdings or any of its
Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of Holdings
or any of its Subsidiaries or any order, judgment or decree of any court or
other agency of government binding on Holdings or any of its Subsidiaries, (ii)
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any Contractual Obligation of Holdings or any of
its Subsidiaries, (iii) result in or require the creation or imposition of any
Lien upon any of the properties or assets of Holdings or any of its Subsidiaries
(other than any Liens created under any of the Loan Documents in favor of
Administrative Agent on behalf of Lenders), or (iv) require any approval of
stockholders or any approval or consent of any Person under any Contractual
Obligation of Holdings or any of its Subsidiaries, except for such approvals or
consents which will be obtained on or before the Closing Date and disclosed in
writing to Lenders.
C. Governmental Consents. The execution, delivery and performance by
Loan Parties of the Loan Documents to which they are parties and the
consummation of the transactions contemplated by the Loan Documents do 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 to the extent obtained or made and except for those
filings made to perfect Liens under the Collateral Documents. The execution,
delivery and performance by Loan Parties of the Related Agreements to which they
are parties and the consummation of the transactions contemplated by the such
Related Agreements do 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 (i) to the extent obtained or
made or (ii) where the failure to obtain or make any of the foregoing,
individually or in the aggregate, is not reasonably likely to have a Material
Adverse Effect.
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D. Binding Obligation. Each of the Loan Documents and Related Agreements
has been duly executed and delivered by each Loan Party that is a party thereto
and is the legally valid and binding obligation of such Loan Party, enforceable
against such Loan Party in accordance with its respective terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or by equitable principles
relating to enforceability.
E. Valid Issuance of Holdings Capital Stock, Senior Subordinated Notes,
Discount Notes, and Junior Subordinated Seller Notes.
(i) Holdings Common Stock. Holdings Common Stock issued on the
---------------------
Closing Date after giving effect to the Merger, when issued and delivered,
will be duly and validly issued, fully paid and nonassessable. The issuance
and sale of such 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.
(ii) Senior Subordinated Notes and Discount Notes. Company has the
--------------------------------------------
corporate power and authority to issue the Senior Subordinated Notes and
the Discount Notes. The Senior Subordinated Notes and the Discount Notes,
when issued and paid for, will be the legally valid and binding obligations
of Company, enforceable against Company in accordance with their respective
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors' rights
generally or by equitable principles relating to enforceability. The
subordination provisions of the Senior Subordinated Notes and the Discount
Notes will be enforceable against the holders thereof, and the Loans and
all other monetary Obligations hereunder are and will be within the
definition of "Senior Debt" included in such provisions. The Senior
Subordinated Notes and the Discount Notes, when issued and sold, will
either (a) have been registered or qualified under applicable federal and
state securities laws or (b) be exempt therefrom.
(iii) Junior Subordinated Seller Notes. Holdings has the corporate
--------------------------------
power and authority to issue the Junior Subordinated Seller Notes. The
Junior Subordinated Seller Notes, when issued and paid for, will be the
legally valid and binding obligations of Holdings, enforceable against
Holdings in accordance with their terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating
to or limiting creditors' rights generally or by equitable principles
relating to enforceability. The subordination provisions of the Junior
Subordinated Seller Notes will be enforceable against the holders thereof,
and the Loans and all other monetary Obligations hereunder are and will be
within the definition of "Senior Debt" included in such provisions. The
Junior Subordinated Seller Notes, when issued and sold, will either (a)
have been registered or qualified under applicable federal and state
securities laws or (b) be exempt therefrom.
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4.3 Financial Condition.
-------------------
Company has heretofore delivered to Lenders, at Lenders' request, the
following financial statements and information: (i) the audited consolidated
balance sheets of Holdings and its Subsidiaries for each of Fiscal Years 1996
and 1995, the unaudited consolidated balance sheet of Holdings and its
Subsidiaries for Fiscal Year 1994 and the related consolidated statements of
income, stockholders' equity and cash flows of Holdings and its Subsidiaries for
each such Fiscal Year and (ii) the unaudited consolidated and consolidating
balance sheets of Holdings and its Subsidiaries for each fiscal month and Fiscal
Quarter ended subsequent to the date of the most recent financial statements
referred to in clause (i) and the related unaudited consolidated statements of
income, stockholders' equity and cash flows of Holdings and its Subsidiaries for
each such period (except for statements of cash flows for each such monthly
period). All such statements were prepared in conformity with GAAP and fairly
present, in all material respects, the financial position (on a consolidated
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 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 and the absence of
footnotes. On the Closing Date, Holdings and Company do not (and will not
following the funding of the initial Loans) have any Contingent Obligation,
contingent liability or liability for taxes, long-term lease or unusual forward
or long-term commitment that is not reflected in the foregoing financial
statements or the notes thereto and which in any such case is material in
relation to the business, operations, properties, assets, condition (financial
or otherwise) or prospects of Holdings or any of its Subsidiaries.
4.4 No Material Adverse Change.
--------------------------
Since August 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.
4.5 Title to Properties; Liens; Real Property.
-----------------------------------------
A. Title to Properties; Liens. Holdings and its Subsidiaries have (i)
good, sufficient and legal title to (in the case of fee interests in real
property), (ii) valid leasehold interests in (in the case of leasehold interests
in real or personal property), (iii) valid licenses in (in the case of licensed
intangible properties), or (iv) good title to (in the case of all other personal
property), all of their respective properties and assets reflected in the most
recent financial statements referred to in subsection 4.3 or in the most recent
financial statements delivered pursuant to subsection 5.1, in each case subject
to Permitted Encumbrances and Liens permitted under subsection 6.6 and except
for assets disposed of since the date of such financial statements in the
ordinary course of business or as otherwise permitted under subsection 6.7.
Except as otherwise permitted by this Agreement, all such properties and assets
are free and clear of Liens.
B. Real Property. As of the Closing Date, Schedule 4.5 annexed hereto
------------
contains a true, accurate and complete list of (i) all Real Property Assets
owned in fee simple by any Loan Party and (ii) all leases, subleases or
assignments of leases (together with all amendments,
93
modifications, supplements, renewals or extensions of any thereof) affecting
each Real Property Asset of any Loan Party, regardless of whether such Loan
Party is the landlord or tenant (whether directly or as an assignee or successor
in interest) under such lease, sublease or assignment. As of the Closing Date,
except as specified in Schedule 4.5 annexed hereto, each agreement referenced in
------------
clause (ii) of the immediately preceding sentence is in full force and effect
and Holdings and Company do not have knowledge of any default that has occurred
and is continuing thereunder (except where the consequences, direct or indirect,
of such default or defaults, if any, would not reasonably be expected to have a
Material Adverse Effect), and each such agreement constitutes the legally valid
and binding obligation of each applicable Loan Party, enforceable against such
Loan Party in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors' rights generally or by equitable principles.
4.6 Litigation; Adverse Facts.
-------------------------
There are no actions, suits, proceedings, arbitrations or governmental
investigations (whether or not purportedly on behalf of Holdings or any of its
Subsidiaries) at law or in equity, or before or by any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign (including any Environmental Claims) that
are pending or, to the knowledge of Holdings or Company, threatened against or
affecting Holdings or any of its Subsidiaries or any property of Holdings or any
of its Subsidiaries and that, individually or in the aggregate, would
reasonably be expected to result in a Material Adverse Effect. Neither Holdings
nor any of its Subsidiaries (i) is in violation of any applicable laws
(including Environmental Laws) that, individually or in the aggregate, would
reasonably be expected to result in a Material Adverse Effect, or (ii) is
subject to or in default with respect to any final judgments, writs,
injunctions, decrees, rules or regulations of any court or any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, that, individually or in the aggregate,
would reasonably be expected to result in a Material Adverse Effect.
4.7 Payment of Taxes.
----------------
Except to the extent permitted by subsection 5.3, all federal, state and
other material tax returns and reports of Holdings and its Subsidiaries required
to be filed by any of them have been timely filed, and all taxes shown on such
tax returns to be due and payable and all assessments, fees and other
governmental charges upon Holdings and its Subsidiaries and upon their
respective properties, assets, income, businesses and franchises which are due
and payable have been paid when due and payable. Holdings and Company know of
no proposed material tax assessment against Holdings or any of its Subsidiaries
which is not being actively contested by Holdings 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.
94
4.8 Performance of Agreements; Materially Adverse Agreements.
--------------------------------------------------------
A. Neither Holdings nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any of its Contractual Obligations, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences, direct or indirect, of
such default or defaults, if any, would not have a Material Adverse Effect.
B. Neither Holdings nor any of its 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, compliance with
which could reasonably be expected to result in a Material Adverse Effect.
4.9 Governmental Regulation.
-----------------------
Neither Holdings nor any of its Subsidiaries is subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its ability to incur
Indebtedness or which may otherwise render all or any portion of the Obligations
unenforceable.
4.10 Securities Activities.
---------------------
A. Neither Holdings nor any of its Subsidiaries is engaged principally,
or as one of its important activities, in the business of extending credit for
the purpose of purchasing or carrying any Margin Stock.
B. Following application of the proceeds of each Loan, not more than 25%
of the value of the assets (either of Holdings only or of Holdings and its
Subsidiaries on a consolidated basis) subject to the provisions of subsection
6.2 or 6.7 or subject to any restriction contained in any agreement or
instrument, between Company and any Lender or any Affiliate of any Lender,
relating to Indebtedness and within the scope of subsection 7.2, will be Margin
Stock.
4.11 Employee Benefit Plans.
----------------------
A. Holdings and each of its Subsidiaries are in compliance in all
material respects with all applicable provisions and requirements of ERISA and
the regulations and published interpretations thereunder with respect to each
Employee Benefit Plan, and have performed all their obligations under each
Employee Benefit Plan. Each Employee Benefit Plan which is intended to qualify
under Section 401(a) of the Internal Revenue Code is so qualified.
B. No ERISA Event has occurred or is reasonably expected to occur which
has or would reasonably be expected to result in a liability to Holdings or any
of its Subsidiaries in excess of $7,500,000.
95
C. Except to the extent required under Section 4980B of the Internal
Revenue Code, the aggregate liabilities with respect to health or welfare
benefits (through the purchase of insurance or otherwise) provided or promised
for any retired or former employee of Holdings or any of its Subsidiaries do not
exceed $10,000,000.
D. As of the most recent valuation date for any Pension Plan, the amount
of unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA),
individually or in the aggregate for all Pension Plans, does not exceed
$10,000,000.
E. As of the most recent valuation date for each Multiemployer Plan for
which the actuarial report is available, the potential liability of Holdings,
its Subsidiaries and their respective ERISA Affiliates for a complete withdrawal
from such Multiemployer Plan (within the meaning of Section 4203 of ERISA), when
aggregated with such potential liability for a complete withdrawal from all
Multiemployer Plans, based on information available pursuant to Section 4221(e)
of ERISA, does not exceed $10,000,000.
4.12 Certain Fees.
------------
Except as set forth on Schedule 4.12 annexed hereto, 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 Holdings and Company 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.
4.13 Environmental Protection.
------------------------
Except as set forth on Schedule 4.13 annexed hereto:
-------------
(i) Neither Holdings nor any of its Subsidiaries nor any of their
respective Facilities or operations are subject to any outstanding written
order, consent decree or settlement agreement with any Person relating to
(a) any Environmental Law, (b) any Environmental Claim, or (c) any
Hazardous Materials Activity that, in the case of (a), (b) or (c),
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect;
(ii) Neither Holdings nor any of its Subsidiaries has received any
letter or written request for information from any governmental agency
under Section 104 of the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. (S) 9604) or any comparable
state law;
(iii) To Holdings' and Company's knowledge, there are no and have
been no conditions, occurrences, or Hazardous Materials Activities which
could reasonably be expected to form the basis of an Environmental Claim
against Holdings or any of its
96
Subsidiaries that, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect;
(iv) Holdings maintains an environmental management system designed
to maintain compliance with Environmental Laws and correct any incidents of
non-compliance;
(v) Compliance with all current or reasonably foreseeable future
requirements pursuant to or under Environmental Laws would not,
individually or in the aggregate, reasonably be expected to give rise to a
Material Adverse Effect; and
(vi) No event or condition has occurred or is occurring with respect
to Holdings or any of its Subsidiaries relating to any Environmental Law,
any Release of Hazardous Materials, or any Hazardous Materials Activity
which individually or in the aggregate has had or would reasonably be
expected to have a Material Adverse Effect.
4.14 Employee Matters.
----------------
There is no strike or work stoppage in existence or threatened involving
Holdings or any of its Subsidiaries that could reasonably be expected to have a
Material Adverse Effect.
4.15 Solvency.
--------
Each Loan Party is and, upon the incurrence of any Obligations by such Loan
Party on any date on which this representation is made, will be, Solvent.
4.16 Matters Relating to Collateral.
------------------------------
A. Creation, Perfection and Priority of Liens. The execution and
delivery of the Collateral Documents by Loan Parties, together with (i) the
actions taken on or prior to the date hereof pursuant to subsections 3.1I, 3.1J,
5.8 and 5.9 and (ii) the delivery to Collateral Agent of any Pledged Collateral
not delivered to Collateral 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 Collateral Agent for the benefit
of Lenders, as security for the respective Secured Obligations (as defined in
the applicable Collateral Document in respect of any Collateral), a valid and
perfected First Priority Lien on all of the Collateral, and all filings and
other actions necessary or desirable to perfect and maintain the perfection and
First Priority status of such Liens have been duly made or taken and remain in
full force and effect, other than the filing of any UCC financing statements
delivered to Collateral Agent for filing (but not yet filed) and the periodic
filing of UCC continuation statements in respect of UCC financing statements
filed by or on behalf of Collateral 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
97
of Collateral Agent pursuant to any of the Collateral Documents or (ii) the
exercise by Collateral 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 4.16A and except as may be
required, in connection with the disposition of any Pledged Collateral, by laws
generally affecting the offering and sale of securities.
C. Absence of Third-Party Filings. Except such as may have been filed in
favor of Collateral Agent as contemplated by subsection 4.16A, (i) no effective
UCC financing statement, fixture filing or other instrument similar in effect
covering all or any part of the Collateral is on file in any filing or recording
office, except with respect to Permitted Encumbrances and Liens permitted under
subsection 6.2A, and (ii) no effective filing covering all or any part of the IP
Collateral is on file in the PTO.
D. Margin Regulations. The pledge of the Pledged Collateral pursuant to
the Collateral Documents does not violate Regulation G, T, U or X of the Board
of Governors of the Federal Reserve System.
E. Information Regarding Collateral. All information supplied to
Administrative Agent or Collateral 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.
4.17 Related Agreements.
------------------
A. Delivery of Related Agreements. Company has delivered to Lenders
complete and correct copies of each Related Agreement and of all exhibits and
schedules thereto.
B. Seller's Warranties. Except to the extent otherwise set forth herein
or in the schedules hereto, each of the representations and warranties given by
Holdings and ▇▇▇▇ to Merger Corp. in the Recapitalization Agreement is true and
correct as of the date hereof (or as of any earlier date to which such
representation and warranty specifically relates) and will be true and correct
as of the Closing Date (or as of such earlier date, as the case may be), in each
case subject to the qualifications set forth in the schedules to the
Recapitalization Agreement, in each case except to the extent that the cause of
any failure of any such representation or warranty to be true and correct,
either individually or in the aggregate with the causes of the failures of any
other such representations and warranties to be true and correct, would not
reasonably be expected to have a Material Adverse Effect.
C. Warranties of Merger Corp. Subject to the qualifications set forth
therein, each of the representations and warranties given by Merger Corp. to
Holdings and ▇▇▇▇ in the Recapitalization Agreement is true and correct as of
the date hereof and will be true and correct as of the Closing Date, in each
case except to the extent that the cause of any failure of any such
representation or warranty to be true and correct, either individually or in the
aggregate with the
98
causes of the failures of any other such representations and warranties to be
true and correct, would not reasonably be expected to have a Material Adverse
Effect.
D. Survival. Notwithstanding anything in the Recapitalization Agreement
to the contrary, the representations and warranties of Holdings and Company set
forth in subsections 4.17B and 4.17C shall, solely for purposes of this
Agreement, survive the Closing Date for the benefit of Lenders.
4.18 Disclosure.
----------
All representations and warranties of Holdings or any of its Subsidiaries
and all information contained in the Confidential Information Memorandum or in
any Loan Document or Related Agreement or in any other document, certificate or
written statement furnished to Lenders by or on behalf of Holdings or any of its
Subsidiaries for use in connection with the transactions contemplated by this
Agreement, taken as a whole, are true and correct in all material respects and
do not omit to state a material fact (known to Holdings or Company, in the case
of any document not furnished by it) necessary in order to make the statements
contained herein or therein (taken as a whole) 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 Holdings and Company 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 Holdings or Company (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.
4.19 Subordination of Seller Notes and Shareholder Subordinated Notes.
----------------------------------------------------------------
The subordination provisions of any Permitted Seller Notes and Shareholder
Subordinated Notes are enforceable against the holders thereof, and the Loans
and other Obligations hereunder are and will be within the definition of
"Senior Indebtedness" or "Senior Debt", as applicable, included in such
provisions.
SECTION 5.
HOLDINGS' AND COMPANY'S AFFIRMATIVE COVENANTS
Holdings and Company covenant and agree that, so long as any of the
Commitments hereunder shall remain in effect and until payment in full of all of
the Loans and other Obligations (other than inchoate indemnification obligations
with respect to claims, losses or liabilities which have not yet arisen and are
not yet due and payable), unless Requisite Lenders
99
shall otherwise give prior written consent, Holdings and Company shall perform,
and shall cause each of their Subsidiaries to perform, all covenants in this
Section 5.
5.1 Financial Statements and Other Reports.
--------------------------------------
Holdings 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 Administrative Agent, with sufficient copies
for each Lender (and Administrative Agent will, after receipt thereof, deliver
to each Lender):
(i) Monthly Financials: as soon as available and in any event
------------------
within 30 days after the end of each month ending after the date which is
six months after the Closing Date, the consolidated balance sheet of
Holdings and its Subsidiaries as at the end of such month and the related
consolidated statements of income, stockholders' equity and cash flows of
Holdings and its Subsidiaries for such month and for the period from the
beginning of the then current Fiscal Year to the end of such month, setting
forth in each case in comparative form the corresponding figures for the
corresponding periods of the previous Fiscal Year and the corresponding
figures from the Financial Plan for the current Fiscal Year, to the extent
prepared on a monthly basis, all in reasonable detail and certified by the
principal financial officer or principal accounting officer of Holdings
that they fairly present, in all material respects, the financial condition
of Holdings and its Subsidiaries as at the dates indicated and the results
of their operations and their cash flows for the periods indicated, subject
to changes resulting from audit and normal year-end adjustments and the
absence of footnotes;
(ii) Quarterly Financials: as soon as available and in any event
--------------------
within 50 days after the end of each Fiscal Quarter, (a) the consolidated
balance sheet of Holdings and its Subsidiaries as at the end of such Fiscal
Quarter and the related consolidated statements of income, stockholders'
equity and cash flows of Holdings and its Subsidiaries for such Fiscal
Quarter and for the period from the beginning of the then current Fiscal
Year to the end of such Fiscal Quarter, setting forth in each case in
comparative form the corresponding figures for the corresponding periods of
the previous Fiscal Year and the corresponding figures from the Financial
Plan for the current Fiscal Year, all in reasonable detail and certified by
the principal financial officer or principal accounting officer of Holdings
that they fairly present, in all material respects, the financial condition
of Holdings and its Subsidiaries as at the dates indicated and the results
of their operations and their cash flows for the periods indicated, subject
to changes resulting from audit and normal year-end adjustments and the
absence of footnotes, and (b) a narrative report describing the operations
of Holdings and its Subsidiaries in the form prepared for presentation to
senior management for such Fiscal Quarter and for the period from the
beginning of the then current Fiscal Year to the end of such Fiscal
Quarter; provided, however, that Company may deliver to Administrative
-------- -------
Agent in lieu of such narrative report copies of the unaudited quarterly
report filed by
100
Holdings with the Securities and Exchange Commission on Form 10-Q in
respect of such Fiscal Quarter;
(iii) Year-End Financials: as soon as available and in any event
-------------------
within 95 days after the end of each Fiscal Year, (a) the consolidated
balance sheet of Holdings and its Subsidiaries as at the end of such Fiscal
Year and the related consolidated statements of income, stockholders'
equity and cash flows of Holdings and its Subsidiaries for such Fiscal
Year, setting forth in each case in comparative form the corresponding
figures for the previous Fiscal Year and the corresponding figures from the
Financial Plan for the Fiscal Year covered by such financial statements,
all in reasonable detail and certified by the principal financial officer
or principal accounting officer of Holdings that they fairly present, in
all material respects, the financial condition of Holdings and its
Subsidiaries as at the dates indicated and the results of their operations
and their cash flows for the periods indicated, (b) a narrative report
describing the operations of Holdings and its Subsidiaries in the form
prepared for presentation to senior management for such Fiscal Year,
provided, however, that Company may deliver to Administrative Agent in lieu
-------- -------
of such narrative report copies of the report filed by Holdings with the
Securities and Exchange Commission on Form 10-K in respect of such Fiscal
Year, and (c) in the case of such consolidated financial statements, a
report thereon of an Independent Public Accountant, which report shall be
unqualified, shall express no doubts about the ability of Holdings and its
Subsidiaries to continue as a going concern, and shall state that such
consolidated financial statements fairly present, in all material respects,
the consolidated financial position of Holdings and its Subsidiaries as at
the dates indicated and the results of their operations and their cash
flows for the periods indicated in conformity with GAAP applied on a basis
consistent with prior years (except as otherwise disclosed in such
financial statements) and that the examination by such accountants in
connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards;
(iv) Officers' and Compliance Certificates: together with each
-------------------------------------
delivery of financial statements of Holdings and its Subsidiaries pursuant
to subdivisions (i), (ii) and (iii) above, (a) an Officers' Certificate of
Holdings stating that the signers have reviewed the terms of this Agreement
and have made, or caused to be made under their super vision, a review in
reasonable detail of the transactions and condition of Holdings 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
Holdings 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 6, in each case to the extent
compliance with such restrictions is required to be tested at the end of
the applicable accounting period;
101
(v) Reconciliation Statements; MIS Accounting Changes: (a) if,
-------------------------------------------------
as a result of any change in accounting principles and policies from those
used in the preparation of the audited financial statements referred to in
subsection 4.3, the consolidated financial statements of Holdings and its
Subsidiaries delivered pursuant to subdivisions (i), (ii), (iii) or (xiii)
of this subsection 5.1 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 (1) together with the first delivery of financial
statements pursuant to subdivision (i), (ii), (iii) or (xiii) of this
subsection 5.1 following such change, consolidated financial statements of
Holdings 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 (2) together with each delivery of financial statements
pursuant to subdivision (i), (ii), (iii) or (xiii) of this subsection 5.1
following such change, a written statement of the principal accounting
officer or principal financial officer of Holdings setting forth the
differences (including any differences that would affect any calculations
relating to the financial covenants set forth in subsection 6) which would
have resulted if such financial statements had been prepared without giving
effect to such change; and (b) if Company changes its method of accounting
for Year 2000 Expenditures, MIS Upgrade Expenditures, EITF 97-13
Expenditures or Other MIS Expenditures, then, together with each Compliance
Certificate delivered pursuant to subdivision (iv) of this subsection 5.1
following such change, a schedule setting forth in reasonable detail the
adjustments to the calculation of IR Consolidated Adjusted EBITDA due to
such accounting change.
(vi) Accountants' Certification: together with each delivery of
--------------------------
consolidated financial statements of Holdings 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 of a financial nature 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 (unless
--------------------
restricted by applicable professional standards), copies of all reports
submitted to Holdings by inde-
102
pendent certified public accountants in connection with each annual,
interim or special audit of the financial statements of Holdings and its
Subsidiaries made by such accountants, including 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 Holdings to analysts
or its security holders or by any Subsidiary of Holdings to analysts or its
security holders other than Holdings or another Subsidiary of Holdings, (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
Holdings 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 written,
publicly announced notices by Holdings or any of its Subsidiaries
concerning material developments in the business of Holdings or any of its
Subsidiaries;
(ix) Events of Default, etc.: promptly upon any Responsible Officer
-----------------------
of Holdings or Company obtaining knowledge (a) of any condition or event
that constitutes an Event of Default or Potential Event of Default, or
becoming aware that any Lender has given any notice (other than to
Administrative Agent) or taken any other action with respect to a claimed
Event of Default or Potential Event of Default, (b) that any Person has
given any notice to Holdings 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 7.2, (c) of any condition or event that would be
required to be disclosed in a current report filed by Holdings or 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 Holdings or Company
were required to file such reports under the Exchange Act, or (d) of the
occurrence of any event or change that has caused or evidences, either in
any case or in the aggregate, a Material Adverse Effect, an Officers'
Certificate specifying the nature and period of existence of such
condition, event or change, or specifying the notice given or action taken
by any such Person and the nature of such claimed Event of Default,
Potential Event of Default, default, event or condition, and what action
Holdings or Company has taken, is taking and proposes to take with respect
thereto;
(x) Litigation or Other Proceedings: promptly upon any Responsible
-------------------------------
Officer of Holdings or Company obtaining knowledge of (a) the institution
of, or non-frivolous threat of, any action, suit, proceeding (whether
administrative, judicial or otherwise), governmental investigation or
arbitration against or affecting Holdings or any of its Subsidiaries or any
property of Holdings or any of its Subsidiaries (collectively,
"Proceedings") not previously disclosed in writing by Holdings or Company
to Lenders or (b) 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
103
(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 Holdings or Company to enable Lenders and their
counsel to evaluate such matters;
(xi) ERISA Events: promptly upon becoming aware of the occurrence
------------
of or forthcoming occurrence of any ERISA Event, a written notice
specifying the nature thereof, what action Holdings, any of its
Subsidiaries or any of their respective ERISA Affiliates has taken, is
taking or proposes to take with respect thereto and, when known, any action
taken or threatened by the Internal Revenue Service, the Department of
Labor or the PBGC with respect thereto;
(xii) ERISA Notices: with reasonable promptness, copies of (a) each
-------------
Schedule B (Actuarial Information) to the annual report (Form 5500 Series)
filed by Holdings, any of its Subsidiaries or any of their respective ERISA
Affiliates with the Internal Revenue Service with respect to each Pension
Plan, as Administrative Agent shall reasonably request; (b) all notices
received by Holdings, any of its Subsidiaries or any of their respective
ERISA Affiliates from a Multiemployer Plan sponsor concerning an ERISA
Event; and (c) copies of such other documents or governmental reports or
filings relating to any Employee Benefit Plan as Administrative Agent shall
reasonably request;
(xiii) Financial Plans: as soon as practicable and in any event no
---------------
later than 30 days after the beginning of each Fiscal Year, a consolidated
plan and financial forecast for such Fiscal Year and the next succeeding
Fiscal Year (the "Financial Plan" for such Fiscal Years), including (a) a
forecasted consolidated balance sheet and forecasted consolidated
statements of income and cash flows of Holdings and its Subsidiaries for
each such Fiscal Year, together with a pro forma Compliance Certificate for
--- -----
the first such Fiscal Year and an explanation of the assumptions on which
such forecasts are based, and (b) such other information regarding such
projections as Administrative Agent may reasonably request;
(xiv) Insurance: as soon as practicable and in any event by the last
---------
day of each Fiscal Year, a report in form and substance satisfactory to
Administrative Agent outlining all material changes made to insurance
coverage maintained as of the Closing Date or the date of the most recent
such report by Holdings and its Subsidiaries;
(xv) New Subsidiaries: promptly upon any Person becoming a
----------------
Subsidiary of Holdings, a written notice setting forth with respect to such
Person (a) the date on which such Person became a Subsidiary of Holdings
and (b) the ownership and debt and equity capitalization of such
Subsidiary;
104
(xvi) Material Contracts: promptly, and in any event within ten
------------------
Business Days after any Material Contract of Holdings or any of its
Subsidiaries is terminated or amended in a manner that is materially
adverse to Holdings 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
(xvii) Other Information: with reasonable promptness, such other
-----------------
information and data with respect to Holdings or any of its Subsidiaries as
from time to time may be reasonably requested by Administrative Agent.
5.2 Corporate Existence, etc.
-------------------------
Except as permitted under subsection 6.7, Holdings 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; provided, however that neither Holdings nor any of its Subsidiaries
-------- -------
shall be required to preserve any such right or franchise if the Board of
Directors of Holdings or such Subsidiary shall determine that the preservation
thereof is no longer desirable in the conduct of the business of Holdings or
such Subsidiary, as the case may be, and that the loss thereof is not
disadvantageous in any material respect to Holdings, such Subsidiary or Lenders.
5.3 Payment of Taxes and Claims; Tax Consolidation.
----------------------------------------------
A. Holdings will, and will cause each of its Subsidiaries to, pay all
federal, state and other material taxes, assessments and other governmental
charges imposed upon it or any of its properties or assets or in respect of any
of its income, businesses or franchises before any penalty accrues thereon, and
all claims (including claims for labor, services, materials and supplies) for
sums that have become due and payable and that by law have or may become a Lien
upon any of its properties or assets, prior to the time when any penalty or fine
shall be incurred with respect thereto; provided that no such charge or claim
--------
need be paid if it is being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted, so long as (1) such reserve or
other appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made therefor and (2) in the case of a charge or claim
which has or may become a Lien against any of the Collateral, such contest
proceedings conclusively operate to stay the sale of any portion of the
Collateral to satisfy such charge or claim.
B. Holdings will not, nor will it permit any of its Subsidiaries to, file
or consent to the filing of any consolidated income tax return with any Person
(other than Holdings or any of its Subsidiaries).
105
5.4 Maintenance of Properties; Insurance; Application of Net
--------------------------------------------------------
Insurance/Condemnation Proceeds.
-------------------------------
A. Maintenance of Properties. Company 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 and damage by casualty excepted, all
material properties used or useful in the business of Company and its
Subsidiaries (including all Intellectual Property) and from time to time will
make or cause to be made all repairs, renewals and replacements thereof which
are useful, customary or appropriate for companies in similar businesses.
B. Insurance. Company will maintain or cause to be maintained, with
financially sound and reputable insurers, such public liability insurance, third
party property damage insurance, business interruption insurance and casualty
insurance with respect to liabilities, losses or damage in respect of the
assets, properties and businesses of Company and its Subsidiaries as may
customarily be carried or maintained under similar circumstances by corporations
of established reputation engaged in similar businesses, in each case in such
amounts (giving effect to self-insurance), with such deductibles, covering such
risks and otherwise on such terms and conditions as shall be customary for
corporations similarly situated in the industry. Without limiting the
generality of the foregoing, Company will maintain or cause to be maintained (i)
flood insurance with respect to each Flood Hazard Property that is located in a
community that participates in the National Flood Insurance Program, in each
case in compliance with any applicable regulations of the Board of Governors of
the Federal Reserve System, and (ii) replacement value property insurance on the
Collateral under such policies of insurance, with such insurance companies, in
such amounts, with such deductibles, and covering such risks as are in
accordance with normal industry practice. Each such policy of insurance related
to property damage, casualty or business interruption shall (a) name
Administrative Agent for the benefit of Lenders as an additional insured
thereunder as its interests may appear and (b) in the case of each business
interruption and casualty insurance policy, contain a loss payable clause or
endorsement, reasonably satisfactory in form and substance to Administrative
Agent, that names Administrative Agent for the benefit of Lenders as the loss
payee thereunder for any covered loss in excess of $1,000,000 and provides for
at least 30 days prior written notice to Administrative Agent of any
modification or cancellation of such policy.
C. Application of Net Insurance/Condemnation Proceeds.
(i) Business Interruption Insurance. Upon receipt by Company or any
-------------------------------
of its Subsidiaries of any business interruption insurance proceeds
constituting Net Insurance/Condemnation Proceeds, (a) so long as no Event
of Default shall have occurred and be continuing, Company or such
Subsidiary may retain and apply such Net Insurance/Condemnation Proceeds
for working capital purposes, and (b) if an Event of Default shall have
occurred and be continuing, within ten Business Days of the receipt thereof
Company shall apply an amount equal to such Net Insurance/Condemnation
Proceeds to prepay the Loans as provided in subsection 2.4B(ii)(b);
106
(ii) Casualty Insurance/Condemnation Proceeds. Within ten Business
----------------------------------------
Days of receipt by Company or any of its Subsidiaries of any Net
Insurance/Condemnation Proceeds other than from business interruption
insurance, (a) so long as no Event of Default shall have occurred and be
continuing and so long as the aggregate amount of Net Asset Sale Proceeds
and Net Insurance/Condemnation Proceeds received from the Closing Date to
the date of determination does not exceed $25,000,000, Company may deliver
to Administrative Agent an Officers' Certificate setting forth (1) that
portion of such Net Insurance/Condemnation Proceeds (the "Proposed
Insurance Reinvestment Proceeds") that Company or such Subsidiary intends
to use (or enter into a contract to use) within 270 days of such date of
receipt to pay or reimburse the costs of repairing, restoring or replacing
the assets in respect of which such Net Insurance/Condemnation Proceeds
were received or to reinvest in Eligible Assets and (2) the proposed use of
the Proposed Insurance Reinvestment Proceeds and such other information
with respect to such proposed use as Administrative Agent may reasonably
request, and Company shall, or shall cause one or more of its Subsidiaries
to, promptly and diligently apply such Proposed Insurance Reinvestment
Proceeds to pay or reimburse the costs of repairing, restoring or replacing
the assets in respect of which such Proposed Insurance Reinvestment
Proceeds were received or to reinvestment in Eligible Assets or, to the
extent the aggregate amount of Net Asset Proceeds and Net
Insurance/Condemnation Proceeds received from the Closing Date to the date
of determination exceed $5,000,000 and are not so applied, to prepay the
Loans as provided in subsection 2.4B(ii)(b), and (b) if an Event of Default
shall have occurred and be continuing, Company shall apply an amount equal
to such Net Insurance/ Condemnation Proceeds to prepay the Loans as
provided in subsection 2.4B(ii)(b).
(iii) Net Insurance/Condemnation Proceeds Received by Administrative
--------------------------------------------------------------
Agent. Upon receipt by Administrative Agent of any Net
-----
Insurance/Condemnation Proceeds as loss payee, (a) if and to the extent
Company or Company would have been required to apply such Net
Insurance/Condemnation Proceeds (if it had received them directly) to
prepay the Loans, Administrative Agent shall, and Company hereby authorizes
Administrative Agent to, apply such Net Insurance/Condemnation Proceeds
within ten Business Days of receipt thereof to prepay the Loans as provided
in subsection 2.4B(ii)(b), and (b) to the extent the foregoing clause (a)
does not apply, Administrative Agent shall deliver such Net
Insurance/Condemnation Proceeds to Company, and Company shall, or shall
cause one or more of its Subsidiaries to, promptly apply such Net
Insurance/Condemnation Proceeds to the costs of repairing, restoring, or
replacing the assets in respect of which such Net Insurance/Condemnation
Proceeds were received or to reinvestment in Eligible Assets.
5.5 Inspection Rights; Audits of Inventory and Accounts Receivable; Lender
----------------------------------------------------------------------
Meeting.
-------
A. Inspection Rights. Holdings 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 Holdings or of any of its
Subsidiaries, to inspect, copy and take extracts from its and their financial
and accounting records, and to discuss its and their affairs, finances and
107
accounts with its and their officers and independent public accountants
(provided that Holdings or Company may, if they so choose, be present at or
participate in any such discussion), all upon reasonable notice and at such
reasonable times during normal business hours and as often as may reasonably be
requested; provided, however, that each Lender shall coordinate with
-------- -------
Administrative Agent the frequency and timing of such visits and inspections so
as to reasonably minimize the burden imposed on Holdings and its Subsidiaries.
B. Audits of Inventory and Accounts Receivable. Holdings shall, and
shall cause each of its Subsidiaries to, permit any authorized representatives
designated by Administrative Agent to conduct one audit of all Inventory and
accounts receivable of Loan Parties during each twelve-month period after the
Closing Date, each such audit to be in scope and substance reasonably
satisfactory to Syndication Agent and Administrative Agent, all upon reasonable
notice and at such reasonable times during normal business hours as may
reasonably be requested.
C. Lender Meeting. Company will, upon the request of Syndication Agent,
Administrative Agent or Requisite Lenders, participate in a meeting of
Administrative Agent and Lenders once during each Fiscal Year to be held at
Company's corporate offices (or at such other location as may be agreed to by
Holdings and Administrative Agent) at such time as may be agreed to by Company
and Administrative Agent.
5.6 Compliance with Laws, etc.
--------------------------
Holdings shall comply, and shall cause each of its Subsidiaries to comply,
with the requirements of all applicable laws, rules, regulations and orders of
any governmental authority (including all Environmental Laws), except where
noncompliance would not reasonably be expected to cause, individually or in the
aggregate, a Material Adverse Effect.
5.7 Environmental Review and Investigation, Disclosure, Etc.; Company's Actions
---------------------------------------------------------------------------
Regarding Hazardous Materials Activities, Environmental Claims and
------------------------------------------------------------------
Violations of Environmental Laws.
--------------------------------
A. Environmental Review and Investigation. Holdings and Company agree
that Administrative Agent may, (i) at any time a fact, event or condition arises
that, in Administrative Agent's reasonable discretion, Administrative Agent
determines could give rise to environmental liabilities that would materially
adversely affect any material Facility, retain, at Company's expense, an
independent professional consultant to review any environmental audits,
investigations, analyses and reports relating to Hazardous Materials at such
Facility prepared by or for Company and (ii) in the event (a) Administrative
Agent reasonably believes that Company or Holdings has breached any
representation, warranty or covenant contained in subsection 4.6, 4.13, 5.6 or
5.7 or that there has been a material violation of Environmental Laws at any
Facility or by Holdings or any of its Subsidiaries at any other location conduct
its own investigation of such breach or violation or (b) an Event of Default has
occurred and is continuing, conduct its own investigation of any Facility;
provided that, in the case of any Facility no longer owned, leased, operated or
--------
used by Holdings or any of its Subsidiaries,
108
Company and Holdings shall only be obligated to use their reasonable best
efforts to obtain permission for Administrative Agent's professional consultant
to conduct an investigation of such Facility. For purposes of conducting an
investigation pursuant to clause (ii) of the preceding sentence, Company and
Holdings hereby grant to Administrative Agent and its agents, employees,
consultants and contractors the right to enter into or onto any Facilities
currently owned, leased, operated or used by Holdings or any of its Subsidiaries
and to perform such tests on such property (including taking samples of soil,
groundwater and suspected asbestos-containing materials) as are reasonably
necessary in connection therewith (to the extent, at any Facility leased by
Holdings or any of its Subsidiaries, such actions are permitted by the owner of
such Facility). Any such investigation of any Facility shall be conducted,
unless otherwise agreed to by Holdings and Administrative Agent, during normal
business hours and, to the extent reasonably practicable, shall be conducted so
as not to interfere with the ongoing operations at such Facility or to cause any
damage or loss to any property at such Facility. Holdings, Company and
Administrative Agent hereby acknowledge and agree that any report of any
investigation conducted at the request of Administrative Agent pursuant to this
subsection 5.7A will be obtained and shall be used by Administrative Agent and
Lenders for the purposes of Lenders' internal credit decisions, to monitor and
police the Loans and to protect Lenders' security interests, if any, created by
the Loan Documents. Administrative Agent agrees to deliver a copy of any such
report to Company with the understanding that Company and Holdings acknowledge
and agree that (x) they will indemnify and hold harmless Administrative Agent
and each Lender from any costs, losses or liabilities relating to Holdings' or
Company's use of or reliance on such report, (y) neither Administrative Agent
nor any Lender makes any representation or warranty with respect to such report,
and (z) by delivering such report to Company, neither Administrative Agent nor
any Lender is requiring or recommending the implementation of any suggestions or
recommendations contained in such report.
B. Environmental Disclosure. Company will deliver to Administrative
Agent, with sufficient copies for each Lender (and Administrative Agent will,
after receipt thereof, deliver to each Lender):
(i) Environmental Audits and Reports. As soon as practicable
--------------------------------
following receipt thereof, copies of all material environmental audits,
investigations, analyses and reports of any kind or character, whether
prepared by personnel of Holdings or any of its Subsidiaries or by
independent consultants, governmental authorities or any other Persons,
with respect to environmental matters at any Facility that could reasonably
be expected to have a Material Adverse Effect.
(ii) Notice of Certain Releases, Remedial Actions, Etc. Promptly upon
--------------------------------------------------
the occurrence thereof, written notice describing in reasonable detail (a)
any Release required to be reported to any federal, state or local
governmental or regulatory agency under any applicable Environmental Laws
unless such Release could not reasonably be expected to result in a
Material Adverse Effect, (b) any remedial action taken by Company, Holdings
or any other Person in response to (1) any Hazardous Materials Activities
the existence of which would reasonably be expected to result in one or
more Environmental Claims having, individually or in the aggregate, a
Material Adverse Effect, or (2) any
109
Environmental Claims of which Holdings or any of its Subsidiaries has
notice that, individually or in the aggregate, would reasonably be expected
to result in a Material Adverse Effect, and (c) Company's or Holdings'
discovery of any occurrence or condition on any real property adjoining or
in the vicinity of any Facility that would reasonably be expected to cause
such Facility or any part thereof to be subject to any material
restrictions on the ownership, occupancy, transferability or use thereof
under any Environmental Laws.
(iii) Written Communications Regarding Environmental Claims,
------------------------------------------------------
Releases, Etc. As soon as practicable following the sending or receipt
--------------
thereof by Holdings or any of its Subsidiaries, a copy of any and all
written communications with respect to (a) any Environmental Claims that,
individually or in the aggregate, would reasonably be expected to give rise
to a Material Adverse Effect, (b) any Release required to be reported to
any federal, state or local governmental or regulatory agency unless such
Release could not reasonably be expected to result in a Material Adverse
Effect, and (c) any request for information from any governmental agency
that suggests such agency is investigating whether Holdings or any of its
Subsidiaries may be potentially responsible for any Hazardous Materials
Activity unless such Hazardous Materials Activity could not reasonably be
expected to have a Material Adverse Effect.
(iv) Notice of Certain Proposed Actions Having Environmental Impact.
--------------------------------------------------------------
Prompt written notice describing in reasonable detail (a) any proposed
acquisition of stock, assets, or property by Holdings or any of its
Subsidiaries that could reasonably be expected to (1) expose Holdings or
any of its Subsidiaries to, or result in, Environmental Claims that could
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect or (2) affect the ability of Holdings or any of its
Subsidiaries to maintain in full force and effect all material Governmental
Authorizations required under any Environmental Laws for their respective
operations and (b) any proposed action to be taken by Holdings or any of
its Subsidiaries to modify current operations in a manner that would
reasonably be expected to subject Holdings or any of its Subsidiaries to
any material additional obligations or requirements under any Environmental
Laws where such obligations or reimbursements would reasonably be expected
to have a Material Adverse Effect.
(v) Other Information. With reasonable promptness, such other
-----------------
documents and information as from time to time may be reasonably requested
by Administrative Agent in relation to any matters disclosed pursuant to
this subsection 5.7.
C. Holdings' and Company's Actions Regarding Hazardous Materials
Activities, Environmental Claims and Violations of Environmental Laws.
(i) Remedial Actions Relating to Hazardous Materials Activities.
-----------------------------------------------------------
Holdings shall promptly undertake, and shall cause each of its Subsidiaries
promptly to undertake, any and all investigations, studies, sampling,
testing, abatement, cleanup, removal, remediation or other response actions
necessary to remove, remediate, clean up or ▇▇▇▇▇
110
any Hazardous Materials Activity on, under or about any Facility that is in
violation of any Environmental Laws or that presents a material risk of
giving rise to an Environmental Claim that would, in either case,
reasonably be expected to have a Material Adverse Effect. In the event
Holdings or any of its Subsidiaries undertakes any such action with respect
to any Hazardous Materials, Holdings or such Subsidiary shall conduct and
complete such action in material compliance with all applicable
Environmental Laws and in accordance an all material respects with the
policies, orders and directives of all federal, state and local
governmental authorities except when, and only to the extent that,
Holdings' or such Subsidiary's liability with respect to such Hazardous
Materials Activity is being contested in good faith by Holdings or such
Subsidiary.
(ii) Actions with Respect to Environmental Claims and Violations of
--------------------------------------------------------------
Environmental Laws. Holdings shall promptly take, and shall cause each of
------------------
its Subsidiaries promptly to take, any and all actions necessary to (i)
cure any violation of applicable Environmental Laws by Holdings or its
Subsidiaries where such violation would reasonably be expected to have a
Material Adverse Effect and (ii) make an appropriate response to any
Environmental Claim against Holdings or any of its Subsidiaries (of which
Holdings or any of its Subsidiaries has notice) where such Environmental
Claim would reasonably be expected to have a Material Adverse Effect, and
discharge any obligations it may have to any Person thereunder.
5.8 Execution of Subsidiary Guaranty and Personal Property Collateral Documents
---------------------------------------------------------------------------
by Future Subsidiaries.
----------------------
A. Execution of Subsidiary Guaranty and Personal Property Collateral
Documents. In the event that any Domestic Subsidiary which is an Excluded
Subsidiary as of the Closing Date ceases to be an Excluded Subsidiary or any
Person becomes a Domestic Subsidiary of Company after the date hereof, Company
will promptly notify Administrative Agent of that fact and cause such Subsidiary
to execute and deliver to Collateral Agent counterparts of the Subsidiary
Guaranty, Subsidiary Pledge Agreement, Subsidiary Security Agreement and
Subsidiary Patent and Trademark Security Agreement and to take all such further
actions and execute all such further documents and instruments (including
actions, documents and instruments comparable to those described in subsection
3.1J) as may be reasonably necessary or, in the reasonable opinion of
Administrative Agent, desirable to create in favor of Collateral Agent, for the
benefit of Lenders, a valid and perfected First Priority Lien on all of the
personal and mixed property assets of such Subsidiary described in the
applicable forms of Collateral Documents.
B. Subsidiary Charter Documents, Legal Opinions, Etc. Company shall
deliver to Administrative Agent, together with such Loan Documents, (i)
certified copies of such Subsidiary's Certificate or Articles of Incorporation,
together with a good standing certificate from the Secretary of State of the
jurisdiction of its incorporation and each other state in which such Person is
qualified as a foreign corporation to do business and, to the extent generally
111
available, a certificate or other evidence of good standing as to payment of any
applicable franchise or similar taxes from the appropriate taxing authority of
each of such jurisdictions, each to be dated a recent date prior to their
delivery to Administrative Agent, (ii) a copy of such Subsidiary's Bylaws,
certified by its corporate secretary or an assistant secretary as of a recent
date prior to their delivery to Administrative Agent, (iii) a certificate
executed by the secretary or an assistant secretary of such Subsidiary as to (a)
the fact that the attached resolutions of the Board of Directors of such
Subsidiary approving and authorizing the execution, delivery and performance of
such Loan Documents are in full force and effect and have not been modified or
amended and (b) the incumbency and signatures of the officers of such Subsidiary
executing such Loan Documents, and (iv) to the extent requested by
Administrative Agent, a favorable opinion of counsel to such Subsidiary, in form
and substance reasonably satisfactory to Administrative Agent and its counsel,
as to (a) the due organization and good standing of such Subsidiary, (b) the due
authorization, execution and delivery by such Subsidiary of such Loan Documents,
(c) the enforceability of such Loan Documents against such Subsidiary, (d) such
other matters (including matters relating to the creation and perfection of
Liens in any Collateral pursuant to such Loan Documents) as Administrative Agent
may reasonably request, all of the foregoing to be reasonably satisfactory in
form and substance to Administrative Agent and its counsel.
5.9 Conforming Leasehold Interests; Matters Relating to Additional Real
-------------------------------------------------------------------
Property Collateral.
-------------------
A. Conforming Leasehold Interests. If Holdings or any of its
Subsidiaries acquires any Material Leasehold Property, Holdings shall use
commercially reasonable efforts to, or shall cause such Subsidiary to use
commercially reasonable efforts to, cause such Leasehold Property to be a
Conforming Leasehold Interest.
B. Additional Mortgages, Etc. From and after the Closing Date, in the
event that (i) Holdings or any Subsidiary Guarantor acquires any fee interest in
real property or any Material Leasehold Property or (ii) at the time any Person
becomes a Subsidiary Guarantor, such Person owns or holds any fee interest in
real property or any Material Leasehold Property, in either case excluding any
such Real Property Asset the encumbrancing of which requires the consent of any
applicable lessor or (in the case of clause (ii) above) then-existing senior
lienholder, where Holdings and its Subsidiaries are unable, after exercising
commercially reasonable efforts, to obtain such lessor's or senior lienholder's
consent (any such non-excluded Real Property Asset described in the foregoing
clause (i) or (ii) being an "Additional Mortgaged Property"), Holdings or such
Subsidiary Guarantor shall deliver to Administrative Agent, as soon as
practicable after such Person acquires such Additional Mortgaged Property or
becomes a Subsidiary Guarantor, as the case may be, the following:
(i) Additional Mortgage. A fully executed and notarized Mortgage (an
-------------------
"Additional Mortgage"), in proper form for recording in all appropriate
places in all applicable jurisdictions, encumbering the interest of such
Loan Party in such Additional Mortgaged Property;
112
(ii) Opinions of Counsel. (a) A favorable opinion of counsel to
-------------------
such Loan Party, in form and substance reasonably satisfactory to
Administrative Agent and its counsel, as to the due authorization,
execution and delivery by such Loan Party of such Additional Mortgage and
such other matters as Administrative Agent may reasonably request, and (b)
if required by Administrative Agent, an opinion of counsel (which counsel
shall be reasonably satisfactory to Administrative Agent) in the state in
which such Additional Mortgaged Property is located with respect to the
enforceability of such Additional Mortgage and such other matters
(including any matters governed by the laws of such state regarding
personal property security interests in respect of any Collateral related
to the Additional Mortgaged Property) as Administrative Agent may
reasonably request, in each case in form and substance reasonably
satisfactory to Administrative Agent;
(iii) Landlord Consent and Estoppel; Recorded Leasehold Interest. In
----------------------------------------------------------
the case of an Additional Mortgaged Property consisting of a Leasehold
Property, (a) a Landlord Consent and Estoppel and (b) evidence that such
Leasehold Property is a Recorded Leasehold Interest;
(iv) Title Insurance. (a) If required by Administrative Agent, an
---------------
ALTA mortgagee title insurance policy or an unconditional commitment
therefor (an "Additional Mortgage Policy") issued by the Title Company
with respect to such Additional Mortgaged Property, in an amount reasonably
satisfactory to Administrative Agent, insuring fee simple title to, or a
valid leasehold interest in, such Additional Mortgaged Property vested in
such Loan Party and assuring Administrative Agent that such Additional
Mortgage creates a valid and enforceable First Priority mortgage Lien on
such Additional Mortgaged Property, subject only to a standard survey
exception, which Additional Mortgage Policy (1) shall include an
endorsement for mechanics' liens, for future advances (in each case, if
available) under this Agreement and for any other matters reasonably
requested by Administrative Agent and (2) shall provide for affirmative
insurance and such reinsurance as Administrative Agent may reasonably
request, all of the foregoing in form and substance reasonably satisfactory
to Administrative Agent; and (b) evidence satisfactory to Administrative
Agent that such Loan Party has (i) delivered to the Title Company all
certificates and affidavits required by the Title Company in connection
with the issuance of the Additional Mortgage Policy and (ii) paid to the
Title Company or to the appropriate governmental authorities all expenses
and premiums of the Title Company in connection with the issuance of the
Additional Mortgage Policy and all recording and stamp taxes (including
mortgage recording and intangible taxes) payable in connection with
recording the Additional Mortgage in the appropriate real estate records;
provided, however, that Administrative Agent shall allow for such
-------- -------
reasonable revisions to the applicable Mortgage and shall otherwise take
such steps as are reasonable and customary to minimize recording, mortgage
recording, stamp, documentary and intangible taxes, at Company's cost;
(v) Title Report. If no Additional Mortgage Policy is required
------------
with respect to such Additional Mortgaged Property, a title report issued
by the Title Company with
113
respect thereto, last updated not more than 30 days prior to the date such
Additional Mortgage is to be recorded and reasonably satisfactory in form
and substance to Administrative Agent;
(vi) Copies of Documents Relating to Title Exceptions. Copies of all
------------------------------------------------
recorded documents listed as exceptions to title or otherwise referred to
in the Additional Mortgage Policy or title report delivered pursuant to
clause (iv) or (v) above;
(vii) Matters Relating to Flood Hazard Properties. (a) Evidence,
-------------------------------------------
which may be in the form of a surveyor's note on a survey or a report from
a flood hazard search firm, as to (1) whether such Additional Mortgaged
Property is a Flood Hazard Property and (2) if so, whether the community in
which such Flood Hazard Property is located is participating in the
National Flood Insurance Program, (b) if such Additional Mortgaged Property
is a Flood Hazard Property, such Loan Party's written acknowledgement of
receipt of written notification from Administrative Agent (1) that such
Additional Mortgaged Property is a Flood Hazard Property and (2) as to
whether the community in which such Flood Hazard Property is located is
participating in the National Flood Insurance Program, and (c) in the event
such Additional Mortgaged Property is a Flood Hazard Property that is
located in a community that participates in the National Flood Insurance
Program, evidence that Holdings or 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
(viii) Environmental Audit. If required by Administrative Agent,
-------------------
reports and other information, in form, scope and substance reasonably
satisfactory to Administrative Agent and prepared by environmental
consultants reasonably satisfactory to Administrative Agent, concerning any
environmental hazards or liabilities to which Holdings or any of its
Subsidiaries may be subject with respect to such Additional Mortgaged
Property.
C. Real Estate Appraisals. Holdings shall, and shall cause each of its
Subsidiaries to, permit an independent real estate appraiser satisfactory to
Administrative Agent, upon reasonable notice, to visit and inspect any
Additional Mortgaged Property for the purpose of preparing an appraisal of such
Additional Mortgaged Property satisfying the requirements of any applicable laws
and regulations (in each case to the extent required under such laws and
regulations as determined by Administrative Agent in its discretion).
5.10 Interest Rate Protection.
------------------------
At all times after the date which is 60 days after the Closing Date,
Company shall maintain in effect one or more Interest Rate Agreements with
respect to the Loans, each such Interest Rate Agreement to be for a term and in
form and substance reasonably satisfactory to Syndication Agent, which Interest
Rate Agreements shall effectively limit the Unadjusted Eurodollar Rate Component
(as hereinafter defined) of the interest costs to Company with respect to an
aggregate notional principal amount of not less than 50% of the aggregate
principal
114
amount of the Tranche A Term Loans outstanding from time to time (based on the
assumption that such notional principal amount was a Eurodollar Rate Loan with
an Interest Period of three months) to a rate equal to not more than 8.0% per
annum. For purposes of this subsection 5.10, the term "Unadjusted Eurodollar
Rate Component" means that component of the interest costs to Company in
respect of a Eurodollar Rate Loan that is based upon the rate obtained pursuant
to clause (i) of the definition of Adjusted Eurodollar Rate.
5.11 Additional Foreign Subsidiary Collateral.
----------------------------------------
If, following a change in the relevant provisions of the Internal Revenue
Code, counsel for Company acceptable to Administrative Agent does not within 30
days after a request from Administrative Agent or Requisite Lenders deliver
evidence, in form and substance satisfactory to Administrative Agent with
respect to any Foreign Subsidiary which has not already had all of its capital
stock pledged pursuant to the Collateral Documents, that (i) a pledge of 66-2/3%
or more of the total combined voting power of all classes of capital stock of
such Foreign Subsidiary entitled to vote, and of any promissory note issued by
such Foreign Subsidiary to Holdings or any of its Domestic Subsidiaries, and
(ii) the entering into by such Foreign Subsidiary of a guaranty in substantially
the form of the Subsidiary Guaranty, in any such case would cause the
undistributed earnings of such Foreign Subsidiary as determined for Federal
income tax purposes to be treated as a deemed dividend to such Foreign
Subsidiary's United States parent for Federal income tax purposes, then: in the
case of a failure to deliver the evidence described in clause (i) above, that
portion of such Foreign Subsidiary's outstanding capital stock or any promissory
notes so issued by such Foreign Subsidiary, in each case not theretofore pledged
pursuant to the Collateral Documents, shall be pledged to Collateral Agent
pursuant to the Collateral Documents (or another pledge agreement in
substantially similar form, if necessary), and in the case of a failure to
deliver the evidence described in clause (ii) above, such Foreign Subsidiary
shall execute and deliver the Subsidiary Guaranty and other Collateral Documents
(or other guaranty and security agreements in substantially similar form, if
necessary), granting Collateral Agent a security interest in all of such Foreign
Subsidiary's real, mixed and personal property and securing the Obligations, in
each case to the extent that such pledge of capital stock and notes and entry
into such guaranty and related documents is permitted by the laws of the
applicable foreign jurisdictions.
5.12 Post-Closing Deliveries.
-----------------------
Company shall cause any actions set forth on Schedule 5.12 annexed hereto
-------------
to be taken within the time period(s) specified on such Schedule 5.12 and in
-------------
form and substance reasonably satisfactory to Administrative Agent and
Syndication Agent.
SECTION 6.
COMPANY'S NEGATIVE COVENANTS
Company 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 (other than
115
inchoate indemnification obligations with respect to claims, losses or
liabilities which have not yet arisen and are not yet due and payable), unless
Requisite Lenders shall otherwise give prior written consent, Company shall
perform, and shall cause each of its Subsidiaries to perform, all covenants in
this Section 6.
6.1 Restricted Payments.
-------------------
Company shall not, and shall not permit any of its Restricted Subsidiaries
to, directly or indirectly: (i) declare or pay any dividend or make any other
payment or distribution on account of Company's Equity Interests (including,
without limitation, any payment in connection with any merger or consolidation
involving Company) or to the direct or indirect holders of Company's Equity
Interests in their capacity as such (other than dividends or distributions
payable in Qualified Capital Stock of Company); (ii) purchase, redeem or
otherwise acquire or retire for value (including, without limitation, in
connection with any merger or consolidation involving Company) any Equity
Interests of Company or any direct or indirect parent of Company; or (iii) make
any Restricted Investment (all such payments and other actions set forth in
clauses (i) through (iii) above being collectively referred to as "Restricted
Payments"), unless, at the time of and after giving effect to such Restricted
Payment:
(a) no Potential Event of Default or Event of Default shall have
occurred and be continuing or would occur as a consequence thereof; and
(b) Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made
at the beginning of the applicable Four-Quarter Period, have been permitted
to incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated Fixed Charge Coverage Ratio test set forth in the first
paragraph of subsection 6.3 hereof; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by Company and its Restricted Subsidiaries
after the date of this Agreement (excluding Restricted Payments permitted
by clauses (3), (5), (6), (8) and (9) of the next succeeding paragraph), is
less than the sum, without duplication, of (i) 50% of the Consolidated Net
Income of Company for the period (taken as one accounting period) from the
beginning of the first Fiscal Quarter commencing after the date of this
Agreement to the end of Company's most recently ended Fiscal Quarter for
which internal financial statements are available at the time of such
Restricted Payment (or, if such Consolidated Net Income for such period is
a deficit, less 100% of such deficit), plus (ii) 100% of the aggregate net
cash proceeds (including the fair market value of property other than cash
that would constitute Marketable Securities or a Permitted Business)
received by Company since the date of this Agreement as a contribution to
its common equity capital (other than from a Subsidiary or that were
financed with loans from Company or any Restricted Subsidiary) or from the
issue or sale of Qualified Capital Stock (including Capital Stock issued
upon the conversion of convertible Indebtedness or in exchange for
outstanding Indebtedness) of Company (excluding any net proceeds from an
Equity Offering or capital contribution to the extent used to repay
116
Loans in accordance with the optional prepayment provisions hereunder) or
from the issue or sale of Disqualified Stock or debt securities of Company
that have been converted into Qualified Capital Stock (other than Qualified
Capital Stock (or Disqualified Stock or convertible debt securities) sold
to a Subsidiary of Company), plus (iii) 100% of the aggregate net proceeds
(including the fair market value of property other than cash that would
constitute Marketable Securities or a Permitted Business) of any (A) sale
or other disposition of Restricted Investments made by Company and its
Restricted Subsidiaries or (B) dividend from, or the sale of the stock of,
an Unrestricted Subsidiary.
Notwithstanding the foregoing, the provisions set forth in the immediately
preceding paragraph will not prohibit (1) the payment of any dividend or the
consummation of any irrevocable redemption within 60 days after the date of
declaration of such dividend or notice of such redemption if the dividend or
payment of the redemption price, as the case may be, would have been permitted
on the date of declaration or notice; (2) if no Event of Default shall have
occurred and be continuing or shall occur as a consequence thereof, the
acquisition of any shares of Capital Stock of Company (the "Retired Capital
Stock"), either (i) solely in exchange for shares of Qualified Capital Stock of
Company (the "Refunding Capital Stock"), or (ii) through the application of
the net proceeds of a substantially concurrent sale for cash (other than to a
Subsidiary of Company) of shares of Qualified Capital Stock of Company, and, in
the case of subclause (i) of this clause (2), if immediately prior to the
retirement of the Retired Capital Stock the declaration and payment of dividends
thereon was permitted under clause (3) of this paragraph, the declaration and
payment of dividends on the Refunding Capital Stock in an aggregate amount per
year no greater than the aggregate amount of dividends per annum that was
declarable and payable on such Retired Capital Stock immediately prior to such
retirement; provided that at the time of the declaration of any such dividends
--------
on the Refunding Capital Stock, no Potential Event of Default or Event of
Default shall have occurred and be continuing or would occur as a consequence
thereof; (3) if no Potential Event of Default or Event of Default shall have
occurred and be continuing or would occur as a consequence thereof, the
declaration and payment of dividends to holders of any class or series of
Designated Preferred Stock (other than Disqualified Stock) issued after the date
of this Agreement (including, without limitation, the declaration and payment of
dividends on Refunding Capital Stock in excess of the dividends declarable and
payable thereon pursuant to clause (2) of this paragraph); provided that, at the
--------
time of such issuance, Company, after giving effect to such issuance on a pro
forma basis, would have had a Consolidated Fixed Charge Coverage Ratio of at
least 2.0 to 1.0 for the most recent Four-Quarter Period; (4) payments to
Holdings for the purpose of permitting, and in an amount equal to the amount
required to permit, Holdings to redeem or repurchase Holdings's common equity or
options in respect thereof, in each case in connection with the repurchase
provisions of employee stock option or stock purchase agreements or other
agreements to compensate management employees; provided that all such
--------
redemptions or repurchases pursuant to this clause (4) shall not exceed
$12,500,000 (which amount shall be increased by the amount of any net cash
proceeds received from the sale since the date of this Agreement of Equity
Interests (other than Disqualified Stock) to members of Company's management
team that have not otherwise been applied to the payment of Restricted Payments
pursuant to the terms of the preceding paragraph (c) and by the cash proceeds of
any
117
"key-man" life insurance policies which are used to make such redemptions or
repurchases) in the aggregate since the date of this Agreement; provided
--------
further, that the cancellation of Indebtedness owing to Company from members of
-------
management of Company or any of its Restricted Subsidiaries in connection with
such a repurchase of Capital Stock of Holdings will not be deemed to constitute
a Restricted Payment under this Agreement; (5) the making of distributions,
loans or advances to Holdings in an amount not to exceed $1,500,000 per annum in
order to permit Holdings to pay the ordinary operating expenses of Holdings
(including, without limitation, directors' fees, indemnification obligations,
professional fees and expenses, but excluding any payments on or repurchases of
Junior Subordinated Seller Notes); (6) payments to Holdings in respect of taxes
pursuant to the terms of the Tax Allocation Agreement as in effect on the date
of this Agreement and as amended from time to time pursuant to amendments that
do not increase the amounts payable by Company or any of its Restricted
Subsidiaries thereunder; (7) if no Potential Event of Default or Event of
Default shall have occurred and be continuing or would occur as a consequence
thereof and Company would be permitted to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with subsection
6.3 hereof, other Restricted Payments in an aggregate amount not to exceed
$12,500,000 since the date of this Agreement; (8) repurchases of Capital Stock
deemed to occur upon the exercise of stock options if such Capital Stock
represents a portion of the exercise price thereof; (9) distributions to
Holdings to fund the Recapitalization Transactions; and (10) if no Potential
Event of Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof, payments or distributions to Holdings to
the extent required for Holdings to repurchase, redeem, defease or otherwise
prepay any Existing Subordinated Notes not tendered pursuant to the Debt Tender
Offer on terms (set forth in the Existing Subordinated Note Indenture or
otherwise) no less favorable in any material respect to Holdings, Company and
Lenders than the terms of the Debt Tender Offer.
In determining the aggregate amount of Restricted Payments made subsequent
to the date of this Agreement in accordance with clause (c) of the immediately
preceding paragraph, (a) amounts expended pursuant to clauses (1), (2), (4), and
(7) shall be included in such calculation; provided such expenditures pursuant
--------
to clause (4) shall not be included to the extent of the cash proceeds received
by Company from any "key-man" life insurance policies and (b) amounts expended
pursuant to clauses (3), (5), (6), (8), (9) or (10) shall be excluded from such
calculation.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Potential Event of
Default. For purposes of making such determination, all outstanding Investments
by Company and its Restricted Subsidiaries (except to the extent repaid in cash)
in the Subsidiary so designated will be deemed to be Restricted Payments at the
time of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of this covenant. All such outstanding
Investments will be deemed to constitute Investments in an amount equal to the
fair market value of such Investments at the time of such designation. Such
designation will only be permitted if such Restricted Payment would be permitted
at such time and if such Restricted Subsidiary otherwise meets the definition of
an Unrestricted Subsidiary.
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The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by Company or such Restricted Subsidiary,
as the case may be, pursuant to the Restricted Payment.
6.2 Dividend and Other Payment Restrictions Affecting Subsidiaries.
--------------------------------------------------------------
Company shall not, and shall not permit any of its Restricted Subsidiaries
to, directly or indirectly, create or otherwise cause or permit to exist or
become effective any consensual encumbrance or consensual restriction on the
ability of any Restricted Subsidiary to (a) pay dividends or make any other
distributions on or in respect of its Capital Stock, (b) make loans or advances
or to pay any Indebtedness or other obligation owed to Company or any other
Restricted Subsidiary of Company or (c) transfer any of its property or assets
to Company or any other Restricted Subsidiary of Company, except for such
encumbrances or restrictions existing under or by reason of: (1) applicable law;
(2) the Loan Documents or the New Sub Debt Indentures; (3) nonassignment
provisions of any contract or any lease entered into in the ordinary course of
business; (4) any instrument governing Acquired Indebtedness, which encumbrance
or restriction is not applicable to any Person, or the properties or assets of
any Person, other than the Person or the properties or assets of the Person so
acquired; (5) agreements existing on the date of this Agreement (including,
without limitation, the Revolving Credit Agreement and the Existing Subordinated
Note Indenture); (6) restrictions on the transfer of assets subject to any Lien
permitted under the applicable Indenture imposed by the holder of such Lien; (7)
restrictions imposed by any agreement to sell assets or Capital Stock permitted
under this Agreement to any Person pending the closing of such sale; (8) any
agreement or instrument governing Capital Stock of any Person that is in effect
on the date such Person is acquired by Company or a Restricted Subsidiary of
Company; (9) any Purchase Money Note, or other Indebtedness or other contractual
requirements of a Securitization Entity in connection with a Qualified
Securitization Transaction; provided that such restrictions apply only to such
--------
Securitization Entity; (10) any agreement or instrument governing Indebtedness
or Permitted Foreign Subsidiary Preferred Stock (whether or not outstanding) of
Foreign Subsidiaries of Company that was permitted by this Agreement to be
incurred; (11) other Indebtedness or Domestic Subsidiary Preferred Stock
permitted to be incurred subsequent to the date of this Agreement pursuant to
the provisions of subsection 6.3; provided that any such restrictions are
--------
ordinary and customary with respect to the type of Indebtedness or preferred
stock being incurred or issued (under the relevant circumstances); (12)
restrictions on cash or other deposits or net worth imposed by customers under
contracts entered into in the ordinary course of business; and (13) any
encumbrances or restrictions imposed by any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings of the contracts, instruments or obligations referred to in clauses
(1) through (12) above; provided that such amendments, modifications,
--------
restatements, renewals, increases, supplements, refundings, replacements or
refinancings are, in the good faith judgment of Company's Board of Directors, no
more restrictive with respect to such dividend and other payment restrictions
than those contained in the dividend or other payment restrictions prior to such
amendment, modification, restatement, renewal, increase, supplement, refunding,
replacement or refinancing.
119
6.3 Incurrence of Indebtedness and Issuance of Preferred Stock.
----------------------------------------------------------
Company shall not, and shall not permit any of its Restricted Subsidiaries
to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness and Company shall not issue any
Disqualified Stock and shall not permit any of its Restricted Subsidiaries to
issue any shares of Preferred Stock; provided, however, that Company may incur
-------- -------
Indebtedness or issue shares of Disqualified Stock if (i) no Potential Event of
Default or Event of Default shall have occurred and be continuing at the time or
as a consequence of the incurrence of any such Indebtedness or the issuance of
any such Disqualified Stock and (ii) the Consolidated Fixed Charge Coverage
Ratio for Company's most recently ended Four-Quarter Period would have been at
least 2.0 to 1.0, determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom) as if the additional Indebtedness had
been incurred, or the Disqualified Stock had been issued, at the beginning of
such Four-Quarter Period.
The provisions of the first paragraph of this covenant will not apply to
the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Indebtedness"):
(i) the Senior Subordinated Notes, the Discount Notes and, in each
case, the guarantees thereof required thereunder;
(ii) Indebtedness incurred pursuant to the Revolving Credit
Agreement and the other Revolving Credit Documents in an aggregate
principal amount at any time outstanding (with letters of credit being
deemed to have a principal amount equal to the maximum potential liability
of Company and its Subsidiaries thereunder) not to exceed $220,000,000 less
(A) the aggregate amount of Indebtedness of Securitization Entities at the
time outstanding less (B) the amount of all optional or mandatory principal
payments of the Tranche A Term Loans actually made by Company or any of its
Restricted Subsidiaries since the date of this Agreement (excluding any
such payments to the extent refinanced at the time of payment under a
Credit Facility) and (C) further reduced by any repayments of revolving
credit borrowings under the Revolving Credit Agreement that are accompanied
by a corresponding commitment reduction thereunder;
(iii) the incurrence of Indebtedness and/or the issuance of Permitted
Foreign Subsidiary Preferred Stock by Foreign Subsidiaries of Company,
which together with the aggregate principal amount of Indebtedness incurred
pursuant to this clause (iii) and the aggregate liquidation value of all
Permitted Foreign Subsidiary Preferred Stock issued pursuant to this clause
(iii), does not exceed $15,000,000 at any one time outstanding; provided
--------
that such amount shall increase to $30,000,000 upon the consummation of an
Initial Public Offering;
(iv) other Indebtedness of Company and its Subsidiaries outstanding
on the date of this Agreement for so long as such Indebtedness remains
outstanding;
120
(v) Interest Swap Obligations of Company covering Indebtedness of
Company; provided that any Indebtedness to which any such Interest Swap
--------
Obligations correspond is otherwise permitted to be incurred under the
applicable Indenture; and provided further, that such Interest Swap
-------- -------
Obligations are entered into, in the judgment of Company, to protect
Company from fluctuation in interest rates on its outstanding Indebtedness;
(vi) Indebtedness of Company under Currency Agreements;
(vii) the incurrence by Company or any of its Restricted Subsidiaries
of intercompany Indebtedness between or among Company and any of its
Restricted Subsidiaries; provided, however, that (i) if Company is the
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obligor on such Indebtedness, such Indebtedness is expressly subordinated
to the prior payment in full in cash of all Obligations and (ii) (A) any
subsequent issuance or transfer of Equity Interests that results in any
such Indebtedness being held by a Person other than Company or a Subsidiary
thereof and (B) any sale or other transfer of any such Indebtedness to a
Person that is not either Company or a Restricted Subsidiary thereof shall
be deemed, in each case, to constitute an incurrence of such Indebtedness
by Company or such Restricted Subsidiary, as the case may be, that was not
permitted by this clause (vii);
(viii) the incurrence of Acquired Indebtedness of Restricted
Subsidiaries of Company to the extent Company could have incurred such
Indebtedness in accordance with the first paragraph of this covenant on the
date such Indebtedness became Acquired Indebtedness;
(ix) Guarantees by Company and the Guarantors of each other's
Indebtedness; provided that such Indebtedness is permitted to be incurred
--------
under this Agreement and the New Sub Debt Indentures;
(x) Indebtedness (including Capital Lease Obligations) incurred by
Company or any of its Restricted Subsidiaries to finance the purchase,
lease or improvement of property (real or personal) or equipment (whether
through the direct purchase of assets or the Capital Stock of any Person
owning such assets) in an aggregate principal amount outstanding not to
exceed 5% of Total Assets at the time of any incurrence thereof (including
any Refinancing Indebtedness with respect thereto);
(xi) Indebtedness incurred by Company or any of its Restricted
Subsidiaries constituting reimbursement obligations with respect to letters
of credit issued in the ordinary course of business, including, without
limitation, letters of credit in respect of workers' compensation claims or
self-insurance, or other Indebtedness with respect to reimbursement type
obligations regarding workers' compensation claims;
(xii) Indebtedness arising from agreements of Company or a Restricted
Subsidiary of Company providing for indemnification, adjustment of purchase
price, earn out or other similar obligations, in each case, incurred or
assumed in connection with the
121
disposition of any business, assets or a Restricted Subsidiary of Company,
other than guarantees of Indebtedness incurred by any Person acquiring all
or any portion of such business, assets or Restricted Subsidiary for the
purpose of financing such acquisition; provided that the maximum assumable
--------
liability in respect of all such Indebtedness shall at no time exceed the
gross proceeds actually received by Company and its Restricted Subsidiaries
in connection with such disposition;
(xiii) obligations in respect of performance and surety bonds and
completion guarantees provided by Company or any Restricted Subsidiary of
Company in the ordinary course of business;
(xiv) any refinancing, modification, replacement, renewal,
restatement, refunding, deferral, extension, substitution, supplement,
reissuance or resale of existing or future Indebtedness (other than
intercompany Indebtedness), including any additional Indebtedness incurred
to pay interest or premiums required by the instruments governing such
existing or future Indebtedness as in effect at the time of issuance
thereof ("Required Premiums") and fees in connection therewith
("Refinancing Indebtedness"); provided that any such event shall not
--------
(1) directly or indirectly result in an increase in the aggregate principal
amount of Permitted Indebtedness (except to the extent such increase is a
result of a simultaneous incurrence of additional Indebtedness (A) to pay
Required Premiums and related fees or (B) otherwise permitted to be
incurred hereunder) of Company and its Restricted Subsidiaries and
(2) create Indebtedness with a Weighted Average Life to Maturity at the
time such Indebtedness is incurred that is less than the Weighted Average
Life to Maturity at such time of the Indebtedness being refinanced,
modified, replaced, renewed, restated, refunded, deferred, extended,
substituted, supplemented, reissued or resold (except that this subclause
(2) will not apply in the event the Indebtedness being refinanced,
modified, replaced, renewed, restated, refunded, deferred, extended,
substituted, supplemented, reissued or resold was originally incurred in
reliance upon clause (xvi) of this paragraph);
(xv) the incurrence by a Securitization Entity of Indebtedness in a
Qualified Securitization Transaction that is Non-Recourse Debt with respect
to Company and its other Restricted Subsidiaries (except for Standard
Securitization Undertakings);
(xvi) the incurrence of additional Indebtedness by Company or any of
its Restricted Subsidiaries and/or the issuance of Permitted Domestic
Subsidiary Preferred Stock by Company's Domestic Subsidiaries or other
Subsidiary Guarantors which together with the aggregate principal amount of
other Indebtedness incurred pursuant to this clause (xvi) and the aggregate
liquidation value of all other Permitted Domestic Subsidiary Preferred
Stock issued pursuant to this clause (xvi), does not exceed $30,000,000 at
any one time outstanding; provided that such amount shall increase to
--------
$50,000,000 upon the consummation of an Initial Public Offering.
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Indebtedness
122
described in clauses (i) through (xvi) above or is entitled to be incurred
pursuant to the first paragraph of this covenant, Company shall, in its sole
discretion, classify such item of Indebtedness in any manner that complies with
this covenant. Accrual of interest, accretion or amortization of original issue
discount, the payment of interest on any Indebtedness in the form of additional
Indebtedness with the same terms, and the payment of dividends on Disqualified
Stock in the form of additional shares of the same class of Disqualified Stock
will not be deemed to be an incurrence of Indebtedness or an issuance of
Disqualified Stock for purposes of this covenant; provided, in each such case,
--------
that the amount thereof is included in Consolidated Fixed Charges of Company as
accrued.
6.4 Asset Sales.
-----------
Company shall not, and shall not permit any of its Restricted Subsidiaries
to, consummate an Asset Sale unless (i) Company or the applicable Restricted
Subsidiary, as the case may be, receives consideration at the time of such Asset
Sale at least equal to the fair market value of the assets sold or otherwise
disposed of (as determined in good faith by the Board of Directors), (ii) at
least 75% of the consideration received by Company or the Restricted Subsidiary,
as the case may be, from such Asset Sale shall be cash or Cash Equivalents;
provided that the amount of (a) any liabilities (as shown on Company's or such
--------
Restricted Subsidiary's most recent balance sheet) of Company or any such
Restricted Subsidiary (other than liabilities that are by their terms
subordinated to the Loans) that are assumed by the transferee of any such
assets, (b) any notes or other obligations received by Company or any such
Restricted Subsidiary from such transferee that are immediately converted by
Company or such Restricted Subsidiary into cash (to the extent of the cash
received) and (c) any Designated Noncash Consideration received by Company or
any of its Restricted Subsidiaries in such Asset Sale having an aggregate fair
market value, taken together with all other Designated Noncash Consideration
received pursuant to this clause (c) that is at that time outstanding, not to
exceed 10% of Total Assets at the time of the receipt of such Designated Noncash
Consideration (with the fair market value of each item of Designated Noncash
Consideration being measured at the time received and without giving effect to
subsequent changes in value), shall be deemed to be cash for the purposes of
this provision, and (iii) upon the consummation of an Asset Sale, Company shall
apply, or cause such Restricted Subsidiary to apply, the Net Asset Sale Proceeds
relating to such Asset Sale in accordance with subsection 2.4B(ii)(a).
6.5 Transactions with Affiliates.
----------------------------
A. Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into or permit to occur any
transaction or series or related transactions (including, without limitation,
the purchase, sale, lease or exchange of any property or the rendering of any
service) with, or for the benefit of, any of its Affiliates involving aggregate
consideration in excess of $2,500,000 (an "Affiliate Transaction"), other than
(x) Affiliate Transactions permitted under subsection 6.5B below and
(y) Affiliate Transactions on terms that are not materially less favorable than
those that might reasonably have been obtained in a comparable transaction at
such time on an arm's length basis from a Person that is not an Affiliate of
Company; provided, however, that for a transaction or series of related
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transactions
123
with an aggregate value of $7,500,000 or more, at Company's option, either (i) a
majority of the disinterested members of the Board of Directors of Company shall
determine in good faith that such Affiliate Transaction is on terms that are not
materially less favorable than those that might reasonably have been obtained in
a comparable transaction at such time on an arm's-length basis from a Person
that is not an Affiliate of Company or (ii) the Board of Directors of Company or
any such Restricted Subsidiary party to such Affiliate Transaction shall have
received an opinion from a nationally recognized investment banking firm that
such Affiliate Transaction is on terms not materially less favorable than those
that might reasonably have been obtained in a comparable transaction at such
time on an arm's-length basis from a Person that is not an Affiliate of Company;
and provided, further, that for an Affiliate Transaction with an aggregate value
-------- -------
of $10,000,000 or more the Board of Directors of Company or any such Restricted
Subsidiary party to such Affiliate Transaction shall have received an opinion
from a nationally recognized investment banking firm that such Affiliate
Transaction is on terms not materially less favorable those that might
reasonably have been obtained in a comparable transaction at such time on an
arm's-length basis from a Person that is not an Affiliate of Company.
B. The foregoing restrictions shall not apply to (i) reasonable fees and
compensation paid to and indemnity provided on behalf of, officers, directors,
employee or consultants of Company or any Subsidiary as determined in good faith
by Company's Board of Directors or senior management; (ii) transactions
exclusively between or among Company and any of its Restricted Subsidiaries or
exclusively between or among such Restricted Subsidiaries, provided such
transactions are not otherwise prohibited by the applicable Indenture;
(iii) transactions effected as part of a Qualified Securitization Transaction;
(iv) any agreement as in effect as of the date of this Agreement or any
amendment or replacement thereto or any transaction contemplated thereby
(including pursuant to any amendment or replacement thereto) so long as any such
amendment or replacement agreement is not more disadvantageous to the Lenders in
any material respect than the original agreement as in effect on the date of
this Agreement; (v) Restricted Payments permitted by this Agreement; (vi) the
payment of customary annual management, consulting and advisory fees and related
expenses to the Principals and their Affiliates made pursuant to any financial
advisory, financing, underwriting or placement agreement or in respect of other
investment banking activities, including in connection with acquisitions or
divestitures which are approved by the Board of Directors of Company or such
Restricted Subsidiary in good faith; (viii) payments or loans to employees or
consultants that are approved by the Board of Directors of Company in good
faith, (ix) the existence of, or the performance by Company or any of its
Restricted Subsidiaries of its obligations under the terms of, any stockholders
agreement (including any registration rights agreement or purchase agreement
related thereto) to which it is a party as of the date of this Agreement and any
similar agreements which it may enter into thereafter; provided, however, that
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the existence of, or the performance by Company or any of its Restricted
Subsidiaries of obligations under, any future amendment to any such existing
agreement or under any similar agreement entered into after the date of this
Agreement shall only be permitted by this clause (ix) to the extent that the
terms of any such amendment or new agreement are not disadvantageous to the
Lenders in any material respect; (x) transactions permitted by, and complying
with, subsection 6.8 hereof; and (xi) transactions with customers, clients,
suppliers, joint venture partners or purchasers or sellers of
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goods or services, in each case in the ordinary course of business (including,
without limitation, pursuant to joint venture agreements) and otherwise in
compliance with the terms hereof which are fair to Company or its Restricted
Subsidiaries, in the reasonable determination of the Board of Directors of
Company or the senior management thereof, or are on terms at least as favorable
as might reasonably have been obtained at such time from an unaffiliated party.
6.6 Liens.
-----
A. Prohibition on Liens. Company shall not, and shall not permit any of
its Restricted Subsidiaries to, create, incur, assume or suffer to exist any
Liens of any kind against or upon any of its property or assets, or any proceeds
therefrom, except:
(i) Permitted Encumbrances;
(ii) Liens created pursuant to the Collateral Documents in favor of
the Collateral Agent for the benefit of the Lenders and/or the lenders
under the Revolving Credit Agreement securing Loan Parties' obligations
under this Agreement, the Revolving Credit Agreement and/or under Interest
Rate Agreements with any such Lenders and/or lenders or their respective
affiliates; provided that such Liens for the benefit of the lenders under
--------
the Revolving Credit Agreement shall at all times secure the Obligations;
(iii) Liens arising in connection with Capital Leases; provided that
--------
no such Lien shall extend to or cover any Collateral or assets other than
the assets subject to such Capital Leases;
(iv) Liens securing Indebtedness incurred (a) to finance the
acquisition, construction or improvement of any real property or tangible
personal property assets acquired or held by Company or any of its
Subsidiaries in the ordinary course of business; provided that (1) such
--------
Liens shall be created within 180 days after the acquisition, construction
or improvement of such assets, and (2) the principal amount of Indebtedness
secured by any such Liens shall at no time exceed 100%, and the proceeds of
such Indebtedness shall be used to provide not less than 75%, of the
original purchase price of such asset or the amount expended to construct
or improve such asset, as the case may be; or (b) to renew, extend or
refinance any Indebtedness described in clause (a); provided that the
--------
amount of any such Indebtedness does not exceed the amount of Indebtedness
so renewed, extended or refinanced which is unpaid and outstanding
immediately prior to such renewal, extension or refinancing; and provided
--------
further, that in the case of clause (a) or (b), (1) such Liens attach
-------
solely to the assets financed with such Indebtedness, (2) no recourse may
be had under the Indebtedness secured by such Lien against any Person other
than the borrower of such Indebtedness for the payment of principal,
interest, fees, costs or premium on such Indebtedness or for any claim
based thereon, and (3) the financial covenants under any Indebtedness
secured by such Liens are, in each case, no more restrictive than those set
forth in the Revolving Credit
125
Agreement (for so long as the Revolving Credit Agreement is in full force
and effect) and this Agreement;
(v) Liens on real property or personal property assets of Foreign
Subsidiaries of Holdings securing Indebtedness of such Foreign Subsidiaries
(other than intercompany Indebtedness) permitted under the Revolving Credit
Agreement (for so long as the Revolving Credit Agreement is in full force
and effect) and this Agreement; and
(vi) other Liens securing Indebtedness in an aggregate amount not to
exceed $5,000,000 at any time outstanding.
Notwithstanding anything in the foregoing to the contrary, the amount of
Indebtedness in respect of Capital Leases and purchase money Indebtedness
secured by Liens permitted under clauses (iii) and (iv) above shall not exceed
at any time outstanding (A) $20,000,000 minus (B) the amount of any Acquired
-----
Subsidiary Debt.
B. Equitable Lien in Favor of Lenders. If Holdings 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 6.6A, 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 6.6A.
6.7 Conduct of Business.
-------------------
Company shall not, and shall not permit any of its Restricted Subsidiaries
to, engage in any businesses a majority of whose revenues are not derived from
the same or reasonably similar, ancillary or related to, or a reasonable
extension, development or expansion of, the businesses in which Company and its
Restricted Subsidiaries are engaged on the date of this Agreement.
6.8 Consolidation, Merger and Sale of Assets.
----------------------------------------
Company shall not consolidate or merge with or into (whether or not Company
is the surviving corporation), or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its properties or assets in one
or more related transactions, to another corporation, Person or entity unless
(i) Company is the surviving corporation or the entity or the Person formed by
or surviving any such consolidation or merger (if other than Company) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made is a corporation organized or existing under the laws of
the United States, any state thereof or the District of Columbia; (ii) the
entity or Person formed by or surviving any such consolidation or merger (if
other than Company) or the entity or Person to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made assumes
all
126
the obligations of Company under this Agreement and the other Loan Documents
pursuant to a instruments in form reasonably satisfactory to Administrative
Agent; (iii) immediately after such transaction no Potential Event of Default or
Event of Default exists; and (iv) except in the case of a merger of Company with
or into a Wholly Owned Subsidiary of Company and except in the case of a merger
entered into solely for the purpose of reincorporating Company in another
jurisdiction, Company or the entity or Person formed by or surviving any such
consolidation or merger (if other than Company), or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made will, at the time of such transaction and after giving pro forma effect
thereto as if such transaction had occurred at the beginning of the applicable
Four-Quarter Period, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Consolidated Fixed Charge Coverage Ratio test set
forth in the first paragraph of subsection 6.3.
6.9 Successor Corporation.
---------------------
Upon any consolidation or merger, or any sale, assignment, transfer, lease,
conveyance or other disposition of all or substantially all of the assets of
Company in accordance with subsection 6.8 hereof, the successor corporation
formed by such consolidation or into or with which Company is merged or to which
such sale, assignment, transfer, lease, conveyance or other disposition is made
shall succeed to, and be substituted for (so that from and after the date of
such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Agreement and the other Loan Documents referring to
"Company" shall refer instead to the successor corporation and not to Company),
and may exercise every right and power of Company under this Agreement and the
Loan Documents with the same effect as if such successor Person had been named
as Company herein; provided, however, that the predecessor Company shall not be
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relieved from its obligation to pay the Obligations except in the case of a sale
of all of Company's assets that meets the requirements of subsection 6.8.
6.10 Amendments or Waivers of Certain Agreements; Amendments of Documents
--------------------------------------------------------------------
Relating to Subordinated Indebtedness; Designation of "Designated Senior
------------------------------------------------------------------------
Debt".
-----
A. Amendments or Waivers of Certain Agreements. None of Holdings,
Company nor any of their respective Subsidiaries will agree to any amendment to,
or waive any of its rights under, the Bain Advisory Services Agreement, the
Harvard Advisory Services Agreement or any Related Agreement (other than any
Related Agreement evidencing or governing any Subordinated Indebtedness) after
the Closing Date if any such amendment or waiver would, individually or in the
aggregate, reasonably be expected to be materially adverse to Lenders without in
each case obtaining the prior written consent of Requisite Lenders to such
amendment or waiver.
B. Amendments of Documents Relating to Subordinated Indebtedness.
Holdings and Company shall not, and shall not permit any of their respective
Subsidiaries to, amend or otherwise change the terms of any Subordinated
Indebtedness, 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, change (to earlier dates) any dates
127
upon which payments of principal or interest are due thereon, change any event
of default or condition to an event of default with respect thereto (other than
to eliminate any such event of default or increase any grace period related
thereto), change the redemption, prepayment or defeasance provisions thereof,
change the subordination provisions of such Subordinated Indebtedness (or of any
guaranty thereof), or change any collateral therefor (other than to release such
collateral), or if the effect of such amendment or change, together with all
other amendments or changes made, is to increase materially the obligations of
the obligor thereunder or to confer any additional rights on the holders of such
Subordinated Indebtedness (or a trustee or other representative on their behalf)
which would be materially adverse to Holdings, Company or Lenders.
C. Amendments of Revolving Credit Documents. Holdings and Company shall
not, and shall not permit any of their respective Subsidiaries to, amend or
otherwise change the terms of any of the Revolving Credit Documents, or make any
payment consistent with an amendment thereof or a change thereto, that would
have the effect of (i) changing (to earlier dates) any dates upon which payments
of principal or interest are due on the loans under the Revolving Credit
Agreement or requiring the earlier payment of letter of credit reimbursement
obligations, (ii) reducing the percentage specified in the definition of
"Requisite Lenders" in the Revolving Credit Agreement, or (iii) changing the
prepayment provisions of the Revolving Credit Agreement in a manner that
disproportionately disadvantages the Lenders relative to the lenders under the
Revolving Credit Agreement or confers additional rights on the lenders under the
Revolving Credit Agreement which would be adverse to Lenders, without the prior
written consent of Requisite Lenders under this Agreement.
D. Designation of "Designated Senior Debt". Holdings and Company shall
not designate any Indebtedness as "Designated Senior Debt" (as defined in the
New Sub Debt Indentures or the Junior Subordinated Seller Notes) for purposes of
the New Sub Debt Indentures or the Junior Subordinated Seller Notes without the
prior written consent of Requisite Lenders.
SECTION 7.
EVENTS OF DEFAULT
If any of the following conditions or events ("Events of Default") shall
occur:
7.1 Failure to Make Interest Payments When Due.
------------------------------------------
Failure to pay interest or fees on any Loans when the same becomes due and
payable if the default continues for a period of three (3) days; or
7.2 Failure to Make Principal Payments When Due.
-------------------------------------------
Failure to pay the principal of any Loans when such principal becomes due
and payable, at maturity, as a result of mandatory prepayment or otherwise; or
128
7.3 Other Defaults Under Loan Documents; Breach of Warranty.
-------------------------------------------------------
A default in the observance or performance of any other covenant or
agreement contained herein or in the Loan Documents if the default continues for
a period of 30 days after Company receives written notice specifying the default
(and demanding that such default be remedied) from Administrative Agent or from
Requisite Lenders; or any representation, warranty, certification or other
statement made by Holdings or any of its Subsidiaries in any Loan Document or in
any statement or certificate at any time given by Holdings 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
7.4 Default in Other Agreements.
---------------------------
(i) Failure of Holdings or any of its Subsidiaries to pay when due any
principal of or interest on or any other amount payable in respect of the
Revolving Credit Agreement or one or more items of Indebtedness (other than the
Loans) or Contingent Obligations in an individual principal amount of $5,000,000
or more or with an aggregate principal amount of $10,000,000 or more, in each
case beyond the end of any grace period provided therefor; or (ii) breach or
default by Holdings or any of its Subsidiaries with respect to any other
material term of (a) the Revolving Credit Agreement, (b) one or more items of
Indebtedness or Contingent Obligations in the individual or aggregate principal
amounts referred to in clause (i) above or (c) 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), and either (X) such default or breach under clause
(i) or (ii) continues for a period of twenty (20) Business Days and remains
uncured and unwaived for such period or (Y) such Indebtedness or Contingent
Obligation is either already at its final maturity in accordance with its terms
or has been accelerated; or (iii) failure to pay at final stated maturity
(giving effect to any extensions thereof) the principal amount of any
Indebtedness of Company or any Restricted Subsidiary (other than a
Securitization Entity), which failure continues for at least 10 days, or the
acceleration of the maturity of any such Indebtedness, which acceleration
remains uncured and unrescinded for at least 10 days, if the aggregate principal
amount of such Indebtedness, together with the principal amount of any other
such Indebtedness in default for failure to pay principal at final maturity or
which has been accelerated, aggregates $20,000,000 or more at any time; or
7.5 Judgments and Attachments.
-------------------------
One or more judgments in an aggregate amount in excess of $20,000,000 shall
have been rendered against Company or any of its Significant Subsidiaries and
such judgments remain undischarged, unpaid or unstayed for a period of 60 days
after such judgment or judgments become final and non-appealable; or
129
7.6 Voluntary Bankruptcy; Appointment of Receiver, etc.
---------------------------------------------------
Company or any of its Significant Subsidiaries or any group of Subsidiaries
that, taken as a whole, would constitute a Significant Subsidiary pursuant to or
within the meaning of Bankruptcy Law:
(i) commences a voluntary case;
(ii) consents to the entry of an order for relief against it in an
involuntary case;
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property;
(iv) makes a general assignment for the benefit of its creditors; or
(v) generally is not paying its debts as they become due; or
7.7 Involuntary Bankruptcy; Appointment of Receiver, etc.
-----------------------------------------------------
A court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary in an involuntary case;
(ii) appoints a Custodian of Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary or for all or substantially all of the
property of Company or any of its Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary; or
(iii) orders the liquidation of Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary, and the order or decree remains
unstayed and in effect for 60 consecutive days; or
7.8 Change in Control.
-----------------
(i) Holdings shall cease to own 100% of the capital stock of Company; or
(ii) Bain and the Other Investors shall cease to have a presently exercisable
right to vote at least 51% of all issued and outstanding equity Securities of
Holdings entitled (without regard to the occurrence of any contingency) to vote
for the election of members of the Board of Directors of Holdings; or (iii) Bain
and the Other Investors shall cease to beneficially own at least 51% of the
economic value of Holdings; or (iv) a majority of the members of the Board of
Directors of Company shall
130
not be Continuing Directors; or (v) Bain shall (a) cease to have a presently
exercisable right to vote more of the issued and outstanding equity Securities
of Holdings entitled (without regard to the occurrence of any contingency) to
vote for the election of members of the Board of Directors of Holdings than any
one of the Other Investors, or (b) cease to beneficially own a greater
percentage of the economic value of Holdings than the percentage beneficially
owned by any one of the Other Investors; or (vi) the ratio of (a) either (x) the
percentage of the issued and outstanding equity Securities of Holdings or
(y) the percentage of the economic value of Holdings, in each case held by Bain
at any time, to (b) either (x) the percentage of the issued and outstanding
equity Securities of Holdings or (y) the percentage of the economic value of
Holdings, in each case held by Bain on the Closing Date after giving effect to
the Recapitalization Transactions, shall at any time be less than .50:1.0; or
(vii) a "Change of Control" under either of the New Sub Debt Indentures shall
occur; or
7.9 Invalidity of Guaranties; Failure of Security; Repudiation of Obligations.
-------------------------------------------------------------------------
At any time after the execution and delivery thereof, (i) any Guaranty for
any reason, other than the satisfaction in full of all Obligations (other than
inchoate indemnification obligations with respect to claims, losses or
liabilities which have not yet arisen and are not yet due and payable), shall
cease to be in full force and effect (other than in accordance with its terms)
or shall be declared to be null and void, (ii) any Collateral Document shall
cease to be in full force and effect (other than by reason of a release of
Collateral thereunder in accordance with the terms hereof or thereof, the
satisfaction in full of the Obligations (other than inchoate indemnification
obligations with respect to claims, losses or liabilities which have not yet
arisen and are not yet due and payable) or any other termination of such
Collateral Document in accordance with the terms hereof or thereof) or shall be
declared null and void, or Administrative Agent shall not have or shall cease to
have a valid and perfected First Priority Lien in any Collateral purported to be
covered thereby having a fair market value, individually or in the aggregate,
exceeding $2,000,000, in each case for any reason other than the failure of
Administrative Agent or any Lender to take any action within its control, or
(iii) any Loan Party shall contest the validity or enforceability of any Loan
Document in writing or deny in writing that it has any further liability,
including with respect to future advances by Lenders, under any Loan Document to
which it is a party;
THEN (i) upon the occurrence of any Event of Default described in subsection 7.6
or 7.7, each of (a) the unpaid principal amount of and accrued interest on the
Loans, and (b) 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 Holdings and Company, and the
obligation of each Lender to make any Loan, shall thereupon terminate, and
(ii) upon the occurrence and during the continuation of any other Event of
Default, Administrative Agent shall, upon the written request or with the
written consent of Requisite Lenders, by written notice to Company, declare all
or any portion of the amounts described in clauses (a) and (b) above to be, and
the same shall forthwith become, immediately due and payable.
131
Notwithstanding anything contained in the preceding paragraph, if at any
time within 60 days after an acceleration of the Loans pursuant to clause
(ii) of such paragraph Company 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 9.6, then Requisite Lenders, by written notice to
Company, may at their option rescind and annul such acceleration and its
consequences; but such action shall not affect any subsequent Event of Default
or Potential Event of Default or impair any right consequent thereon. The
provisions of this paragraph are intended merely to bind Lenders to a decision
which may be made at the election of Requisite Lenders and are not intended,
directly or indirectly, to benefit Holdings or Company, and such provisions
shall not at any time be construed so as to grant Holdings or Company the right
to require Lenders to rescind or annul any acceleration hereunder or to preclude
Administrative Agent or Lenders from exercising any of the rights or remedies
available to them under any of the Loan Documents, even if the conditions set
forth in this paragraph are met.
SECTION 8.
AGENTS
8.1 Appointment.
-----------
A. Appointment of Agents. GSCP is hereby appointed Syndication Agent
hereunder, and each Lender hereby authorizes Syndication Agent to act as its
agent in accordance with the terms of this Agreement and the other Loan
Documents. ▇▇▇▇▇▇ Guaranty is hereby appointed Administrative Agent hereunder
and under the other Loan Documents and each Lender hereby authorizes
Administrative Agent to act as its agent in accordance with the terms of this
Agreement and the other Loan Documents. BTCo. is hereby appointed Documentation
Agent hereunder. Each Lender hereby authorizes and confirms the appointment by
Administrative Agent of ▇▇▇▇▇▇ Guaranty as Collateral Agent under the
Intercreditor Agreement and each Lender hereby authorizes Collateral Agent to
act as its agent in accordance with the terms of the Intercreditor Agreement and
the other Loan Documents. Each Agent hereby 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
Agents and Lenders and Company shall have no rights as a third party beneficiary
of any of the provisions thereof. In performing its functions and duties under
this Agreement, each 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 Holdings or any of its Subsidiaries.
Each of Syndication Agent, without consent of or notice to any party hereto, may
assign any and all of its rights or obligations hereunder to any of its
Affiliates. As of the date on which Syndication Agent notifies Company that it
has concluded its primary syndication of the Loans and Commitments, all
obligations of GSCP, in its capacity as Syndication Agent
132
hereunder, shall terminate. BTCo., in its capacity as Documentation Agent,
shall have no obligations hereunder.
B. Appointment of Supplemental Collateral Agents. It is the purpose of
this Agreement and the other Loan Documents that there shall be no violation of
any law of any jurisdiction denying or restricting the right of banking
corporations or associations to transact business as agent or trustee in such
jurisdiction. It is recognized that in case of litigation under this Agreement
or any of the other Loan Documents, and in particular in case of the enforcement
of any of the Loan Documents, or in case Administrative Agent deems that by
reason of any present or future law of any jurisdiction it may not exercise any
of the rights, powers or remedies granted herein or in any of the other Loan
Documents or take any other action which may be desirable or necessary in
connection therewith, it may be necessary that Administrative Agent appoint an
additional individual or institution as a separate trustee, co-trustee,
collateral agent or collateral co-agent (any such additional individual or
institution being referred to herein individually as a "Supplemental Collateral
Agent" and collectively as "Supplemental Collateral Agents").
In the event that Administrative Agent appoints a Supplemental Collateral
Agent with respect to any Collateral, (i) each and every right, power, privilege
or duty expressed or intended by this Agreement or any of the other Loan
Documents to be exercised by or vested in or conveyed to Administrative Agent
with respect to such Collateral shall be exercisable by and vest in such
Supplemental Collateral Agent to the extent, and only to the extent, necessary
to enable such Supplemental Collateral Agent to exercise such rights, powers and
privileges with respect to such Collateral and to perform such duties with
respect to such Collateral, and every covenant and obligation contained in the
Loan Documents and necessary to the exercise or performance thereof by such
Supplemental Collateral Agent shall run to and be enforceable by either
Administrative Agent or such Supplemental Collateral Agent, and (ii) the
provisions of this Section 8 and of subsections 9.2 and 9.3 that refer to
Administrative Agent shall inure to the benefit of such Supplemental Collateral
Agent and all references therein to Administrative Agent shall be deemed to be
references to Administrative Agent and/or such Supplemental Collateral Agent, as
the context may require.
Should any instrument in writing from Holdings, Company or any other Loan
Party be required by any Supplemental Collateral Agent so appointed by
Administrative Agent for more fully and certainly vesting in and confirming to
him or it such rights, powers, privileges and duties, Holdings or Company shall,
or shall cause such Loan Party to, execute, acknowledge and deliver any and all
such instruments promptly upon request by Administrative Agent. In case any
Supplemental Collateral Agent, or a successor thereto, shall die, become
incapable of acting, resign or be removed, all the rights, powers, privileges
and duties of such Supplemental Collateral Agent, to the extent permitted by
law, shall vest in and be exercised by Administrative Agent until the
appointment of a new Supplemental Collateral Agent.
133
8.2 Powers and Duties; General Immunity.
-----------------------------------
▇. ▇▇▇▇▇▇; Duties Specified. Each Lender irrevocably authorizes each
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 such Agent by the terms hereof and thereof,
together with such powers, rights and remedies as are reasonably incidental
thereto. Each Agent shall have only those duties and responsibilities that are
expressly specified in this Agreement and the other Loan Documents. Each Agent
may exercise such powers, rights and remedies and perform such duties by or
through its agents or employees. No Agent shall 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 any 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. No Agent shall be responsible
to any Lender for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any other
Loan Document or for any representations, warranties, recitals or statements
made herein or therein or made in any written or oral statements or in any
financial or other statements, instruments, reports or certificates or any other
documents furnished or made by any of Agent to Lenders or by or on behalf of
Holdings or Company to any Agent or any Lender in connection with the Loan
Documents and the transactions contemplated thereby or for the financial
condition or business affairs of Holdings or Company or any other Person liable
for the payment of any Obligations, nor shall any 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 as to the existence or possible
existence of any Event of Default or Potential Event of Default. Anything
contained in this Agreement to the contrary notwithstanding, Administrative
Agent shall not have any liability arising from confirmations of the amount of
outstanding Loans or the component amounts thereof.
C. Exculpatory Provisions. None of Agents nor any of their respective
officers, partners, directors, employees or agents shall be liable to Lenders
for any action taken or omitted by any Agent under or in connection with any of
the Loan Documents except to the extent caused by such Agent's gross negligence
or willful misconduct. Each Agent shall be entitled to refrain from any act or
the taking of any action (including the failure to take an action) in connection
with this Agreement or any of the other Loan Documents or from the exercise of
any power, discretion or authority vested in it hereunder or thereunder unless
and until such Agent, in the case of any Agent other than the Collateral Agent,
shall have received instructions in respect thereof from Requisite Lenders (or
such other Lenders as may be required to give such instructions under subsection
9.6) or, in the case of the Collateral Agent, in accordance with the
Intercreditor Agreement, and, upon receipt of such instructions from Requisite
Lenders (or such other Lenders, as the case may be) or in accordance with the
Intercreditor Agreement, as the case may be, such Agent shall be entitled to act
or (where so instructed) refrain from acting, or to exercise such power,
discretion or authority, in accordance
134
with such instructions. Without prejudice to the generality of the foregoing,
(i) each 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 Holdings and its
Subsidiaries), accountants, experts and other professional advisors selected by
it; and (ii) no Lender shall have any right of action whatsoever against any
Agent as a result of such Agent acting or (where so instructed) refraining from
acting under this Agreement or any of the other Loan Documents, in the case of
any Agent other than the Collateral Agent, in accordance with the instructions
of Requisite Lenders (or such other Lenders as may be required to give such
instructions under subsection 9.6) or, in the case of the Collateral Agent, in
accordance with the Intercreditor Agreement.
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, any Agent in its individual capacity as a Lender hereunder.
With respect to its participation in the Loans, each 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 each Agent in its
individual capacity. Any 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 Holdings, Company or any of their Affiliates as
if it were not performing the duties specified herein, and may accept fees and
other consideration from Holdings and Company for services in connection with
this Agreement and otherwise without having to account for the same to Lenders.
8.3 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 Holdings and its
Subsidiaries in connection with the making of the Loans and that it has made and
shall continue to make its own appraisal of the creditworthiness of Holdings and
its Subsidiaries. No Agent shall 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 no Agent shall have
any responsibility with respect to the accuracy of or the completeness of any
information provided to Lenders.
8.4 Right to Indemnity.
------------------
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify each Agent, to the extent that such Agent shall not have been
reimbursed by Company or Holdings, for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including counsel fees and disbursements) or disbursements of any kind
135
or nature whatsoever which may be imposed on, incurred by or asserted against
such 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 such 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 such Agent's gross
negligence or willful misconduct. If any indemnity furnished to any Agent for
any purpose shall, in the opinion of such Agent, be insufficient or become
impaired, such Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional indemnity is
furnished; provided that in no event shall this sentence require any Lender to
--------
indemnify any Agent against any liability, obligation, loss, damage, penalty,
action, judgment, suit, cost, expense or disbursement in excess of such Lender's
Pro Rata Share thereof; and provided, further, that this sentence shall not be
--------
deemed to require any Lender to indemnify any Agent against any liability,
obligation, loss, damage, penalty, action, judgment, suit, cost, expense or
disbursement described in the proviso to the immediately preceding sentence.
8.5 Successor Administrative Agent.
------------------------------
Administrative Agent may resign at any time by giving 30 days' prior
written notice thereof to Lenders and Company, and Administrative Agent may be
removed at any time with or without cause by an instrument or concurrent
instruments in writing delivered to Company and Administrative Agent and signed
by Requisite Lenders. Upon any such notice of resignation or any such removal,
Requisite Lenders shall have the right, upon five Business Days' notice to
Company, to appoint a successor Administrative Agent with the consent of Company
(which consent shall not be unreasonably withheld). Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, that successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or
removed Administrative Agent and the retiring or removed Administrative Agent
shall be discharged from its duties and obligations under this Agreement. After
any retiring or removed Administrative Agent's resignation or removal hereunder
as Administrative Agent, the provisions of this Section 8 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement.
8.6 Collateral Documents and Guaranty.
---------------------------------
Each Lender hereby further authorizes Administrative Agent, on behalf of
and for the benefit of Lenders, to enter into the Intercreditor Agreement, and
each Lender agrees to be bound by the terms of the Intercreditor Agreement;
provided that Administrative Agent shall not enter into or consent to any
--------
material amendment, modification, termination or waiver of the Intercreditor
Agreement without the prior consent of Requisite Lenders (or such other Lenders
as may be required to give such instructions under subsection 9.6). Each Lender
hereby further authorizes Collateral Agent (and under the terms of the
Intercreditor Agreement Collateral Agent is authorized), on behalf of and for
the benefit of Lenders, to enter into each Collateral Document as secured party
and to be the agent for and representative of the Lenders under the
136
Guaranties, and each Lender agrees to be bound by the terms of each Collateral
Document and each Guaranty; provided that Collateral Agent shall not enter into
--------
or consent to any material amendment, modification, termination or waiver of the
Intercreditor Agreement without the prior consent of Requisite Lenders (or such
other Lenders as may be required to give such instructions under subsection
9.6); provided further, however, that, without further written consent or
-------- ------- -------
authorization from Lenders, Collateral Agent may execute any documents or
instruments necessary to (a) release any Lien encumbering any item of Collateral
that is the subject of a sale or other disposition of assets permitted by this
Agreement or as permitted or required under the Intercreditor Agreement or the
Collateral Documents or to which Requisite Lenders (or such other Lenders as may
be required to give such consent under subsection 9.6) have otherwise consented
or (b) release any Subsidiary Guarantor from the Subsidiary Guaranty if all of
the capital stock of such Subsidiary Guarantor is sold to any Person pursuant to
a sale or other disposition permitted hereunder or as permitted under the
Intercreditor Agreement or to which Requisite Lenders (or such other Lenders as
may be required to give such consent under subsection 9.6) have otherwise
consented; provided, however, that nothing in this subsection shall require
-------- -------
consent to release from the Subsidiary Guaranty any Person which, immediately
after such sale, shall be a Domestic Subsidiary of Holdings which is obligated
to and will enter into the Subsidiary Guaranty. Anything contained in any of
the Loan Documents to the contrary notwithstanding, Company, Administrative
Agent, Collateral Agent and each Lender hereby agree that (X) no Lender shall
have any right individually to realize upon any of the Collateral under any
Collateral Document or to enforce the Subsidiary Guaranty, it being understood
and agreed that all powers, rights and remedies under the Collateral Documents
and the Guaranties may be exercised solely by Collateral Agent for the benefit
of Secured Parties in accordance with the terms thereof, and (Y) in the event of
a foreclosure by Collateral Agent on any of the Collateral pursuant to a public
or private sale, Collateral Agent or any Secured Party may be the purchaser of
any or all of such Collateral at any such sale and Collateral Agent, as agent
for and representative of Secured Parties (but not any Secured Party or Secured
Parties in its or their respective individual capacities unless Requisite
Lenders shall otherwise agree in writing) shall be entitled, for the purpose of
bidding and making settlement or payment of the purchase price for all or any
portion of the Collateral sold at any such public sale, to use and apply any of
the Obligations as a credit on account of the purchase price for any collateral
payable by Collateral Agent at such sale.
SECTION 9.
MISCELLANEOUS
9.1 Assignments and Participations in Loans.
---------------------------------------
A. General. Subject to subsection 9.1B, 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 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
-------- -------
137
no such sale, assignment or transfer described in clause (i) above shall be
effective unless and until an Assignment Agreement effecting such sale,
assignment or transfer shall have been accepted by Administrative Agent and
recorded in the Register as provided in subsection 9.1B(ii). Except as
otherwise provided in this subsection 9.1, no Lender shall, as between Company
and such Lender, be relieved of any of its obligations hereunder as a result of
any sale, assignment or transfer of all or any part of its Commitments or the
Loans or the other Obligations owed to such Lender.
B. Assignments.
(i) Amounts and Terms of Assignments. Each Commitment, Loan 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 Administrative Agent, or (b) be assigned in an
aggregate amount of not less than $5,000,000 (or such lesser amount as
shall constitute the aggregate amount of the Commitments, Loans and other
Obligations of the assigning Lender) to any other Eligible Assignee with
the consent of Company and Administrative Agent (which consent of Company
and Administrative Agent shall not be unreasonably withheld or delayed);
provided that, unless otherwise agreed to in writing by Company and
--------
Administrative Agent, the assigning Lender shall have, immediately after
giving effect to such assignment, not less than an aggregate amount of
$5,000,000 in Commitments and Loans; and provided further, however, that
-------- ------- -------
(x) upon the occurrence and during the continuance of an Event of Default,
or (y) in the case of assignments by GSCP or ▇▇▇▇▇▇ Guaranty, or (z) in the
case of an assignment of a funded Loan, an assignment in accordance with
this clause (b) may be made without the consent of Company or
Administrative Agent, upon the giving of notice to Company and
Administrative Agent. 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 Administrative Agent, for its acceptance and recording in the
Register, an Assignment Agreement, together with a processing and
recordation fee of $500 in the case of assignments pursuant to clause
(a) above and assignments by GSCP or ▇▇▇▇▇▇ Guaranty, and $2000 in the case
of all other assignments and such forms, certificates or other evidence, if
any, with respect to United States federal income tax withholding matters
as the assignee under such Assignment Agreement may be required to deliver
to Administrative Agent pursuant to subsection 2.7B(iii)(a). Upon such
execution, delivery, acceptance and recordation, from and after the
effective date specified in such Assignment Agreement, (y) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment
Agreement, shall have the rights and obligations of a Lender hereunder and
(z) the assigning Lender thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment
Agreement, relinquish its rights (other than any rights which survive the
termination of this Agreement under subsection 9.9B) and be released from
its obligations under this Agreement (and, in the
138
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). 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 any Notes hereunder, the assigning Lender shall, upon
the effectiveness of such assignment or as promptly thereafter as
practicable, surrender its applicable Notes, if any, to Administrative
Agent for cancellation, and thereupon new Notes shall, if so requested by
the assignee and/or the assigning Lenders in accordance with
Subsection 2.1E, be issued to the assignee and/or to the assigning Lender,
substantially in the form of Exhibit IV, Exhibit V or Exhibit VI annexed
---------- --------- ----------
hereto, as the case may be, with appropriate insertions, to reflect the new
Commitments and/or outstanding Loans, as the case may be, of the assignee
and/or the assigning Lender.
(ii) Acceptance by Administrative Agent; Recordation in Register.
-----------------------------------------------------------
Upon its receipt of an Assignment Agreement executed by an assigning Lender
and an assignee representing that it is an Eligible Assignee, together with
the processing and recordation fee referred to in subsection 9.1B(i) and
any forms, certificates or other evidence with respect to United States
federal income tax withholding matters that such assignee may be required
to deliver to Administrative Agent pursuant to subsection 2.7B(iii)(a),
Administrative Agent shall, if Administrative Agent has and Company have
consented to the assignment evidenced thereby (in each case to the extent
such consent is required pursuant to subsection 9.1B(i)), (a) accept such
Assignment Agreement by executing a counterpart thereof as provided therein
(which acceptance shall evidence any required consent of Administrative
Agent to such assignment), (b) record the information contained therein in
the Register, and (c) give prompt notice thereof to Company.
Administrative Agent shall maintain a copy of each Assignment Agreement
delivered to and accepted by it as provided in this subsection 9.1B(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 or fees payable on any Loan allocated to such
participation, and all amounts payable by Company hereunder (including amounts
payable to such Lender pursuant to subsections 2.6D and 2.7) shall be determined
as if such Lender had not sold such participation. Company and each Lender
hereby acknowledge and agree that, solely for purposes of subsections 9.4 and
9.5, (a) any participation will give rise to a direct obligation of Company to
the participant and (b) the participant shall be considered to be a "Lender".
D. Assignments to Federal Reserve Banks and Fund Trustees. In addition
to the assignments and participations permitted under the foregoing provisions
of this subsection 9.1, 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, and with the consent of Company and
139
Administrative Agent any Lender which is an investment fund may pledge all or
any portion of its Notes or Loans to its trustee in support of its obligations
to such trustee; provided that (i) no Lender shall, as between Company 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 or
trustee 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 9.19.
F. Representations of Lenders. Each Lender listed on the signature pages
hereof hereby represents and warrants (i) that it is an Eligible Assignee
described in clause (A) of the definition thereof; (ii) that it has experience
and expertise in the making of loans such as the Loans; and (iii) that it will
make its Loans for its own account in the ordinary course of its business and
without a view to distribution of such Loans within the meaning of the
Securities Act or the Exchange Act or other federal securities laws (it being
understood that, subject to the provisions of this subsection 9.1, the
disposition of such Loans or any interests therein shall at all times remain
within its exclusive control). Each Lender that becomes a party hereto pursuant
to an Assignment Agreement shall be deemed to agree that the representations and
warranties of such Lender contained in Section 2(c) of such Assignment Agreement
are incorporated herein by this reference.
9.2 Expenses.
--------
Whether or not the transactions contemplated hereby are consummated,
Company agrees to pay promptly (i) all the actual and reasonable costs and
expenses of preparation of the Loan Documents and any consents, amendments
(requested by or for the benefit of Company), waivers or other modifications
thereto; (ii) all the costs of furnishing all opinions by counsel for Company
(including any opinions requested by Lenders as to any legal matters arising
hereunder) and of Company'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 Syndication Agent and counsel to
Administrative Agent (in each case including allocated costs of internal
counsel) in connection with the negotiation, preparation, execution and
administration of the Loan Documents and any consents, amendments (requested by
or for the benefit of Company), waivers or other modifications thereto and any
other documents or matters requested by Company; (iv) all the reasonable costs
and reasonable expenses of creating and perfecting Liens in favor of Collateral
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 Syndication Agent, counsel to Administrative Agent and counsel to
Collateral Agent and of counsel providing any opinions that Syndication Agent,
Administrative Agent, Collateral Agent or Requisite Lenders may request in
respect of the Collateral Documents or the Liens created
140
pursuant thereto; (v) all the reasonable costs and reasonable expenses
(including the reasonable fees, expenses and disbursements of any auditors,
accountants or appraisers and any environmental or other consultants, advisors
and agents employed or retained by Administrative Agent or Syndication Agent and
their respective counsel) of obtaining and reviewing any appraisals provided for
under subsection 5.9C, any environmental audits or reports provided for under
subsection 3.1K or 5.9B(ix) and any audits or reports provided for under
subsection 5.5B with respect to Inventory and accounts receivable of Holdings
and its Subsidiaries; (vi) all the reasonable costs and reasonable expenses
(including the reasonable fees, expenses and disbursements of any consultants,
advisors and agents employed or retained by Administrative Agent or Collateral
Agent and its counsel) in connection with the custody or preservation of any of
the Collateral; (vii) all other reasonable costs and expenses incurred by
Syndication Agent or Administrative Agent in connection with the syndication of
the Commitments and the negotiation, preparation and execution of the Loan
Documents and any consents, amendments (requested by or for the benefit of
Company), 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
Syndication Agent, Administrative Agent and Lenders in enforcing any Obligations
of or in collecting any payments due from any Loan Party hereunder or under the
other Loan Documents by reason of such Event of Default (including 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.
9.3 Indemnity.
---------
In addition to the payment of expenses pursuant to subsection 9.2, whether
or not the transactions contemplated hereby are consummated, Company agrees to
defend (subject to Indemnitees' selection of counsel), indemnify, pay and hold
harmless Agents (including Collateral Agent) and Lenders, and the officers,
partners, directors, trustees, employees, agents and affiliates of any of Agents
(including Collateral Agent) and Lenders (collectively called the
"Indemnitees"), from and against any and all Indemnified Liabilities (as
hereinafter defined); provided that Company shall not have any obligation to any
--------
Indemnitee hereunder with respect to any Indemnified Liabilities to the extent
such Indemnified Liabilities arise from the gross negligence, bad faith or
willful misconduct of that Indemnitee as determined by a final, non-appealable
judgment of a court of competent jurisdiction.
As used herein, "Indemnified Liabilities" means, collectively, any and
all liabilities, obligations, losses, damages (including natural resource
damages), penalties, actions, judgments, suits, claims (including Environmental
Claims), costs (including the costs of any investigation, study, sampling,
testing, abatement, cleanup, removal, remediation or other response action
necessary to remove, remediate, clean up or ▇▇▇▇▇ any Hazardous Materials
Activity), expenses and disbursements of any kind or nature whatsoever
(including the reasonable fees and disbursements of counsel for Indemnitees in
connection with any investigative, administrative or judicial proceeding
commenced or threatened by any Person, whether or not any such Indemnitee shall
141
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 Related
Agreements or the transactions contemplated hereby or thereby (including
Lenders' agreement to make the Loans hereunder or the use or intended use of the
proceeds thereof, or 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 Company 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 Holdings or any of its Subsidiaries.
To the extent that the undertakings to defend, indemnify, pay and hold
harmless set forth in this subsection 9.3 may be unenforceable in whole or in
part because they are violative of any law or public policy, Company 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.
9.4 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 and during the
continuance of any Event of Default each Lender is hereby authorized by Company
at any time or from time to time subject to the consent of Collateral Agent,
without notice to Company or to any other Person (other than Collateral Agent),
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 or payroll accounts) and any other Indebtedness at any
time held or owing by that Lender to or for the credit or the account of Company
against and on account of the obligations and liabilities of Company which are
then due and payable to that Lender under this Agreement and the other Loan
Documents, including all claims of any nature or description arising out of or
connected with this Agreement or any other Loan Document, irrespective of
whether or not that Lender shall have made any demand hereunder which are then
due and payable. Company hereby further grants to Collateral Agent and each
Lender a security interest in all deposits and accounts maintained with
Collateral Agent or such Lender as security for the Obligations.
Company, the Lenders and Administrative Agent hereby acknowledge and agree
that the provisions of this subsection 9.4 are subject to the provisions of the
Intercreditor Agreement. To the extent that any Lender is required pursuant to
the provisions of the Intercreditor Agreement to turn over to the Collateral
Agent any payments otherwise subject to the provisions of this subsection 9.4,
such payments shall not be subject to the provisions of this subsection 9.4.
142
9.5 Ratable Sharing.
---------------
Lenders hereby agree among themselves that if any of them shall, whether by
voluntary payment (other than a voluntary prepayment of Loans made and applied
in accordance with the terms of this Agreement), by realization upon security,
through the exercise of any right of set-off or banker's lien, by counterclaim
or cross action or by the enforcement of any right under the 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 Lender hereunder or
under the other Loan Documents (collectively, the "Aggregate Amounts Due" to
such Lender) which is greater than the proportion received by any other Lender
in respect of the Aggregate Amounts Due to such other Lender, then the Lender
receiving such proportionately greater payment shall (i) notify Administrative
Agent and each other Lender of the receipt of such payment and (ii) apply a
portion of such payment to purchase participations (which it shall be deemed to
have purchased from each seller of a participation simultaneously upon the
receipt by such seller of its portion of such payment) in the Aggregate Amounts
Due to the other Lenders so that all such recoveries of Aggregate Amounts Due
shall be shared by all Lenders in proportion to the Aggregate Amounts Due to
them; provided that if all or part of such proportionately greater payment
--------
received by such purchasing Lender is thereafter recovered from such Lender upon
the bankruptcy or reorganization of Company 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. 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.
Company, the Lenders and Administrative Agent hereby acknowledge and agree
that the provisions of this subsection 9.5 are subject to the provisions of the
Intercreditor Agreement. To the extent that any Lender is required pursuant to
the provisions of the Intercreditor Agreement to turn over to the Collateral
Agent any payments otherwise subject to the provisions of this subsection 9.5,
such payments shall not be subject to the provisions of this subsection 9.5.
9.6 Amendments and Waivers.
----------------------
A. No amendment, modification, termination or waiver of any provision of
the Loan Documents, or consent to any departure by Company therefrom, shall in
any event be effective without the written concurrence of Requisite Lenders;
provided that no such amendment, modification, termination, waiver or consent
--------
shall, without the consent of each Lender (with Obligations directly affected in
the case of the following clause (i)): (i) extend the scheduled final maturity
of any Loan or Note, waive, reduce or postpone any scheduled repayment set forth
in subsection 2.4A(i), 2.4(A)(ii) or 2.4A(iii), or reduce the rate of interest
on any Loan (other than any waiver of any increase in the interest rate
applicable to any Loan pursuant to
143
subsection 2.2E) or any fees payable hereunder, or extend the time for payment
of any such interest or fees, or reduce the principal amount of any Loan, (ii)
amend, modify, terminate or waive any provision of this subsection 9.6, (iii)
reduce the percentage specified in the definition of "Requisite Lenders" (it
being understood that, with the consent of Requisite Lenders, additional
extensions of credit pursuant to this Agreement may be included in the
determination of "Requisite Lenders" on substantially the same basis as the
AXEL Series B Commitments, AXELs Series B, AXEL Series C Commitments, AXELs
Series C, AXEL Series D Commitments and AXELs Series D are included on the
Closing Date), (iv) release all or substantially all of the Collateral or
Holdings from the Holdings Guaranty or all or substantially all of the
Subsidiary Guarantors from the Subsidiary Guaranty except as expressly provided
in the Loan Documents, or (v) consent to the assignment or transfer by Company
of any of its rights and obligations under this Agreement; provided, further
-------- -------
that no such amendment, modification, termination or waiver shall (1) increase
the Commitments of any Lender over the amount thereof then in effect, or extend
the duration thereof, without the consent of such Lender (it being understood
that no amendment, modification or waiver of any condition precedent, covenant,
Potential Event of Default or Event of Default shall constitute an increase or
extension in the Commitment of any Lender, and that no increase in the available
portion of any Commitment of any Lender shall constitute an increase in such
Commitment of such Lender); (2) amend the definition of "Requisite Class
Lenders" without the consent of Requisite Class Lenders of each Class, or alter
the required application of any repayments or prepayments as between Classes
pursuant to subsection 2.4B(iii) without the consent of Requisite Class Lenders
of each Class which is being allocated a lesser repayment or prepayment as a
result thereof (although Requisite Lenders may waive, in whole or in part, any
mandatory prepayment so long as the application, as between Classes, of any
portion of such prepayment which is still required to be made is not altered);
or (3) amend, modify, terminate or waive any provision of Section 8 as the same
applies to any Agent (including the Collateral Agent), or any other provision of
this Agreement as the same applies to the rights or obligations of any Agent
(including the Collateral Agent), in each case without the consent of such Agent
(including the Collateral Agent).
B. Administrative Agent may, but shall have no obligation to, with the
concurrence of any Lender, execute amendments, modifications, waivers or
consents on behalf of that Lender. Any waiver or consent shall be effective
only in the specific instance and for the specific purpose for which it was
given. No notice to or demand on Company in any case shall entitle Company to
any other or further notice or demand in similar or other circumstances. Any
amendment, modification, termination, waiver or consent effected in accordance
with this subsection 9.6 shall be binding upon each Lender at the time
outstanding, each future Lender and, if signed by Company, on Company.
9.7 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
9.8 Notices.
-------
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed; provided that notices to Syndication Agent or
--------
Administrative Agent shall not be effective until received. For the purposes
hereof, the address of each party hereto shall be as set forth under such
party's name on the signature pages hereof or (i) as to Holdings, Company and
Administrative Agent, such other address as shall be designated by such Person
in a written notice delivered to the other parties hereto and (ii) as to each
other party, such other address as shall be designated by such party in a
written notice delivered to Administrative Agent.
9.9 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 Company and Holdings set forth in subsections 2.6D,
2.7, 9.2, 9.3 and 9.4 and the agreements of Lenders set forth in subsections
8.2C, 8.4 and 9.5 shall survive the payment of the Loans and the termination of
this Agreement.
9.10 Failure or Indulgence Not Waiver; Remedies Cumulative.
-----------------------------------------------------
No failure or delay on the part of Administrative Agent or any Lender in
the exercise of any power, right or privilege hereunder or under any other Loan
Document shall impair such power, right or privilege or be construed to be a
waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege. All rights and
remedies existing under this Agreement and the other Loan Documents are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
9.11 Marshalling; Payments Set Aside.
-------------------------------
Neither Administrative Agent nor any Lender shall be under any obligation
to marshal any assets in favor of Company or any other party or against or in
payment of any or all of the Obligations. To the extent that Company makes a
payment or payments to Administrative Agent or Lenders (or to Administrative
Agent for the benefit of Lenders), or Administrative Agent or Lenders enforce
any security interests or exercise their rights of setoff, and such payment or
payments or the proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to
145
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.
9.12 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.
9.13 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.
9.14 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.
9.15 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.
9.16 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 9.1). Neither Holdings'
or Company's rights or obligations hereunder nor any interest therein may
146
be assigned or delegated by Holdings or Company without the prior written
consent of all Lenders.
9.17 Consent to Jurisdiction and Service of Process.
----------------------------------------------
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY OR HOLDINGS 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, COMPANY AND HOLDINGS, FOR THEMSELVES AND IN
CONNECTION WITH ITS PROPERTIES, IRREVOCABLY
(I) ACCEPT GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVE ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREE 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 HOLDINGS AND COMPANY AT THEIR ADDRESSES PROVIDED IN
ACCORDANCE WITH SUBSECTION 9.8;
(IV) AGREE 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) AGREE 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) AGREE THAT THE PROVISIONS OF THIS SUBSECTION 9.17 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST
EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR
OTHERWISE.
9.18 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
147
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 9.18 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.
9.19 Confidentiality.
---------------
Each Lender shall hold all non-public information obtained pursuant to the
requirements of this Agreement which has been identified as confidential by
Company in accordance with such Lender's customary procedures for handling
confidential information of this nature and in accordance with prudent lending
or investing practices, it being understood and agreed by Company and Holdings
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 by any direct or indirect
contractual counterparties (or the professional advisors thereto) in swap
agreements (provided that such swap counterparties and advisors are advised of
--------
and agree to be bound by the provisions of this subsection 9.19) or disclosures
required or requested by any governmental agency or representative thereof or by
the NAIC 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 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 Holdings or any of its Subsidiaries.
9.20 Counterparts; Effectiveness.
---------------------------
This Agreement and any amendments, waivers, consents or supplements hereto
or in connection herewith may be executed in any number of counterparts and by
different parties
148
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 Company and Administrative 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.
COMPANY:
SEALY MATTRESS COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:
HOLDINGS:
SEALY CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:
Notice Address:
Sealy Corporation
Halle Building, 10th Floor
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇ Capital, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S-1
AGENTS AND LENDERS:
▇▇▇▇▇▇▇ SACHS CREDIT PARTNERS L.P.,
individually and as Syndication Agent
By:
-------------------------------------------------
Authorized Signatory
Notice Address:
▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P.
c/o Goldman, Sachs & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
Telecopy:
S-2
▇▇▇▇▇▇ GUARANTY TRUST COMPANY OF NEW YORK,
individually and as Administrative Agent
By:
------------------------------------------------
Name:
Title:
Notice Address:
▇▇▇▇▇▇ Guaranty of New York
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Vice President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ Guaranty of New York
c/o ▇.▇. ▇▇▇▇▇▇ Services Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Credit Administrator
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
S-3
BANKERS TRUST COMPANY,
individually and as Documentation Agent
By: /s/ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
-------------------------------------------------
Name:
Title:
Notice Address:
Bankers Trust
-------------------------------------------------
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------------------
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
-------------------------------------------------
Attention: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
-------------------------------------------------
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
-------------------------------------------------
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
------------------------------------------------
S-4
SCHEDULE 1.1(i)
Addbacks to EBITDA
------------------
Without duplication:
(i) MIS Upgrade Expenditures, Year 2000 Expenditures, EITF 97-13
Expenditures and Other MIS Expenditures, in each case to the extent
deducted in determining Consolidated Net Income;
(ii) any bad debt and factoring losses incurred specifically with
respect to the bankruptcy of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇;
(iii) items classified as unusual or nonrecurring gains and losses
(including restructuring costs, severance and relocation costs, any
one-time expenses related to (or resulting from) any merger,
recapitalization or Permitted Acquisition);
(iv) one-time compensation charges, including any arising from any
recapitalization of Holdings' special bonus program or existing
stock options, performance share or restricted stock plans
resulting from any merger or recapitalization transaction or
expensed in any period prior to the consummation of the Merger;
(v) non-recurring cash restructuring charges incurred in connection
with the Recapitalization Transactions and related transactions to
the extent deducted in determining Consolidated Net Income;
provided that such charges are incurred on or before December 18,
--------
1998 and do not exceed in the aggregate the sum of (a) premiums
paid in connection with the Debt Tender Offer plus (b) $1,000,000;
----
(vi) non-recurring cash restructuring charges incurred in connection
with Permitted Acquisitions to the extent deducted in determining
Consolidated Net Income; and
(vii) ▇▇▇▇ Management Fees (excluding any portion thereof representing
---------
reimbursement of expenses or fees for acquisitions, financings or
divestitures) paid during such period under the ▇▇▇▇ Advisory
Services Agreement, and any Harvard Management Fees (excluding any
---------
portion thereof representing reimbursement of expenses paid during
such period);
(viii) non-recurring cash charges incurred prior to June 18, 1999 in
connection with the relocation of any of Company's facilities and
transition expenses related thereto, but only to the extent that
such non-recurring charges do not exceed $6,000,000; and
(ix) to the extent deducted in determining Consolidated Net Income,
premiums and transaction costs on Existing Subordinated Notes not
tendered in the Debt Tender Offer.
1.1(i)-1
EXHIBIT INDEX
-------------
2.1 Agreement and Plan of Merger, dated as of October 30, 1997, by and among
the Registrant, Sandman Merger Corporation and ▇▇▇▇/Chilmark Fund, L.P.
2.2 First Amendment to the Agreement and Plan of Merger, dated as of
December 18, 1997, by and among the Registrant, Sandman Merger
Corporation and ▇▇▇▇/Chilmark Fund, L.P.
4.1 Indenture, dated as of December 18, 1997, by and among Sealy Mattress
Company, the Guarantors named therein and The Bank of New York,
describing the Series A and Series B 9-7/8% Senior Subordinated Notes
due 2007
4.2 Indenture, dated as of December 18, 1997, by and among Sealy Mattress
Company, the Guarantors named therein and The Bank of New York,
describing the Series A and Series B 10-7/8% Senior Subordinated
Discount Notes due 2007
4.3 Second Supplemental Indenture, dated as of December 5, 1997, by and
between the Registrant and The Bank of New York
10.1 Dealer Manager Agreement, dated as of November 18, 1997, among Sandman
Merger Corporation, the Registrant and ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
10.2 Purchase Agreement, dated as of December 11, 1997, by and among Sealy
Mattress Company, the Guarantors named therein, ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.,
▇.▇. ▇▇▇▇▇▇ Securities Inc. and BT Alex. ▇▇▇▇▇ Incorporated
10.3 Registration Rights Agreement, dated as of December 18, 1997, by and
among Sealy Mattress Company, the Guarantors named therein, ▇▇▇▇▇▇▇,
Sachs & Co., ▇.▇. ▇▇▇▇▇▇ Securities Inc. and BT Alex. ▇▇▇▇▇ Incorporated
10.4 Credit Agreement
10.5 AXEL Credit Agreement
10.6 [Change of Control Agreement]
