EXHIBIT 4.1
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SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
dated as of
December 24, 2002
among
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, INC.
(formerly known as French Fragrances, Inc.),
the banks listed on the signature pages hereof,
JPMorgan
JPMORGAN CHASE BANK,
as Administrative Agent,
FLEET NATIONAL BANK,
as Collateral agent
with
JPMORGAN CHASE BANK and FLEET NATIONAL BANK
as Co- Arrangers and Joint Bookrunners
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Table of Contents
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Page
ARTICLE I. Definitions...............................................................................................1
Section 1.01. Definitions........................................................................................1
Section 1.02. Accounting Terms and Determinations...............................................................25
Section 1.03. Types of Borrowings...............................................................................26
ARTICLE II. The Credits..............................................................................................26
Section 2.01. Commitments to Lend...............................................................................26
Section 2.02. Notice of Borrowings..............................................................................26
Section 2.03. Swingline Loans...................................................................................27
Section 2.04. Notice to Banks; Funding of Loans.................................................................29
Section 2.05. Notes.............................................................................................30
Section 2.06. Interest Rate Elections...........................................................................30
Section 2.07. Interest Rates....................................................................................32
Section 2.08. Fees..............................................................................................32
Section 2.09. Voluntary Reduction or Termination of Commitments.................................................33
Section 2.10. Maturity of Loans.................................................................................33
Section 2.11. Prepayments.......................................................................................33
Section 2.12. General Provisions as to Payments.................................................................34
Section 2.13. Funding Losses....................................................................................34
Section 2.14. Computation of Interest and Fees..................................................................35
Section 2.15. Letters of Credit.................................................................................35
Section 2.16. Application of Payments and Collateral............................................................38
Section 2.17. Pro Rata Treatment................................................................................39
ARTICLE III. Conditions...............................................................................................40
Section 3.01. Effectiveness.....................................................................................40
Section 3.02. Each Credit Event.................................................................................42
Section 3.03. Effective Date Advances and Adjustments...........................................................42
ARTICLE IV. Representations and Warranties...........................................................................43
Section 4.01. Corporate Existence and Power.....................................................................43
Section 4.02. Corporate and Governmental Authorization; No Contravention........................................43
Section 4.03. Binding Effect....................................................................................43
Section 4.04. Financial Information.............................................................................43
Section 4.05. Litigation........................................................................................44
Section 4.06. Compliance with ERISA.............................................................................44
Section 4.07. Environmental Matters.............................................................................44
Section 4.08. Taxes.............................................................................................44
Section 4.09. Subsidiaries......................................................................................44
Section 4.10. Not an Investment Company.........................................................................45
Section 4.11. Full Disclosure...................................................................................45
Section 4.12. Compliance with Laws and Agreements...............................................................45
Section 4.13. Governmental Approvals............................................................................45
Section 4.14. Locations.........................................................................................45
Section 4.15. Licenses; Trademarks; Distribution Agreements.....................................................45
Section 4.16. Inventory.........................................................................................46
TABLE OF CONTENTS, Page i
Section 4.17. Security..........................................................................................47
Section 4.18. Quality of Inventory..............................................................................47
Section 4.19. Lockbox Accounts..................................................................................47
Section 4.20. Solvency..........................................................................................47
Section 4.21. Common Enterprise; Benefit Received...............................................................47
ARTICLE V. Covenants................................................................................................47
Section 5.01. Information.......................................................................................47
Section 5.02. Payment of Obligations............................................................................50
Section 5.03. Maintenance of Property; Insurance................................................................50
Section 5.04. Conduct of Business and Maintenance of Existence..................................................50
Section 5.05. Compliance with Laws..............................................................................50
Section 5.06. Inspection of Property, Books and Records.........................................................50
Section 5.07. Additional Guarantors.............................................................................51
Section 5.08. Amendment of Certain Documents....................................................................51
Section 5.09. Investments.......................................................................................51
Section 5.10. Negative Pledge...................................................................................52
Section 5.11. Consolidations, Mergers and Sales of Assets.......................................................53
Section 5.12. Use of Proceeds and Letters of Credit.............................................................54
Section 5.13. Transactions with Affiliates......................................................................54
Section 5.14. Restricted Payments...............................................................................54
Section 5.15. Borrower or Guarantor Indebtedness................................................................54
Section 5.16. Sale and Lease Back Transaction...................................................................55
Section 5.17. Foreign Jurisdictions.............................................................................55
Section 5.18. Swap Agreements...................................................................................55
Section 5.19. Minimum Quarterly Consolidated Debt Service Coverage Ratio........................................55
Section 5.20. Minimum Availability..............................................................................56
Section 5.21. Restriction on Payment of Indebtedness............................................................56
Section 5.22. Lockbox and Deposit Accounts......................................................................57
ARTICLE VI. Defaults.................................................................................................57
Section 6.01. Events of Default.................................................................................57
Section 6.02. Default...........................................................................................59
Section 6.03. Management; Collection of Accounts................................................................59
Section 6.04. Status of Accounts................................................................................60
Section 6.05. Collateral Custodian..............................................................................62
Section 6.06. Performance by the Agent..........................................................................62
ARTICLE VII. The Administrative Agent.................................................................................62
Section 7.01. Appointment and Authorization.....................................................................62
Section 7.02. Agents and Affiliates.............................................................................63
Section 7.03. Action by Agent...................................................................................63
Section 7.04. Consultation with Experts.........................................................................63
Section 7.05. Liability of Agent................................................................................63
Section 7.06. Indemnification...................................................................................64
Section 7.07. Credit Decision...................................................................................64
Section 7.08. Successor Agents..................................................................................64
Section 7.09. Administrative Agent's Fees.......................................................................64
Section 7.10. Sub-Agent; Issuing Banks; Swingline Lender........................................................64
TABLE OF CONTENTS, Page ii
Section 7.11. Perfection by Possession and Control; Deposit Accounts............................................65
Section 7.12. Powers and Immunities of Issuing Bank and Swingline Lender........................................65
ARTICLE VIII. Change in Circumstances..................................................................................66
Section 8.01. Basis for Determining Interest Rate Inadequate or Unfair..........................................66
Section 8.02. Illegality........................................................................................66
Section 8.03. Increased Cost and Reduced Return.................................................................66
Section 8.04. Taxes.............................................................................................68
Section 8.05. Base Rate Loans Substituted for Affected LIBOR Loans..............................................69
Section 8.06. Substitution of Bank..............................................................................70
ARTICLE IX. Miscellaneous............................................................................................70
Section 9.01. Notices...........................................................................................70
Section 9.02. No Waivers........................................................................................70
Section 9.03. Expenses; Indemnification.........................................................................70
Section 9.04. Setoffs...........................................................................................71
Section 9.05. Amendments and Waivers............................................................................72
Section 9.06. Successors and Assigns............................................................................72
Section 9.07. Governing Law; Submission to Jurisdiction.........................................................75
Section 9.08. Counterparts; Integration.........................................................................75
Section 9.09. WAIVER OF JURY TRIAL..............................................................................75
Section 9.10. Confidentiality...................................................................................75
Section 9.11. Replacement Note..................................................................................76
Section 9.12. Usury.............................................................................................76
Section 9.13. Independence of Covenants.........................................................................76
Section 9.14. Replacement/Restatement of Original Credit Agreement; Contribution; Intercompany Subordination....76
TABLE OF CONTENTS, Page iii
List of Exhibits and Schedules
Exhibits
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A Form of Promissory Note
B Form of Opinion of Weil, Gotshal & ▇▇▇▇▇▇, LLP,
counsel for the Borrower and the Guarantors
C Form of Borrowing Base Certificate
D Form of Consent and Subordination Agreement
E Form of Compliance Certificate
F Form of Assignment and Assumption Agreement
Schedules
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1.01 Commitments
1.01(a) Existing Letters of Credit
4.05 Litigation
4.09 Subsidiaries
4.14 Locations
4.15 Licenses, Trademarks and Distribution Agreements
4.19 Lockbox Accounts
5.09 Permitted Investments
5.10 Liens
LIST OF EXHIBITS AND SCHEDULES, Solo Page
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT is dated as of
December 24, 2002 among ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, INC. (formerly known as French
Fragrances, Inc.), a Florida corporation (the "Borrower"), the banks listed on
the signature pages hereof, JPMORGAN CHASE BANK, as administrative agent and
FLEET NATIONAL BANK, as collateral agent.
WHEREAS, the Borrower, Fleet National Bank, in its capacity as
administrative agent thereunder, and certain other financial institutions party
thereto executed that certain Amended and Restated Credit Agreement dated as of
January 29, 2001 (as amended or otherwise modified by the following: that
certain First Amendment to Amended and Restated Credit Agreement dated July 20,
2001 and that certain Second Amendment to Amended and Restated Credit Agreement
dated March 13, 2002, herein the "Original Credit Agreement") pursuant to which
the banks party thereto extended a credit facility to the Borrower for revolving
loans and letters of credit. The Original Credit Agreement amended and restated
the terms of a Credit Agreement dated January 23, 2001.
WHEREAS, certain of the banks party to the Original Credit Agreement
have assigned all of their right, title and interest in and to the Original
Credit Agreement to certain of the banks party hereto pursuant to the terms of
that certain Master Assignment and Acceptance dated December 24, 2002.
WHEREAS, the Borrower has requested that: (i) JPMorgan Chase Bank
assume the responsibilities as the administrative agent hereunder; (ii) Fleet
National Bank assume the role of the collateral agent hereunder; and (iii) the
Original Credit Agreement be amended and restated as herein set forth. JPMorgan
Chase Bank has agreed to become the administrative agent, Fleet National Bank
has agreed to remain the collateral agent and the parties hereto have agreed to
otherwise amend and restate the Original Credit Agreement upon and subject to
the terms and conditions set forth in this Agreement.
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE I.
Definitions
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Section 1.01. Definitions. The following terms, as used herein, have
the following meanings:
"Acquisition" means the purchase or acquisition of all or
substantially all of the assets of any Person, the purchase of a controlling
equity interest in any Person, or the merger or consolidation of any Person with
any other Person, in any transaction or group of transactions which are part of
a common plan.
"Accounts" means all accounts (as such term is defined in the Uniform
Commercial Code in effect in the State of New York (as the same may be amended
or modified from time to time), whether now owned or hereafter acquired by the
Borrower or any Domestic Subsidiary.
"Acquisition Agreement" means that certain Purchase Agreement dated
as of October 30, 2000 by and between the Borrower and the Seller, as amended.
"Active Excess Inventory" means inventory on hand that is in excess
of the Borrower's projected sales for the next twelve months.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 1
"Active No Requirement Inventory" means inventory on hand for which
the Borrower does not have forecasted sales.
"Administrative Agent" means JPMorgan Chase Bank in its capacity as
administrative agent for itself, the Collateral Agent and the other Banks as
appointed pursuant to the provisions of Article VII of this Agreement, and its
successors in such capacity.
"Administrative Questionnaire" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Administrative Agent
and submitted to the Administrative Agent (with a copy to the Borrower) duly
completed by such Bank.
"Affiliate" means any Person directly or indirectly controlling,
controlled by or under common control with the Borrower. As used in this
definition, the term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise, but not including Seller or its affiliates.
"Agents" means, together, the Administrative Agent and the Collateral
Agent.
"Agreement" shall mean this Credit Agreement, as the same may be
amended, supplemented, extended and modified from time to time.
"Allowance Accounts" means accounts consisting of the returns
reserve, salary support, sales allowance and co-op advertising.
"Applicable Letter of Credit Fee" means, with respect to each Letter
of Credit, a fee equal to the Applicable Margin for LIBOR Loans times the face
amount of the Letter of Credit.
"Applicable Lending Office" means, with respect to any Bank, (i) in
the case of its Base Rate Loans, its Domestic Lending Office and, (ii) in the
case of its LIBOR Loans, its LIBOR Lending Office.
"Applicable Margin" means, with respect to either Type of Loan, the
applicable margin (expressed in basis points) in the column below for the
applicable Type of Loan and opposite the Consolidated Total Debt/EBITDA Ratio
set forth in the table below that corresponds with the actual Consolidated Total
Debt/EBITDA Ratio set forth in the most recent Compliance Certificate:
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CONSOLIDATED
TIER TOTAL DEBT/EBITDA LIBOR LOANS BASE RATE LOANS
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I Greater than 4.5:1.0 300 125
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II Less than or equal to 4.5:1.0 but greater than 275 100
3.5:1.0
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III Less than or equal to 3.5:1.00 but greater than 250 75
2.5:1.0
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IV Less than or equal to 2.5:1.0 225 50
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Each Applicable Margin shall be determined by reference to Tier II
for the period from the Effective Date until the first business day of the month
following the day when the Compliance Certificate required in connection with
the annual audited financial statements for the fiscal year ended January 31,
2003 is delivered. On such date, each Applicable Margin shall change in
accordance with the Consolidated Total Debt/EBITDA Ratio set forth therein and
the table set forth above. Thereafter, each Applicable Margin shall change
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 2
effective commencing on the first business day of the month following the date
when a quarterly Compliance Certificate required by Section 5.01(c) is
delivered, such change to be made in accordance with the Consolidated Total
Debt/EBITDA Ratio set forth therein and the table set forth above; provided,
however, if any Compliance Certificate is not received by the date required by
Section 5.01(c), the Applicable Margins shall revert to Tier I until delivery of
the next Compliance Certificate.
"Applicable Percentage" of any Bank means the percentage of the
aggregate Commitments represented by such Bank's Commitment.
"Approved Location" means: (i) any location owned by the Borrower and
as set forth in Schedule 4.14 attached hereto or identified in an inventory
location report delivered under Section 5.01(g) as owned by the Borrower; (ii)
any location set forth on Schedule 4.14 attached hereto or identified in an
inventory location report delivered under Section 5.01(g) which is leased by the
Borrower and for which a fully executed Consent and Subordination Agreement from
the applicable landlord is delivered; (iii) any third party location set forth
on Schedule 4.14 attached hereto or identified in an inventory location report
delivered under Section 5.01(g) if: (A) a fully executed Consent and
Subordination Agreement from the applicable third party vendor is delivered and
(B) the Borrower shall have taken such action as the Administrative Agent shall
reasonably request to perfect and protect the Collateral Agent's security
interest in any Collateral held at such third party location (including, without
limitation, the filing of a financing statement in the proper jurisdiction
naming the applicable third party as the debtor/bailee, the Borrower as the
secured party/▇▇▇▇▇▇ and the Collateral Agent as the assignee and notifying the
debtor/bailee's secured lenders of the Borrower's interest in the inventory held
by such debtor/bailee); (iv) any other leased location for which a fully
executed Consent and Subordination Agreement from the applicable landlord has
been delivered as of the Effective Date; and (v) any third party location for
which the actions described in sub-clause (A) of clause (iii) have been taken as
of the Effective Date.
"Arden Accounting System" means the computer accounting systems used
to track the Purchased Assets which the Borrower continues to use following the
Arden Acquisition.
"Arden Acquisition" means the Acquisition of the Purchased Assets by
the Borrower from Seller pursuant to the terms of the Acquisition Agreement
which occurred in connection with the closing under the Original Credit
Agreement.
"Arden Inventory" means, that specific Arden inventory identified by
Borrower to the Banks that existed in the Borrower's inventory prior to the
Acquisition.
"Assignee" means a Person who has been assigned a portion of the
Loans pursuant to Section 9.06 hereof.
"Assignment and Assumption" means an assignment and assumption
entered into by a Bank and an Assignee (with the consent of any party whose
consent is required by Section 9.06), and accepted by the Administrative Agent,
in the form of Exhibit F or any other form approved by the Administrative Agent.
"Bank" means each bank or financial institution listed on the
signature pages hereof, each Assignee, which becomes a Bank pursuant to Section
9.06, and their respective successors. References herein to a Bank or Banks may
include the Issuing Banks or the Swingline Lender or both, as the context
requires.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 3
"Base Rate" means, for any day, a rate per annum equal to the higher
of (i) the Prime Rate for such day, (ii) the sum of 1/2 of 1% plus the Federal
Funds Rate for such day, or (iii) the sum of 1% plus the Base CD Rate for such
day. For purposes of this Agreement, any change in the Base Rate due to a change
in the Prime Rate, Federal Funds Rate or the Base CD Rate shall be effective on
the effective date of such change in the Prime Rate, Federal Funds Rate or the
Base CD Rate, respectively. If for any reason the Administrative Agent shall
have determined (which determination shall be conclusive and binding, absent
manifest error) that it is unable to ascertain the Federal Funds Rate or Base CD
Rate, or both, for any reason, including the inability or failure of the
Administrative Agent to obtain sufficient quotations in accordance with the
terms hereof, the Base Rate shall be determined without regard to clause (ii) or
(iii), or both, as appropriate, until the circumstances giving rise to such
inability no longer exist. As used in this definition, the following terms have
the following meanings:
"Assessment Rate" shall mean the annual assessment rate
(net of refunds and rounded upwards, if necessary, to the next 1/16
of 1%) estimated by the Administrative Agent (in good faith, but in
no event in excess of statutory or regulatory maximums) to be payable
by JPMorgan Chase Bank to the Federal Deposit Insurance Corporation
(or any successor) for insurance by such corporation (or such
successor) of time deposits made in Dollars at the Administrative
Agent's domestic offices during the current calendar year.
"Base CD Rate" shall mean the sum of (a) the product of (i)
the Three-Month Secondary CD Rate and (ii) Statutory Reserves and (b)
the Assessment Rate.
"Prime Rate" shall mean the rate of interest per annum
publicly announced from time to time by JPMorgan Chase Bank, or its
successor financial institution, at its principal office as its prime
rate in effect at such time. Without notice to the Borrower or any
other Person, the Prime Rate shall change automatically from time to
time as and in the amount by which said prime rate shall fluctuate,
with each such change to be effective as of the date of each change
in such prime rate. THE PRIME RATE IS A REFERENCE RATE AND DOES NOT
NECESSARILY REPRESENT THE LOWEST OR BEST RATE ACTUALLY CHARGED BY
JPMORGAN CHASE BANK OR SUCH SUCCESSOR FINANCIAL INSTITUTION TO ANY OF
ITS CUSTOMERS. JPMORGAN CHASE BANK OR ANY SUCH SUCCESSOR FINANCIAL
INSTITUTION MAY MAKE COMMERCIAL LOANS OR OTHER LOANS AT RATES OF
INTEREST AT, ABOVE AND BELOW THE PRIME RATE.
"Statutory Reserves" shall mean a fraction (expressed as a
decimal), the numerator of which is the number one and the
denominator of which is the number one minus the aggregate of the
maximum reserve percentage (including without limitation, any
marginal, special, emergency or supplemental reserves) expressed as a
decimal, established by the Board of Governors of the Federal Reserve
System of the United States or any banking authority to which
JPMorgan Chase Bank is subject with respect to the Base CD Rate for
new negotiable non-personal time deposits in Dollars of over $100,000
with maturities approximately equal to three months. Statutory
Reserves shall be adjusted automatically on and as of the effective
date of any change in any applicable reserve percentage.
"Three-Month Secondary CD Rate" shall mean, for any day,
the secondary market rate for three-month certificates of deposit
reported as being in effect on such day (or, if such day shall not be
a Domestic Business Day, the next preceding Domestic Business Day) by
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 4
the Board of Governors of the Federal Reserve System of the United
States through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current
practices of such Board of Governors, be published in Federal Reserve
Statistical Release H.15(519) during the week following such day),
or, if such rate shall not be so reported on such day or such next
preceding Domestic Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major money
center banks in New York City received at approximately 10:00 a.m. on
such day (or, if such day shall not be a Domestic Business Day, on
the next preceding Domestic Business Day) by the Administrative Agent
from three New York City negotiable certificate of deposit dealers of
recognized standing selected by Administrative Agent.
"Base Rate Borrowing" means any Loan or portion thereof subject to
the Base Rate.
"Base Rate Loan" means at any time a Loan outstanding hereunder which
bears interest at such time at a rate based on the Base Rate pursuant to a
Notice of Borrowing or Notice of Interest Rate Election or pursuant to Article
VIII or pursuant to the other provisions hereof. The term "Base Rate Loan"
includes all "Base Rate Loans" made under Article 2 of the Original Credit
Agreement which are outstanding as of the Effective Date.
"Benefit Arrangement" means at any time an employee benefit plan
within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.
"Borrower" means ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Inc. (formerly known as French
Fragrances, Inc.), a Florida corporation
"Borrowing" has the meaning set forth in Section 1.03.
"Borrowing Availability" means the remainder of (a) Total
Availability minus (b) the Committed Exposure.
"Borrowing Base" shall mean, as of any date, the sum of the
following, determined as of such date, without duplication:
(a) Eligible Accounts Receivable. The product of the
Advance Percent (as defined below in this definition) multiplied by
the aggregate amount of all Eligible Accounts Receivable; plus
(b) Eligible Finished Goods Inventory; Packaged. The lesser
of:
(i) the product of the percentage set forth in
either clause (A) or (B) below which is applicable as of the date of
determination multiplied by the aggregate amount of all Eligible
Finished Goods Inventory and Eligible Arden Finished Goods Inventory,
in each case, which have been packaged for delivery to a customer and
valued based on the lower of cost or market value:
(A) In Season. if the date of
determination is during the two fiscal quarters beginning on
or about May 1 and ending on or about October 31,
seventy-five percent (75%); and
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 5
(B) Out of Season. if the date of
determination is during the two fiscal quarters beginning on
or about November 1 and ending on or about April 30,
sixty-five percent (65%); or
(ii) eighty-five percent (85%) of the product of
the Appraised Liquidation Percentage (as defined below in this
definition) multiplied by the gross cost of all finished goods
inventory of Borrower which has been packaged for delivery to a
customer; plus
(c) Eligible Finished Goods Inventory; Unpackaged. The
lesser of:
(i) the product of forty percent (40%) multiplied
by the aggregate amount of all Eligible Finished Goods Inventory and
Eligible Arden Finished Goods Inventory, in each case, which have not
been packaged for delivery to a customer and valued based on the
lower of cost or market value; or
(ii) eighty-five percent (85%) of the product of
the Appraised Liquidation Percentage multiplied by the gross cost of
all finished goods inventory of Borrower which has not been packaged
for delivery to a customer; plus
(e) Eligible Raw Materials Inventory. The lesser of:
(i) the product of twenty-five percent (25%)
multiplied by the aggregate amount of all Eligible Raw Materials
Inventory and Eligible Arden Raw Materials Inventory, in each case
valued based on the lower of cost or market value; or
(ii) eighty-five percent (85%) of the product of
the Appraised Liquidation Percentage multiplied by the gross cost of
all work-in-process and raw materials inventory of Borrower; plus
(f) Eligible Gift Inventory. The lesser of:
(i) the product of ten percent (10%) multiplied
by the aggregate amount of all Eligible Gift Inventory valued based
on the lower of cost or market value; or
(ii) eighty-five percent (85%) of the product of
the Appraised Liquidation Percentage multiplied by the gross cost of
all inventory held as a gift given with purchased merchandise in the
ordinary course of Borrower's business or as promotional merchandise
in the ordinary course of business;or
(iii) $500,000; plus
(g) Cash Collateral. The amount of cash or cash equivalents
that are pledged to the Collateral Agent as collateral for the
Obligations; minus
(h) Reserves. The aggregate amount of the reserves
established by the Administrative Agent at any time and from time to
time after the Effective Date that the Administrative Agent
determines are necessary to protect the Banks' interests, such
determination to be made in the Administrative Agent's reasonable and
sole discretion. Reserves established under this clause (h) may
include, without limitation: (i) with respect to accounts receivable,
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 6
reserves for Allowance Accounts, customer markdowns, and destroyed in
field and (ii) with respect to inventory and to the extent not
included as ineligibles (but without impairing the obligation to
exclude from any eligible inventory all inventory which is required
to be excluded under the definitions thereof hereunder); inventory
classified as long term assets; and capitalized costs.
As used in this definition, the term "Advance Percent" means
eighty-five percent (85%) based on continuing confirmation of a Dilution
Percentage of no more than five percent (5%) determined, as of any date, upon
the Administrative Agent's most recent field examination or if the Dilution
Percentage is more than five percent (5%) determined, as of any date, upon the
Administrative Agent's most recent field examination, such other percent as the
Administrative Agent may, at any time hereafter, determine is necessary to
protect its interests, such determination to be made in the Administrative
Agent's reasonable sole discretion. The term "Dilution Percentage" means the
average dilution percentage for the accounts receivable of the Borrower for the
period selected by the Administrative Agent based on its most recent field
examination. "Average dilution percentage" shall be calculated by the
Administrative Agent for the period by dividing the dilution of accounts
receivables occurring during such period by the gross sales for such period and
multiplying the resulting quotient by 100. For purposes of the foregoing,
"dilution" means any reduction in the value of accounts receivables caused by
returns, write-offs, discounts, credits, allowances, and/or any other non-cash
offsets asserted by account debtors having the effect of reducing the value of
the accounts receivable; provided reductions in the value of accounts receivable
arising from Allowance Accounts, customer markdowns, destroyed in field and
certain other sales allowances identified by the Administrative Agent will not
be considered in calculating dilution if sufficient information is supplied in
connection with the Administrative Agent's field examinations so that such
amounts may be included in the reserves established pursuant to clause (h) above
in a manner and in an amount satisfactory to the Administrative Agent in its
reasonable and sole discretion. The Administrative Agent shall also be entitled
to reduce the other advance percentages used in this definition of Borrowing
Base in its reasonable and sole discretion. The term "Appraised Liquidation
Percentage " means the percentage net liquidation value of inventory determined
on an orderly going-out-of-business-sale basis, net of all commissions,
associated costs, fees and expenses associated with such liquidation, as
determined from the most recent appraisal thereof performed by a credentialed
appraiser satisfactory to the Administrative Agent. The Borrowing Base will be
calculated without duplication and any items included in reserves, in the
calculation of the Dilution Percentage or in an ineligible category (a
"Borrowing Base Deduction") shall not also be included in any other Borrowing
Base Deduction. No Accounts or Inventory acquired in a Permitted Acquisition or
arising from a business acquired in a Permitted Acquisition shall be included in
the Borrowing Base unless and until the Administrative Agent shall be satisfied
that the manner of calculating the Borrowing Base as herein set forth is
appropriate for the assets and business acquired.
"Borrowing Base Certificate" means a certificate of the principal
financial officer of the Borrower, in substantially the form attached hereto as
Exhibit C having the blanks therein appropriately completed, setting forth in
reasonable detail the calculation of the Borrowing Base as of the date required
by Section 5.01(f).
"Capital Expenditures" shall mean, with respect to any Person, all
expenditures of such Person for assets which are or should be capitalized, and
the fair value of any Capitalized Lease.
"Capitalized Lease" shall mean any lease which is or should be
capitalized on the balance sheet of the lessee thereunder in conformity with the
GAAP.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 7
"Capital Stock" shall mean any and all shares, interests, rights to
purchase, participations or other equivalents of or interest in (however
designated) corporate stock.
"Capitalized Lease Obligations" shall mean, with respect to any
Person, the amount of the liability under all Capitalized Leases of such Person
as at any date, determined in accordance with GAAP.
"Cash Flow" has the meaning specified in Section 5.19.
"Change of Control" shall mean the occurrence of any of the
following: (i) the sale, lease, transfer, conveyance or other disposition (other
than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Borrower and its
Subsidiaries taken as a whole to any "person" (as such term is used in Section
13(d)(3) of the Exchange Act) other than the Principals or their Related
Parties, (as such terms are defined in the Indenture for the Senior Secured
Notes), (ii) the adoption of a plan relating to the liquidation or dissolution
of the Borrower, (iii) the consummation of any transaction or series of
transactions (including, without limitation, any merger or consolidation) the
result of which is that any "person" (as defined above) (other than the
Principals and their Related Parties) becomes the "beneficial owner" (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly
or indirectly, of (a) 35% or more of the voting Capital Interests (as such term
is defined in the Indenture for the Senior Secured Notes) of the Borrower and
(b) more of the voting Capital Interests of the Borrower than are, in the
aggregate, beneficially owned by the Principals and their Related Parties at the
time of such consummation, or (iv) the first day on which a majority of the
members of the Board of Directors of the Borrower are not Continuing Directors
(as such term is defined in the Indenture for the Senior Secured Notes). For
purposes of this definition, any transfer of an equity interest of an entity
that was formed for the purpose of acquiring voting Capital Interests of the
Borrower shall be deemed to be a transfer of such portion of such voting Capital
Interests as corresponds to the portion of the equity of such entity that has
been transferred.
"Collateral" shall have the meaning as set forth in the Security
Agreement.
"Collateral Agent" means Fleet National Bank in its capacity as the
collateral agent for the Administrative Agent and the Banks as provided by this
Agreement, or any successor in such capacity.
"Commitment Fee Rate" means the commitment fee rate (expressed in
basis points) set forth in the column below entitled "Commitment Fee Rate" and
opposite the Consolidated Total Debt/EBITDA Ratio set forth in the table below
that corresponds with the actual Consolidated Total Debt/EBITDA Ratio set forth
in the most recent Compliance Certificate:
============ ================================================= ==================================
TIER CONSOLIDATED TOTAL DEBT/EBITDA COMMITMENT FEE RATE
============ ================================================= ==================================
I Greater than 3.5 50
------------ ------------------------------------------------- ----------------------------------
II Less than 3.5 or equal to 3.5:1.0 37.5
============ ================================================= ==================================
The Commitment Fee Rate shall be determined by reference to Tier I for the
period from the Effective Date until the date that is the first business day of
the month following the day when the Compliance Certificate required in
connection with the annual audited financial statements for the fiscal year
ended January 31, 2003 is delivered. On such date, the Commitment Fee shall
change in accordance with the Consolidated Total Debt/EBITDA Ratio set forth
therein and the table set forth above. Thereafter, the Commitment Fee Rate shall
change effective commencing on the first business day of the month following the
date when a quarterly Compliance Certificate required by Section 5.01(c) is
delivered, such change to be made in accordance with the Consolidated Total
Debt/EBITDA Ratio set forth therein and the table set forth above; provided,
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 8
however, if any Compliance Certificate is not received by the date required by
Section 5.01(c), the Commitment Fee Rate shall revert to Tier I until delivery
of the next Compliance Certificate.
"Commitment" means, with respect to a Bank, the obligation of such
Bank to make advances of funds and purchase participation interests in Letters
of Credit in the aggregate principal or face amount at any time outstanding not
to exceed the amount set forth opposite such Bank's name under the column titled
"Commitment" on Schedule 1.01 hereto (or, in the case of an Assignee, in its
Assignment and Assumption Agreement), as such amount may be reduced from time to
time pursuant to Section 2.09 and adjusted to reflect assignments pursuant to
Section 9.06.
"Committed Exposure" means: (a) at any time of determination and with
respect to all the Banks, the sum of the following, without duplication: (i) the
aggregate amount of Loans then outstanding; plus (ii) the aggregate amount of
Letter of Credit Exposure; plus (iii) all interest, expenses, fees or other
amounts both accrued and owed to the Agents or the Banks under all Loan
Documents and (b) at any time of determination and when determined with respect
to a Bank, the sum of the following, without duplication: (i) the aggregate
amount of Loans held by such Bank then outstanding; (ii) the Bank's
participation or other interest in the Swingline Loans; (iii) such Bank's
participation or other interest in the Letter of Credit Exposure; plus (iv) all
interest, expenses, fees or other amounts both accrued and owed to such Bank
under all Loan Document. When the Committed Exposure of the Swingline Lender is
determined in its capacity as a Bank hereunder, its Applicable Percentage of the
Swingline Loans then outstanding shall be included instead of the total amount
of all Swingline Loans. When the Committed Exposure of the Issuing Bank is
determined in its capacity as a Bank hereunder, its Applicable Percentage of the
Letter of Credit Exposure then outstanding shall be included instead of the
total amount of all Letter of Credit Exposure.
"Compliance Certificate" means a certificate of an authorized
signatory of the Borrower, in substantially the form of Exhibit E or any other
form approved by the Administrative Agent, containing the information required
by Section 5.01(c).
"Consent and Subordination Agreement" means: (i) any consent and
subordination agreement which has been executed and delivered for the benefit of
the Collateral Agent and is in effect as of the Effective Date; and (ii) a
consent and subordination agreement substantially in the form of Exhibit D
hereto or such other form as the Administrative Agent may reasonably approve.
"Concentration Account" shall mean a deposit account established at
the Administrative Agent by the Borrower and controlled by the Administrative
Agent for the benefit of the Secured Parties in which all funds received through
the Lockbox Accounts shall be deposited.
"Consolidated EBITDA" means for any period, Consolidated Net Income
for such period, plus (i) the sum of (a) Consolidated Net Interest Expense, (b)
depreciation, amortization and other non-cash charges, (c) losses on asset
sales, exchanges, transfers or other dispositions, and (d) extraordinary or
other non-recurring losses or charges, (e) plus income tax expense, less (ii)
the sum of (a) gains on asset sales, exchanges, transfers or other dispositions,
(b) extraordinary or other non-recurring gains or credits, and (c) income
attributable to non-cash items or other non-cash credits, in each case to the
extent included in arriving at such net income (or loss) for such period and
determined in accordance with GAAP, provided, however, that for the purposes of
this definition, Borrower may add back the higher cost effect of the Arden
Inventory resulting in an add back of $15,461,000 for the fiscal quarter ending
April 27, 2002, $12,309,000 for the fiscal quarter ending July 27, 2002 and
$3,968,000 for the fiscal quarter ending October 26, 2002.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 9
"Consolidated Net Income" means, for any period, the consolidated net
income (or loss) of Borrower and its Consolidated Subsidiaries for such period.
"Consolidated Net Interest Expense" means for any fiscal period, the
cash interest expense of Borrower and its Consolidated Subsidiaries for such
fiscal period, determined on a consolidated basis in accordance with GAAP.
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which would be consolidated with those of the Borrower in
its consolidated financial statements if such statements were prepared as of
such date.
"Consolidated Total Debt" means at any date, the Indebtedness of the
Borrower and its Consolidated Subsidiaries, determined on a consolidated basis
at such date.
"Consolidated Total Debt/EBITDA Ratio" means, as of any fiscal
quarter end, the ratio of Consolidated Total Debt (less cash in excess of
$5,000,000) outstanding as of such fiscal quarter end to Consolidated EBITDA for
the four fiscal quarters then ended.
"Debt Service" has the meaning specified in Section 5.19.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Disbursement Account" means a disbursement account which the
Borrower may maintain with the Administrative Agent and designate as the
"disbursement account". The Borrower is not required to maintain a disbursement
account with the Administrative Agent.
"Distribution Agreements" means those Distribution Agreements set
forth in Schedule 4.15 attached hereto.
"Dividend" means, as to any Person, any declaration or payment of any
dividend or the making of any distribution, loan advance or investment on or
with respect to any shares of a Person's Capital Stock (other than dividends or
distributions payable solely in shares or other evidence of ownership of such
Person's Capital Stock).
"Dollars" and the sign "$" mean lawful money of the United States.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York, New York are authorized or
required by law to close.
"Domestic Lending Office" means, as to each Bank, its office located
at its address set forth in its Administrative Questionnaire (or identified in
its Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Bank may hereafter designate as its Domestic Lending Office by
notice to the Borrower and the Administrative Agent.
"Domestic Subsidiary" means a Subsidiary that is not a Foreign
Subsidiary.
"Effective Date" means the date this Agreement becomes effective in
accordance with Section 3.01.
"Election Date" has the meaning set forth in Section 2.06(b).
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 10
"Eligible Accounts Receivable" means the face amount of any of
Borrower's trade accounts receivable for goods sold and/or services rendered by
Borrower in the ordinary course of its business which have been invoiced on the
FFI Accounting System or on the Arden Accounting System in the normal course of
business and which satisfy each of the following requirements (unless waived by
all the Banks):
(i) the subject goods have been shipped or delivered to an
account debtor (a) on an absolute sale basis and not on consignment,
approval or a sale-or-return basis or subject to any other repurchase
or return agreement, or (b) on an open account basis, in either case
with no part of the subject goods having been returned, rejected,
lost or damaged;
(ii) the account is not evidenced by chattel paper or an
instrument of any kind, unless such chattel paper or instrument is in
the possession of the Collateral Agent, endorsed, if applicable,
payable to the order of the Collateral Agent;
(iii) the account debtor is not insolvent or the subject of
any bankruptcy or insolvency proceeding of any kind;
(iv) the account debtor is located in the United States or
Puerto Rico or if the account debtor is located outside of such
jurisdictions, the account debtor provides a letter of credit (with
terms satisfactory to the Administrative Agent) issued by a bank
acceptable to the Administrative Agent or a foreign credit insurance
(with terms satisfactory to the Administrative Agent) issued by a
Person acceptable to the Administrative Agent;
(v) the account is a valid, legally enforceable obligation
of the account debtor thereunder and is not subject to any offset
(other than discount for prompt payment consistent with past
practices of Borrower) or other defenses on the part of such account
debtor or to any claim on the part of such account debtor denying
liability thereunder;
(vi) the account is subject to no Lien, except for the
security interest in favor of the Collateral Agent, for the ratable
interest of the Administrative Agent and the Banks, under the Loan
Documents;
(vii) the invoice evidencing such account has not remained
unpaid for a period exceeding sixty (60) days after the due date or
one hundred twenty (120) days past the date of invoice;
(viii) to the extent the obligation is with an account
debtor that is the federal government or a political subdivision
thereof, Borrower has complied with the Federal Assignment of Claim
Acts of 1940, and any amendment thereto, with respect to such
obligation;
(ix) the account does not arise out of a transaction with
any Affiliate of Borrower or any directors, officers or employees of
Borrower and Borrower's Affiliates (excluding Seller and its
affiliates);
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 11
(x) no more than fifty percent (50%) of the aggregate
accounts receivable for the same account debtor shall have remained
unpaid for a period exceeding sixty (60) days after the due date;
(xi) the account is payable in Dollars; and
(xii) the account is not otherwise determined by the
Administrative Agent to be difficult to collect, uncollectible or
otherwise unacceptable for any reasons, irrespective of how many days
past due, as reasonably determined by the Administrative Agent, which
determination shall be final and binding.
The aggregate amount of the Eligible Accounts Receivable owed by an account
debtor or other Person to Borrower shall be reduced by the amount of all "contra
accounts" and other obligations owed by such Borrower to such account debtor or
other Person. The amount of the Eligible Accounts Receivable owed by an account
debtor or other Person shall be reduced by the amount thereof which is subject
to any setoff, discounts granted in connection with the settlement thereof,
credit, counterclaim, defense, dispute, recoupment, chargeback or other
adjustment If the aggregate amount of the accounts receivable due from a single
account debtor or other Person obligated thereon (other than Eckerd Drugs, Inc.,
JC Penney Corporation or Wal-Mart Inc.) exceeds an aggregate amount equal to
fifteen percent (15%) of the aggregate accounts receivable of Borrower at the
time of determination, the amount of the excess shall be subtracted from all
Eligible Accounts Receivable. The aggregate amount of the accounts receivable
due from each of Eckerd Drugs, Inc., JC Penney Corporation and Wal-Mart Inc.
which are eligible shall be included in Eligible Accounts Receivable without
limit as long as, with respect to each such company, its or its parent's credit
is rated BBB- or better by Standard & Poor's or Baa3 or better by ▇▇▇▇▇'▇
Investor Service.
"Eligible Arden Finished Goods Inventory" means any of Borrower's
finished goods that constitute part of the Eligible Inventory purchased in
connection with the Arden Acquisition and inventory purchased or manufactured on
an on-going basis that is tracked on the Arden Accounting System which satisfy
each of the following requirements (unless waived by all the Banks):
(i) the inventory is located at Borrower's principal place
of business or at another Approved Location in the United States or
Puerto Rico (or if not located at any Approved Location, then such
Inventory must be located at a location in the United States or
Puerto Rico disclosed pursuant to Section 5.01(g) and reserves for
third party claims relating to rent and other obligations in an
amount satisfactory to the Administrative Agent shall have been taken
with respect thereto) or is in-transit between Approved Locations;
(ii) the inventory does not constitute promotional
merchandise that will not be sold in the ordinary course of
Borrower's business;
(iii) the inventory does not constitute items that will be
used as a gift included with purchased merchandise in the ordinary
course of Borrower's business;
(iv) the inventory is not damaged or subject to any Lien,
except for the security interest in favor of the Collateral Agent,
for the ratable benefit of the Administrative Agent and the Banks,
under the Loan Documents;
(v) the inventory does not include samples, displays or
testers; and
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 12
(vi) such inventory is not subject to a licensing agreement
or a distribution agreement with Borrower or any of its Subsidiaries
that prohibits or restricts the Collateral Agent's right to liquidate
such inventory or to have the inventory repurchased by the licensor
or manufacturer other than in the same manner that Borrower may be
entitled to under the terms of such licensing or distribution
agreement.
Furthermore, if such inventory meets the requirements of subsections
(i) through (vi) but constitutes Slow Moving Inventory, twenty-five percent
(25%) of such inventory shall be excluded in calculating "Eligible Arden
Finished Goods Inventory".
"Eligible Arden Raw Materials Inventory" means any of Borrower's raw
materials and work in process that constitute a part of Eligible Inventory
purchased in connection with the Arden Acquisition or raw materials and
work-in-process purchased or manufactured on an on-going basis and that are
tracked on the Arden Accounting System which satisfy each of the following
requirements (unless waived by all Banks):
(i) the inventory is located at Borrower's principal place
of business or at another Approved Location in the United States or
Puerto Rico (or if not located at any Approved Location, then such
Inventory must be located at a location in the United States or
Puerto Rico disclosed pursuant to Section 5.01(g) and reserves for
third party claims relating to rent and other obligations in an
amount satisfactory to the Administrative Agent shall have been taken
with respect thereto) or is in-transit between Approved Locations;
(ii) such inventory is not subject to a licensing agreement
or a distribution agreement with Borrower or any of its Subsidiaries
that prohibits or restricts the Collateral Agent's right to liquidate
such inventory or to have the inventory repurchased by the licensor
or manufacturer other than in the same manner that Borrower may be
entitled to under the terms of such licensing or distribution
agreement;
(iii) the inventory is not damaged or subject to any Lien
other than the security interest in favor of the Collateral Agent,
for the ratable benefit of the Administrative Agent and the Banks,
under the Loan Documents; and
(iv) the inventory is not included on the Arden Accounting
System as any of (a) chemical or compounds in the process of being
mixed or any other items classified as Category I (as classified on
the Arden Accounting System) or (b) bulk formulations of creams or
any other items classified as Category B (as classified as such on
the Arden Accounting System).
Furthermore, if such inventory meets the requirements of subsections
(i) through (iv) but constitutes Slow Moving Inventory, twenty-five percent
(25%) of such inventory shall be excluded in calculating "Eligible Arden Raw
Materials Inventory".
"Eligible Finished Goods Inventory" means, as of any date of
determination, any of Borrower's finished goods that constitute part of the
Eligible Inventory which is tracked on the FFI Accounting System and which
satisfy each of the following requirements (unless waived by all the Banks):
(i) the inventory is located at Borrower's principal place
of business or at an Approved Location in the United States or Puerto
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 13
Rico (or if not located at any Approved Location, then such Inventory
must be located at a location in the United States or Puerto Rico
disclosed pursuant to Section 5.01(g) and reserves for third party
claims relating to rent and other obligations in an amount
satisfactory to the Administrative Agent shall have been taken with
respect thereto) or is in-transit between Approved Locations;
(ii) the inventory does not constitute promotional
merchandise that will not be sold in the ordinary course of
Borrower's business;
(iii) the inventory does not constitute items that will be
used as a gift included with purchased merchandise in the ordinary
course of Borrower's business;
(iv) the inventory is not damaged or subject to any Lien,
except for the security interest in favor of the Collateral Agent,
for the ratable benefit of the Administrative Agent and the Banks,
under the Loan Documents;
(v) the inventory does not include samples, displays or
testers; and
(vi) such inventory is not subject to a licensing agreement
or a distribution agreement with Borrower or any of its Subsidiaries
that prohibits or restricts the Collateral Agent's right to liquidate
such inventory or to have the inventory repurchased by the licensor
or manufacturer other than in the same manner that Borrower may be
entitled to under the terms of such licensing or distribution
agreement.
Furthermore, if such inventory meets the requirements of subsections
(i) through (vi) but constitutes Slow Moving Inventory, twenty-five percent
(25%) of such inventory shall be excluded in calculating "Eligible Finished
Goods Inventory".
"Eligible Gift Inventory" means any of Borrower's finished goods that
constitute part of the Eligible Inventory and are used as a gift given with
purchased merchandise in the ordinary course of Borrower's business or as
promotional merchandise in the ordinary course of business which satisfy each of
the following requirements (unless waived by all the Banks):
(i) the inventory is located at Borrower's principal place
of business or at an Approved Location in the United States or Puerto
Rico (or if not located at any Approved Location, then such Inventory
must be located at a location in the United States or Puerto Rico
disclosed pursuant to Section 5.01(g) and reserves for third party
claims relating to rent and other obligations in an amount
satisfactory to the Administrative Agent shall have been taken with
respect thereto) or is in-transit between Approved Locations;
(ii) the inventory is not damaged or subject to any Lien,
except for the security interest in favor of the Collateral Agent,
for the ratable benefit of the Administrative Agent and the Banks,
under the Loan Documents;
(iii) the inventory does not include samples, displays or
testers;
(iv) such inventory is not subject to a licensing agreement
or a distribution agreement with Borrower or any of its Subsidiaries
that prohibits or restricts the Collateral Agent's right to liquidate
such inventory or to have the inventory repurchased by the licensor
or manufacturer other than in the same manner that Borrower may be
entitled to under the terms of such licensing or distribution
agreement; and
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 14
(v) such inventory has been packaged for delivery to a
customer.
Furthermore, if such inventory meets the requirements of subsections
(i) through (v) but constitutes Slow Moving Inventory, twenty-five percent (25%)
of such inventory shall be excluded in calculating "Eligible Gift Inventory".
"Eligible Inventory" shall mean, as of any date of determination, the
Borrower's inventory of raw materials, work-in-process and finished goods
determined on a consolidated FIFO basis in accordance with GAAP which is in good
condition, meets all standards imposed by any governmental agency or department
or division thereof having regulatory authority over such goods, their use,
manufacture and/or sale, is currently usable or currently saleable in the normal
course of the Borrower's business, is not on consignment to or from any Person
and is not otherwise deemed by the Administrative Agent in its reasonable sole
discretion to be ineligible.
"Eligible Raw Materials Inventory" means, as of any date of
determination, any of Borrower's raw materials and work in process that
constitute a part of Eligible Inventory which is tracked on the FFI Accounting
System and which satisfy each of the following requirements (unless waived by
all the Banks):
(i) the inventory is located at Borrower's principal place
of business or at an Approved Location in the United States or Puerto
Rico (or if not located at any Approved Location, then such Inventory
must be located at a location in the United States or Puerto Rico
disclosed pursuant to Section 5.01(g) and reserves for third party
claims relating to rent and other obligations in an amount
satisfactory to the Administrative Agent shall have been taken with
respect thereto) or is in-transit between Approved Locations;
(ii) such inventory is not subject to a licensing agreement
or a distribution agreement with Borrower or any of its Subsidiaries
that prohibits or restricts the Collateral Agent's right to liquidate
such inventory or to have the inventory repurchased by the licensor
other than in the same manner that Borrower may be entitled to under
the terms of such licensing or distribution agreement; and
(iii) the inventory is not damaged or subject to any Lien
other than the security interest in favor of the Collateral Agent,
for the ratable benefit of the Administrative Agent and the Banks,
under the Loan Documents.
Furthermore, if such inventory meets the requirements of subsections
(i) through (iii) but constitutes Slow Moving Inventory, twenty-five percent
(25%) of such inventory shall be excluded in calculating "Eligible Raw Materials
Inventory".
"Environmental Laws" means any and all Federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements with
Governmental Authorities or other governmental restrictions binding upon the
Borrower or any of the Subsidiaries, as applicable, relating to the environment
or to emissions, discharges or releases of pollutants, contaminants, petroleum
or petroleum products, chemicals or industrial, toxic or hazardous substances or
wastes into the environment including, without limitation, ambient air, surface
water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, petroleum or petroleum products, chemicals
or industrial, toxic or hazardous substances or wastes or the clean-up or other
remediation thereof.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 15
"ERISA" means the Employee Retirement Income Security Act of 1974 and
the rules and regulations promulgated thereunder, as the same may from time to
time be amended and remain in effect.
"ERISA Group" means the Borrower, any Subsidiary and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Existing Letters of Credit" shall mean the letters of credit
originally issued by Fleet National Bank, in its capacity as Issuing Bank under
the terms of the Original Credit Agreement, which are outstanding on the
Effective Date and are listed on Schedule 1.01(a).
"Event of Default" shall have the meaning as set forth in Section
6.01.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day, provided that (i) if such day is not a Domestic
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day as so published on the
next succeeding Domestic Business Day, and (ii) if no such rate is so published
on such next succeeding Domestic Business Day, the Federal Funds Rate for such
day shall be the average rate quoted to the Administrative Agent (in its
individual capacity) on such day on such transactions as determined by the
Administrative Agent.
"FFI Accounting System" means the existing computer accounting
systems used by the Borrower before and after the Arden Acquisition.
"FIFO" means on a first in, first out basis as determined in
accordance with GAAP.
"Financing Transactions" means the execution and delivery of the Loan
Documents and the performance of the transactions contemplated by the Loan
Documents, including the borrowing of the Loans and the issuance of Letters of
Credit.
"Foreign Bank" means any Bank that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States, each State thereof and the District of
Columbia shall be deemed to constitute a single jurisdiction.
"Foreign Subsidiary" means any Subsidiary of the Borrower formed
under the laws of any jurisdiction other than the United States, its territories
or any political subdivision thereof substantially all of the assets of which
are located outside the United States or that conducts substantially all of its
business outside of the United States.
"GAAP" means generally accepted accounting principles consistently
applied.
"Governmental Authority" means any federal, state, local or foreign
government or political subdivision or any court or governmental agency,
authority, instrumentality or regulatory body.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 16
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Indebtedness
or other obligation of any other Person and, without limiting the generality of
the foregoing, any obligation, direct or indirect, contingent or otherwise, of
such Person (i) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness or other obligation (whether arising by virtue
of partnership arrangements, by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for the purpose of
assuring in any other manner the obligee of such Indebtedness or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part), provided that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Guarantee Agreement" means that certain Amended and Restated
Guarantee Agreement dated January 29, 2001, pursuant to which the Guarantors
unconditionally guarantee the full payment of the obligations described therein,
as the same may be amended, restated, supplemented or otherwise modified from
time to time, including, without limitation, any modification thereto which
joins any new Guarantor thereto.
"Guarantor" means each Person that is or becomes party to the
Guarantee Agreement as a Guarantor and their respective successors. As of the
Effective Date, DF Enterprises, Inc. a Delaware corporation, FD Management,
Inc., a Delaware corporation and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ International Holding, Inc.
(formerly known as FFI International, Inc.), a Delaware corporation, are the
Guarantors.
"Historical Inventory" means inventory on hand for which the Borrower
has indicated no planned usage, which includes, without limitation, old
promotional items and discontinued items.
"Indebtedness" shall mean, with respect to any Person, all items
which in accordance with GAAP should be included as liabilities on the balance
sheet of such Person as at the date as of which Indebtedness is to be determined
(other than accruals, deferred revenue and deferred taxes), and, in any event,
shall include the following, without limitation or duplication: (a) all
obligations of such Person representing borrowed money, including, without
limitation, any obligations evidenced by notes, bonds, debentures or similar
obligations; (b) any obligation for the deferred purchase price of property or
services or an obligation under a conditional sale or other title retention
agreement, except trade accounts payable arising in the ordinary course of
business; (c) Capitalized Lease Obligations; (d) all obligations of such Person
relating to Sale Lease-Back Transactions and securitization transactions; (e)
all obligations secured by any Lien to which any property owned or held by such
Person is subject, whether or not the obligations secured thereby shall have
been assumed, (f) all obligations of others Guaranteed by such Person; (g) all
obligations with respect to any letters of credit issued on behalf of such
Person to any beneficiary or with respect to which such Person has any
reimbursement obligations; and (h) all obligations of such Person, contingent or
otherwise, for the payment of money under any noncompete, consulting or similar
agreement entered into with the seller of a target in an Acquisition or any
other similar arrangements but only to the extent, in each case under this
clause (h), that the arrangement provides for the deferred payment of the
purchase price for an Acquisition permitted hereby or an Acquisition consummated
prior to the date hereof.
"Indentures" shall mean collectively, the Indenture dated as of May
13, 1997, between the Borrower and Marine Midland Bank, as trustee relating to
the 10 3/8% Senior Notes due 2007, the Indenture dated April 27, 1998, between
the Borrower and Marine Midland Bank, as trustee, relating to the 10 3/8% Senior
Notes due 2007, the Indenture dated as of January 23, 2001 among the Borrower,
certain other parties and HSBC Bank USA as trustee relating to the 11 3/4%
Senior Secured Notes due 2011. To the extent that any terms defined in an
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 17
Indenture are incorporated herein as therein defined, such definitions shall be
incorporated herein as set forth in such Indenture on the date hereof, without
giving effect to any amendment or other modification thereto unless modified for
purposes of such incorporation, with the consent of the Required Banks.
"Intercreditor Agreement" means that certain Intercreditor Agreement
dated January 23, 2001 among the Collateral Agent, the Borrower and HSBC Bank
USA, as trustee for the holders of the Senior Secured Notes, as amended,
restated, supplemented or otherwise modified from time to time.
"Interest Period" means with respect to each LIBOR Loan, the period
commencing on the date specified in the applicable Notice of Borrowing or Notice
of Interest Rate Election and ending one, two, three or six months thereafter
(or nine or twelve months, if acceptable to all Banks), as the Borrower may
elect in such Notice of Borrowing or Notice of Interest Rate Election; provided
that:
(a) any Interest Period which would otherwise end on a day
which is not a LIBOR Business Day shall be extended to the next
succeeding LIBOR Business Day unless such LIBOR Business Day falls in
another calendar month, in which case such Interest Period shall end
on the next preceding LIBOR Business Day;
(b) any Interest Period which begins on the last LIBOR
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of
such Interest Period) shall, subject to clause (c) below, end on the
last LIBOR Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"Inventory" means all inventory (as such term is defined in the
Uniform Commercial Code in effect in the State of New York (as the same may be
amended or modified from time to time)), whether now owned or hereafter
acquired.
"Investment" means any investment in any Person, whether by means of
share or other equity interest purchase, capital contribution, loan, advance,
time deposit or otherwise.
"Issuing Bank" means JPMorgan Chase Bank or with respect to the
Existing Letters of Credit only, Fleet National Bank, in each case in their
respective capacities as the issuers of Letters of Credit, and their respective
successors in such capacity. JPMorgan Chase Bank may, in its discretion, arrange
for one or more Letters of Credit to be issued by its affiliates, in which case
the term "Issuing Bank" shall include any such affiliate with respect to Letters
of Credit issued by such affiliate.
"Letter of Credit" means any letter of credit issued pursuant to
Section 2.15 and any Existing Letter of Credit.
"Letter of Credit Disbursement" means a payment or disbursement made
by an Issuing Bank pursuant to a Letter of Credit.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 18
"Letter of Credit Documents" shall mean a letter of credit
application, any issued Letter of Credit and any other application or agreement
in the form customarily used by the Issuing Bank for or in connection with the
issuance of letters of credit.
"Letter of Credit Exposure" means at any time the sum of (i) the
aggregate undrawn amount of all outstanding Letters of Credit plus (ii) the
aggregate amount of all Letter of Credit Disbursements not yet reimbursed by the
Borrower as provided in Section 2.15. The Letter of Credit Exposure shall be
expressed in Dollars; provided, however, the aggregate of subsection (i) and
(ii) shall not be permitted to exceed $25,000,000. The Letter of Credit Exposure
of any Bank at any time shall mean its Applicable Percentage of the aggregate
Letter of Credit Exposure at such time.
"LIBOR Base Rate" means with respect to each Interest Period for a
LIBOR Loan, the rate appearing on Page 3750 of the Telerate Service (or on any
successor or substitute page of such Service, or any successor to or substitute
for such Service, providing rate quotations comparable to those currently
provided on such page of such Service, as determined by the Administrative Agent
from time to time for purposes of providing quotations of interest rates
applicable to Dollar deposits in the London interbank market) at approximately
11:00 a.m., London time, three LIBOR Business Days prior to the commencement of
such Interest Period, as the rate for dollar deposits with a maturity comparable
to such Interest Period. In the event that such rate is not available at such
time for any reason, then the "LIBOR Rate" with respect to such Libor Loan and
Interest Period shall be the rate at which Dollar deposits of $5,000,000 and for
a maturity comparable to such Interest Period are offered by the principal
London office of the Administrative Agent in immediately available funds in the
London interbank market at approximately 11:00 a.m., London time, three LIBOR
Business Days prior to the commencement of such Interest Period. The
Administrative Agent shall give notice to the Borrower of the LIBOR Rate as
determined for each LIBOR Loan and such notice shall be conclusive and binding,
absent manifest error.
"LIBOR Borrowing" means any Loan or portion thereof subject to a
LIBOR Base Rate.
"LIBOR Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
Dollar deposits) in London.
"LIBOR Lending Office" means, as to each Bank, its office, branch or
affiliate located at its address set forth in its Administrative Questionnaire
(or identified in its Administrative Questionnaire as its LIBOR Lending Office)
or such other office, branch or affiliate of such Bank as it may hereafter
designate as its LIBOR Lending Office by notice to the Borrower and the
Administrative Agent.
"LIBOR Loan" means at any time a Loan outstanding hereunder which
bears interest at such time at a rate based on the LIBOR Rate pursuant to a
Notice of Borrowing or Notice of Interest Rate Election.
"LIBOR Rate" means with respect to each day during each Interest
Period pertaining to a LIBOR Loan, a rate per annum determined for such day in
accordance with the following formula (rounded upward, if necessary, to the
nearest 1/32nd of 1%):
LIBOR Base Rate
---------------------------------------------------
1.00 - LIBOR Reserve Requirements
"LIBOR Reserve Requirements" means, for any day as applied to a LIBOR
Loan, the aggregate (without duplication) of the maximum rates (expressed as a
decimal fraction) of reserve requirements in effect on such day (including
basic, supplemental, marginal and emergency reserves under any regulations of
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 19
the Board of Governors of the Federal Reserve System or other Governmental
Authority having jurisdiction with respect thereto) dealing with reserve
requirements prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of such Board) maintained by a member
bank of the Federal Reserve System" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
LIBOR Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any bank to United
States residents).
"License Agreements" means those license agreements identified as
such in Schedule 4.15 attached hereto which Schedule shall be amended from time
to time to reflect new licensing agreements.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, or any other type of
preferential arrangement that has the practical effect of a security interest,
in respect of such asset. For the purposes of this Agreement, the Borrower or
any Subsidiary shall be deemed to own subject to a Lien any asset which it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such asset.
"Loan" means advances made under Article 2 of this Agreement and
"Loans" made under Article 2 of the Original Credit Agreement which are
outstanding as of the Effective Date.
"Loan Documents" means this Agreement, the Guarantee Agreement, the
Security Agreement, the Notes, the Intercreditor Agreement, and each other
instrument, agreement, certificate or other documentation referred to herein or
contemplated hereby, as the same may be amended or otherwise modified from time
to time.
"Lockbox Accounts" shall mean the lockbox accounts established from
time to time pursuant to the Lockbox Agreements in which all funds received
pursuant to the Lockbox Agreements shall be deposited.
"Lockbox Agreements" shall mean any lockbox or other agreement
entered into by Borrower or any Guarantor with the Administrative Agent, the
Collateral Agent, any Bank or any other institution acceptable to the
Administrative Agent which has entered into a control agreement with the
Administrative Agent pursuant to which a lockbox and deposit account shall be
established into which payments on the Borrower's and the Subsidiaries' Accounts
and other Collateral shall be sent and deposited, as the same may be amended or
otherwise modified.
"Margin Stock" has the meaning given to such term under Regulation U.
"Material Adverse Effect" means (i) a materially adverse effect on
the business, operations or financial condition of the Borrower and its
Subsidiaries considered as a whole, (ii) material impairment of the ability of
the Borrower or any Subsidiary to perform any of its obligations under any Loan
Document to which it is or will be a party, or (iii) material impairment of the
rights of or benefits available to the Administrative Agent, the Collateral
Agent or the Banks under any Loan Document.
"Material Debt" means Indebtedness (other than the Notes) of the
Borrower and/or one or more of its Subsidiaries, arising in one or more related
or unrelated transactions, in an aggregate principal amount equal to or
exceeding $5,000,000.
"Material Subsidiary" means a Subsidiary of the Borrower that, as of
the time of determination of whether such Subsidiary is a "Material Subsidiary",
accounted on a consolidated basis for five percent (5%) or more of the total
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 20
sales of the Borrower and its Consolidated Subsidiaries for the most recent four
fiscal quarters or accounted on a consolidated basis for five percent (5%) or
more of the total assets of the Borrower and its Consolidated Subsidiaries as of
the most recent date for which a consolidated balance sheet of the Borrower has
been delivered to the Administrative Agent pursuant to Section 5.01(a) or (b).
"Mortgage Notes" means those certain Mortgage Notes dated as of June
5, 1996 issued by the Borrower in favor of Westmark Mortgage Corp. No. 2 in the
original principal amount of $5,500,000, with respect to the real property
located at ▇▇▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
"Multiemployer Plan" means at any time an employee pension benefit
plan within the meaning of Section 4001(a)(3) of ERISA to which any member of
the ERISA Group is then making or accruing an obligation to make contributions
or has within the preceding five plan years made contributions, including for
these purposes any Person which ceased to be a member of the ERISA Group during
such five year period.
"Net Proceeds" means gross proceeds received by the Borrower less
customary fees and expenses associated with the transactions, including
reasonable banking, legal and accounting fees and less income taxes payable by
the Borrower as a result of such transaction less, with respect to asset sales,
the amount required to be applied to the repayment of Indebtedness secured
thereby.
"Note" means a promissory note of the Borrower substantially in the
form of Exhibit A hereto, evidencing the obligation of the Borrower to repay
Loans made to it, and "Notes" means any or all of such promissory notes issued
hereunder.
"Notice of Borrowing" has the meaning set forth in Section 2.02.
"Notice of Interest Rate Election" has the meaning set forth in
Section 2.06.
"Obligations" has the meaning set forth in the Guarantee Agreement.
"Parent" means, with respect to any Bank, any Person controlling such
Bank.
"Participant" has the meaning set forth in Section 9.06.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Acquisition" means an Acquisition in which each of the
following conditions are satisfied:
(i) No Default then exists or would arise from the
consummation of such Acquisition.
(ii) Such Acquisition shall have been approved by the Board
of Directors of the Person (or similar governing body if such Person
is not a corporation) which is the subject of such Acquisition and
such Person shall not have announced that it will oppose such
Acquisition or shall not have commenced any action which alleges that
such Acquisition will violate applicable law.
(iii) The Borrower shall have furnished the Administrative
Agent prior notice of such intended Acquisition immediately following
approval by its Board of Directors and shall have furnished the
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 21
Administrative Agent with such information regarding the proposed
acquisition as the Administrative Agent reasonably requested so long
as such information is readily available.
(iv) Any assets acquired shall be utilized in, and if the
Acquisition involves a merger, consolidation or stock acquisition,
the Person which is the subject of such Acquisition shall be engaged
in the same general type of business as now conducted by the Borrower
or its Subsidiaries.
(v) The total consideration paid for all such Acquisitions
after the effective date of the Original Credit Agreement shall not
exceed for any one Acquisition, $15,000,000 or in the aggregate for
all Acquisitions consummated after such date, $25,000,000.
(vi) The ratio of pro forma Cash Flow to pro forma Debt
Service is more than 1.00 to 1.00, computed in each case: (A) for the
Borrower and its Consolidated Subsidiaries on a consolidated basis,
(B) in accordance with GAAP; (C) as of the end of the most recently
ended fiscal quarter prior to the date of the proposed Acquisition
for the four fiscal quarters then ended; (D) as if the Acquisition
occurred on the first day of such period; and (E) including in Cash
Flow and Debt Service in a manner acceptable to the Administrative
Agent, the Cash Flow and Debt Service of the Person to be acquired or
attributable to the assets to be acquired; and
(vii) No sooner than five days prior to the date of the
closing of the proposed Acquisition, the Borrower shall have
delivered to the Administrative Agent a certificate which shall
certify compliance with the forgoing clauses (i) through (vi) and
shall show in reasonable detail the calculation required by clauses
(v) through (vi).
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 22
"Permitted Indebtedness" means (i) any Borrowings made hereunder,
(ii) the Senior Notes, (iii) the Mortgage Notes, (iv) up to $15,000,000 of other
subordinated indebtedness or preferred stock existing as of the effective date
of the Original Credit Agreement, (v) the Seller Preferred, (vi) the Senior
Secured Notes and any guarantees thereunder, (vii) the intercompany Indebtedness
incurred in connection with the Arden Acquisition described on Schedule 5.09
(the "Acquisition Indebtedness"), (viii) no more than $10,000,000 (in the
aggregate) of Purchase Money Indebtedness outstanding at any time, (ix) up to
$35,000,000 (in the aggregate) of Indebtedness (in addition to the Acquisition
Indebtedness) outstanding at any time of Subsidiaries which are Foreign
Subsidiaries which, if secured, is secured only by accounts receivable and
inventory of such Subsidiaries, (x) any other unsecured indebtedness in an
aggregate amount of no more than $15,000,000 outstanding at any time, which
shall be on such terms and conditions as are satisfactory to the Administrative
Agent in all respects, (xi) any refinancings of any of the above, which shall be
on such terms and conditions as are satisfactory to the Administrative Agent in
all respects, or (xii) intercompany Indebtedness (in addition to the Acquisition
Indebtedness) between or among the Borrower or the Guarantors, as lenders, and
any Foreign Subsidiary, as a borrower, which when the aggregate outstanding
amount thereof is aggregated with the amounts committed or outstanding
(whichever is greater) under clause (ix) above and the aggregate amount of any
Permitted Investment made pursuant to Section 5.09(j) shall not exceed
$50,000,000 in the aggregate, provided, that, after giving effect to such
intercompany Indebtedness, the Borrower shall have Borrowing Availability under
this Agreement of at least $15,000,000 and provided, further, any committed or
outstanding amounts of Indebtedness under clause (ix) above (whichever is
greater) shall permanently reduce dollar-for-dollar the amount of intercompany
Indebtedness permitted under this clause (xii).
"Permitted Refinancing" means Indebtedness incurred in any
refinancing of any existing Indebtedness (other than the Borrowings hereunder);
provided that such refinancing Indebtedness has, as compared to such existing
Indebtedness, (a) an equal or greater weighted-average life, (b) final maturity
date that is the same or later, (c) a right of payment that is subordinate to or
pari passu with such existing Indebtedness, (d) terms and conditions (including
those described in clauses (a) through (c)), taken as a whole, no less favorable
to the Banks and (e) no collateral securing the payment thereof other than the
collateral which secured the payment of the related existing Indebtedness.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
Governmental Authority.
"Plan" means at any time an employee pension benefit plan (other than
a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"Primary Licensing Agreement" means the Licensing Agreement between
The ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Cosmetics Company and ▇▇▇▇▇▇▇▇▇▇▇ Ponds, Inc. dated
February 14, 1986, as amended January 26, 1989, March 20, 1990, June 28, 1990,
August 3, 1999, October 26, 2000 and July 26, 2001.
"Purchase Money Indebtedness" means, with respect to any Person,
Indebtedness of such Person incurred to acquire assets in the ordinary course of
such Person's business, which Indebtedness is secured by purchase money liens or
other liens of a conditional vendor; provided, however, that the Indebtedness
secured thereby shall not exceed the cost thereof and provided further that such
Indebtedness shall not otherwise be prohibited by the terms of this Agreement.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 23
"Purchased Assets" has the meaning ascribed to it in the Acquisition
Agreement.
"Register" has the meaning set forth in Section 9.06.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Related Parties" means, with respect to any specified Person, such
Person's affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's affiliates.
"Required Banks" means at any time Banks having more than fifty
percent (50%) of the Commitments or, if the Commitments shall have been
terminated, Banks with Committed Exposure of more than fifty percent (50%) of
the aggregate Committed Exposure.
"Restricted Payment" means (i) any dividend or other distribution on
any shares of the capital stock of the Borrower or any Subsidiary (except
dividends payable solely in shares of its capital stock) or (ii) any payment on
account of the purchase, redemption, retirement or acquisition of (a) any shares
of the capital stock of the Borrower or any Subsidiary or (b) any option,
warrant or other right to acquire shares of the capital stock of the Borrower or
any Subsidiary.
"Revolving Credit Period" means the period from and including the
Effective Date to, but excluding, the Termination Date.
"Sale and Lease-Back Transaction" means any arrangement, entered into
by the Borrower or a Subsidiary, directly or indirectly, with any Person whereby
it shall sell or transfer any asset, real or personal, whether now owned or
hereafter acquired, and thereafter rent or lease such asset.
"Security Agreement" means that certain Amended and Restated Security
Agreement dated January 29, 2001 between the Collateral Agent and the Borrower,
as the same has been and may be further amended, restated, supplemented or
otherwise modified from time to time.
"Seller" means Conopco, Inc., a New York corporation.
"Senior Notes" means those certain Senior 10 3/8% Notes of the
Borrower in the amount of $155,000,000 and which mature on May 15, 2007.
"Senior Secured Notes" means those certain 11 3/4% senior secured
notes due 2010 issued by the Borrower in the amount of $160,000,000.
"Slow Moving Inventory" means (i) as to inventory tracked on the
Arden Accounting System, Historical Inventory, Active No Requirement Inventory
and Active Excess Inventory, and (ii) as to inventory tracked on the FFI
Accounting System, inventory on hand that is in excess of Borrower's projected
sales for the next twelve months.
"Subsidiary" means any corporation or other entity now existing or
hereafter formed of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors or other
persons performing similar functions are at the time directly or indirectly
owned by the Borrower.
"Sublicense Agreement" means any and all Sublicense Agreements
executed by the Borrower or its Subsidiaries (as applicable) in favor of the
Collateral Agent, pursuant to which the Borrower assigns and sublicenses to the
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 24
Collateral Agent, for the benefit of the Administrative Agent and the Banks, any
and all rights of the Borrower in and to the License Agreements.
"Swap Agreement" means any agreement with respect to any swap,
forward, future or derivative transaction or option or similar agreement
involving, or settled by reference to, one or more rates, currencies,
commodities, equity or debt instruments or securities, or economic, financial or
pricing indices or measures of economic, financial or pricing risk or value or
any similar transaction or any combination of these transactions; provided that
no phantom stock or similar plan providing for payments only on account of
services provided by current or former directors, officers, employees or
consultants of the Borrower or its Subsidiaries shall be a Swap Agreement.
"Swingline Exposure" means at any time the aggregate principal amount
of all Swingline Loans outstanding at such time. The Swingline Exposure of a
Bank at any time shall mean its Applicable Percentage of the Swingline Exposure
at such time.
"Swingline Lender" means JPMorgan Chase Bank, in its capacity as the
lender of Swingline Loans hereunder, and its successors in such capacity or any
Swingline Lender that for purposes of Section 2.03, is a Swingline Lender.
"Swingline Limit" means $15,000,000 or such other amount as may be
established from time to time by the Swingline Lender.
"Swingline Loan" means an advance made by the Swingline Lender
pursuant to Section 2.03.
"Termination Date" means January 29, 2006.
"Total Availability" has the meaning set forth in Section 2.01(c).
"Total Commitments" means the aggregate maximum principal amount of
the Commitments of the Banks.
"Type" has the meaning set forth in Section 1.03.
"Unfunded Liabilities" means, with respect to any Plan at any time,
the amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
"United States" means the United States of America, including the
States and the District of Columbia, but excluding its territories and
possessions.
Section 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with United
States generally accepted accounting principles as in effect from time to time,
applied on a basis consistent (except for changes concurred in by the Borrower's
independent public accountants) with the most recent audited consolidated
financial statements of the Borrower and its Consolidated Subsidiaries delivered
to the Banks prior to the Effective Date.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 25
Section 1.03. Types of Borrowings. Borrowings and Loans hereunder are
distinguished by "Type". The Type of a Loan refers to whether such Loan is a
Base Rate Loan, a LIBOR Loan or a Swingline Loan. The term "Borrowing" denotes
the aggregation of Loans of one or more Banks to be made to the Borrower
pursuant to Article II on a single date and for a single Interest Period (if
applicable). Borrowings are classified for purposes of this Agreement either by
reference to the pricing of Loans comprising such Borrowing (e.g., a "LIBOR
Borrowing") or by reference to the provisions of Article II under which
participation therein is determined.
ARTICLE II
The Credits
-----------
Section 2.01. Commitments to Lend.
(a) Loans. During the Revolving Credit Period each Bank severally
agrees, on the terms and conditions set forth in this Agreement, to make
advances to the Borrower from time to time in amounts that will not result in
(i) such Bank's Committed Exposure at any time exceeding its Commitment, or (ii)
the Committed Exposure at any time exceeding the Total Availability. Within the
foregoing limits, the Borrower may borrow under this subsection, repay (subject
to the limitations of Section 2.13), or to the extent permitted by Section 2.11,
prepay Loans and reborrow at any time during the Revolving Credit Period under
this subsection (a). All Loans shall be made in Dollars.
(b) Borrowings Ratable. Each Borrowing under this Section 2.01 shall
be made from the Banks in proportion to their respective Commitments.
(c) Total Availability.
(i) The Total Availability shall be equal to the lesser of:
(x) the Borrowing Base as in effect from time to
time, or
(y) $200,000,000.
(ii) The Borrowing Base shall be adjusted upon the Administrative
Agent's review and acceptance of (i) each Borrowing Base Certificate submitted
by the Borrower or (ii) any additional information obtained by the
Administrative Agent (including any Notice of Borrowing or updated Borrowing
Base Certificates) relating to the determination of Eligible Accounts Receivable
and Eligible Inventory.
Section 2.02. Notice of Borrowings.
(i) Formal Notice. Borrower shall give the
Administrative Agent telephone notice followed by written confirmation ("Notice
of Borrowing") not later than 11:00 a.m. (New York, New York time) on (a) the
date of any Base Rate Borrowing (other than a Swingline Loan which is governed
by Section 2.03 hereof) or (b) three (3) LIBOR Business Days before any LIBOR
Borrowing, specifying:
(A) the date of such Borrowing, which shall be
a Domestic Business Day in the case of a Base Rate Borrowing or a LIBOR Business
Day in the case of a LIBOR Borrowing;
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 26
(B) the aggregate amount of such Borrowing
(which must be in an amount such that each Bank's Applicable Percentage thereof
shall, at a minimum, be $500,000 or a larger multiple of $100,000, except that
any Borrowing may be in an aggregate amount equal to the excess of the Total
Availability over the Committed Exposure);
(C) whether the Loans comprising such Borrowing
are to be Base Rate Loans or LIBOR Loans; and
(D) in the case of a LIBOR Borrowing, the
duration of the Interest Period applicable thereto, subject to the provisions of
the definition of Interest Period.
(ii) Automatic Borrowing. No notice of a request for a
Loan in accordance with Section 2.02 or Section 2.03 hereof shall be required to
be presented by Borrower to the Administrative Agent: (A) if no Default exists,
and a check, checks or other debit shall be presented for payment against the
Disbursement Account on a Business Day when funds are not otherwise available
therein to honor such debits or (B) when any Obligation is due hereunder. In
either such event, the Administrative Agent shall without Borrower's or any
Bank's consent (in the case of clause (B)), promptly advise the Banks of the
amount of the Loans or shall advise the Swingline Lender of the amount of
Swingline Loans, in each case as is necessary (x) to be credited to the
Disbursement Account on such day to permit such debits to be honored provided no
Default exists or (y) to pay the amount of the Obligation due and unpaid. Not
later than 3:00 p.m. on any day the Banks are advised of a Loan under this
Section 2.02(ii), each Bank will make available the amount of the Loan to be
made by it on such date to the Administrative Agent in immediately available
funds, for the account of the Borrower. However, if the Swingline Lender is
advised of such amount, the Swingline Lender will make available the amount of
the Swingline Loan to be made by it on such date to the Administrative Agent in
immediately available funds, for the account of the Borrower not later than 3:00
p.m. on such date. The amounts so received by the Administrative Agent, shall,
subject to the terms and conditions of this Agreement, be made available to the
Borrower by crediting the same to the Disbursement Account or by utilizing the
same to pay the Obligations, as applicable. Loans made under this Section
2.02(ii) shall be made as Base Rate Loans.
Section 2.03. Singline Loans.
(a) Commitment.
(i) Swingline Loans. Subject to the terms and conditions
of this Agreement, the Swingline Lender agrees to make one or more advances to
the Borrower from time to time from and including the Effective Date to but
excluding the Termination Date in an aggregate principal amount at any time
outstanding up to but not exceeding the Swingline Limit; provided, however,
except as permitted by Section 2.03(a)(ii): (A) the Committed Exposure shall
never exceed the Total Availability and (B) the Committed Exposure applicable to
a Bank (including the Swingline Lender as a Bank) shall never exceed such Bank's
Commitment. Subject to the foregoing limitations, and the other terms and
provisions of this Agreement, the Borrower may borrow, prepay, and reborrow
hereunder the amount of the Swingline Limit. All Swingline Loans shall be made
in Dollars and shall consist only of Base Rate Loans. The Swingline Lender shall
make each Swingline Loan available to the Borrower by means of a credit to the
Disbursement Account or by wire transfer to such third party as the Borrower may
direct.
(ii) Permitted Overadvances. The Swingline Lender may
extend Swingline Loans even if after giving effect thereto the Committed
Exposure exceeds the Total Availability (each such Swingline Loan herein an
"Overadvance Loan") if it determines to do so in its discretion (the Swingline
Lender however having no obligation to do so) and the following conditions are
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 27
satisfied as of the date when the Overadvance Loan is made: (A) the aggregate
amount by which the Committed Exposure exceeds the Total Availability does not
at any time exceed five percent (5%) of the total amount of the Commitments of
all Banks (such aggregate amount, herein the "Overadvance"); (B) the Committed
Exposure shall at no time exceed the aggregate amount of the Commitments; (C) no
other Overadvance Loan had been outstanding for more than forty-five (45)
consecutive days; (D) no other Overadvance Loan had been made within the last
one hundred and eighty days (180); and (E) the applicable Overadvance results
from the payment by the Swingline Lender of any amounts required to maintain,
protect or realize upon the Collateral or to prevent a cessation of business by
the Borrower or any of the Subsidiaries. The fact that the Swingline Lender may
make an Overadvance Loan or an Overadvance may exist, shall not constitute a
waiver of the rights and remedies of the Administrative Agent and the Banks
under this Agreement and the Administrative Agent and the Banks, may at any time
require the Borrower's strict compliance with this Agreement, including without
limitation, the provisions of Section 2.11(b)(i). The terms of this Section
2.03(a)(ii) are provided to facilitate the administration of the facility
contemplated hereby as among the Banks. This Section 2.03(a)(ii) shall not give
the Borrower any substantive rights against the Swingline Lender or any other
Bank and is for the sole benefit of the Administrative Agent and the Banks.
(iii) Bank Participation. On the date a Swingline Loan
is made by the Swingline Lender (including, without limitation, any Swingline
Loan that is an Overadvance Loan made in accordance with clause (ii) immediately
above), the Swingline Lender shall be deemed without further action by any party
hereto, to have sold to each Bank, and each Bank shall be deemed, without
further action by any party hereto, to have purchased from the Swingline Lender
a risk participation to the extent of such Bank's Applicable Percentage in the
Swingline Loan so made, such participation to be funded in accordance with
clause (c) of this Section 2.03.
(b) Evidence of Swingline Loans. The Swingline Loans made by the
Swingline Lender shall be evidenced by this Agreement.
(c) Repayment of Swingline Loans; Funding of Participation. The
Borrower promises to pay to the order of the Swingline Lender for its own
account the outstanding principal amount of each Swingline Loan on the earlier
of (i) the Termination Date, (ii) the date which is seven (7) days after the
Swingline Loan is made or (iii) the date after a Swingline Loan is made when any
other Loan is made pursuant to a formal Notice of Borrowing under Section 2.02
(the earlier of such date with respect to a Swingline Loan herein the "Swingline
Maturity"). Subject to the other terms and conditions of this Agreement,
Borrower may repay a Swingline Loan on its Swingline Maturity under clause (ii)
above or at any time prior thereto by requesting another Loan in accordance with
the terms hereof and with the proceeds of such other Loan payable to the
Swingline Lender for its own account. The Swingline Lender, at any time in its
sole and absolute discretion and whether or not a Swingline Maturity shall have
occurred, may require that each Bank fund its participation in the then
outstanding principal amount of all Swingline Loans (including, without
limitation, any Swingline Loan made as an Overadvance Loan in accordance with
Section 2.03(a)(iii)) by giving each Bank notice thereof. Additionally, if the
Borrower shall not have repaid a Swingline Loan by 1:00 p.m. (New York City
time) on the corresponding Swingline Maturity, the Swingline Lender will notify
each Bank of the aggregate principal amount of the Swingline Loan which has not
been repaid. Upon the giving of any notice by the Swingline Lender under either
of the preceding two sentences, each Bank shall make available to the Swingline
Lender in immediately available funds, an amount equal to its Applicable
Percentage of the aggregate principal amount of Swingline Loan or Swingline
Loans subject to such notice by not later than 3:00 p.m. (New York City time) on
the date such notice is received if such notice is received by 1:00 p.m. (New
York City time) or by 11:00 a.m. (New York City time) on the next Domestic
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 28
Business Day, if such notice is received after 1:00 p.m. (New York City time),
whether or not the conditions to a Loan under Article III are satisfied. Amounts
funded by a Bank under this Section 2.03(c) shall be Base Rate Loans.
(d) Participation Obligations Absolute; Failure to Fund
Participation. The obligations of a Bank to fund its participation in the
Swingline Loans in accordance with the terms hereof shall be absolute,
unconditional, and irrevocable and shall be performed strictly in accordance
with the terms of the Loan Documents under all circumstances whatsoever,
including without limitation, the following circumstances: (a) any lack of
validity of any Loan Document; (b) the occurrence of any Default; (c) the
existence of any claim, set-off, counterclaim, defenses, or other rights which
such Bank, Borrower, any Guarantor, or any other Person may have; (d) the
occurrence of any event that has or could reasonably be expected to have a
Material Adverse Effect; (e) the failure of any condition to a Loan under
Article III to be satisfied; (f) the fact that after giving effect to the
funding of the participation the Committed Exposure may exceed the Borrowing
Base; (g) the fact that the Swingline Loan is an Overadvance Loan made in
accordance with Section 2.03(a)(iii); or (h) any other circumstance whatsoever,
whether or not similar to any of the foregoing. If a Bank fails to fund its
participation in a Swingline Loan as required hereby, such Bank shall, subject
to the foregoing proviso, remain obligated to pay to the Swingline Lender the
amount it failed to fund on demand together with interest thereon in respect of
the period commencing on the date such amount should have been funded until the
date the amount was actually funded at a rate per annum equal to the Federal
Funds Effective Rate for such period and the Administrative Agent shall be
entitled to offset against any and all sums to be paid to such Bank hereunder
the amount due under this sentence.
Section 2.04. Notice to Banks; Funding of Loans.
(a) Upon receipt of a Notice of Borrowing, the Administrative Agent
shall promptly notify each Bank of the contents thereof and of such Bank's
Applicable Percentage (if any) of such Borrowing and such Notice of Borrowing
shall not thereafter be revocable by the Borrower.
(b) Not later than 1:00 p.m. (New York City time) on the date of each
Borrowing, each Bank participating therein shall make available its share of
such Borrowing, in Federal or other funds immediately available in New York
City, to the Administrative Agent at its address specified in or pursuant to
Section 9.01 to the account of the Administrative Agent at such place as shall
have been notified by the Administrative Agent to the Banks by not less than
five Domestic Business Days' notice. Unless the Administrative Agent determines
that any applicable condition specified in Article III has not been satisfied,
the Administrative Agent will make the funds so received from the Banks
available to the Borrower at the Administrative Agent's aforesaid address.
(c) If an Issuing Bank has not received from the Borrower a payment
required by Section 2.15(g) to be made to such Issuing Bank by 1:00 p.m. (New
York City time) on the date on which such payment is due, as provided in Section
2.15(g), such Issuing Bank shall promptly notify the Administrative Agent
thereof and, promptly following receipt of such notice, the Administrative Agent
will notify each Bank of the Letter of Credit Disbursement and such Bank's
Applicable Percentage of such Letter of Credit Disbursement. Not later than 3:00
p.m. (New York City time) on such date, each Bank shall make available such
Bank's Applicable Percentage of such Letter of Credit Disbursement, in Federal
or other funds immediately available in New York City, to the Administrative
Agent at its address specified in or pursuant to Section 9.01, and the
Administrative Agent will promptly make such funds available to such Issuing
Bank. Thereafter, any payments made by the Borrower in respect of such Letter of
Credit Disbursement shall be paid to the Administrative Agent in Dollars (and
such Issuing Bank shall promptly remit such payments to the Administrative Agent
if received by such Issuing Bank) and the Administrative Agent will promptly
remit to each Bank that shall have made such funds available its Applicable
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 29
Percentage of any amounts subsequently received by the Administrative Agent from
such Issuing Bank or the Borrower in respect of such Letter of Credit
Disbursement (excluding interest for the account of such Issuing Bank for the
period prior to the date that such Bank shall have made such funds available).
(d) Unless the Administrative Agent shall have received written
notice from a Bank prior to the date of any Borrowing, or prior to the time of
any required payment by such Bank in respect of a Letter of Credit Disbursement,
that such Bank will not make available (which can only be refused if there
exists an Event of Default identified by such Bank) to the Administrative Agent
such Bank's share of such Borrowing or payment, the Administrative Agent may
assume that such Bank has made such share available to the Administrative Agent
on the date of such Borrowing or payment in accordance with subsection (b) or
(c), as applicable, of this Section 2.04 and the Administrative Agent may, in
reliance upon such assumption, make available to the applicable Borrower or the
applicable Issuing Bank, as the case may be, on such date a corresponding
amount. If and to the extent that such Bank shall not have so made such share
available to the Administrative Agent, such Bank and the Borrower severally
agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available by the Administrative Agent until the date such
amount is repaid to the Administrative Agent, at (i) in the case of the
Borrower, a rate per annum equal to the higher of the Federal Funds Rate and the
interest rate applicable thereto pursuant to Section 2.07 or Section 2.15(g), as
applicable, and (ii) in the case of such Bank, the Federal Funds Rate. In the
case of a Borrowing, if such Bank shall repay to the Administrative Agent such
corresponding amount, such amount so repaid shall constitute such Bank's Loan
included in such Borrowing for purposes of this Agreement.
Section 2.05. Notes.
(a) The Loans of each Bank to the Borrower shall be evidenced by a
single Note of the Borrower payable to the order of such Bank for the account of
its Applicable Lending Office.
(b) Upon receipt of each Bank's Note pursuant to Section 3.01(b), the
Administrative Agent shall forward such Note to such Bank. Each Bank shall
record the date, amount, Type and maturity of each Loan made by it to the
Borrower and the date and amount of each payment of principal made by the
Borrower with respect thereto and may, in connection with any transfer of any of
its Notes, endorse on the schedule forming a part thereof appropriate notations
to evidence the foregoing information with respect to each such Loan of the
Borrower then outstanding; provided that (and the Borrower understands and
agrees that) the failure of any Bank to make any such recordation or endorsement
shall not affect the obligations of the Borrower hereunder or under the Notes.
Each Bank is hereby irrevocably authorized by the Borrower so to endorse its
Note and to attach to and make a part of its Note a continuation of any such
schedule as and when required.
Section 2.06. Interest Rate Elections.
(a) The initial Type of Loans comprising each Borrowing, and the
duration of the initial Interest Period applicable thereto if they are initially
LIBOR Loans, shall be as specified in the applicable Notice of Borrowing.
Thereafter, the Borrower may from time to time elect to change or continue the
Type of, or the duration of the Interest Period applicable to, the Loans (other
than Swingline Loans) included in any Borrowing (excluding overdue Loans and
subject in each case to the provisions of the definition of Interest Period and
Article VIII), as follows:
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 30
(i) if such Loans are Base Rate Loans (other than a
Swingline Loan), the Borrower may elect to designate such Loans as LIBOR Loans,
may elect to continue such Loans as Base Rate Loans or may elect to designate
such Loans as any combination of Base Rate Loans and LIBOR Loans; and
(ii) if such Loans are LIBOR Loans, the Borrower may
elect to designate such Loans as Base Rate Loans, may elect to continue such
Loans as LIBOR Loans for an additional Interest Period, or may elect to
designate such Loans as any combination of Base Rate Loans and LIBOR Loans.
Notwithstanding the foregoing, the Borrower may not elect an Interest Period for
LIBOR Loans unless the aggregate outstanding principal amount of each Bank's
Applicable Percentage of the LIBOR Loans (including any such LIBOR Loans made
pursuant to Section 2.01 on the date that such Interest Period is to begin) to
which such Interest Period will apply is at least $500,000 or any larger
multiple of $100,000 provided, however, at no time shall there be more than six
(6) different Interest Periods outstanding.
(b) Any election permitted by subsection (a) of this Section may
become effective on any LIBOR Business Day specified by the Borrower (the
"Election Date"); provided that, with respect to any outstanding LIBOR Loan, the
Borrower may not specify an Election Date that is other than the last day of the
Interest Period therefor. Each such election shall be made by the Borrower by
delivering a notice (a "Notice of Interest Rate Election") to the Administrative
Agent not later than 11:00 a.m. (New York City time) on (x) the Election Date,
if all the resulting Loans will be Base Rate Loans and (y) the date three (3)
LIBOR Business Days before the Election Date, if the resulting Loans will
include LIBOR Loans. Each Notice of Interest Rate Election shall specify with
respect to the outstanding Loans to which such notice applies:
(i) the Election Date;
(ii) if the Type of Loan is to be changed, the new Type
of Loan and, if such new Type is a LIBOR Loan, the duration of the new Interest
Period applicable thereto;
(iii) if such Loans are LIBOR Loans and the Type of such
Loans is to be continued for an additional or different Interest Period, the
duration of such additional or different Interest Period; and
(iv) if such Loans are to be designated as a combination
of Base Rate Loans, or LIBOR Loans, the information specified in clauses (i)
through (iii) above as to each resulting Borrowing and the aggregate amount of
each such Borrowing.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period and the last
sentence of subsection (a) of this Section.
(c) Upon receipt of a Notice of Interest Rate Election, the
Administrative Agent shall promptly notify each Bank of the contents thereof and
of such Bank's share of such Borrowing and such notice shall not thereafter be
revocable by the applicable Borrower.
(d) If a Borrower (i) fails to deliver a timely Notice of Interest
Rate Election to the Administrative Agent electing to continue or change the
Type of, or the duration of the Interest Period applicable to, the Loans
included in any Borrowing as provided in this Section and (ii) has not
theretofore delivered a notice of prepayment relating to such Loans, then such
Borrower shall be deemed to have given the Administrative Agent a Notice of
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 31
Interest Rate Election electing to change the Type of such Loans to (or continue
the Type thereof as) Base Rate Loans, commencing on the last day of the then
current Interest Period.
Section 2.07. Interest Rates.
(a) Each Base Rate Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Loan is made until it
becomes due or is converted to a Loan of another Type, at a rate per annum equal
to the Base Rate for such day plus the Applicable Margin. Such interest shall be
payable monthly in arrears on the first Domestic Business Day of each month and,
with respect to the principal amount of any Base Rate Loan converted to a LIBOR
Loan, on the date such Base Rate Loan is so converted.
(b) Each LIBOR Loan shall bear interest on the outstanding principal
amount thereof, for each day during each Interest Period applicable thereto, at
a rate per annum equal to the sum of the LIBOR Rate plus the Applicable Margin.
Such interest shall be payable for each Interest Period on the last day thereof
and, if such Interest Period is longer than three months, at intervals of three
months after the first day thereof.
(c) Each Swingline Loan shall bear interest on the outstanding
principal amount thereof, for each day each Swingline Loan is outstanding, at
such rate per annum equal to the Base Rate plus the Applicable Margin for such
day. Such interest shall be payable monthly in arrears on the first Domestic
Business Day of each month.
(d) The Administrative Agent shall determine each interest rate
applicable to the Loans hereunder pursuant to the terms hereof. The
Administrative Agent shall give prompt notice to the applicable Borrower and the
Banks of each rate of interest so determined, and its determination thereof
shall be conclusive in the absence of manifest error.
(e) Notwithstanding the foregoing, upon the occurrence and
continuation of an Event of Default, all Loans shall bear interest at a rate per
annum equal to the sum of 2% plus the Base Rate plus the Applicable Margin for
Base Rate Loans.
Section 2.08. Fees.
(a) Commitment Fee. The Borrower shall pay to the Administrative
Agent for the account of the Banks based on their Applicable Percentage a
commitment fee at the applicable per annum Commitment Fee Rate. Such commitment
fee shall accrue from and including the Effective Date to, but excluding, the
date on which the Commitments expire or terminate, on the daily average unused
portion of the Total Commitments. The Administrative Agent shall determine the
Commitment Fee Rate applicable from time to time hereunder.
(b) Payments. Accrued fees under this Section shall be payable
quarterly in arrears on (i) the third Domestic Business Day following the last
day of March, June, September and December in each year, commencing on the first
such date that occurs after the Effective Date and (ii) the date on which the
Commitments expire or terminate. The Administrative Agent shall determine the
amount of accrued fees payable hereunder on each payment date and notify the
Borrower thereof.
(c) For purposes of determining the applicable Commitment Fee payable
to the Swingline Lender, the aggregate outstanding principal amount of Swingline
Loans shall be considered outstanding for purposes of the Borrower and the
Swingline Lender, only.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 32
Section 2.09. Voluntary Reduction or Termination of Commitments.
(a) On December 24, 2003, or, if such day is not a Domestic Business
Day, the next succeeding Domestic Business Day, the Borrower may, upon at least
five Domestic Business Days' notice to the Administrative Agent, terminate the
Total Commitment at any time, or proportionately reduce from time to time each
Bank's Commitment by an aggregate amount of $10,000,000 or any larger multiple
of $1,000,000, provided, however that any reduction in the aggregate amount of
the Commitments shall be expressly conditioned upon the Borrower demonstrating
projected Borrowing Availability (acceptable to the Administrative Agent) for
the next twelve (12) months of at least $35,000,000 and, on any date, the Total
Commitment may not be reduced to less than an amount equal to the greater of:
(i) the Swingline Limit and (ii) the Committed Exposure as of such date.
(b) The Commitments shall terminate on the Termination Date.
Section 2.10. Maturity of Loans. The Loans shall mature, and the
principal amount thereof shall be due and payable, together with accrued
interest thereon, on the Termination Date; provided that each Swingline Loan
shall also be due and payable as set forth in Section 2.03.
Section 2.11. Prepayments.
(a) Voluntary Prepayments. Subject to Section 2.13, the Borrower may,
upon at least one Domestic Business Day's notice (or, if such prepayment is made
prior to noon, on the same day or in the case of a Borrowing of LIBOR Loans, two
LIBOR Business Days' notice) to the Administrative Agent, prepay any Borrowing
of the Borrower in whole at any time, or from time to time in part in amounts
aggregating $2,000,000 or any larger multiple of $1,000,000, by paying the
principal amount to be prepaid together with accrued interest thereon to the
date of prepayment. Each such optional prepayment shall be applied to prepay
ratably the Loans of the several Banks included in such Borrowing.
(b) Mandatory Prepayments.
(i) If at any time the Committed Exposure exceeds the
Total Availability, the Borrower shall immediately upon notice from the
Administrative Agent: (i) repay, by payment to the Administrative Agent for the
account of the Banks, to be applied to the Loans, the amount of such excess,
and/or (ii) furnish Collateral and/or repay the Swingline Loan and/or Letter of
Credit Exposure, in an amount equal to such excess;
(ii) The Borrower shall make a prepayment/repayment of
the Loans in the amount of 100 % of Net Proceeds from the issuance of equity or
debt to the extent that such equity or debt proceeds are not used to repurchase,
redeem or otherwise retire the Seller Preferred, the Senior Notes, the Senior
Secured Notes or the Borrower's 8.5% Junior Subordinated Debenture Due 2004
dated September 17, 2002 in the principal amount of $4,333,333.34; and
(iii) The Borrower shall make a prepayment of the Loans
in the amount of 100% of the Net Proceeds from the sale of assets permitted
under Section 5.11(b).
The mandatory repayments set forth in this Section 2.11 shall be
applied first to reduce all outstanding principal, interest and fees on
Swingline Loans, second to reduce all outstanding principal, interest and fees
on other Loans and third to cash collateralize the principal amount and any fees
of the Letter of Credit Exposure.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 33
(c) Swingline Prepayments. The Borrower may, upon notice to the
Administrative Agent prior to 12:00 Noon (New York City time) on the date of
prepayment (which shall be a Domestic Business Day), prepay any Swingline Loan
of the Borrower in whole at any time, or from time to time in part, by paying
the Swingline Lender the principal amount to be prepaid together with accrued
interest thereon to the date of prepayment.
(d) Notice of Prepayments. Upon receipt of a notice of prepayment
pursuant to this Section, the Administrative Agent shall promptly notify each
Bank (or, in the case of a Swingline Loan, the Swingline Lender) of the contents
thereof and of such Bank's ratable share of such prepayment and such notice
shall not thereafter be revocable by the Borrower.
(e) Control of Cash and Application to Obligations. Prepayment will
also be made on the Loans as a result of the Administrative Agent's control of
collections on Collateral as described in Section 2.16.
Section 2.12. General Provisions as to Payments.
(a) Except as otherwise expressly provided herein, all payments to be
made by the Borrower hereunder or under the Notes shall be made not later than
1:00 p.m. (New York City time) on the date when due, in Federal or other funds
immediately available in New York City, to the Administrative Agent at its
address referred to in Section 9.01. The Administrative Agent will promptly
distribute to each Bank its ratable share of each such payment received by the
Administrative Agent for the account of the Banks.
(b) Whenever any payment of principal of, or interest on, the Base
Rate Loans or of fees shall be due on a day which is not a Domestic Business
Day, the date for payment thereof shall be extended to the next succeeding
Domestic Business Day. Whenever any payment of principal of, or interest on the
LIBOR Loans shall be due on a day which is not a LIBOR Business Day, the date
for payment thereof shall be extended to the next succeeding LIBOR Business Day,
unless such LIBOR Business Day falls in another calendar month, in which case
the date for payment thereof shall be the next preceding LIBOR Business Day. If
the date for any payment of principal is extended by operation of law or
otherwise, interest thereon shall be payable for such extended time.
(c) Unless the Administrative Agent shall have been notified by a
Bank or Borrower (the "Payor") prior to the date on which such Bank is to make
payment to the Administrative Agent hereunder or Borrower is to make a payment
to the Administrative Agent for the account of one or more of the Banks, as the
case may be (such payment being herein called the "Required Payment"), which
notice shall be effective upon receipt, that the Payor does not intend to make
the Required Payment to the Administrative Agent, the Administrative Agent may
assume that the Required Payment has been made and may, in reliance upon such
assumption (but shall not be required to), make the amount thereof available to
the intended recipient on such date and, if the Payor has not in fact made the
Required Payment to the Administrative Agent, (i) the recipient of such payment
shall, on demand, pay to the Administrative Agent the amount made available to
it together with interest thereon in respect of the period commencing on the
date such amount was so made available by the Administrative Agent until the
date the Administrative Agent recovers such amount at a rate per annum equal to
the Federal Funds Rate for such period and (ii) the Administrative Agent shall
be entitled to offset against any and all sums to be paid to such recipient, the
amount calculated in accordance with the foregoing clause (i).
Section 2.13. Funding Losses. If the Borrower makes any
payment of principal with respect to any LIBOR Rate Loan (pursuant to Article II
or otherwise) on any day other than the last day of the Interest Period
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 34
applicable thereto, or the end of any applicable period fixed pursuant to the
terms hereto, or if the Borrower fails to borrow any LIBOR Loans after notice
has been given to any Bank in accordance with Section 2.04(a) or to change or
continue the Type of, or the duration of the Interest Period applicable to, any
LIBOR Loans after notice has been given to any Bank in accordance with Section
2.06(c), the Borrower shall reimburse each Bank within fifteen (15) days after
demand for any resulting loss or expense incurred by it (or by an existing or
prospective Participant in the related Loan) including (without limitation) any
loss incurred in obtaining, liquidating or employing deposits from third
parties, but excluding loss of margin for the period after any such payment or
failure to borrow; provided that such Bank shall have delivered to the Borrower
a certificate as to the amount of such loss or expense, which certificate shall
be conclusive in the absence of manifest error.
Section 2.14. Computation of Interest and Fees. All interest and fees
shall be computed on the basis of a year of 360 days and paid for the actual
number of days elapsed (including the first day but excluding the last day).
Section 2.15. Letters of Credit.
(a) The Borrower may request the issuance of letters of credit by
JPMorgan Chase Bank, in a form reasonably acceptable to the Administrative Agent
and such Issuing Bank, appropriately completed, for the account of the Borrower
or one or more of its Subsidiaries, at any time and from time to time during the
Revolving Credit Period; provided that any Letter of Credit shall be issued only
if, and each request by the Borrower for the issuance of any Letter of Credit
shall be deemed a representation and warranty of the Borrower that, immediately
following the issuance of any such Letter of Credit the Committed Exposure shall
not exceed the amount of Total Availability.
(b) Each issuance of any Letter of Credit shall be made on such prior
notice from the Borrower to JPMorgan Chase Bank as shall be acceptable to such
Issuing Bank specifying the date of issuance, the date on which such Letter of
Credit is to expire (which shall not be later than the earlier of (i) the date
that is one Domestic Business Day prior to the Termination Date, and (ii)
subject to renewal, the date one year after the date of such Letter of Credit,
or, if such Letter of Credit is issued to a beneficiary outside the United
States, the date that is five Domestic Business Days prior to the Termination
Date), the amount and currency of such Letter of Credit, the name and address of
the beneficiary of such Letter of Credit, whether such Letter of Credit is a
documentary or stand-by Letter of Credit, the purpose of such Letter of Credit,
and such other information as may be necessary or desirable to complete such
Letter of Credit. Each Issuing Bank will give the Administrative Agent prompt
notice of the issuance and amount of each Letter of Credit issued by it, the
currency thereof and the expiration of such Letter of Credit. Each Issuing Bank
will give the Administrative Agent and the Borrower daily notice of the
aggregate amount available to be drawn under all outstanding Letters of Credit
issued by it a quarterly summary indicating, on a daily basis during such
quarter, the issuance of any Letter of Credit issued by it and the amount
thereof, the expiration of any such Letter of Credit and any payment on drafts
presented under such Letters of Credit.
(c) Each Issuing Bank that issues a Letter of Credit, by the issuance
of such Letter of Credit and without any further action on the part of such
Issuing Bank or the Banks in respect thereof, hereby grants to each Bank, and
each Bank hereby acquires from such Issuing Bank, a participation in such Letter
of Credit equal to such Bank's Applicable Percentage of the aggregate amount
available to be drawn under such Letter of Credit, effective upon the issuance
of such Letter of Credit. In consideration and in furtherance of the foregoing,
each Bank hereby absolutely and unconditionally agrees to pay to the
Administrative Agent, on behalf of such Issuing Bank, in accordance with Section
2.04(b), such Bank's Applicable Percentage of each Letter of Credit Disbursement
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 35
made by such Issuing Bank and not reimbursed by the Borrower when due in
accordance with subsection (f) of this Section; provided that the Banks shall
not be obligated to make any such payment with respect to any wrongful Letter of
Credit Disbursement made as a result of the gross negligence or willful
misconduct of such Issuing Bank.
(d) Each Bank acknowledges and agrees that its obligation to acquire
participations pursuant to subsection (c) above in respect of Letters of Credit
is absolute and unconditional and shall not be affected by any circumstance
whatsoever, including any circumstance described in Section 2.03(d), any
amendment, renewal or extension of a Letter of Credit or the occurrence and
continuance of a Default, and that each such payment shall be made without any
offset, abatement, withholding or reduction whatsoever (subject only to the
proviso in subsection (c) above).
(e) Upon each issuance of a Letter of Credit, Borrower agrees to pay
the Applicable Letter of Credit Fee to the Banks, and a fronting fee to be
determined by the Issuing Bank. Fees under this subsection shall be calculated
by the applicable Issuing Bank and shall be payable quarterly in advance on the
third Domestic Business Day following the last day of March, June, September and
December in each year and on the Termination Date (or any earlier date on which
the Commitments are terminated). The applicable Issuing Bank will notify the
Borrower of the amount of accrued fees payable hereunder on each payment date.
In addition to the foregoing, the Borrower shall pay directly to each Issuing
Bank, for its account, such Issuing Bank's customary processing and
documentation fees in connection with the issuance or amendment of or payment on
any Letter of Credit, payable within fifteen (15) days after demand therefor by
such Issuing Bank.
(f) If an Issuing Bank shall pay any draft presented under a Letter
of Credit, the Borrower shall pay directly to such Issuing Bank an amount equal
to the amount of such draft before 2:00 p.m. (New York City time), on the day on
which such Issuing Bank shall have notified the Borrower (as provided in
subsection (j) below) that payment of such draft will be made; provided that, if
the Borrower shall not have received notice of such draft before 10:00 a.m. (New
York City time) on the date that payment of such draft is made, then such
payment may be made by the Borrower to such Issuing Bank on the Domestic
Business Day immediately following the date of receipt by the Borrower of notice
of such payment, together with interest (at a rate per annum equal to the sum of
the Applicable Margin for LIBOR Loans at the time plus the rate determined by
such Issuing Bank to be equal to the rate per annum at which deposits in the
same currency as such draft are then being offered to such Issuing Bank in the
London interbank market for a period of one month) on the amount of such draft
from and including the date such draft was paid by such Issuing Bank to but
excluding such next Domestic Business Day. If the Borrower shall fail to pay any
amount required to be paid by it under this subsection when due, such unpaid
amount shall bear interest, for each day from and including the due date to but
excluding the date of payment, at a rate per annum equal to the interest rate
applicable to overdue Base Rate Loans.
(g) The Borrower's obligation to reimburse Letter of Credit
Disbursements as provided in subsection (f) above shall be absolute,
unconditional and irrevocable and shall be performed strictly in accordance with
the terms of this Agreement under any and all circumstances whatsoever, and
irrespective of:
(i) any lack of validity or enforceability of any Letter
of Credit or any Loan Document;
(ii) the existence of any claim, setoff, defense or
other right which the Borrower, any Subsidiary or any other Person may at any
time have against the beneficiary under any Letter of Credit, any Issuing Bank,
the Administrative Agent, the Collateral Agent or any Bank or any other Person
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 36
in connection with this Agreement, any other Loan Document or any other related
or unrelated agreement or transaction;
(iii) any draft or other document presented under a
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
(iv) payment by any Issuing Bank under a Letter of
Credit against presentation of a draft or other document which does not comply
with the terms of such Letter of Credit, subject to subsection (i) below; and
(v) any other act or omission or delay of any kind or
any other circumstance or event whatsoever, whether or not similar to any of the
foregoing and whether or not foreseeable, that might, but for the provisions of
this subsection (g), constitute a legal or equitable discharge of the Borrower's
obligations hereunder.
(h) None of the Banks (including any Issuing Bank) nor the
Administrative Agent nor any of their officers or directors or employees or
agent shall be liable or responsible by reason of or in connection with (and the
Borrower shall indemnify and hold harmless each of the Banks, the Issuing Banks,
the Administrative Agent and their officers, directors, employees and agent from
and against any and all liabilities, losses, damages, costs and expenses,
including, without limitation, reasonable fees and disbursements of counsel,
arising by reason of or in connection with) the execution and delivery or
transfer of or payment or failure to pay under any Letter of Credit, including
without limitation any of the circumstances enumerated in subsection (g) above,
as well as (i) any error, omission, interruption or delay in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise, (ii)
any error in interpretation of technical terms, (iii) any loss or delay in the
transmission of any document required in order to make a drawing under a Letter
of Credit, or (iv) any consequences arising from causes beyond the control of
any Issuing Bank, including, without limitation, any government acts, or any
other circumstances whatsoever in making or failing to make payment under any
Letter of Credit; provided that the Borrower shall not be required to indemnify
any Issuing Bank for any claims, damages, losses, liabilities, costs or
expenses, and the Borrower shall have a claim for direct (but not consequential)
damage suffered by it, to the extent found by a court of competent jurisdiction
to have been caused by (x) the willful misconduct or gross negligence of an
Issuing Bank in determining whether a request presented under any Letter of
Credit issued by it complied with the terms of such Letter of Credit or (y) an
Issuing Bank's failure to pay under any Letter of Credit issued by it after the
presentation to it of a request strictly complying with the terms and conditions
of such Letter of Credit. Nothing in this subsection (h) is intended to limit
the obligations of the Borrower under any other provision of this Agreement. To
the extent the Borrower does not indemnify an Issuing Bank as required by this
subsection, the Banks agree to do so in accordance with their Applicable
Percentage. It is expressly understood and agreed that, for purposes of
determining whether a wrongful payment under a Letter of Credit resulted from an
Issuing Bank's gross negligence or willful misconduct, such Issuing Bank may
accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary and, in making any payment under any Letter of
Credit (A) an Issuing Bank's exclusive reliance on the documents presented to it
under such Letter of Credit as to any and all matters set forth therein,
including reliance on the amount of any draft presented under such Letter of
Credit, whether or not the amount due to the beneficiary thereunder equals the
amount of such draft and whether or not any document presented pursuant to such
Letter of Credit proves to be insufficient in any material respect, if such
document on its face appears to be in order, and whether or not any other
statement or any other document presented pursuant to such Letter of Credit
proves to be forged or invalid or any statement therein proves to be inaccurate
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 37
or untrue in any respect whatsoever and (B) any noncompliance in any immaterial
respect of the documents presented under such Letter of Credit with the terms
thereof shall, in each case, be deemed not to constitute willful misconduct or
gross negligence of such Issuing Bank.
(i) Each Issuing Bank shall, promptly following its receipt thereof,
examine all documents purporting to represent a demand for payment under a
Letter of Credit issued by such Issuing Bank. Such Issuing Bank shall as
promptly as possible give telephonic notification, confirmed by telex or
telecopy, to the Administrative Agent, the Borrower of such demand for payment
and whether such Issuing Bank has made or will make a Letter of Credit
Disbursement thereunder, provided that the failure to give such notice shall not
relieve the Borrower of its obligation to reimburse any such Letter of Credit
Disbursement in accordance with this Section. The Administrative Agent shall
promptly give each Bank notice thereof.
(j) If at any time the Committed Exposure exceeds the Total
Availability, then the Borrower shall provide cash collateral in respect of the
Letter of Credit Exposure as provided below in an amount equal to such excess;
provided that, solely for purposes of determining whether the Borrower is in
compliance with the foregoing requirements of this subsection (j), the Total
Availability shall be increased by the amount of any cash collateral then held
by the Administrative Agent pursuant to this subsection (j). In the event that
the Borrower is required pursuant to the terms of this Agreement to provide cash
collateral in respect of the Letter of Credit Exposure, the Borrower shall
deposit in an account with the Administrative Agent, for the benefit of the
Banks (including the Issuing Banks), an amount in cash equal to (x) in the case
of a deposit required pursuant to the first sentence of this subsection (j), the
amount specified therein, or (y) in the case of a deposit required as a result
of an Event of Default, the entire Letter of Credit Exposure. Such deposit shall
be held by the Administrative Agent as collateral for the payment and
performance of the Obligations. The Administrative Agent shall have exclusive
dominion and control, including the exclusive right of withdrawal, over such
account. If the Borrower is required to provide an amount of cash collateral
hereunder pursuant to the first sentence of this subsection (j), the
Administrative Agent shall return such amount (to the extent not applied as
aforesaid) to the Borrower, from time to time, to the extent that doing so would
not give rise to an obligation on the part of the Borrower to provide additional
cash collateral pursuant to such sentence. If the Borrower is required to
provide an amount of cash collateral hereunder as a result of an Event of
Default, such amount (to the extent not applied as aforesaid) shall be returned
to the Borrower within three Domestic Business days after all Events of Default
have been cured or waived, and if prior to such return the amount of the Letter
of Credit Exposure is reduced, any excess of the amount deposited (to the extent
not applied as aforesaid and disregarding interest or profits on investments)
over the reduced amount of the Letter of Credit Exposure shall be returned to
the Borrower promptly after such reduction gives rise to such excess.
Notwithstanding the foregoing, if any Obligation payable by the Borrower
hereunder is due and payable but remains unpaid at the time that the
Administrative Agent would otherwise be required to return any amount of cash
collateral to the Borrower hereunder, the Administrative Agent may retain such
cash collateral and apply the amounts retained to the payment of such unpaid
Obligation.
Section 2.16. Application of Payments and Collateral. Notwithstanding
anything in the Security Agreement to the contrary, at all times during this
Agreement after February 1, 2003 the Borrower will instruct all customers and
other Persons making payment on Accounts and other Collateral to make all
payments thereon to a Lockbox Account. In the event the Borrower (or any
Affiliate of the Borrower or any Person acting for or in concert with the
Borrower) at any time during the term of this Agreement (both before and after
February 1, 2003) shall receive any monies, checks, drafts or other similar
negotiable items of payments made with respect to Accounts and other Collateral,
the Borrower or such Persons shall receive the same in trust and shall promptly
deposit the same into a Lockbox Account. The Borrower agrees that it will cause
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 38
the funds on deposit in Borrower's Lockbox Accounts to be paid to the
Administrative Agent on a daily basis by automated clearinghouse debit for
credit to the Concentration Account or by wire transfer. The funds deposited
into the Concentration Account (over which the Borrower shall have no control)
or wire transferred to the Administrative Agent from the Lockbox Accounts shall
be applied by the Administrative Agent on the day of their receipt if received
by 1:00 p.m. (New York City time) on a Domestic Business Day and on the next
Domestic Business Day if received after such time: first to repay outstanding
Swingline Loans; second, to repay other outstanding Loans that are Base Rate
Loans and all outstanding reimbursement obligations under Letters of Credit;
third, to repay outstanding Loans that are LIBOR Loans and all breakage costs
due in respect of such repayment or, at the Borrower's option (if no Event of
Default has occurred and is then continuing), to fund a cash collateral deposit
to a cash collateral account at the Administrative Agent or the Collateral Agent
with direction to pay, all or a portion of any such outstanding LIBOR Loans on
the last day of the next ending Interest Period therefor; fourth, to pay
interest due and payable on the Obligations and to pay fees and expense
reimbursements and indemnification then due and payable to the Administrative
Agent, the Collateral Agent or any Bank, fifth, to pay all other Obligations
that are then outstanding and payable and sixth, if after the foregoing
applications no Default exists and available funds remains available to be
disbursed, the Administrative Agent shall deposit such remaining amount to the
Disbursement Account or transfer such funds as Borrower shall otherwise direct.
Notwithstanding anything in the Security Agreement or the Guaranty Agreement to
the contrary, all funds (i) received by either Agent from the enforcement of the
Guarantee Agreement or from the Collateral Agent's sale or other liquidation of
the Collateral when an Event of Default exists (including, without limitation,
any amounts paid as adequate protection payments or any other distributions in
any bankruptcy or insolvency proceeding made on or in respect of any Collateral)
or (ii) deposited into the Concentration Account after an Event of Default
exists shall first be applied as payment of the accrued and unpaid fees of the
Agents hereunder and then to all other unpaid or unreimbursed Obligations
(including reasonable attorneys' fees and expenses) owing to the either Agent in
its capacity as an Agent hereunder only and then any remaining amount of such
proceeds shall be distributed:
(i) first, to an account at the Administrative Agent
over which the Administrative Agent shall have control in an amount sufficient
to fully collateralize all Letter of Credit Exposure in an amount equal to 101%
of all Letter of Credit Exposure then outstanding; and
(ii) second, to the Banks, pro rata in accordance with
the respective unpaid amounts of Obligations for application in accordance with
the immediately preceding sentence, until all the Obligations have been paid and
satisfied in full or cash collateralized.
After all the Obligations (including without limitation, all contingent
Obligations) have been paid and satisfied in full and all Commitments
terminated, any proceeds of Collateral shall be delivered to the Person entitled
thereto as directed by the Borrower or as otherwise determined by applicable law
or applicable court order. All credits against the Obligations shall be
conditioned upon final payment to the Agents of the items giving rise to such
credits and shall be subject to fully available funds. If any amount applied
under this Section is subsequently dishonored or returned unpaid for any reason,
whether or not such return is rightful or timely, the Agents shall have the
right to reverse such credit and charge the amount of such item to the Borrower,
who shall indemnify the Agents, the Issuing Bank and the Banks against all
claims and losses resulting from such dishonor or return.
Section 2.17. Pro Rata Treatment. Except to the extent otherwise provided
herein: (i) each Loan shall be made by the Banks, each payment of fees under
Section 2.08 and Section 2.15 shall be made for the account of the Banks, and
each termination or reduction of the Commitments shall be applied to the
Commitments of the Banks pro rata according to their respective Applicable
Percentages; (ii) the making, conversion, and continuation of Borrowings of a
particular Type shall be made pro rata among the Banks holding Loans of such
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 39
Type according to their respective Applicable Percentages; (iii) each payment
and prepayment of principal of or interest on Loans or reimbursement obligations
in respect of Letters of Credit by the Borrower shall be made to the
Administrative Agent for the account of the Agent or the Banks holding such
Obligations (or participation interests therein) pro rata in accordance with the
respective unpaid principal amounts of such Loans or participation interests
held by such Banks (provided that (1) only the Swingline Lender shall be
entitled to principal and interest on the Swingline Loan unless the other Banks
have funded their participations therein and (2) as long as no default in the
payment of interest exists, payments of interest made when the Banks are holding
different Types of Loans applicable to the same Borrowing, shall be made to the
Banks in accordance with the amount of interest actually owed to each based on
the Type of Loan held by each such Bank); and (iv) the Banks (other than the
Issuing Bank) shall purchase from the Issuing Bank participations in the Letters
of Credit and, the Banks (other than the Swingline Lender) shall purchase from
the Swingline Lender participations in the Swingline Loans, in each case pro
rata according to their respective Applicable Percentages.
ARTICLE III
Conditions
----------
Section 3.01. Effectiveness. The effectiveness of this Agreement to
amend and restate the Original Credit Agreement shall be conditioned upon
satisfaction of the following conditions:
(a) receipt by the Administrative Agent of counterparts hereof signed
by each of the parties hereto and the Guarantors (or, in the case of any party
as to which an executed counterpart shall not have been received, receipt by the
Administrative Agent in form satisfactory to them of telegraphic, telex or other
written confirmation from such party of execution of a counterpart hereof by
such party);
(b) receipt by the Administrative Agent for the account of each Bank
of a duly executed Note of the Borrower dated on or before the Effective Date
complying with the provisions of Section 2.06;
(c) receipt by the Administrative Agent of evidence that the
assignments contemplated by that certain Master Assignment and Assumption
Agreement dated as of December 24, 2002, among certain of the Banks and certain
of the banks party to the Original Credit Agreement (as agreed to and
acknowledged by the Borrower and the Administrative Agent) shall have been
consummated;
(d) receipt by the Administrative Agent of evidence of: (i) the
repayment of all swingline loans outstanding under the Original Credit
Agreement; (ii) the termination of all Libor interest periods outstanding under
the Original Credit Agreement; and (iii) the payment of all unpaid interest and
fees accrued under the Original Credit Agreement to the Effective Date, together
with all other fees, expenses and other charges outstanding thereunder including
amounts due under Section 2.13 of the Original Credit Agreement as a result of
the termination of the interest periods thereunder on the Effective Date;
(e) receipt by the Administrative Agent of a certificate signed by an
executive officer of the Borrower, dated the Effective Date, to the effect that
(i) no Default has occurred and is continuing as of the Effective Date, and (ii)
the representations and warranties of the Borrower set forth in Article IV
hereof are true in all material respects on, and as of, the Effective Date;
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 40
(f) receipt by the Administrative Agent of all fees and other
compensation payable to the Administrative Agent and/or the Banks on or prior to
the Effective Date pursuant to their agreements with the Borrower, including
reimbursement of all reasonable out-of-pocket expenses of the Administrative
Agent, including, without limitation, legal fees, field exams fees and
syndication fees payable by the Borrower in accordance with this Agreement for
which invoices have been presented;
(g) receipt by the Administrative Agent of an opinion of Weil,
Gotshal & ▇▇▇▇▇▇ LLP, counsel for the Borrower and Guarantors, substantially in
the form of Exhibit B hereto, and covering such additional matters relating to
the Financing Transactions as Administrative Agent and its counsel may
reasonably request;
(h) receipt by the Administrative Agent of all documents and
certificates it may reasonably request relating to the existence of the Borrower
and the Guarantors and the corporate authority for and the validity of this
Agreement and the other Loan Documents, the accuracy of the representations and
warranties contained in this Agreement and the other Loan Documents on the
Effective Date, the Financing Transactions and any other matters relevant hereto
or thereto, all in form and substance satisfactory to the Administrative Agent;
(i) receipt by the Administrative Agent of reasonably satisfactory
written evidence that all requisite governmental authorities and third parties
required to approve or consent to the Financing Transactions shall have approved
or consented thereto to the extent required (without the imposition of any
materially burdensome condition or qualification in the reasonable judgment of
the Administrative Agent) and all such approvals or consents shall be in full
force and effect, all applicable appeal periods shall have expired and there
shall be no governmental or judicial action, actual or threatened, that has or
could have a reasonable likelihood of restraining, preventing or imposing
materially burdensome conditions on any of the Financing Transactions;
(j) the Administrative Agent shall be satisfied that no action, suit,
investigation, litigation or other legal proceeding, tax or accounting matter,
ERISA matter, environmental matter or other matter is pending or threatened
against the Borrower, any Subsidiary or any Guarantor in any court or before any
arbitrator or governmental instrumentality that purports to affect the Financing
Transactions which could have a Material Adverse Effect on the Financing
Transactions or that could have a Material Adverse Effect on the business,
assets, conditions (financial or otherwise), operations, performance, properties
or projections of the Borrower;
(k) the Administrative Agent shall be satisfied that no material
adverse change or any condition or event, which with the passage of time would
result in a material adverse change shall have occurred or become known with
respect to the business, assets, condition (financial or otherwise), operations,
performance, properties or projections of the Borrower, the Subsidiaries or any
Guarantor since the end of the most recently ended fiscal year for which audited
statements have been provided to the Administrative Agent or in the facts or
information as represented by the Borrower to the Administrative Agent to date;
and
(l) the Administrative Agent shall have received in form and
substance satisfactory to the Administrative Agent in all respects evidence that
the Borrowing Availability is at least $50,000,000 calculated, notwithstanding
anything in the definition therein to the contrary, based on: (i) the Borrowing
Base Certificate dated as of November 30, 2002 delivered under the Original
Credit Agreement and (ii) the loans and letters of credit outstanding under the
Original Credit Agreement as of the Effective Date;
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 41
provided that this Agreement shall not become effective or be binding on any
party hereto unless all of the foregoing conditions are satisfied not later than
December 31, 2002. The Administrative Agent shall promptly notify the Borrower
and the Banks of the Effective Date, and such notice shall be conclusive and
binding on all parties hereto.
Section 3.02. Each Credit Event. The obligation of any Bank to make a
Loan on the occasion of any Borrowing and of any Issuing Bank to issue any
Letter of Credit is subject to the satisfaction of the following conditions:
(a) receipt by the Administrative Agent of a Notice of Borrowing as
required by Section 2.02, receipt by the Swingline Lender of a notice requesting
a Swingline Loan as required by Section 2.03 or receipt by the applicable
Issuing Bank of a notice requesting issuance of a Letter of Credit as required
by Section 2.15(a), as applicable;
(b) the fact that, immediately after such Borrowing or the issuance
of such Letter of Credit, the Committed Exposure shall not exceed the Total
Availability;
(c) the fact that, immediately before and after such Borrowing or the
issuance of such Letter of Credit, no Default shall have occurred and be
continuing; and
(d) the fact that the representations and warranties of the Borrower
contained in this Agreement and the other Loan Documents shall be true in all
material respects (which materiality exception will not apply to representations
and warranties qualified by materiality standards) on and as of the date of such
Borrowing or issuance of such Letter of Credit; and
(e) evidence of sufficient Borrowing Availability under the most
recent Borrowing Base Certificate delivered to the Administrative Agent.
Each Borrowing hereunder and the issuance of each Letter of Credit hereunder
shall be deemed to be a representation and warranty by the Borrower on the date
of such Borrowing or issuance as to the facts specified in clauses (b), (c) (d),
and (e) of this Section.
Section 3.03. Effective Date Advances and Adjustments. On the
Effective Date, the aggregate amount of the commitments under the Original
Credit Agreement are being increased hereunder but not all Banks are providing
their Applicable Percentage (determined under the Original Credit Agreement) of
the amount of the increase. As a result, the loans outstanding under the
Original Credit Agreement which are continued hereunder will not be held pro
rata by the Banks in accordance with the Applicable Percentages determined
hereunder. To remedy the forgoing, on the Effective Date and upon fulfillment of
the conditions in Section 3.01, the Banks shall make advances among themselves
so that after giving effect thereto the Loans (which are not Swingline Loans)
will be held by the Banks, pro rata in accordance with the Applicable
Percentages hereunder. The advances made on the Effective Date under this
Section 3.03 by each Bank whose Applicable Percentage has increased (as compared
to its Applicable Percentage under the Original Credit Agreement) shall be
deemed to be a purchase of a corresponding amount of the Loans of the Bank or
Banks whose Applicable Percentages have decreased (as compared to the Applicable
Percentages under the Original Credit Agreement). The advances made under this
Section 3.03 shall be Base Rate Loans made under each Bank's Commitment.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 42
ARTICLE IV
Representations and Warranties
------------------------------
The Borrower represents and warrants that:
Section 4.01. Corporate Existence and Power. The Borrower is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Florida, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted.
Section 4.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Borrower and the
Guarantors of each Loan Document to which it is or is to be a party and the
Financing Transactions is within its corporate powers, has been duly authorized
by all necessary corporate action, require no action by or in respect of, or
filing with, any Governmental Authority or official thereof (other than such as
have been duly taken or made) and do not contravene, or constitute a default
under, any provision of applicable law or regulation or of the charter or
by-laws of the Borrower or any Guarantor or the Indentures or any other
indenture, agreement, judgment, injunction, order, decree or other instrument
binding upon the Borrower or any Guarantor or result in the creation or
imposition of any Lien (other than Liens created by the Loan Documents) on any
asset of the Borrower or any Subsidiary, except for any contraventions or
defaults under such indentures, agreements, judgments, injunctions, orders,
decrees or other instruments or the creation or imposition of any such Liens
that, individually or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect.
Section 4.03. Binding Effect. This Agreement constitutes a valid and
binding agreement of the Borrower, and the other Loan Documents to which the
Borrower or any of the Guarantors is a party, when executed and delivered in
accordance with this Agreement, will constitute valid and binding agreements and
obligations of each of the Borrower and the Guarantors that is a party thereto,
in each case enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally
and equitable principles of general applicability.
Section 4.04. Financial Information.
(a) The consolidated audited balance sheet of the Borrower as of
January 31, 2002 and the related consolidated statements of operations,
shareholders' equity and cash flows for the fiscal year then ended, a copy of
which has been delivered to each of the Banks, fairly present in all material
respects, in conformity with generally accepted accounting principles, the
financial position of the Borrower as of such date and its results of operations
and cash flows for such fiscal year.
(b) The unaudited consolidated balance sheet of the Borrower as of
October 26, 2002, and the related consolidated statements of operations and cash
flows for the fiscal period then ended, a copy of which has been delivered to
each of the Banks, fairly present in all material respects, applied on a basis
consistent with the financial statements referred to in subsection (a) of this
Section, the financial position of the Borrower as of such date and its results
of operations and cash flows for such fiscal period (subject to normal year-end
adjustments).
(c) Since October 26, 2002, there has been no material adverse change
in the business, operations or financial condition of the Borrower and its
Consolidated Subsidiaries, considered as a whole.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 43
Section 4.05. Litigation. Except as disclosed on Schedule 4.05, there
is (i) no injunction, stay, decree or order of any Governmental Authority or
(ii) action, suit or proceeding pending against, or to the knowledge of the
Borrower threatened against or affecting, the Borrower or any Subsidiary before
any Governmental Authority or official thereof in which there is a reasonable
probability of an adverse decision which would reasonably be expected to have a
Material Adverse Effect or which in any manner draws into question the validity
of this Agreement or any other Loan Document.
Section 4.06. Compliance with ERISA. Except to the extent that all
such failures to fulfill any such obligations or comply with any such provisions
would not reasonably be expected to have a Material Adverse Effect, each member
of the ERISA Group has fulfilled its obligations under the minimum funding
standards of ERISA and the Internal Revenue Code with respect to each Plan and
is in compliance in all material respects with the presently applicable
provisions of ERISA and the Internal Revenue Code with respect to each Plan.
Except to the extent that all such waivers, failures and liabilities would not
reasonably be expected to have a Material Adverse Effect, no member of the ERISA
Group has (i) sought a waiver of the minimum funding standard under Section 412
of the Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could result in the imposition of a Lien or the posting of
a bond or other security under ERISA or the Internal Revenue Code or (iii)
incurred any liability under Title IV of ERISA other than a liability to the
PBGC for premiums under Section 4007 of ERISA.
Section 4.07. Environmental Matters. The Borrower and its
Subsidiaries have complied in all respects with all Environmental Laws, except
to the extent failure to so comply would not reasonably be expected to have a
Material Adverse Effect. Neither the Borrower nor any Subsidiary has received
notice of any failure so to comply with the Environmental Laws, which alone or
together with any other such failure would reasonably be expected to result in a
Material Adverse Effect. The facilities of the Borrower and its Subsidiaries do
not manage or handle any hazardous wastes, hazardous substances, hazardous
materials, toxic substances or toxic pollutants, as those terms are used in the
applicable Environmental Laws, in violation thereof where such violation would
reasonably be expected to result, individually or together with other
violations, in a Material Adverse Effect.
Section 4.08. Taxes. The Borrower and its Subsidiaries have filed or
there has otherwise been filed all United States Federal income tax returns and
all other material tax returns which are required to be filed by them and have
paid or there has otherwise been paid all taxes shown to be due on such returns
or pursuant to any assessment received the Borrower or any Subsidiary, except
where the same is being or will be contested in good faith by appropriate
proceedings. The charges, accruals and reserves on the books of the Borrower and
the Subsidiaries in respect of taxes or other governmental charges are, in the
opinion of the Borrower, adequate.
Section 4.09. Subsidiaries. Each of the Guarantors is a corporation
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and, to the extent that the failure to do so
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted. Each of the Borrower's other corporate Subsidiaries is a corporation
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all corporate powers and all governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted, except to the extent that all failures to comply with
the foregoing would not reasonably be expected to have, in the aggregate, a
Material Adverse Effect. The Guarantors are the only Domestic Subsidiaries that
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 44
are Material Subsidiaries as of the Effective Date. As of the Effective Date,
all the Borrower's Subsidiaries are reflected on Schedule 4.09.
Section 4.10. Not an Investment Company. Neither the Borrower nor any
Guarantor is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
Section 4.11. Full Disclosure. All information heretofore furnished
in writing by the Borrower or any Subsidiary to either Agent or any Bank for
purposes of or in connection with this Agreement, any other Loan Document or the
Financing Transactions was, and all such information hereafter furnished in
writing by the Borrower or any Subsidiary to the Administrative Agent or any
Bank will be, in each case considered as a whole, true and accurate in all
material respects on the date as of which such information is stated or
certified. The Borrower has disclosed to the Banks in writing any and all facts
which materially and adversely affect or may materially and adversely affect (to
the extent that the Borrower can now reasonably foresee), the business,
operations or financial condition of the Borrower and its Consolidated
Subsidiaries, considered as a whole, or the ability of the Borrower to perform
its obligations hereunder or under any other Loan Document. Notwithstanding the
forgoing, no representation or warranty is given herein with respect to any
projections other than that the information contained therein was based upon
good faith estimates and assumptions believed to be reasonable at the time made
in light of the past operations of the Borrower and its Subsidiaries, it being
recognized by the Banks that such projections as to future events are not to be
viewed as fact and that actual results during the period or periods covered by
any such projections may differ from the projected results.
Section 4.12. Compliance with Laws and Agreements. Neither the
Borrower nor any Subsidiary is in violation of any law, rule or regulation, or
in default with respect to any judgment, writ, injunction or decree applicable
to it of any Governmental Authority, where such violation or default
(individually or in the aggregate) would reasonably be expected to result in a
Material Adverse Effect. Neither the Borrower nor any Subsidiary is in default
in any manner under any provision of any indenture or other agreement or
instrument evidencing Indebtedness, or any other agreement or instrument to
which it is a party or by which it or any of its properties or assets are or may
be bound, where such default (individually or in the aggregate) would reasonably
be expected to result in a Material Adverse Effect.
Section 4.13. Governmental Approvals. As of the Effective Date, all
material consents and approvals of, and material filings and registrations with,
and all other material actions in respect of, all Governmental Authorities or
any other Person required in order to consummate the Financing Transactions
shall have been obtained, given, filed or taken and shall be in full force and
effect.
Section 4.14. Locations. As of the Effective Date, Schedule 4.14
attached hereto sets forth: (i) every location in the United States, Puerto Rico
or Canada where any Inventory is located other than third party locations in
which the value of the Inventory located thereon does not exceed $3,000,000 in
the aggregate for all such locations, (ii) every other location in the United
States where the Borrower or any Material Subsidiary has an office (other than
sales offices) or place of business, (iii) the address of all material real
estate owned in the United States by Borrower or any Material Subsidiary, (iv)
the address of all material real estate leased in the United States by Borrower
or any Material Subsidiary (including the record owner of such real estate), and
(v) each jurisdiction in the United States in which Borrower or any Material
Subsidiary is qualified or required to be qualified to do business.
Section 4.15. Licenses; Trademarks; Distribution Agreements.
(a) Schedule 4.15 attached hereto and made a part hereof sets forth
as of the Effective Date a list of (i) all material non-governmental License
Agreements held by Borrower or any of its Subsidiaries relating to the operation
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 45
of its business as now conducted or presently contemplated (including, as to
each such License Agreement, the name of the licensee and licensor, a
description of the subject matter of the License Agreement, the termination date
or notice requirement with respect to termination and renewal options), (ii) all
trademarks, trade names, service marks, copyrights, patents and applications for
any of the foregoing owned by or registered in the name of Borrower or any
Material Subsidiary, relating to or used in connection with the operation of its
business as now conducted or presently contemplated, and (iii) all material
Distribution Agreements relating to the operation of its domestic business as
now conducted or presently contemplated (including, as to each such Distribution
Agreement, the names of the parties, a description of the subject matter of such
Distribution Agreement, the termination date or notice requirement with respect
to termination and renewal options).
(b) Except as set forth in Schedule 4.15 as of the Effective Date,
all of such License Agreements and Distribution Agreements are in full force and
effect and constitute legal, valid and binding obligations of Borrower; there
have not been and there currently are not any defaults thereunder by the
Borrower or, to the best of its knowledge, by any other party which could cause
such License Agreement or Distribution Agreement to be canceled, revoked or
terminated; and no event has occurred which (whether with or without notice,
lapse of time or the happening or occurrence of any other event) would
constitute such a default by Borrower or, to the best of its knowledge, by any
other party thereunder. Borrower owns or has a right to use all the trademarks,
trade names, service marks, copyrights, know-how, patents and applications for
any of the foregoing listed on Schedule 4.15 and, except as set forth thereon or
as permitted herein, pays no royalty under any of them and has the exclusive
right to bring actions for the infringement thereof. Except as set forth on
Schedule 4.15, no product made or sold by Borrower violates any License
Agreement or Distribution Agreement or, to the best of its knowledge, infringes
any trademark, trade name, service ▇▇▇▇, copyright, know-how, patent or
application for any of the foregoing of any other Person. Except as listed on
Schedule 4.15, there is no pending or, to the best of its knowledge, threatened
claim or litigation against Borrower contesting the right of Borrower to use any
of the trademarks, trade names, service marks and know-how or the validity of
any of the License Agreements, Distribution Agreements, copyrights and patents
listed on such Schedule or asserting the misuse thereof which if adversely
determined would have a Material Adverse Effect.
Section 4.16. Inventory. In determining which items of inventory
listed on any schedule of inventory heretofore or hereafter provided by Borrower
to Banks are Eligible Inventory, Banks may rely on all statements or
representations made by Borrower on or with respect to any such schedule;
further, Borrower represents and warrants that:
(a) The most recent inventory location report delivered under Section
5.01(g), sets forth every location where any Inventory is located other than
third party locations in which the value of the Inventory located thereon does
not exceed $3,000,000 in the aggregate for all such locations;
(b) no inventory is subject to any lien or security interest
whatsoever, except as permitted by the terms of this Agreement; and
(c) Except as permitted by the definition of the term "Approved
Location", no inventory included in the Borrowing Base as eligible is now, or
shall at any time or times hereafter be, stored with a bailee, warehouseman or
similar party unless either: (i) the obligations payable to such third party are
included in the reserves established under clause (g) of the definition of the
term "Borrowing Base" or (ii) such bailee, warehouseman or similar party has
signed a Consent and Subordination Agreement, any warehouse receipts issued by
such party in respect of such inventory have been issued in non-negotiable form
(or in negotiable form and delivered to the Administrative Agent) and Borrower
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 46
shall have taken such other action required to cause the location at which such
inventory is held to constitute an "Approved Location" hereunder.
Section 4.17. Security. The Guarantee Agreement and the Security
Agreement are in full force and effect and the Security Agreement is effective
to create in favor of the Collateral Agent, for the benefit of the
Administrative Agent and the Banks, a legally valid and enforceable first
priority, perfected security interest in the Collateral.
Section 4.18. Quality of Inventory. The Borrower shall (i) only sell
Inventory that is appropriate for the marketplace in which the Inventory is sold
and (ii) not knowingly sell Inventory that is counterfeit.
Section 4.19. Lockbox Accounts. As of the Effective Date, Schedule
4.19 correctly identifies all Lockbox Accounts owned by the Borrower and each
Guarantor and the institutions holding such accounts. No Person other than the
Agents and the institution at which a lockbox account is held, has control over
any lockbox account owned by the Borrower or by any Guarantor.
Section 4.20. Solvency. Borrower and each Guarantor, on a
consolidated basis: (a) own assets the fair saleable value of which are (i)
greater than the total amount of their liabilities (including contingent
liabilities) and (ii) greater than the amount that will be required to pay their
then existing debts as they become absolute and matured considering all
financing alternatives and potential asset sales reasonably available to them;
(b) have capital that is not unreasonably small in relation to their business as
presently conducted; and (c) do not intend to incur and do not believe that they
will incur debts beyond their ability to pay such debts as they become due.
Section 4.21. Common Enterprise; Benefit Received. The Borrower and
the Guarantors are members of an affiliated group and the Borrower and the
Guarantors are collectively engaged in a common enterprise with one another.
Borrower and each Guarantor will receive reasonably equivalent value in exchange
for the obligations incurred under the Loan Documents to which each is a party.
Borrower and each Guarantor will derive substantial benefit from the credit
extended pursuant hereto in an amount at least equal to its obligations under
the Loan Documents to which it is a party.
ARTICLE V.
Covenants
---------
The Borrower agrees that, so long as any Bank has any Commitment or
any Loan or Letter of Credit Disbursement or accrued interest thereon remains
unpaid or any Letter of Credit remains outstanding:
Section 5.01. Information. The Borrower will deliver to each of the
Banks (directly or through the Administrative Agent):
(a) as soon as available and in any event within ninety (90) days
after the end of each fiscal year of the Borrower, audited consolidated balance
sheet of the Borrower and its Consolidated Subsidiaries as of the end of such
fiscal year and the related consolidated statements of operations, stockholders'
equity and cash flows for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, all reported on in
the form of an unqualified audit opinion by independent public accountants of
nationally recognized standing;
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 47
(b) as soon as available and in any event within forty-five (45) days
after the end of each of the first three quarters of each fiscal year of the
Borrower, a consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of such quarter and the related consolidated
statements of operations, stockholders' equity and cash flows for such quarter
and for the portion of the Borrower's fiscal year ended at the end of such
quarter, setting forth in each case in comparative form the figures for the
corresponding quarter and the corresponding portion of the Borrower's previous
fiscal year, all certified (subject to normal year-end adjustments) as to
fairness of presentation, generally accepted accounting principles and
consistency by the principal financial officer or principal accounting officer
of the Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of the
principal financial officer or the principal accounting officer of the Borrower
(i) setting forth in reasonable detail the calculations required to establish
whether the Borrower was in compliance with the requirements of Section 5.19 of
this Agreement on the date of such financial statements, (ii) setting forth in
reasonable detail the calculations required to establish the Consolidated Total
Debt/EBITDA in order to determine the Applicable Margin, Applicable Letter of
Credit Fee and the Commitment Fee Rate for the upcoming fiscal quarter, (iii)
stating whether any Default exists hereunder on the date of such certificate
and, if any Default then exists, setting forth the details thereof and the
action which the Borrower is taking or proposes to take with respect thereto,
(iv) stating whether, since the date of the most recent financial statements
previously delivered pursuant to this Section, there has been any material
change in the generally accepted accounting principles applied in the
preparation of such statements, and, if so, describing such change and (v)
stating whether there is any Material Subsidiary that is required to be a
Guarantor but currently is not a Guarantor;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements as to (i)
whether anything has come to their attention to cause them to believe that any
Default existed on the date of such statements and (ii) confirming the
calculations set forth in the officer's certificate delivered simultaneously
therewith pursuant to clause (c) above; provided that the foregoing shall not be
construed to require that such accountants conduct any investigation outside the
regular course of their audit;
(e) within thirty (30) days after the end of each month, a
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as
of the end of such month and the related consolidated statements of operations,
stockholders' equity and cash flows for such month and for the portion of the
Borrower's fiscal year ended at the end of such month, setting forth in each
case in comparative form the figures for the corresponding month and the
corresponding portion of the Borrower's previous fiscal year, all certified
(subject to normal year-end adjustments) as to fairness of presentation,
generally accepted accounting principles and consistency by the principal
financial officer or principal accounting officer of the Borrower;
(f) a Borrowing Base Certificate together with an accounts receivable
aging report (reflecting all journal entries and adjustments including all
customer credits and debits), a report showing all amounts payable by the
Borrower to the account debtors whose accounts receivable are included in the
Borrowing Base, a collections report, a sales report and lockbox statements all
certified by Borrower's principal financial officer: (i) within fifteen (15)
days after the end of each month, with the Borrowing Base Certificate and
reports being prepared as of the last day of such month, (ii) during the two
fiscal quarters beginning on or about May 1 and ending on or about October 31,
on Tuesday of each week, with the Borrowing Base Certificate and reports being
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 48
prepared as of the immediately preceding Saturday, and (iii) if a Default
exists, within three days after any other date requested by the Administrative
Agent with the Borrowing Base Certificate and such reports being prepared as of
the date of the request;
(g) within fifteen (15) days after the end of each month, a report,
in the form acceptable to the Administrative Agent, setting forth in reasonable
detail the location and dollar amount of the inventory of the Borrower and the
Subsidiaries as of the last day of the month, certified by Borrower's principal
financial officer as of the end of such month;
(h) within thirty (30) days after the end of each fiscal year
(commencing for the fiscal year ended January 31, 2003) of the Borrower,
projections in reasonable detail of an annual operating budget and cash flow of
the Borrower and its Subsidiaries, prepared by Borrower on a monthly basis for
the current fiscal year and on an annual basis for the next succeeding fiscal
year, and also containing a certification by its principal financial officer to
the effect that such projections have been prepared on a sound financial
planning basis and that the assumptions upon which such projections are based
are reasonable;
(i) within five (5) days after the principal executive officer,
president or any financial officer of the Borrower obtains knowledge of any
Default, if such Default is then continuing, a certificate of the principal
financial officer or the principal accounting officer of the Borrower setting
forth the details thereof and the action which the Borrower is taking or
proposes to take with respect thereto;
(j) promptly upon the mailing thereof to the shareholders of the
Borrower generally, copies of all financial statements, reports and proxy
statements so mailed;
(k) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their
equivalents) which the Borrower shall have filed with the Securities and
Exchange Commission;
(l) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as defined in
Section 4043 of ERISA) with respect to any Plan which might constitute grounds
for a termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event given or
required to be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any Multiemployer
Plan is in reorganization, is insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent
to terminate, impose liability (other than for premiums under Section 4007 of
ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of
such notice; (iv) applies for a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code, a copy of such application; (v) gives
notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of
such notice and other information filed with the PBGC; (vi) gives notice of
withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such
notice; or (vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which has resulted or could
reasonably be expected to result in the imposition of a Lien or the posting of a
bond or other security, a certificate of the principal financial officer or the
principal accounting officer of the Borrower setting forth details as to such
occurrence and action, if any, which the Borrower or applicable member of the
ERISA Group is required or proposes to take;
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 49
(m) from time to time such additional information regarding the
financial position or business of the Borrower and the Subsidiaries as either
Agent, at the request of any Bank, may reasonably request; and
(n) within thirty (30) days after the end of each month, the
following reports: (i) a management narrative of the financial results of
Borrower; (ii) financial comparison of month to date and year to date
performance of the Borrower to prior year results and current year's budget;
(iii) a listing of the top ten concentration for accounts receivable and
accounts payable; (iv) a listing of the balance of inter-company loans to the
Foreign Subsidiaries; (v) consolidating profit and loss statement
(domestic/international); and (vi) SBU (i.e., strategic business unit) analysis
of sales, EBITDA and gross margin.
Section 5.02. Payment of Obligations. The Borrower will pay and
discharge, and will cause each of its Subsidiaries to pay and discharge, at or
before maturity, all their respective material obligations and liabilities,
including, without limitation, tax liabilities, except where the same may be
contested in good faith by appropriate proceedings, and will maintain, and will
cause each Subsidiary to maintain, in accordance with generally accepted
accounting principles, appropriate reserves for the accrual of any of the same.
Section 5.03. Maintenance of Property; Insurance.
(a) The Borrower will keep, and will cause each of its Subsidiaries
to keep, all property necessary in its business in good working order and
condition, ordinary wear and tear expected.
(b) The Borrower will maintain, and will cause each of its
Subsidiaries to maintain, insurance in such amounts and against such risks as is
customary for companies in the same or similar businesses, in each case with
financially sound and reputable insurers. The Collateral Agent shall be named as
loss payee on all property loss policies for inventory and the Collateral Agent
shall be named as additional insured on all liability policies.
Section 5.04. Conduct of Business and Maintenance of Existence. The
Borrower will continue, and will cause each of its Subsidiaries to continue, to
engage in business of the same general type as now conducted by the Borrower and
its Subsidiaries, and will preserve, renew and keep in full force and effect,
and will cause each of its Subsidiaries to preserve, renew and keep in full
force and effect, their respective corporate existence and their respective
rights, privileges and franchises necessary or desirable in the normal conduct
of business; provided that nothing in this Section 5.04 shall prohibit (i) any
merger of any Subsidiary of the Borrower permitted by Section 5.11(a) or (ii)
the termination of the corporate existence of any Subsidiary if the Borrower in
good faith determines that such termination is in the best interest of the
Borrower and is not materially disadvantageous to the Banks.
Section 5.05. Compliance with Laws. The Borrower will comply, and
cause each of its Subsidiaries to comply, in all material respects with all
applicable laws, ordinances, rules, regulations, and requirements of any
Governmental Authority (including, without limitation, Environmental Laws and
ERISA and the rules and regulations thereunder) except where the necessity of
compliance therewith is contested in good faith by appropriate proceedings or
where noncompliance would not have a Material Adverse Effect.
Section 5.06. Inspection of Property, Books and Records. The Borrower
will keep, and will cause each of its Subsidiaries to keep, proper books of
record and account in which full, true and correct entries shall be made of all
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 50
dealings and transactions in relation to its business and activities. The
Borrower will permit, and will cause each of its Subsidiaries to permit,
representatives of the Administrative Agent, at Borrower's expense to visit and
inspect any of their respective properties, to examine and make abstracts from
any of their respective books and records, to discuss their respective affairs,
finances and accounts with their respective officers and independent public
accountants and to otherwise conduct inventory inspections, appraisals,
collateral audits or other field examinations as follows: (a) unless an Event of
Default shall have occurred hereunder, the Administrative Agent may not conduct
more than two (2) field examinations in any calendar year; (b) unless Borrowing
Availability is less than $20,000,000 at any time during the period from
November 1 to April 30 of any year or an Event of Default shall have occurred at
any time, the Administrative Agent may not conduct, and the Borrower shall not
be obligated to pay for, more than one appraisal of the Inventory each calendar
year; and (c) the exercise by the Administrative Agent of its rights under this
sentence shall require reasonable prior notice to the Borrower and shall be
conducted during normal business hours in a reasonable manner so as not to
disrupt the normal conduct of the Borrower's business. Notwithstanding anything
contained to the contrary herein or in any of the Loan Documents, upon the
occurrence of an Event of Default, the Administrative Agent may visit and
inspect the Borrower, any of its Subsidiaries and any of their respective
properties in order to examine and make abstracts from any of their respective
books and records, to discuss their respective affairs, finances and accounts
with their respective officers and independent public accountants and to
otherwise conduct inventory inspections, appraisals, collateral audits or other
field examinations as often as may reasonably be desired. If Borrowing
Availability is less than $20,000,000 at any time during the period from
November 1 to April 30 of any year, then the Administrative Agent may conduct
one additional appraisal of the Inventory during such year at the Borrower's
expense. If an Event of Default shall have occurred hereunder at any time, the
Administrative Agent may conduct such number of appraisals of the Inventory as
it deems necessary in its reasonable sole discretion and the Borrower shall be
obligated to pay from all such appraisals. In addition, Administrative Agent has
the right at any time and from time to time, at the Borrower's expense, to
conduct routine and periodic verifications as to the existence and condition of
Accounts, in each case without prior notice to or consent of Borrower and
whether or not a Default exists. In conducting the verifications hereunder, the
Administrative Agent will advise the parties contacted that the verification is
routine. The Administrative Agent will not conduct verifications of Accounts
under this Section 5.06 more frequently than is reasonably necessary.
Section 5.07. Additional Guarantors. If at any time after the
Effective Date any Subsidiary (other than (a) a Guarantor or (b) any Foreign
Subsidiary that does not Guarantee any Obligations of the Borrower) is or
becomes a Material Subsidiary, the Borrower, within thirty (30) days of such
Subsidiary becoming a Material Subsidiary, will cause such Subsidiary to become
a Guarantor pursuant to the Guarantee Agreement.
Section 5.08. Amendment of Certain Documents. Neither the Borrower
nor any of its Subsidiaries shall, without the prior written consent of the
Administrative Agent, amend or modify the Primary Licensing Agreement where such
amendment or modification would have a Material Adverse Effect on rights of the
Banks thereunder. Borrowers shall, within fifteen (15) days of termination of
any material licensing or distribution agreement, provide Administrative Agent
with notice of such termination.
Section 5.09. Investments. Neither the Borrower nor any of its
Subsidiaries will make or acquire any Investment in any Person other than:
(a) Existing investments as more specifically identified on Schedule
5.09;
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 51
(b) Investments by the Borrower or any Guarantor in the Borrower or
any Guarantor, in addition to those disclosed on Schedule 5.09; provided,
however that such additional investments made after the effective date of the
Original Credit Agreement in any Subsidiary that is not a Guarantor shall be
limited to $5,000,000 in the aggregate for all such Subsidiaries;
(c) Advances to employees for business expenses or for personal needs
not to exceed $500,000 in the case of any one (1) employee outstanding at any
one time and not to exceed $2,500,000 in the aggregate to all such employees of
Borrower outstanding at any one time;
(d) investments in short-term obligations of the United States;
(e) demand deposits, certificates of deposit, bankers' acceptances
and time deposits of United States banks having total assets in excess of
$250,000,000;
(f) securities commonly known as "commercial paper" issued by a
corporation organized and existing under the laws of the United States or any
state thereof which at the time of purchase have been rated and the ratings for
which are not less than "P-1" if rated by ▇▇▇▇▇'▇ Investors Services, Inc., and
not less than "A-1" if rated by Standard & Poor's;
(g) fully collateralized repurchase agreements with a term of not
more than 30 days for securities described in clause (d) above and entered into
with a financial institution satisfying the criteria described in clause (e)
above;
(h) any other investments made by Borrower made after the effective
date of the Original Credit Agreement, the aggregate amount of which at no time
exceeds $5,000,000;
(i) investments in money market funds, liquid assets funds and other
similar funds purchasing, investing in or otherwise acquiring or holding only
investments otherwise permitted by paragraphs (d) through (g) of this Section
5.09;
(j) investments, in addition to those disclosed on Schedule 5.09, by
the Borrower or any Subsidiaries in any of the Foreign Subsidiaries who are not
Guarantors, for working capital or general corporate purposes, which when
aggregated with amounts committed under clause (ix) of the definition of
Permitted Indebtedness and outstanding Indebtedness under clause (xii) thereof
shall not exceed $50,000,000 in the aggregate; provided, that after giving
effect to any such investments, Borrowing Availability shall be at least
$15,000,000 and provided, further, any committed or outstanding amounts of
Indebtedness under clause (ix) of the definition of Permitted Indebtedness shall
permanently reduce dollar-for-dollar the amount of investments permitted under
this Section 5.09(j); and (k) Permitted Acquisitions.
Section 5.10. Negative Pledge. Neither the Borrower nor any of
its Subsidiaries will create, assume or suffer to exist any Lien on any asset
now owned or hereafter acquired by it, except the following:
(a) Liens securing Permitted Indebtedness to the extent expressly
permitted;
(b) Liens existing on the date of this Agreement identified on
Schedule 5.10 securing only the obligations identified on such Schedule;
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 52
(c) any Lien arising out of the refinancing, extension, renewal or
refunding of any Indebtedness secured by any Lien permitted by any of the
foregoing clauses of this Section; provided that such refinancing, extension,
renewal or refunding constitutes a Permitted Refinancing;
(d) Liens for taxes not delinquent or being contested in good faith
and by appropriate proceedings;
(e) deposits or pledges to secure obligations under workers'
compensation, social security or similar laws, or under unemployment insurance
or to secure the performance of bids, tenders, contracts (other than for the
repayment of borrowed money) or leases, or to secure statutory obligations or
surety or appeal bonds, or to secure indemnity, performance or other similar
bonds in the ordinary course of business;
(f) mechanics', workers', materialmen's, warehousemen's, lessor's or
other like Liens arising in the ordinary course of business with respect to
obligations which are not due or which are being contested in good faith; or
(g) Liens, other than those described in the forgoing clauses of this
Section, arising in the ordinary course of its business which (i) do not secure
Indebtedness or any monetary obligation and (ii) do not in the aggregate
materially detract from the value of its assets or materially impair the use
thereof in the operation of its business; provided, however, in any case such
Lien shall not secure obligations in excess of $2,000,000 in the aggregate
outstanding at any time.
Section 5.11. Consolidations, Mergers and Sales of Assets.
(a) Neither the Borrower nor any of its Subsidiaries will consolidate
or merge with or into any other Person, except that if, after giving effect
thereto, no Default shall have occurred and be continuing, (i) any Subsidiary of
the Borrower may be merged into the Borrower if the Borrower is the surviving
corporation, (ii) any Subsidiary of the Borrower may merge with any other
corporation (other than the Borrower) if such Subsidiary is the surviving
corporation; provided, that if a Guarantor is a party to any such merger, such
Guarantor shall be the surviving corporation and (iii) Permitted Acquisitions
and asset dispositions permitted pursuant to subsection (b) of this Section may
be consummated in the form of a merger, as long as, in the event of a Permitted
Acquisition, the Borrower or a Subsidiary is the surviving Person, provided that
any such merger involving a Person that is not a wholly owned Subsidiary
immediately prior to such merger shall not be permitted unless also permitted by
Section 5.09 and provided further that any such merger involving a Person that
is a Guarantor shall not be permitted unless such Guarantor is the surviving
Person.
(b) Neither the Borrower nor any of its Subsidiaries will sell, lease
or otherwise transfer any asset, except (i) in the ordinary course of its
business (which ordinary course shall include the sale or other disposition of
obsolete or excess inventory or intellectual property, fixtures or equipment to
the extent ordinary and consistent with past practice), (ii) sale of assets, not
in the ordinary course of business, which from and after the effective date of
the Original Credit Agreement do not in the aggregate exceed $25,000,000, (iii)
transfers made as Investments permitted by Section 5.09 or Restricted Payments
permitted by Section 5.14, or (iv) to the extent not otherwise permitted in
clauses (i) through (iii) of this clause (b), transfers of assets by the
Borrower or any Subsidiary to Borrower or to a Domestic Subsidiary or by one
Foreign Subsidiary to another Foreign Subsidiary if: (A) no Default exists or
would result; (B) the assets transferred do no include Accounts or Inventory;
(C) the assets transferred do not include any intellectual property necessary
for the manufacture or sale of the Inventory unless the Borrower shall have take
such action as the Administrative Agent may request to ensure that the
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 53
Collateral Agent will be able to utilize the intellectual property in question
pursuant to the license granted under the Security Agreement or otherwise to
liquidate the Inventory; and (D) with respect to any such transfer involving the
Borrower and the Domestic Subsidiaries, the party receiving the assets
transferred shall be the Borrower or a Guarantor or simultaneously with such
transfer will become a Guarantor and party to the Security Agreement. No Foreign
Subsidiary shall be required to become a Guarantor under this Section 5.11.
Section 5.12. Use of Proceeds and Letters of Credit. The proceeds of
the Loans (including Letters of Credit) will be used for on-going working
capital requirements of the Borrower and its Subsidiaries. In addition, proceeds
of the Loans may be used by the Borrower to fund the payments permitted by
Section 5.21. In the event any proceeds from the issuance of equity issued after
the date hereof are used to repay the Obligations, then subject to the other
terms and conditions of this Agreement, the Borrower may, within the twelve
months following the date of the receipt of such proceeds, request a Borrowing
hereunder in an amount equal to such proceeds with the amount of such Borrowing
used to make the payments permitted by Sections 5.14(c) and 5.21(d). Letters of
Credit will be issued only as (a) documentary Letters of Credit used only to
support obligations of the Borrower or any Subsidiary (other than a Foreign
Subsidiary) related to the purchase of Inventory in the ordinary course of
business or (b) standby Letters of Credit used to support other obligations of
the Borrower or any Subsidiary. None of such proceeds of the Loans will be used,
directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of buying or carrying any Margin Stock.
Section 5.13. Transactions with Affiliates. The Borrower will not,
nor will it permit any of its Subsidiaries to, directly or indirectly, enter
into any transaction, including any purchase, sale, lease or exchange of
property or rendering of services, with or for the benefit of any Affiliate,
other than (a) any such transaction expressly permitted by this Agreement
(including any Investment in an Affiliate expressly permitted under Section
5.09), (b) any such transactions where each of the parties thereto is either the
Borrower or a Guarantor or (c) any transaction entered into by the Borrower or
any Subsidiary which is (i) not otherwise prohibited under this Agreement, (ii)
in the ordinary course of business of such entity's business and (iii) upon fair
and reasonable terms no less favorable to such entity than it would obtain in a
comparable arm's-length transaction with a Person not an Affiliate.
Section 5.14. Restricted Payments. The Borrower will not, nor will it
permit any Subsidiary to make any Restricted Payments except:
(a) a dividend paid by a wholly-owned Subsidiary to the Borrower;
(b) from the period from the effective date of the Original Credit
Agreement and at all times thereafter, up to $4,000,000 in the aggregate of
payments pursuant to the existing Stock Repurchase Plan authorized by the Board
of Directors of the Borrower by written consent on January 20, 2000;
(c) redemption of the Seller Preferred with the proceeds of an equity
issuance; or
(d) as long as no Event of Default exists and is continuing, any
other payments made since the effective date of the Original Credit Agreement in
the aggregate amount which shall not exceed $1,000,000.
Section 5.15. Borrower or Guarantor Indebtedness. The Borrower will
not, nor will it permit any Subsidiary to, create, assume or otherwise be or
become liable with respect to any Indebtedness except:
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 54
(a) Indebtedness of the Borrower in respect of the Loans and the
Letters of Credit;
(b) Indebtedness of the Guarantors in respect of the Guarantees under
the Guarantee Agreement;
(c) Indebtedness owed by any Guarantor to the Borrower or any
Subsidiary or debt owed by the Borrower to any Subsidiary;
(d) Indebtedness incurred in connection with Swap Agreements entered
into in compliance with Section 5.18; or
(e) The Permitted Indebtedness.
The Borrower will not, nor will it permit any Subsidiary, to incur any
obligations under a "synthetic" lease of real property (i.e., a lease accounted
for under GAAP as an operating lease but intended by the parties for all other
purposes as a financing) or any other off balance sheet financing arrangement
relating to the financing of real property which is not reflected as a liability
on the balance sheets referred to in Section 4.04 or delivered pursuant to
Section 5.01 except for such obligations which in the aggregate do not exceed
$2,500,000 at any time outstanding.
Section 5.16. Sale and Lease Back Transaction. The Borrower will not,
nor will it permit any Subsidiary to, enter into any Sale and Lease Back
Transaction.
Section 5.17. Foreign Jurisdictions. The Borrower will inform
Administrative Agent upon qualifying (or causing its Material Subsidiaries to
qualify) to do business in any United States jurisdictions where it is not
presently qualified to do business.
Section 5.18. Swap Agreements. The Borrower will not, and will not
permit any of its Subsidiaries to, enter into any Swap Agreement, except (a)
Swap Agreements entered into to hedge or mitigate risks (including, without
limitation, currency and commodity risk), to which the Borrower or any
Subsidiary has actual exposure (other than those in respect of Capital Stock of
the Borrower or any of its Subsidiaries), (b) Swap Agreements entered into in
order to effectively cap, collar or exchange interest rates (from fixed to
floating rates, from one floating rate to another floating rate or otherwise)
with respect to any interest-bearing liability or investment of the Borrower or
any Subsidiary, and (c) forward purchase agreements entered into in respect of
the materials needed by the Borrower and the Subsidiaries in the ordinary course
of business.
Section 5.19. Minimum Quarterly Consolidated Debt Service Coverage
Ratio. If Average Borrowing Base Capacity (as defined below) is equal to or less
than $50,000,000 as of any fiscal quarter end, the Borrower will not permit the
ratio of Cash Flow to Debt Service to be less than 1.10 to 1.00, computed in
each case for the Borrower and its Consolidated Subsidiaries on a consolidated
basis in accordance with GAAP as of the end of such fiscal quarter for the
preceding twelve months. As used in this Section 5.19, the following terms shall
have the following meanings:
"Cash Flow" means, for any period, the sum of (i)
Consolidated EBITDA minus (ii) Capital Expenditures which were not
financed with Indebtedness permitted hereby; minus (iii) all income
and franchise taxes paid in cash.
"Debt Service" means, for any period, the sum of (i)
Consolidated Net Interest Expense plus (ii) regularly scheduled
principal payments made in respect of Indebtedness during such period
plus (iii) all cash Dividends paid during such period.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 55
"Average Borrowing Base Capacity" means, as of a fiscal
quarter end, an amount equal to the average daily balances of the sum
of the Borrower's domestic cash, domestic cash equivalents and
Borrowing Base Capacity for the thirty day period ending on the date
of calculation.
"Borrowing Base Capacity" means, on any date, an amount
equal to the Borrowing Base in effect on such date minus the
Committed Exposure on such date.
Section 5.20. Minimum Availability. Borrower shall at no time permit
the sum of the Borrowing Base minus the Committed Exposure to be less than
$15,000,000.
Section 5.21. Restriction on Payment of Indebtedness. Borrower will
not, nor will it permit any Subsidiary to, make or agree to pay or make,
directly or indirectly, any payment or other distribution (whether in cash
securities or other property) of or in respect of principal of or interest on
the Senior Notes, the Senior Secured Notes or the Borrower's 8.5% Junior
Subordinated Debenture Due 2004 dated September 17, 2002 in the principal amount
of $4,333,333.34 (all of the forgoing, herein the "Significant Debt"), or any
payment or other distribution (whether in cash, securities or other property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any of the
Significant Debt, except:
(a) payment of regularly scheduled interest and principal payments as
and when due, other than payments in respect of any subordinated Indebtedness
prohibited by the subordination provisions thereof;
(b) refinancing of Indebtedness to the extent permitted by Section
5.15;
(c) payment of the Senior Secured Notes that becomes due as a result
of the voluntary sale or transfer of the property or assets securing such
Indebtedness;
(d) any prepayment, purchase, redemption, or other acquisition of any
of the Significant Debt (each a "Prepayment") from the Net Proceeds of an equity
offering; and
(e) any other Prepayment which is not permitted by clause (d)
preceeding but only if:
(i) no Default exists or would result;
(ii) if the Prepayment is made:
(A) during the two fiscal quarters beginning on or about
May 1 and ending on or about October 31, then the sum of the following must
equal or exceed $25,000,000 as of the date of calculation (which date must not
be more than 30 days prior to the date of the Prepayment): (x) the most recent
Borrowing Base in effect on the calculation date; minus (y) the Committed
Exposure on the calculation date; minus (z) the amount of the Prepayment; or
(B) during the two fiscal quarters beginning on or about
November 1 and ending on or about April 30, then the sum of the following must
equal or exceed $50,000,000 as of the date of calculation (which date must not
be more than 30 days prior to the date of the Prepayment): (x) the most recent
Borrowing Base in effect on the calculation date; minus (y) the Committed
Exposure on the calculation date; minus (z) the amount of the Prepayment; and
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 56
(iii) the Borrower shall have delivered to the
Administrative Agent a certificate certifying as to its compliance with the
forgoing clauses (i) and (ii) and shall show in reasonable detail the
calculation required by clause (ii).
Section 5.22. Lockbox and Deposit Accounts. Borrower shall not, and
its shall not permit any Guarantor to, open any new lockbox account or otherwise
utilize any such lockbox account other than the lockbox accounts identified on
Schedule 4.19 unless it shall have given the Administrative Agent thirty (30)
days prior written notice thereof and shall have taken all action deemed
necessary or desirable by the Administrative Agent to cause the Collateral
Agent's security interest in the proceeds of Collateral to be perfected and
protected. Borrower will not, nor will it permit any Guarantor to, give any
party (other than the depository institution holding the Lockbox Account)
control over any Lockbox Account. At any time and from time to time within
fifteen days of the Administrative Agent's request, the Borrower shall provide
the Administrative Agent with a list identifying all deposit accounts owned by
the Borrower and each Guarantor and the institutions holding such accounts.
ARTICLE VI
Defaults
--------
Section 6.01. Events of Default. If one or more of the following
events ("Events of Default") shall have occurred and be continuing:
(a) (i) the Borrower shall fail to pay when due any principal on any
Loan or any reimbursement obligation in respect of a Letter of Credit
Disbursement or (ii) the Borrower shall fail to pay interest on any Loan, any
fees or any other amount payable hereunder or under any other Loan Document
within five (5) days of the time such amount is due;
(b) the Borrower shall fail to observe or perform any covenant
contained in Section 5.01 or any of Sections 5.08 to 5.21, inclusive;
(c) the Borrower shall fail to observe or perform any covenant or
agreement contained in any Loan Document (other than those covered by clause (a)
or (b) above) for thirty (30) days after written notice thereof has been given
to the Borrower by the Administrative Agent;
(d) any representation, warranty, certification or statement made by
the Borrower in this Agreement or any other Loan Document or in any certificate,
financial statement or other document delivered pursuant to this Agreement or
any other Loan Document shall prove to have been incorrect in any material
respect when made (or deemed made);
(e) the Borrower or any Subsidiary shall fail to make any payment in
respect of any Material Debt or Permitted Indebtedness when due or within any
applicable grace period;
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt or Permitted Indebtedness or
enables (or, with the giving of notice or lapse of time or both, would enable)
the holder of such Material Debt or Permitted Indebtedness or any Person acting
on such holder's behalf to accelerate the maturity thereof or, under
circumstances in the nature of a default, to require the prepayment or
repurchase thereof prior to the maturity thereof;
(g) the Borrower or any Subsidiary shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 57
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing;
(h) an involuntary case or other proceeding shall be commenced
against the Borrower or any Subsidiary seeking liquidation, reorganization or
other relief with respect to it or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of sixty (60) days; or an
order for relief shall be entered against the Borrower or any Subsidiary under
the federal bankruptcy laws as now or hereafter in effect;
(i) one or more judgments or orders for the payment of money in an
aggregate amount in excess of $5,000,000 shall be rendered against the Borrower
or any Subsidiary or a combination thereof and shall continue unsatisfied and
unstayed for a period of 60 days, or any action shall be legally taken by a
judgment creditor to levy upon assets or properties of the Borrower or any
Subsidiary to enforce any such judgment;
(j) a Change of Control shall occur;
(k) the Guarantee of any Guarantor under the Guarantee Agreement
shall cease to be, or shall be asserted by such Guarantor not to be, a valid and
binding obligation of such Guarantor, except as expressly contemplated by the
Guarantee Agreement;
(l) a contribution required to be made with respect to any defined
contribution plan has not been timely made, the Borrower or any Guarantor has
incurred or is likely to incur any liability to or on account of any defined
contribution plan under Section 409, 502(i) or 502(1) of ERISA or Section 4975
of the Code or on account of a group health plan (as defined in Section 607(1)
of ERISA or Section 4980B(g)(2) of the Code) under Section 4980B of the Code, or
the Borrower or any Guarantor has incurred or is likely to incur liabilities
pursuant to one or more employee welfare benefit plans (as defined in Section
3(1) of ERISA) that provide benefits to retired employees or other former
employees (other than as required by Section 601 of ERISA) or the Borrower or
any Guarantor has incurred or is likely to incur liabilities pursuant to one or
more Defined Contribution Plans; and such liability, individually, and/or in the
aggregate, has had, or is reasonably likely to have, a Material Adverse Effect;
then, and in every such event, the Administrative Agent shall (i) if
requested by the Required Banks, by notice to the Borrower terminate the
Commitments and they shall thereupon terminate, (ii) if requested by the
Required Banks holding Notes evidencing more than 50% in aggregate principal
amount of the Loans, by notice to the Borrower declare the Notes of the Borrower
(together with accrued interest thereon) to be, and the Notes (together with
accrued interest thereon) shall thereupon become, immediately due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower, or, (iii) if requested by the Required Banks,
do any combination of the foregoing; provided that in the case of any of the
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 58
Events of Default specified in clause (g) or (h) above with respect to the
Borrower, without any notice to the Borrower or any other act by the
Administrative Agent or the Banks, (i) the Commitments shall thereupon
terminate, (ii) the Notes of the Borrower (together with accrued interest
thereon) shall become immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrower and (iii) the Borrower shall be required to provide, immediately, cash
collateral as contemplated by Section 2.15(j) in an amount equal to the Letter
of Credit Exposure Upon the occurrence of any Event of Default, the
Administrative Agent may (and shall if directed by the Required Banks) exercise
any and all other rights and remedies afforded by the laws of the State of New
York or any other jurisdiction, by any of the Loan Documents, by equity, or
otherwise.
Section 6.02. Default. The Administrative Agent shall give notice to
the Borrower under Section 6.01(c) promptly upon being requested to do so by any
Bank and shall thereupon notify all the Banks thereof.
Section 6.03. Management; Collection of Accounts.
(a) Upon the occurrence of an Event of Default, the Borrower will, at
the Required Banks' request, at the Borrower's cost and expense, collect and
otherwise enforce as Banks' property and in trust for Collateral Agent for the
ratable benefit of the Administrative Agent and the Banks all amounts payable on
or otherwise receivable with respect to the Accounts and Inventory of the
Borrower. In such event, as to all moneys so collected and all other proceeds of
Accounts and Inventory received by the Borrower, the Borrower shall receive in
trust and shall deliver to Administrative Agent (or to a Lockbox Account or the
Concentration Account) in original form and on the date of receipt thereof, all
checks, drafts, notes, money orders, acceptances, cash and other evidences of
Indebtedness. Upon any termination of the Borrower's authority to collect and
enforce the Accounts and amounts payable with respect to Inventory (which
Administrative Agent may do at any time after the occurrence of an Event of
Default, or the occurrence of any event which, with the passage of time or
giving of a Default notice or both, would constitute an Event of Default),
Administrative Agent may send a notice of assignment and/or notice of the
Collateral Agent's security interest to any and all customers or any third party
otherwise concerned with any of the Accounts or such Inventory, and thereafter
Administrative Agent shall have the sole right to collect and receive and/or
take possession of the Accounts and such other amounts and the books and records
relating thereto.
(b) (i) the Borrower hereby constitutes the Agents or their
respective designees on behalf of the Banks as the Borrower's attorney-in-fact
with power: to receive, endorse, assign and/or deliver in its name or the name
of the Borrower any notes, acceptances, checks, drafts, money orders or other
evidences of payment or account that may come into its possession and the
Borrower hereby waives notice of presentment, protest and non-payment of any
instrument so endorsed; to sign the Borrower's name on any invoice or ▇▇▇▇ of
lading relating to any of the Accounts; and to send verifications of Accounts;
to do all other acts and things necessary to carry out this Agreement and, upon
the occurrence of an Event of Default, to notify postal service authorities to
change the address for delivery of mail addressed to the Borrower to such
address as the Agents may designate. All acts of said attorney or designee are
hereby ratified and approved, and said attorney or designee shall not be liable
for any acts of omission or commission, for any error of judgment or for any
mistake of fact or law, provided that the Agents or their respective designees
shall not be relieved of liability to the extent it is determined by a final
judicial decision that its act, error or mistake constituted gross negligence or
willful misconduct. This power of attorney, being coupled with an interest, is
irrevocable until all of the obligations of the Borrower to the Agents and the
Banks under this Agreement and the Notes are paid in full and the Commitments
are terminated.
(ii) The Collateral Agent, on behalf of the Banks,
without notice to or consent of the Borrower but acting only at the direction of
the Administrative Agent or the Required Banks, upon the occurrence of an Event
of Default, (A) may make demand on, ▇▇▇ upon or otherwise collect, extend the
time of payment of, or compromise or settle for cash, credit or otherwise upon
such terms as shall be determined by Administrative Agent in its sole
discretion, any of the Accounts or any securities, instruments or insurance
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 59
applicable thereto and/or release the obligor thereon; and (B) is authorized and
empowered to accept the return of the goods represented by any of the Accounts.
(c) Nothing herein contained shall be construed to constitute the
Borrower as agent of Administrative Agent or the Collateral Agent for any
purpose whatsoever, and neither Agent shall be responsible or liable for any
shortage, discrepancy, damage, loss or destruction of any part of the Collateral
wherever the same may be located and regardless of the cause thereof (except for
the Agents' obligations, if any, under the Uniform Commercial Code with respect
thereto or to the extent it is determined by a final judicial decision that
either Agent's act or omission constituted gross negligence or willful
misconduct). Neither Agent shall, under any circumstances or in any event
whatsoever, have any liability for any error or omission or delay of any kind
occurring in the settlement, collection or payment of any of the Accounts or any
instrument received in payment thereof or for any damage resulting therefrom
(except to the extent it is determined by a final judicial decision that either
Agent's error, omission or delay constituted gross negligence or willful
misconduct). The Agents, by anything herein or in any assignment or otherwise,
do not assume any of the Borrower's obligations under any contract or agreement
assigned to either Agent, and no Agent shall be responsible in any way for the
performance by Borrower of any of the terms and conditions thereof.
(d) If any of the Accounts include a charge for any tax payable to
any governmental tax authority, the Administrative Agent is hereby authorized
(but in no event obligated) to pay the amount thereof to the proper taxing
authority for the Borrower's account and to charge Borrower's account therefor.
The Borrower shall notify the Administrative Agent if any Accounts include any
tax due to any such taxing authority and, in the absence of such notice, the
Administrative Agent shall have the right to retain the full proceeds of such
Accounts and shall not be liable for any taxes that may be due from the Borrower
by reason of the sale and delivery creating such Accounts.
Section 6.04. Status of Accounts.
(a) With respect to Eligible Accounts Receivable of the Borrower in
existence on the date hereof and at the time any future Eligible Accounts
Receivable are included in any Borrowing Base Certificate, the Borrower
represents and warrants that:
(i) the Borrower is the sole owner of the Account and is
fully authorized to sell, transfer, pledge and/or grant a security interest in
each and every Account, free and clear of all liens except in favor of
Collateral Agent for the ratable benefit of the Administrative Agent and the
Banks or otherwise permitted hereunder;
(ii) each Account is a good and valid account
representing a bona fide transaction completed in accordance with the terms and
provisions contained in any documents related thereto;
(iii) the amount of the face value shown on any schedule
of Accounts provided to the Administrative Agent and/or all invoices and
statements delivered to the Agents with respect to any Account, are actually and
absolutely owing to the Borrower for delivery of goods or services and are not
contingent for any reason;
(iv) to the best of the Borrower's knowledge, there are
no setoffs, counterclaims or disputes existing or asserted with respect thereto,
the Account is not subject to a contra account, and the Borrower has not made
any agreement with any account debtor thereunder for any deduction therefrom,
except a discount or allowance allowed by the Borrower in the ordinary course of
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 60
its business for prompt payment consistent with past practices of the Borrower,
all of which discounts or allowances are reflected in the calculation of the
face value of each respective invoice related thereto;
(v) none of the transactions underlying or giving rise
to any Account shall violate in any material respect any applicable state or
federal laws or regulations, and all documents relating to any Account shall be
legally sufficient under such laws or regulations and shall be legally
enforceable in accordance with their terms;
(vi) to the best of the Borrower's knowledge, all
signatures and endorsements that appear on all documents and agreements relating
to Accounts are genuine and each account debtor, guarantor or endorser
thereunder (i) had the capacity, power and authority to contract at the time any
such document or agreement giving rise to the Account was executed and (ii) is
solvent and will continue to be fully able to pay all Accounts on which it is
obligated in full when due;
(vii) all documents and agreements relating to Accounts
are true and correct and in all respects what they purport to be and are not
evidenced by a judgment;
(viii) to the best of the Borrower's knowledge, there
are no facts, events or occurrences which in any way impair the validity or
enforcement thereof or tend to reduce the amount payable or collectible
thereunder from the amount of the invoice face value shown on any schedule of
Accounts, and on all contracts, invoices and statements delivered to the Agents
with respect thereto;
(ix) the goods giving rise thereto are not, and were not
at the time of the sale thereof, subject to any lien, claim, encumbrance or
security interest, except the lien of the Borrower as vendor thereof pursuant to
the Uniform Commercial Code, the security interest of the Collateral Agent for
the benefit of the Administrative Agent and the Banks pursuant to the Loan
Documents;
(x) to the best of the Borrower's knowledge, there are
no proceedings or actions which are threatened or pending against any account
debtor thereunder which might result in any material adverse change in the
financial condition of such account debtor; and
(xi) they have not been pledged to any other Person.
(b) the Borrower covenants that, from and after the date hereof:
(i) the Borrower shall maintain books and records
pertaining to said Collateral in such detail, form and scope as Banks shall
reasonably require;
(ii) the Borrower will, promptly upon learning thereof,
report to the Administrative Agent any matters materially adversely affecting
the value, enforceability or collectibility of any of the Accounts;
(iii) if any amount payable under or in connection with
any Account is evidenced by a promissory note or other instrument, as such terms
are defined in the Uniform Commercial Code, such promissory note or instrument
shall be immediately pledged, endorsed, assigned and delivered to Collateral
Agent for the ratable benefit of the Administrative Agent and the Banks as
additional collateral;
(iv) other than in the ordinary course of business, the
Borrower shall not re-date any invoice or sale, or make sales on extended terms
dating beyond that customary in the industry;
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 61
(v) The Borrower shall conduct a physical count of its
inventory at such intervals as the Administrative Agent may reasonably request,
and promptly supply the Administrative Agent with a copy of such counts
accompanied by a report of the value (based on the lower of average cost basis
and market value) of such inventory;
(vi) The Borrower shall not, without the Administrative
Agent's prior written consent, grant any extension of the time of payment of any
Eligible Account Receivable, compromise or settle any Eligible Account
Receivable for less than the full amount thereof, release in whole or in part,
any Person or property liable for the payment thereof, or allow any credit or
discount whatsoever thereon (other than discounts in the ordinary course of
business for prompt payment consistent with past practices); provided, that, the
Borrower may without the Administrative Agent's prior written consent grant
extensions of time of payment for Accounts which are not Eligible Accounts
Receivable, or compromise or settle any such Accounts for less than the full
amount thereof or allow a credit or discount on any such Account, so long as
such extension, compromise, settlement, credit or discount is in the ordinary
course of the Borrower's business consistent with past practices and on such
terms as may be customary in the industry.
Section 6.05. Collateral Custodian. Upon the occurrence of an Event
of Default, the Administrative Agent may at any time and from time to time
employ and maintain in the premises of the Borrower a custodian selected by the
Administrative Agent who shall have full authority to do all acts necessary to
protect Banks' interests and to report to the Administrative Agent thereon. The
Borrower hereby agrees to cooperate with any such custodian and to do whatever
the Administrative Agent may reasonably request to preserve the collateral. All
costs and expenses incurred by the Administrative Agent by reason of the
employment of the custodian shall be charged to the Borrower's account and added
to the amounts due and owing under this Agreement and the Notes.
Section 6.06. Performance by the Agent. If Borrower or any Guarantor
shall fail to perform any covenant or agreement in accordance with the terms of
the Loan Documents, either Agent may, at the direction of Required Banks,
perform or attempt to perform such covenant or agreement on behalf of Borrower
or the applicable Guarantor. In such event, the Borrower shall, at the request
of the Administrative Agent, promptly pay any necessary and reasonable amount
expended by the applicable Agent or the Banks in connection with such
performance or attempted performance. Notwithstanding the foregoing, it is
expressly agreed that neither the Administrative Agent, the Collateral Agent nor
any Bank shall have any liability or responsibility for the performance of any
obligation of Borrower or any Guarantor under any Loan Document. An Agent may be
obligated to pay certain amounts to the financial institutions party to the
Lockbox Agreements from time to time, including without limitations, fees owed
to such financial institutions arising from their lock box and other deposit
account services and amounts sufficient to reimburse such financial institutions
for the amount of any item deposited in the related account which is returned
unpaid. In the event an Agent is required to pay any such amounts, the
applicable Agent shall notify Borrower and Borrower shall promptly pay any
amount so expended by such Agent to the such Agent. Amounts due and unpaid under
this Section 6.06 may be funded as Swingline Loans or other Loans pursuant to
the terms of Section 2.02(ii).
ARTICLE VII.
The Administrative Agent
------------------------
Section 7.01. Appointment and Authorization. Fleet National Bank
hereby resigns as the "Agent" under the Original Credit Agreement (except to the
extent necessary to continue its role as the "Collateral Agent" as described
below). Each Bank irrevocably appoints and authorizes JPMorgan Chase Bank to
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 62
take such action as agent on its behalf and to exercise such powers under this
Agreement and the other Loan Documents as are delegated to the Administrative
Agent by the terms hereof or thereof, together with all such powers as are
reasonably incidental thereto. The Borrower hereby approves the appointment of
JPMorgan Chase Bank as Administrative Agent hereunder. The Administrative Agent
and each Bank irrevocably appoints and authorizes Fleet National Bank to act as
its nominee as collateral agent under this Agreement and the other Loan
Documents (and continues the appointment of Fleet National Bank as the "Agent"
under the Original Credit Agreement but only with respect to the Liens granted
to the "Agent" under the Original Credit Agreement and the Loan Documents
executed pursuant thereto) with such powers as are specifically designates to
the Collateral Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as a reasonably incidental thereto,
including, without limitation, to act as nominee for and behalf of the
Administrative Agent and the Banks under this Agreement and the Loan Documents
and in connection with the Lockbox Accounts with respect to the Liens created by
the Security Agreement, and except, as otherwise expressly set forth herein, to
take such action as may be requested by the Administrative Agent or the Required
Banks: provided, that, unless and until Collateral Agent shall have received any
such request, Collateral Agent may take such administrative action, as it may
deem advisable to protect the value of the Collateral and the ability of the
Banks to realize the full amount thereof.
Section 7.02. Agents and Affiliates. JPMorgan Chase Bank and Fleet
National Bank shall have the same rights and powers under this Agreement as any
other Bank and may exercise or refrain from exercising the same as though it
were not the Administrative Agent or the Collateral Agent (as applicable), and
JPMorgan Chase Bank, Fleet National Bank and their respective affiliates may
accept deposits from, lend money to, and generally engage in any kind of
business with the Borrower or any Subsidiary or Affiliate of the Borrower as if
it were not an Agent hereunder.
Section 7.03. Action by Agent. The obligations of either Agent under
this Agreement or any other Loan Documents are only those expressly set forth
herein or therein. Without limiting the generality of the foregoing, neither
Agent shall be required to take any action with respect to any Default, except
as expressly provided in Article VI.
Section 7.04. Consultation with Experts. Each Agent may consult with
legal counsel (who may be counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
Section 7.05. Liability of Agent. Neither Agent nor any of their
respective directors, officers, agent, or employees shall be liable for any
action taken or not taken by it in connection herewith (i) with the consent or
at the request of the Required Banks or, with respect to the Collateral Agent,
at the request of the Administrative Agent or (ii) in the absence of its own
gross negligence or willful misconduct. Neither Agent nor any of their
respective directors, officers, agents or employees shall be responsible for or
have any duty to ascertain, inquire into or verify (i) any statement, warranty
or representation made in connection with this Agreement or any other Loan
Document or any Borrowing hereunder; (ii) the performance or observance of any
of the covenants or agreements of the Borrower or any Guarantor; (iii) the
satisfaction of any condition specified in Article III, except receipt of items
required to be delivered to the Administrative Agent; or (iv) the validity,
effectiveness or genuineness of this Agreement, the other Loan Documents or any
other instrument or writing furnished in connection herewith or therewith unless
specifically requested to do so by a Bank. Neither Agent shall incur any
liability by acting in reliance upon any notice, consent, certificate,
statement, or other writing (which may be a bank wire, telex or similar writing)
believed by it in good faith to be genuine or to be signed by the proper party
or parties.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 63
Section 7.06. Indemnification. Each Bank shall, in accordance with
its Applicable Percentage, indemnify each Agent and each Agent's Related Parties
(to the extent not reimbursed by the Borrower) against any cost, expense
(including counsel fees and disbursements), claim, demand, action, loss or
liability (except such as result from the indemnified parties' gross negligence
or willful misconduct) that either Agent or any of their respective Related
Parties may suffer or incur in connection with this Agreement or any other Loan
Document (including, without limitation, in connection with the Lockbox
Accounts) or any action taken or omitted by such Agent or Related Party
hereunder or thereunder. If a Bank makes any indemnification payment to an
indemnified party pursuant to this Section and thereafter such party receives
payment from the Borrower in respect of the same indemnified amount, such
indemnified party shall reimburse such Bank to the extent of its ratable share
of such payment received by such party.
Section 7.07. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon either Agent or any other Bank, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon either Agent
or any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement.
Section 7.08. Successor Agents. The Administrative Agent may resign
at any time by giving at least 15 days prior written notice thereof to the
Banks, the Collateral Agent and the Borrower. Upon any such resignation, the
Required Banks shall have the right to appoint a successor Administrative Agent
approved by the Borrower (such approval not to be unreasonably withheld);
provided that no approval of the Borrower shall be necessary if an Event of
Default has occurred and is continuing. If no successor Administrative Agent
shall have been so appointed by the Required Banks and, if required, approved by
the Borrower and shall have accepted such appointment, within 30 days after the
retiring Administrative Agent gives notice of resignation, then the retiring
Administrative Agent may, on behalf of the Banks, appoint a successor
Administrative Agent, which shall be a commercial bank organized or licensed
under the laws of the United States or of any State thereof and having a
combined capital and surplus of at least $50,000,000. The Collateral Agent may
resign at any time by giving at least 30 days prior written notice thereof to
the Administrative Agent, the Banks and the Borrower. Upon any such resignation,
the Administrative Agent shall have the right to appoint a successor Collateral
Agent approved by the Borrower (such approval not to be unreasonably withheld);
provided that no approval of the Borrower shall be necessary if an Event of
Default has occurred and is continuing. Upon the acceptance of its appointment
as an Agent, each successor Agent shall thereupon succeed to and become vested
with all the rights and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations. After any retiring Agent's
resignation hereunder as an Agent, the provisions of this Article shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent.
Section 7.09. Administrative Agent's Fees. The Borrower shall pay to
the Administrative Agent for its own account fees in the amounts and at the
times previously agreed upon between the Borrower and the Administrative Agent.
Section 7.10. Sub-Agent; Issuing Banks; Swingline Lender. Either
Agent may perform any of its obligations and exercise any of its rights under
the Loan Documents by or through sub-agent. The provisions of this Article VII
shall inure to the benefit of any sub-agent of any Agent, each Issuing Bank and
the Swingline Lender in the same manner and to the same extent as they inure to
the benefit of the such Agent.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 64
Section 7.11. Perfection by Possession and Control; Deposit Accounts.
The Administrative Agent and the Collateral Agent hereby appoint each of the
other Banks to serve as bailee to perfect Collateral Agent's Liens in any
Collateral in the possession of any such other Bank. Each Bank possessing any
Collateral agrees to so act as bailee for the Collateral Agent in accordance
with the terms and provisions hereof. In furtherance of the forgoing, each Bank
acknowledges that the Borrower and certain of the Guarantors maintain deposit
accounts at one or more of the Banks (all such accounts the "Loan Party
Accounts"). Each Bank agrees to hold its Loan Party Accounts as bailee for the
Collateral Agent to perfect the Collateral Agent's Liens in the proceeds of
Collateral held therein. Each Bank who holds a Lockbox Account agrees to pay to
the Administrative Agent on a daily basis by automated clearinghouse debit for
credit to the Concentration Account or by wire transfer all collected funds on
deposit in its Lockbox Accounts. The Administrative Agent shall be the only
party entitled to make withdrawals from or otherwise give any direction with
respect to the Lockbox Accounts. Prior to the receipt by a Bank of a written
notice of an Event of Default from the Administrative Agent, the Borrower and
the Guarantors are entitled to make withdrawals from the Loan Party Accounts
which are not Lockbox Accounts and make deposits into all the Loan Party
Accounts. When a Bank has received a written notice of an Event of Default from
the Administrative Agent, (a) the Administrative Agent shall be the only party
entitled to make withdrawals from or otherwise give any direction with respect
to the Loan Party Accounts, and (b) each Bank shall transfer, in immediately
available funds by wire transfer to the Administrative Agent, the amount of the
collected funds credited to the Loan Party Accounts it holds (to the extent not
already doing so with respect to Lockbox Accounts) and deliver to the
Administrative Agent all moneys or instruments relating thereto or held therein
and any other Collateral at any time the Administrative Agent demands payment or
delivery thereof by such written notice to such Bank. The Borrower and each
Guarantor agrees that each Bank is authorized to immediately deliver all the
Collateral to the Administrative Agent upon the Bank's receipt of such notice
from the Administrative Agent. No Bank (other than the Administrative Agent
acting for the benefit of the Secured Parties) shall exercise any right of
set-off or banker's lien against any Loan Party Account for any obligations
other than the Obligations; provided that a Bank shall be entitled to charge, or
set-off against a Loan Party Account and retain for its own account, any
customary fees, costs, charges and expenses owed to it in connection with the
opening, operating and maintaining such Loan Party Account and for the amount of
any item credited to such Loan Party Account that is subsequently returned for
any reason.
Section 7.12. Powers and Immunities of Issuing Bank and Swingline
Lender. Neither the Issuing Bank, the Swingline Lender nor any of their
respective Related Parties shall be liable for any action taken or omitted to be
taken by any of them hereunder or otherwise in connection with any Loan Document
except for its or their own gross negligence or willful misconduct. Without
limiting the generality of the preceding sentence, neither the Issuing Bank nor
the Swingline Lender: (i) shall have any duties or responsibilities except those
expressly set forth in the Loan Documents, and shall not by reason of any Loan
Document be a trustee or fiduciary for any Bank or for either Agent, (ii) shall
be required to initiate any litigation or collection proceedings under any Loan
Document, (iii) shall be responsible to any Bank or either Agent for any
recitals, statements, representations, or warranties contained in any Loan
Document, or any certificate or other documentation referred to or provided for
in, or received by any of them under, any Loan Document, or for the value,
validity, effectiveness, enforceability, or sufficiency of any Loan Document or
any other documentation referred to or provided for therein or for any failure
by any Person to perform any of its obligations thereunder, (iv) may consult
with legal counsel (including counsel for the Borrower), independent public
accountants, and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants, or experts, and (v) shall incur no
liability under or in respect of any Loan Document by acting upon any notice,
consent, certificate, or other instrument or writing believed by it to be
genuine and signed or sent by the proper party or parties. As to any matters not
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 65
expressly provided for by any Loan Document, the Issuing Bank and the Swingline
Lender shall in all cases be fully protected in acting, or in refraining from
acting, hereunder in accordance with instructions signed by the Required Banks,
and such instructions of the Required Banks and any action taken or failure to
act pursuant thereto shall be binding on the Agents and all of the other Banks;
provided, however, that neither the Issuing Bank nor the Swingline Lender shall
be required to take any action which exposes it to personal liability or which
is contrary to any Loan Document or applicable law.
ARTICLE VIII.
Change in Circumstances
-----------------------
Section 8.01. Basis for Determining Interest Rate Inadequate or
Unfair. If on or prior to the first day of any Interest Period for any LIBOR
Rate Borrowing Required Banks advise the Administrative Agent that the LIBOR
Rate, as determined by the Administrative Agent will not adequately and fairly
reflect the cost to such Banks of funding their LIBOR Loans for such Interest
Period, the Administrative Agent shall forthwith give notice thereof to the
Borrower and the Banks, whereupon until the Administrative Agent notifies the
Borrower that the circumstances giving rise to such suspension no longer exist,
(i) the obligations of the Banks to make LIBOR Loans or to convert outstanding
Loans into LIBOR Loans shall be suspended, (ii) each outstanding LIBOR Loan
shall be converted into a Base Rate Loan on the last day of the then current
Interest Period applicable thereto, and (iii) unless the Borrower notifies the
Administrative Agent at least two Domestic Business Days before the date of any
LIBOR Rate Borrowing for which a Notice of Borrowing has previously been given
that it elects not to borrow on such date shall instead be made as a Base Rate
Borrowing.
Section 8.02. Illegality. If, on or after the date of this Agreement,
the adoption of any applicable law, rule or regulation, or any change therein,
or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
LIBOR Lending Office) with any request or directive (whether or not having the
force of law) of any such authority, central bank or comparable agency shall
make it unlawful or impossible for any Bank (or its LIBOR Lending Office) to
make, maintain or fund its LIBOR Loans and such Bank shall so notify the
Administrative Agent, the Administrative Agent shall forthwith give notice
thereof to the other Banks and the Borrower, whereupon until such Bank notifies
the Borrower and the Administrative Agent that the circumstances giving rise to
such suspension no longer exist, the obligation of such Bank to make LIBOR Loans
to the Borrower shall be suspended. Before giving any notice to the
Administrative Agent pursuant to this Section, such Bank shall designate a
different LIBOR Lending Office if such designation will avoid the need for
giving such notice and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. If such Bank shall determine that it may not
lawfully continue to maintain and fund any of its outstanding LIBOR Loans to the
Borrower to maturity and shall so specify in such notice, the Borrower shall
immediately prepay in full the then outstanding principal amount of each such
LIBOR Loan, together with accrued interest thereon. Concurrently with prepaying
each such LIBOR Loan, the Borrower shall borrow a Base Rate Loan in an equal
principal amount from such Bank (on which interest and principal shall be
payable contemporaneously with the related LIBOR Loans of the other Banks), and
such Bank shall make such a Base Rate Loan.
Section 8.03. Increased Cost and Reduced Return.
(a) If on or after the date hereof, in the case of any Loan or any
obligation to make Loans, the adoption of any applicable law, rule or
regulation, or any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 66
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Applicable Lending
Office) with any request or directive (whether or not having the force of law)
of any such governmental authority, central bank or comparable agency shall
impose, modify or deem applicable any reserve, special deposit, insurance
assessment or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve System,
against assets of, deposits with or for the account of, or credit extended by,
any Bank (or its Applicable Lending Office) or shall impose on any Bank (or its
Applicable Lending Office) or on the United States market for certificates of
deposit or the London interbank market any other condition affecting its LIBOR
Loans or Letters of Credit or its obligation to make such LIBOR Loans or issue
Letters of Credit and the result of any of the foregoing is to increase the cost
to such Bank (or its Applicable Lending Office) of making or maintaining any
LIBOR Loan to the Borrower or issuing or maintaining any letter of Credit, or to
reduce the amount of any sum received or receivable by such Bank (or its
Applicable Lending Office) under this Agreement or under its Notes with respect
thereto, by an amount reasonably deemed by such Bank to be material, then,
within 15 days after demand by such Bank setting forth the circumstances giving
rise to such demand and a calculation of the amount or amounts demanded (with a
copy to the Administrative Agent), the Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank for such increased
cost or reduction.
(b) If any Bank shall have determined that, after the date hereof,
the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or any request
or directive regarding capital adequacy (whether or not having the force of law)
of any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on capital of such Bank (or its Parent) as
a consequence of such Bank's obligations hereunder to a level below that which
such Bank (or its Parent) could have achieved but for such adoption, change,
request or directive (taking into consideration its policies with respect to
capital adequacy) by an amount deemed by such Bank to be material, then from
time to time, within 15 days after demand by such Bank (with a copy to the
Administrative Agent), the Borrower shall pay to such Bank such additional
amount or amounts as will compensate such Bank (or its Parent) for such
reduction.
(c) Each Bank will promptly notify the Borrower and the
Administrative Agent of any event of which it has knowledge, occurring after the
date hereof, which will entitle such Bank to compensation pursuant to this
Section and will designate a different Applicable Lending Office if such
designation will avoid the need for, or reduce the amount of, such compensation
and will not, in the judgment of such Bank, be otherwise disadvantageous to such
Bank. A certificate of any Bank claiming compensation under this Section and
setting forth the additional amount or amounts to be paid to it hereunder shall
be conclusive in the absence of manifest error. In determining such amount, such
Bank may use any reasonable averaging and attribution methods.
(d) Failure or delay on the part of a Bank or an Issuing Bank to
demand compensation pursuant to this Section shall not constitute a waiver of
such Bank's or such Issuing Bank's, as the case may be, right to demand such
compensation; provided that the Borrower shall not be required to compensate a
Bank pursuant to this Section for any increased costs or reduced returns
incurred more than 270 days prior to the date such Bank notifies the Borrower
thereof and of such Bank's intention to claim compensation therefor; provided
further that, if the change in law or in the application of law giving rise to
such increased costs or reduced returns is retroactive, than the 270-day period
referred to above shall be extended to include the period of retroactive effect
thereof.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 67
(e) The provisions of this Section also shall inure to the benefit of
each Issuing Bank in its capacity as such.
Section 8.04. Taxes.
(a) For purposes of this Section 8.04(a), the following terms have
the following meanings:
"Taxes" means any and all present or future taxes, duties,
levies, imposts, deductions, charges or withholdings with respect to
any payment by the Borrower pursuant to this Agreement or under any
Note, and all liabilities with respect thereto, including any taxes,
duties, levies, imposts, deductions, charges or withholdings with
respect to any payment by the Borrower that would not have been
imposed on a payment by the Borrower, but excluding (i) in the case
of each Bank and each Agent, taxes imposed on its income, and
franchise or similar taxes imposed on it, by a jurisdiction under the
laws of which such Bank or Agent (as the case may be), is organized
or in which its principal executive office is located or, in the case
of each Bank, in which its Applicable Lending Office is located, (ii)
in the case of each Bank and each Agent, taxes imposed solely by
reason of such Bank or Agent (as the case may be) doing business in
the jurisdiction imposing such tax, other than as a result of this
Agreement or any Note or any transaction contemplated hereby
(including the negotiation of any of the foregoing) and (iii) in the
case of each Bank, any withholding tax imposed on such payments but
only at a rate equal to the United States withholding tax that such
Bank is (or would be) subject to on such payments by the Borrower at
the time such Bank first becomes a party to this Agreement.
"Other Taxes" means any present or future stamp or
documentary taxes and any other excise or property taxes, or similar
charges or levies, which arise from any payment made pursuant to this
Agreement or under any Notes or from the execution or delivery of, or
otherwise with respect to, this Agreement or any Note.
(b) Any and all payments by the Borrower to or for the account of any
Bank or either Agent hereunder or under any Note shall be made without deduction
for any Taxes or Other Taxes; provided that, if the Borrower shall be required
by law to deduct any Taxes or Other Taxes from any such payments, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section) the Bank or Agent (as the case may be) receives an amount equal to
the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions, (iii) the Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law and (iv) the Borrower shall furnish to the
Administrative Agent, at its address referred to in Section 9.01, the original
or a certified copy of a receipt evidencing payment thereof.
(c) The Borrower agrees to indemnify each Bank and each Agent for the
full amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed or asserted on amounts payable under this Section) paid by
such Bank or the applicable Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto. This indemnification shall be paid within 15 days after such Bank or
Agent (as the case may be) makes demand therefor. After any Bank or Agent (as
the case may be) learns of the imposition of Taxes or Other Taxes, such Bank or
Agent (as the case may be) will act in good faith promptly to notify the
relevant Borrower of its obligations hereunder.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 68
(d) Each Foreign Bank, on or prior to the date of its execution and
delivery of this Agreement in the case of each Bank listed on the signature
pages hereof and on or prior to the date on which it becomes a Bank in the case
of each other Bank, and from time to time thereafter if requested in writing by
the Borrower (but only so long as such Bank remains lawfully able to do so),
shall provide the Borrower and the Administrative Agent with the appropriate
form or forms (including any forms required to replace forms previously provided
because of a change in a Bank's place of organization, principal office or
Applicable Lending Office, or in the event that any forms are no longer valid
because of their expiration or a change in law or regulations, other appropriate
evidence of exemption or reduction as reasonably requested by the Borrower),
certifying that such Bank is entitled to benefits under an income tax treaty to
which the United States is a party which exempts the Bank from withholding tax
imposed by the United States or reduces the rate of withholding tax (if any) on
payments of interest for the account of such Bank or certifying that the income
receivable pursuant to this Agreement is otherwise not subject to such
withholding tax.
(e) For any period with respect to which a Bank has failed to provide
the Borrower or the Administrative Agent with the appropriate form as required
by Section 8.04(d) (unless such failure is due to a change in treaty, law or
regulation occurring subsequent to the date on which such form originally was
required to be provided), such Bank shall not be entitled to indemnification
under Section 8.04(b) or (c) with respect to the withholding taxes that would
not have been imposed if such form had been provided; provided that if a Bank,
which is otherwise exempt from or subject to a reduced rate of withholding tax,
becomes subject to Taxes because of its failure to deliver a form required
hereunder, the Borrower shall take such steps as such Bank shall reasonably
request to assist such Bank to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for
the account of any Bank pursuant to this Section, then such Bank will change the
jurisdiction of its Applicable Lending Office if such change (i) will eliminate
or reduce any such additional payment which may thereafter accrue and (ii) in
the judgment of such Bank, is not otherwise disadvantageous to such Bank.
(g) If a Bank or an Agent shall receive a refund (including any
offset or credit) from a taxation authority (as a result of any error in the
imposition of Taxes or Other Taxes by such taxation authority) of any Taxes or
Other Taxes paid by the Borrower pursuant to Section 8.04(b) or (c), such Bank
or Agent (as the case may be) shall promptly pay to the Borrower the amount so
received, with interest received from the taxation authority with respect to
such refund.
Section 8.05. Base Rate Loans Substituted for Affected LIBOR Loans.
If (i) the obligation of any Bank to make LIBOR Loans to the Borrower has been
suspended pursuant to Section 8.02 or (ii) any Bank has demanded compensation
from the Borrower under Section 8.03 or 8.04 with respect to its LIBOR Loans and
the Borrower shall, by at least five LIBOR Business Days' prior notice to such
Bank through the Administrative Agent, have elected that the provisions of this
Section shall apply to such Bank, then, unless and until such Bank notifies the
Borrower that the circumstances giving rise to such suspension or demand for
compensation no longer apply:
(a) all Loans which would otherwise be made by such Bank as LIBOR
Loans shall be made instead as Base Rate Loans (on which interest and principal
shall be payable contemporaneously with the related LIBOR Loans of the other
Banks), and
(b) after each of its LIBOR Loans has been repaid, all payments of
principal which would otherwise be applied to repay such LIBOR Loans shall be
applied to repay its Base Rate Loans instead.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 69
Section 8.06. Substitution of Bank. If (i) the obligation of any Bank
to make or maintain LIBOR Loans has been suspended pursuant to Section 8.02 or
(ii) any Bank has demanded compensation under Section 8.03 or is receiving
increased payments or indemnification payments under Section 8.04, the Borrower
shall have the right to seek a bank or banks ("Substitute Banks"), which may be
one or more of the Banks or one or more other banks satisfactory to the
Administrative Agent, to purchase all (but not less than all) the Notes and the
participations in the Letter of Credit Exposure and Swingline Loans of such Bank
(the "Affected Bank") and, if the Borrower locates a Substitute Bank, the
Affected Bank shall, upon payment to it of the purchase price agreed between it
and the Substitute Bank (or, failing such agreement, a purchase price in the
amount of the outstanding principal amount of its Loans and accrued interest
thereon to the date of payment plus the Affected Bank's Applicable Percentage of
all unreimbursed Letter of Credit Disbursements) plus any amount (other than
principal and interest) then due to it or accrued for its account hereunder,
assign all its rights and obligations under this Agreement and the Notes to the
Substitute Bank, and the Substitute Bank shall assume such rights and
obligations, whereupon the Substitute Bank shall be a Bank party to this
Agreement and shall have all the rights and obligations of a Bank. Any
assignment by an Affected Bank pursuant to this Section shall be treated as a
prepayment of the Affected Bank's LIBOR Loans for purposes of Section 2.12.
ARTICLE IX..
Miscellaneous
-------------
Section 9.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including bank wire, facsimile
transmission or similar writing) and shall be given to such party: (x) in the
case of the Borrower, any Issuing Bank, the Swingline Lender or either Agent, at
its address or its telecopy number set forth on the signature pages hereof, (y)
in the case of any Bank, at its address or its telecopy number set forth in its
Administrative Questionnaire, or (z) in the case of any party, such other
address or other telecopy or telex number as such party may hereafter specify
for the purpose by notice to the Administrative Agent and the Borrower. Each
such notice, request or other communication shall be effective (i) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified in
this Section and the appropriate confirmation of receipt or answerback is
received, (ii) if given by mail, 72 hours after such communication is deposited
in the mails with first class postage prepaid, addressed as aforesaid or (iii)
if given by any other means, when delivered at the address specified in this
Section; provided that notices to the Administrative Agent under Article II or
Article VIII shall not be effective until received.
Section 9.02. No Waivers. No failure or delay by the Administrative
Agent, any Issuing Bank or any Bank in exercising any right, power or privilege
hereunder or under any other Loan Document shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
Section 9.03. Expenses; Indemnification.
(a) Subject to the limitations in Section 5.06 with respect to the
obligations to pay for field examinations and inventory appraisals, the Borrower
shall pay (i) all reasonable out-of-pocket expenses of the Administrative Agent,
the Collateral Agent and (in the case of expenses relating to any Letter of
Credit) each Issuing Bank, including reasonable fees and disbursements of
special counsel for each Agent in connection with the preparation and
administration of this Agreement and the other Loan Documents, any waiver or
consent hereunder or thereunder or any amendment hereof or thereof or any
Default or alleged Default hereunder; any fees and expenses incurred in
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 70
connection with field examinations of the Collateral (if payment is required by
the Borrower) and inventory appraisals; provided that when no Default exists,
neither Agent shall incur more than $10,000 in fees or expenses (relating to a
single expense or a series of expenses) without prior written consent from the
Borrower, provided further that the forgoing limitation does not apply to (A)
reasonable fees and expenses of each Agent's legal counsel or (B) any other
expenditure which has been previously approved by the Borrower, and (ii) if an
Event of Default occurs, all reasonable out-of-pocket expenses incurred by
either Agent, each Issuing Bank and each Bank, including, without limitation,
reasonable fees and disbursements of counsel, in connection with such Event of
Default and collection, bankruptcy, insolvency and other enforcement proceedings
resulting therefrom.
(b) The Borrower agrees to indemnify the Administrative Agent, the
Collateral Agent, each Issuing Bank and each Bank, their respective affiliates
and the respective directors, officers, agent and employees of the foregoing
(each an "Indemnitee") and hold each such Indemnitee harmless from and against
any and all liabilities, losses, damages, costs and expenses of any kind
(including any of the foregoing with respect to Environmental Laws applicable to
the Borrower or any Subsidiary), including, without limitation, the reasonable
fees and disbursements of counsel, which may be actually incurred by such
Indemnitee in connection with any investigative, administrative or judicial
proceeding (whether or not such Indemnitee shall be designated a party thereto)
brought or threatened relating to or arising out of the Loan Documents or any
actual or proposed use of proceeds of Loans or Letters of Credit hereunder;
provided that no Indemnitee shall have the right to be indemnified hereunder for
its own gross negligence or willful misconduct as determined by a final
nonappealable judgment of a court of competent jurisdiction.
Section 9.04. Setoffs.
(a) Subject to the obligations under Section 7.11, each Bank agrees
that if it shall, by exercising any right of setoff or counterclaim or
otherwise, receive payment of a proportion of the aggregate amount of its claims
in respect of Letter of Credit Disbursements and principal and interest due with
respect to any Note held by it which is greater than the proportion received by
any other Bank in respect of the aggregate amount of claims in respect of Letter
of Credit Disbursements and principal and interest due with respect to any Note
held by such other Bank, the Bank receiving such proportionately greater payment
shall purchase such participations in the claims in respect of Letter of Credit
Disbursements and Notes held by the other Banks, and such other adjustments
shall be made, as may be required so that all such payments of claims in respect
of Letter of Credit Disbursements and of principal and interest with respect to
the Notes held by the Banks shall be shared by the Banks pro rata. The Borrower
agrees, to the fullest extent it may effectively do so under applicable law,
that any holder of a participation in a claim in respect of a Letter of Credit
Disbursement or in a Note, whether or not acquired pursuant to the foregoing
arrangements, may exercise rights of setoff or counterclaim and other rights
with respect to such participation as fully as if such holder of a participation
were a direct creditor of the Borrower in the amount of such participation.
(b) In addition to any rights and remedies of the Banks provided by
law but subject to the obligations under Section 7.11, each Bank shall have the
right, without prior notice the Borrower or any of its Subsidiaries, any such
notice being expressly waived to the extent permitted by applicable law, upon
any amount becoming due and payable by the Borrower or any of its Subsidiaries
hereunder (whether at the stated maturity, by acceleration or otherwise) or
under any of the other Loan Documents, to set off and appropriate and apply
against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Bank or any
branch or agency thereof to or for the credit or the account of the Borrower or
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 71
any of its Subsidiaries, as the case may be, and whether or not such Bank is
otherwise fully secured. Each Bank agrees promptly to notify the Borrower and
the Agents after any such setoff and application made by such Bank, provided,
that the failure to give such notice shall not affect the validity of such
setoff and application. ANY AND ALL RIGHTS TO REQUIRE THE ADMINISTRATIVE AGENT
TO DIRECT THE COLLATERAL AGENT TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT
TO ANY OTHER COLLATERAL WHICH SECURES ANY OF THE OBLIGATIONS PRIOR TO THE
EXERCISE BY THE BANKS OF THEIR RIGHT OF SET-OFF UNDER THIS SECTION ARE HEREBY
KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
Section 9.05. Amendments and Waivers. Any provision of this Agreement
or any other Loan Document may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by, or approved in writing by,
the Borrower and the Required Banks (and, if the rights or duties of the
Administrative Agent, any Issuing Bank or the Swingline Lender are affected
thereby, by the Administrative Agent or such Issuing Bank or the Swingline
Lender, as the case may be); provided that no such amendment or waiver shall,
unless signed by, or approved in writing by, all the Banks affected thereby (i)
increase or decrease the Total Commitment from that in effect on the Closing
Date or the Commitment of any Bank (except for a ratable decrease in the
Commitments of all Banks) or subject any Bank to any additional obligation, (ii)
reduce the principal of or rate or amount of interest on any Loan or any claim
for reimbursement of a Letter of Credit Disbursement or any fees hereunder,
(iii) postpone the date fixed for any payment of principal (but not a mandatory
prepayment) of or interest on any Loan or for any reimbursement of a Letter of
Credit Disbursement or for payment of any fees hereunder or for any reduction or
termination of any Commitment, (iv) change the respective Applicable Commitments
or the aggregate unpaid principal amount of the Notes, or the number of Banks,
which shall be required for the Banks or any of them to take any action under
this Section or any other provision of this Agreement, (v) change the ratable
treatment of the Banks under any provision of this Agreement that provides for
such ratable treatment, (vi) release any Guarantor that is a Material Subsidiary
from its Guarantee under the Guarantee Agreements, (vii) increase the advance
rates under the Borrowing Base in excess of the advance rates in effect on the
Effective Date, (viii) direct the Collateral Agent to release any portion of the
Collateral greater than five percent (5%) of the aggregate amount of the
Collateral or (ix) release or discharge any of the obligations of the Borrower
under the Loan Documents. If the Borrower is successful in raising additional
equity, the Net Proceeds contributed to the Borrower in connection therewith
equals or exceeds $50,000,000, no Default exists and the Borrower requests
amendments to the restrictive covenants contained in this Agreement in
connection with such additional equity contribution in light of the improved
financial position of the Borrower as a result thereof, the Agents and the Banks
agree that they will not charge an amendment fee in connection with any
resulting amendment entered into in connection therewith. The forgoing sentence
shall not obligate either Agent or any of the Banks to enter into any such
amendment.
Section 9.06. Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
permitted hereby (including any affiliate of the Issuing Bank that issues any
Letter of Credit), except that (i) the Borrower may not assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of each Bank (and any attempted assignment or transfer by the Borrower
without such consent shall be null and void) and (ii) no Bank may assign or
otherwise transfer its rights or obligations hereunder except in accordance with
this Section. Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby (including any affiliate of
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 72
the Issuing Bank that issues any Letter of Credit), Participants (to the extent
provided in paragraph (c) of this Section) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent,
the Collateral Agent and the Banks) any legal or equitable right, remedy or
claim under or by reason of this Agreement.
(b) (i) Subject to the conditions set forth in paragraph (b)(ii)
below, any Bank may assign to one or more assignees all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it) with the prior written consent
(such consent not to be unreasonably withheld) of:
(A) the Borrower, provided that no consent of the
Borrower shall be required for an assignment to a Bank, an affiliate of a Bank,
an Approved Fund (as defined below) or, if an Event of Default under clauses
(a), (g) or (h) of Section 6.01 has occurred and is continuing, any other
assignee; and
(B) the Administrative Agent, provided that no consent
of the Administrative Agent shall be required for an assignment of any
Commitment to an assignee that is a Bank with a Commitment immediately prior to
giving effect to such assignment.
(ii) Assignments shall be subject to the following additional
conditions:
(A) except in the case of an assignment to a Bank or an
Affiliate of a Bank or an assignment of the entire remaining amount of the
assigning Bank's Commitment, the amount of the Commitment of the assigning Bank
subject to each such assignment (determined as of the date the Assignment and
Assumption with respect to such assignment is delivered to the Administrative
Agent) shall not be less than $5,000,000 unless each of the Borrower and the
Administrative Agent otherwise consent, provided that no such consent of the
Borrower shall be required if an Event of Default under clauses (a), (g) or (h)
of Section 6.01 has occurred and is continuing;
(B) each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Bank's rights and
obligations under this Agreement;
(C) the parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and Assumption, together with
a processing and recordation fee of $3,500; and
(D) the assignee, if it is not a Bank, shall deliver to
the Administrative Agent an Administrative Questionnaire.
For the purposes of this Section 9.06(b), the term "Approved Fund"
means any Person (other than a natural person) that is engaged in making,
purchasing, holding or investing in bank loans and similar extensions of credit
in the ordinary course of its business and that is administered or managed by
(a) a Bank, (b) an affiliate of such Bank or (c) an entity or an affiliate of an
entity that administers or manages a Bank.
(iii) Subject to acceptance and recording thereof pursuant to
paragraph (b)(iv) of this Section, from and after the effective date specified
in each Assignment and Assumption the assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Bank under this Agreement, and
the assigning Bank thereunder shall, to the extent of the interest assigned by
such Assignment and Assumption, be released from its obligations under this
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 73
Agreement (and, in the case of an Assignment and Assumption covering all of the
assigning Bank's rights and obligations under this Agreement, such Bank shall
cease to be a party hereto but shall continue to be entitled to the benefits of
Sections 2.13, 8.03 and 8.04). Any assignment or transfer by a Bank of rights or
obligations under this Agreement that does not comply with this Section 9.06
shall be treated for purposes of this Agreement as a sale by such Bank of a
participation in such rights and obligations in accordance with paragraph (c) of
this Section.
(iv) The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices a copy of each
Assignment and Assumption delivered to it and a register for the recordation of
the names and addresses of the Banks, and the Commitment of, and principal
amount of the Loans and Letter of Credit Disbursements owing to, each Bank
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive, and the Borrower, the Agents and the Banks may
treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Bank hereunder for all purposes of this Agreement, notwithstanding
notice to the contrary. The Register shall be available for inspection by the
Borrower, the Collateral Agent and any Bank, at any reasonable time and from
time to time upon reasonable prior notice.
(v) Upon its receipt of a duly completed Assignment and
Assumption executed by an assigning Bank and an assignee, the assignee's
completed Administrative Questionnaire (unless the assignee shall already be a
Bank hereunder), the processing and recordation fee referred to in paragraph (b)
of this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Administrative Agent shall accept such Assignment and
Assumption and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
(c) (i) Any Bank may, without the consent of the Borrower, the
Administrative Agent, the Issuing Bank or the Swingline Lender, sell
participations to one or more banks or other entities (a "Participant") in all
or a portion of such Bank's rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
provided that (A) such Bank's obligations under this Agreement shall remain
unchanged, (B) such Bank shall remain solely responsible to the other parties
hereto for the performance of such obligations and (C) the Borrower, the
Administrative Agent and the other Banks shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and obligations
under this Agreement. Any agreement or instrument pursuant to which a Bank sells
such a participation shall provide that such Bank shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Bank will not, without the consent of the Participant, agree
to any amendment, modification or waiver described in the first proviso to
Section 9.05 that affects such Participant. Subject to paragraph (c)(ii) of this
Section, the Borrower agrees that each Participant shall be entitled to the
benefits of clauses (a), (g) or (h) of Section 6.01 to the same extent as if it
were a Bank and had acquired its interest by assignment pursuant to paragraph
(b) of this Section. To the extent permitted by law, each Participant also shall
be entitled to the benefits of Section 9.04(b) as though it were a Bank,
provided such Participant agrees to be subject to Section 9.04(a) as though it
were a Bank.
(ii) A Participant shall not be entitled to receive any greater
payment under Sections 8.03 or 8.04 than the applicable Bank would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower's prior written consent. A Participant that would be a Foreign Bank if
it were a Bank shall not be entitled to the benefits of Section 8.04 unless the
Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrower, to comply with Section 8.04
as though it were a Bank.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 74
(d) Any Bank may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Bank, including any pledge or assignment to secure obligations to a Federal
Reserve Bank, and this Section shall not apply to any such pledge or assignment
of a security interest; provided that no such pledge or assignment of a security
interest shall release a Bank from any of its obligations hereunder or
substitute any such pledgee or assignee for such Bank as a party hereto.
Section 9.07. Governing Law; Submission to Jurisdiction. This
Agreement, each Note and each other Loan Document shall be governed by and
construed in accordance with the laws of the State of New York (other than those
conflict of law provisions that would defer to the substantive laws of another
jurisdiction). Without in any way limiting the preceding choice of law, the
parties elect to be governed by New York law in accordance with, and are relying
(at least in part) on, Section 5-1401 of the General Obligations Law of the
State of New York. The Borrower hereby submits to the nonexclusive jurisdiction
of the United States District Court for the Southern District of New York and of
any New York State court sitting in New York City for purposes of all legal
proceedings arising out of or relating to this Agreement or the transactions
contemplated hereby. The Borrower irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in an inconvenient
forum.
Section 9.08. Counterparts; Integration. This Agreement may be signed
in any number of counterparts and on telecopy counterparts, each of which shall
be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument. This Agreement constitutes the entire agreement
and understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof, including, without limitation, the Original Credit Agreement.
Section 9.09. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND THE
BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 9.10. Confidentiality. Each of the Administrative Agent, the
Collateral Agent and the Banks agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its affiliates' directors, officers, employees and agent, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information confidential)
for purposes of evaluating Loans, (b) to the extent requested by any regulatory
authority, (c) to the extent otherwise required by applicable laws and
regulations or by any subpoena or similar legal process, (d) to any other party
to this Agreement, (e) in connection with the exercise of any remedies hereunder
or any suit, action or proceeding relating to this Agreement or the enforcement
of rights hereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section, to any Assignee of or
Participant in, or any prospective Assignee of or Participant in, any of its
rights or obligations under this Agreement, (g) with the consent of the Borrower
or (h) to the extent such Information (i) becomes publicly available other than
as a result of a breach of this Section or (ii) becomes available to the
Administrative Agent, the Collateral Agent any Issuing Bank or any Bank on a
nonconfidential basis from a source other than the Borrower or any Subsidiary.
For the purposes of this Section, "Information" means all information received
in writing from the Borrower or any Subsidiary relating to the Borrower or any
Subsidiary or their businesses, other than any such information that is
available to the Administrative Agent, the Collateral Agent or any Bank on a
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 75
nonconfidential basis prior to disclosure by the Borrower or any Subsidiary;
provided that, in the case of non-financial information received from the
Borrower or any Subsidiary after the date hereof, such information is clearly
identified at the time of delivery as confidential. Any Person required to
maintain the confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
Section 9.11. Replacement Note. Upon receipt of an appropriate and
reasonably acceptable affidavit of an officer of the affected Bank as to the
loss, theft, destruction or mutilation of any Note or of any other Loan Document
which is not of public record and, in the case of any such mutilation, upon
surrender and cancellation of such Note or other Loan Document, the Borrower
will issue, in lieu thereof, a replacement Note or other Loan Document in the
same principal amount (as to any Note) and in any event of like tenor.
Section 9.12. Usury. All agreements between the Borrower (on the one
hand) and the Administrative Agent or any of the Banks (on the other hand)
relating to the Financing Transactions are hereby expressly limited so that in
no contingency or event whatsoever, whether by reason of acceleration of
maturity of the Notes or otherwise, shall the amount paid or agreed to be paid
for the use or the forbearance of the Indebtedness represented by any Note
exceed the maximum permissible under applicable law. In this regard, it is
expressly agreed that it is the intent of the Borrower, the Administrative Agent
and the Banks, in the execution, delivery and acceptance of the Notes, to
contract in strict compliance with the laws of the State of New York. If, under
any circumstances whatsoever, performance or fulfillment of any provision of any
of the Notes or any of the other Loan Documents at the time such provision is to
be performed or fulfilled shall involve exceeding the limit of validity
prescribed by applicable law, then the obligation so to be performed or
fulfilled shall be reduced automatically to the limits of such validity, and if
under any circumstances whatsoever the Administrative Agent or any Bank should
ever receive as interest an amount which would exceed the highest lawful rate,
such amount which would be excessive interest shall be applied to the reduction
of the principal balance evidenced by the Notes and not to the payment of
interest. The provisions of this Section 9.12 shall control every other
provision of this Agreement and of each Note.
Section 9.13. Independence of Covenants. All covenants under the Loan
Documents shall be given independent effect so that if a particular action is
not permitted by any of such covenants, the fact that it would be permitted by
an exception to, or be otherwise within the limitations of, another covenant
shall not avoid the occurrence of a Default if such action is taken.
Section 9.14. Replacement/Restatement of Original Credit Agreement;
Contribution; Intercompany Subordination.
(a) Amendment, Restatement and Ratification. This Agreement amends
and restates in its entirety the Original Credit Agreement. The execution of
this Agreement, the Notes and the other Loan Documents executed in connection
herewith does not extinguish the indebtedness outstanding in connection with the
Original Credit Agreement nor does it constitute a novation with respect to such
indebtedness. The Borrower, the Agents and the Banks ratify and confirm each of
the Loan Documents entered into prior to the Effective Date (but excluding the
Original Credit Agreement) and agree that such Loan Documents continue to be
legal, valid, binding and enforceable in accordance with their respective terms.
However, for all matters arising prior to the Effective Date (including, without
limitation, the accrual and payment of interest and fees, and matters relating
to indemnification), the terms of the Original Credit Agreement (as unmodified
by this Agreement) shall control and are hereby ratified and confirmed. Without
limiting the generality of the foregoing and notwithstanding anything in any
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 76
Loan Document to the contrary, the Borrower, the Agents and the Banks agree and
acknowledge that:
(i) the term "Credit Agreement" as used in each Loan Document
means this Agreement and any reference in any description of the Original
Agreement to the Agent shall mean both Agents;
(ii) the term "Administrative Agent" as used in the Security
Agreement means Fleet National Bank, as Collateral Agent;
(iii) the term "Agent", as used in the definition of the term
"Borrower Obligations" that is contained in the Security Agreement, means either
or both Agents;
(iv) the term "Lender", as used in the Security Agreement,
includes the Administrative Agent;
(v) Any reference to FFI International, Inc. in any Loan Document
means ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ International Holding, Inc. (formerly FFI International,
Inc.) and
(vi) the term "Agent" as used in the following places in the
Guarantee Agreement:
(a) the first sentence of clause (a) of Section 1 means
both Agents;
(b) the second sentence of clause (a) of Section 1 and
the first and second usage in the first sentence of Section 6 means the
Administrative Agent;
(c) the first usage in the first sentence of clause (b)
of Section 1 means the Collateral Agent;
(d) the second usage in the first sentence of clause (b)
of Section 1 means either Agent;
(e) all other usages means either or both Agents as the
context requires;
(vii) references to any specific section or article of the
Uniform Commercial Code in any Loan Document shall mean a reference to the
corresponding section of the Uniform Commercial Code as amended; and
(viii) The term "Obligations" as defined in the Guarantee
Agreement and the term "Borrower Obligations" as defined in the Security
Agreement include, without limitation, all obligations, indebtedness, and
liability of the Borrower to the Agents and the Banks, or any one of them,
arising under this Agreement and the Notes executed pursuant hereto.
(b) Release. THE BORROWER AND EACH GUARANTOR REPRESENTS AND WARRANTS
THAT AS OF THE DATE HEREOF THERE ARE NO CLAIMS OR OFFSETS AGAINST, OR DEFENSES
OR COUNTERCLAIMS TO, ITS OBLIGATIONS UNDER THE ORIGINAL CREDIT AGREEMENT, AS
AMENDED AND RESTATED BY THIS AGREEMENT, or under THE OTHER LOAN DOCUMENTS. TO
INDUCE THE AGENTS AND THE BANKS TO ENTER INTO THIS AGREEMENT, THE BORROWER AND
(by its execution of this Agreement below) EACH GUARANTOR WAIVES ANY AND ALL
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 77
SUCH CLAIMS, OFFSETS, DEFENSES, OR COUNTERCLAIMS, WHETHER KNOWN OR UNKNOWN,
ARISING PRIOR TO THE DATE HEREOF AND RELATING TO THE ORIGINAL CREDIT AGREEMENT
OR THE LOAN DOCUMENTS.
(c) Contribution. The Borrower and the Guarantors, together desire to
allocate among themselves (the "Contributing Obligors"), in a fair and equitable
manner, their obligations arising under the Loan Documents. Accordingly, in the
event any payment or distribution is made by the Borrower or a Guarantor under
the Loan Documents (a "Funding Obligor") that exceeds its Fair Share (as defined
below), that Funding Obligor shall be entitled to a contribution from each of
the other Contributing Obligors in the amount of such other Contributing
Obligor's Fair Share Shortfall (as defined below), with the result that all such
contributions will cause each Contributing Obligor's Aggregate Payments (as
defined below) to equal its Fair Share. "Fair Share" means, with respect to a
Contributing Obligor as of any date of determination, an amount equal to (i) the
ratio of (x) the Adjusted Maximum Amount (as defined below) with respect to such
Contributing Obligor to (y) the aggregate of the Adjusted Maximum Amounts with
respect to all Contributing Obligors, multiplied by (ii) the aggregate amount
paid or distributed on or before such date by all Funding Obligors under this
Agreement in respect of the Obligations. "Fair Share Shortfall" means, with
respect to a Contributing Obligor as of any date of determination, the excess,
if any, of the Fair Share of such Contributing Obligor over the Aggregate
Payments of such Contributing Obligor. "Adjusted Maximum Amount" means, with
respect to a Contributing Obligor as of any date of determination, the maximum
aggregate amount of the obligations of such Contributing Obligor under the Loan
Documents to which it is a party determined in accordance with the provisions
hereof; provided that, solely for purposes of calculating the "Adjusted Maximum
Amount" with respect to any Contributing Obligor for purposes of this Section
9.14(c), the assets or liabilities arising by virtue of any rights to or
obligations of contribution hereunder shall not be considered as assets or
liabilities of such Contributing Obligor. "Aggregate Payments" means, with
respect to a Contributing Obligor as of any date of determination, the aggregate
amount of all payments and distributions made on or before such date by such
Contributing Obligor in respect of the Loan Documents (including, without
limitation, in respect of this Section 9.14(c). The amounts payable as
contributions hereunder shall be determined as of the date on which the related
payment or distribution is made by the applicable Funding Obligor. The
allocation among Contributing Obligors of their obligations as set forth in this
Section 9.14(c) shall not be construed in any way to limit the liability of any
Contributing Obligor under any Loan Document. In the event a payment is made by
Borrower or a Guarantor in excess of its Fair Share, then such party shall be
subrogated to the rights then held by Agents and the Banks with respect to the
Obligations to the extent to which the Obligations were discharged by such party
and, in addition, upon payment by such party of any sums to an Agent or any Bank
in excess of its Fair Share, all rights of such party against Borrower or the
other Guarantors or against any Collateral arising as a result therefrom by way
of right of subrogation, reimbursement, or otherwise shall in all respects be
subordinate and junior in right of payment to the prior indefeasible payment in
full of the Obligations. By becoming a party to the Guarantee Agreement, each
Subsidiary who becomes a Guarantor after the date hereof shall be bound by the
provisions of this Section 9.14(c) and Section 9.14(d).
(d) Intercompany Subordination. Borrower and each Guarantor agrees
that the Intercompany Subordinated Indebtedness (as defined below) shall be
subordinate and junior in right of payment to the prior payment in full of all
Obligated Party Obligations (as defined below) as herein provided. The
Intercompany Subordinated Indebtedness shall not be payable, and no payment of
principal, interest or other amounts on account thereof, and no property or
guarantee of any nature to secure or pay the Intercompany Subordinated
Indebtedness shall be made or given, directly or indirectly by or on behalf of
any Subordination Party (hereafter defined) or received, accepted, retained or
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 78
applied by any Guarantor unless and until the Obligated Party Obligations shall
have been paid in full in cash; except that prior to the occurrence and
continuance of a Default, a Guarantor shall have the right to receive, accept,
retain and apply payments on the Intercompany Subordinated Indebtedness made in
the ordinary course of business. After the occurrence and during the continuance
of a Default, no payments may be made or given, directly or indirectly, by or on
behalf of any Subordination Party or received, accepted, retained or applied by
any Guarantor unless and until the Obligated Party Obligations shall have been
paid in full in cash. If any sums shall be paid to a Guarantor by any
Subordination Party or any other Person on account of the Intercompany
Subordinated Indebtedness when such payment is not permitted hereunder, such
sums shall be held in trust by such party for the benefit of the Agents and the
Banks and shall forthwith be paid to the Administrative Agent without affecting
the liability of any Guarantor under the Loan Documents and may be applied by
the Administrative Agent against the Obligated Party Obligations in accordance
with this Agreement as if such payments were Collateral. Upon the request of the
Administrative Agent, each Guarantor shall execute, deliver, and endorse to the
Administrative Agent such documentation as the Administrative Agent may request
to perfect, preserve, and enforce its rights hereunder. For purposes of this
Agreement, the term "Intercompany Subordinated Indebtedness" means, with respect
to each Guarantor, all indebtedness, liabilities, and obligations of any other
Guarantor and of Borrower (herein a "Subordination Party") to such Guarantor,
whether such indebtedness, liabilities, and obligations now exist or are
hereafter incurred or arise, or are direct, indirect, contingent, primary,
secondary, several, joint and several, or otherwise, and irrespective of whether
such indebtedness, liabilities, or obligations are evidenced by a note,
contract, open account, or otherwise, and irrespective of the Person or Persons
in whose favor such indebtedness, obligations, or liabilities may, at their
inception, have been, or may hereafter be created, or the manner in which they
have been or may hereafter be acquired by such party. The term "Obligated Party
Obligations" means, with respect to any Subordination Party, all obligations,
indebtedness and liability of such Subordination Party to the Agents and the
Banks or any one of them under the Loan Documents (including, without
limitation, any and all post-petition interest and expenses whether or not
allowed under any bankruptcy, insolvency or other similar law). Each Guarantor
agrees that any and all Liens (including any judgment liens) upon any
Subordination Party's assets securing payment of any Intercompany Subordinated
Indebtedness shall be and remain inferior and subordinate to any and all Liens
upon any Subordination Party's assets securing payment of the Obligated Party
Obligations or any part thereof, regardless of whether such Liens in favor of a
Guarantor, an Agent or any Bank presently exist or are hereafter created or
attached. Without the prior written consent of the Administrative Agent, no
Guarantor shall (i) file suit against any Subordination Party or exercise or
enforce any other creditor's right it may have against any Subordination Party,
or (ii) foreclose, repossess, sequester, or otherwise take steps or institute
any action or proceedings (judicial or otherwise, including without limitation
the commencement of, or joinder in, any liquidation, bankruptcy, rearrangement,
debtor's relief or insolvency proceeding) to enforce any obligations of any
Subordination Party to such party or any Liens held by such party on assets of
any Subordination Party. In the event of any receivership, bankruptcy,
reorganization, rearrangement, debtor's relief, or other insolvency proceeding
involving any Subordination Party as debtor, the Administrative Agent shall have
the right to prove and vote any claim under the Intercompany Subordinated
Indebtedness and to receive directly from the receiver, trustee or other court
custodian all dividends, distributions, and payments made in respect of the
Intercompany
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 79
Subordinated Indebtedness until the Obligated Party Obligations have been paid
in full in cash. The Administrative Agent may apply any such dividends,
distributions, and other payments against the Obligated Party Obligations in
accordance with this Agreement as if such payments were Collateral.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President, Finance
Address:
--------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Inc.
▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Oscar Marina
Phone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 80
JPMORGAN CHASE BANK, individually as a Bank,
an Issuing Bank and as Administrative Agent
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
Address:
--------
JPMorgan Chase Bank
P. O. Box 660197
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Lending Office for Base Rate
Loans and Libor Loans:
----------------------
JPMorgan Chase Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Asset Based Operations
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 81
FLEET NATIONAL BANK,
as Collateral Agent and a Bank
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
Address:
Fleet National Bank
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.:
Domestic Lending Office:
------------------------
Fleet National Bank
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
LIBOR Lending Office:
---------------------
Fleet National Bank
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 82
OTHER BANKS:
------------
LASALLE BUSINESS CREDIT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
U. S. BANK BUSINESS CREDIT
(f/n/a Firstar Bank N.A.)
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇▇ FINANCIAL, INC.
By: /s/ W. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------------
Name: W. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Duly Authorized Signatory
ORIX FINANCIAL SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. Coulomb
-----------------------------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. Coulomb
Title: Vice President
WACHOVIA BANK, NATIONAL ASSOCIATION
(f/n/a First Union National Bank)
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 83
SIEMENS FINANCIAL SERVICES, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President - Credit
CREDIT SUISSE FIRST BOSTON, Cayman Island Branch
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Director
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Assistant Vice President
THE PROVIDENT BANK
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Assistant Vice President
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, Page 84
Consent of Guarantors and Reaffirmation of Loan Documents
---------------------------------------------------------
Each of the undersigned Guarantors hereby (a) agrees that the
Guarantee Agreement is and shall remain in full force and effect; (b) agrees
that the Security Agreement and the Guarantee Agreement, each is and shall
remain in full force and effect; (c) ratifies and confirms all terms and
provisions of the Guarantee Agreement and Security Agreement, (d) acknowledges
its consent and agreement to this Agreement (including without limitation, the
provisions of Section 9.14 hereof) and agrees to be bound thereby, (e)
acknowledges and agrees that all Loans and Letters of Credit issued under this
Agreement constitute "Obligations" under the Guarantee Agreement and "Borrower
Obligations" under the Security Agreement, and (f) agrees that all liens,
security interests and other encumbrances granted under the Security Agreement
in favor of the Collateral Agent secure the credit extended under this
Agreement.
FD MANAGEMENT, INC.
By: /s/ E. ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------------
Name: E. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
DF ENTERPRISES, INC.
By: /s/ E. ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------------
Name: E. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ INTERNATIONAL
HOLDING, INC., (formerly FFI International, Inc.)
By: /s/ E. ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------------
Name: E. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
CONSENT OF GUARANTORS AND REAFFIRMATION OF LOAN DOCUMENTS - Solo Page
Index to Exhibits and Schedules
-------------------------------
Exhibits
--------
A Form of Promissory Note
B Form of Opinion of Weil, Gotshal & ▇▇▇▇▇▇, LLP, counsel for the
Borrower and the Guarantors
C Form of Borrowing Base Certificate
D Form of Consent and Subordination Agreement
E Form of Compliance Certificate
F Form of Assignment and Assumption Agreement
Schedules:
----------
1.01 Commitments
1.01(a) Existing Letters of Credit
4.05 Litigation
4.09 Subsidiaries
4.14 Locations
4.15 Licenses, Trademarks and Distribution Agreements
4.19 Deposit Accounts; Lockbox Agreements
5.09 Permitted Investments
5.10 Liens
LIST OF EXHIBITS AND SCHEDULES, Solo Page