|
|
|
|
Legal Resources
Business Contracts
MCLE Courses
Projects
Friends
|
Sample Business ContractsHome: Sample Business Contracts:
------------------------------------------------------------------------------
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of May 6, 1997
among
WEIDER NUTRITION INTERNATIONAL, INC.
and
ITS SUBSIDIARIES NAMED HEREIN,
THE LENDERS NAMED HEREIN
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
1. AMOUNT AND TERMS OF CREDIT.............................................1
1.1 REVOLVING CREDIT ADVANCES........................................1
1.2 LETTERS OF CREDIT................................................2
1.3 PREPAYMENT.......................................................3
1.4 USE OF PROCEEDS; OBLIGORS' REPRESENTATIVE........................3
1.5 INTEREST ON REVOLVING CREDIT LOAN................................4
1.6 FEES.............................................................7
1.7 CASH MANAGEMENT SYSTEMS..........................................7
1.8 RECEIPT OF PAYMENTS..............................................7
1.9 APPLICATION AND ALLOCATION OF PAYMENTS...........................7
1.10 LOAN ACCOUNT AND ACCOUNTING......................................8
1.11 ACCESS...........................................................8
1.12 INDEMNITY........................................................9
1.13 TAXES...........................................................10
1.14 CAPITAL ADEQUACY; INCREASED COSTS; ILLEGALITY...................11
1.15 REPLACEMENT OF LENDER IN RESPECT OF INCREASED COSTS.............12
1.16 SINGLE LOAN.....................................................13
2. CONDITIONS PRECEDENT..................................................13
2.1 CONDITIONS TO REVOLVING CREDIT LOAN.............................13
2.2 FURTHER CONDITIONS TO EACH REVOLVING CREDIT ADVANCE.............14
3. REPRESENTATIONS AND WARRANTIES........................................15
3.1 CORPORATE EXISTENCE; COMPLIANCE WITH LAW........................15
3.2 EXECUTIVE OFFICES...............................................16
3.3 CORPORATE POWER, AUTHORIZATION, ENFORCEABLE OBLIGATIONS.........16
3.4 FINANCIAL STATEMENTS AND PROJECTIONS............................16
3.5 COLLATERAL REPORTS..............................................17
3.6 MATERIAL ADVERSE EFFECT.........................................17
3.7 OWNERSHIP OF PROPERTY; LIENS....................................17
3.8 RESTRICTIONS; NO DEFAULT........................................18
3.9 LABOR MATTERS...................................................18
3.10 VENTURES, SUBSIDIARIES AND AFFILIATES; OUTSTANDING STOCK AND
INDEBTEDNESS....................................................18
3.11 GOVERNMENT REGULATION...........................................18
3.12 MARGIN REGULATIONS..............................................19
3.13 TAXES...........................................................19
3.14 ERISA...........................................................20
3.15 NO LITIGATION...................................................21
3.16 BROKERS.........................................................21
-i-
<PAGE>
3.17 EMPLOYMENT MATTERS..............................................21
3.18 PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES....................21
3.19 FULL DISCLOSURE.................................................21
3.20 HAZARDOUS MATERIALS.............................................22
3.21 INSURANCE POLICIES..............................................22
3.22 DEPOSIT AND DISBURSEMENT ACCOUNTS...............................22
3.23 GOVERNMENT CONTRACTS............................................22
3.24 CUSTOMER AND TRADE RELATIONS....................................22
3.25 AGREEMENTS AND OTHER DOCUMENTS..................................23
4. FINANCIAL STATEMENTS AND INFORMATION..................................23
4.1 REPORTS AND NOTICES.............................................23
4.2 COMMUNICATION WITH ACCOUNTANTS..................................23
5. AFFIRMATIVE COVENANTS.................................................24
5.1 MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS................24
5.2 PAYMENT OF OBLIGATIONS..........................................24
5.3 BOOKS AND RECORDS...............................................25
5.4 LITIGATION......................................................25
5.5 INSURANCE.......................................................25
5.6 COMPLIANCE WITH LAWS............................................26
5.7 AGREEMENTS......................................................26
5.8 SUPPLEMENTAL DISCLOSURE.........................................26
5.9 EMPLOYEE PLANS..................................................26
5.10 ENVIRONMENTAL MATTERS...........................................27
5.11 LANDLORDS' AGREEMENTS AND BAILEE LETTERS AND MORTGAGEE
AGREEMENTS.....................................................27
5.12 LEASED LOCATIONS OF COLLATERAL..................................27
6. NEGATIVE COVENANTS....................................................28
6.1 MERGERS, SUBSIDIARIES, ETC......................................28
6.2 INVESTMENTS; LOANS AND ADVANCES.................................30
6.3 INDEBTEDNESS....................................................30
6.4 EMPLOYEE LOANS AND AFFILIATE TRANSACTIONS.......................31
6.5 CAPITAL STRUCTURE AND BUSINESS..................................32
6.6 GUARANTEED INDEBTEDNESS.........................................32
6.7 LIENS...........................................................32
6.8 SALE OF ASSETS..................................................33
6.9 ERISA...........................................................33
6.10 HAZARDOUS MATERIALS.............................................33
6.11 SALE-LEASEBACKS.................................................33
6.12 CANCELLATION OF INDEBTEDNESS....................................34
6.13 RESTRICTED PAYMENTS.............................................34
6.14 LEASES..........................................................35
-ii-
<PAGE>
6.15 FISCAL YEAR.....................................................35
6.16 CHANGE OF CORPORATE NAME........................................35
6.17 SALE OF STOCK...................................................35
6.18 CASH MANAGEMENT.................................................35
6.19 NO IMPAIRMENT OF CROSS-STREAMING, UPSTREAMING,
DOWNSTREAMING OR LIENS..........................................36
6.20 FINANCIAL COVENANTS.............................................36
6.21 INTERCOMPANY LOANS..............................................36
6.22 NEW YORK STOCK EXCHANGE LISTING.................................37
7. TERM .................................................................37
7.1 TERMINATION.....................................................37
7.2 SURVIVAL OF OBLIGATIONS UPON TERMINATION OF FINANCING
ARRANGEMENTS...................................................37
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES................................37
8.1 EVENTS OF DEFAULT...............................................37
8.2 REMEDIES........................................................40
8.3 WAIVERS BY OBLIGORS.............................................41
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT...................41
9.1 ASSIGNMENT AND PARTICIPATIONS...................................41
9.2 APPOINTMENT OF AGENT............................................43
9.3 AGENT'S RELIANCE, ETC...........................................44
9.4 GE CAPITAL AND AFFILIATES.......................................44
9.5 LENDER CREDIT DECISION..........................................45
9.6 INDEMNIFICATION.................................................45
9.7 SUCCESSOR AGENT.................................................45
9.8 SETOFF AND SHARING OF PAYMENTS..................................46
9.9 ADVANCES; PAYMENTS; NON-FUNDING LENDERS; INFORMATION;
ACTIONS IN CONCERT..............................................47
10. SUCCESSORS AND ASSIGNS..................................................49
10.1 SUCCESSORS AND ASSIGNS..........................................49
11. MISCELLANEOUS...........................................................49
11.1 COMPLETE AGREEMENT; MODIFICATION OF AGREEMENT...................49
11.2 AMENDMENTS AND WAIVERS..........................................49
11.3 FEES AND EXPENSES...............................................51
11.4 NO WAIVER.......................................................52
11.5 REMEDIES........................................................53
11.6 SEVERABILITY....................................................53
11.7 CONFLICT OF TERMS...............................................53
11.8 AUTHORIZED SIGNATURE............................................53
-iii-
<PAGE>
11.9 GOVERNING LAW...................................................53
11.10 NOTICES.........................................................54
11.11 CONFIDENTIALITY.................................................54
11.12 SECTION TITLES..................................................55
11.13 COUNTERPARTS....................................................55
11.14 WAIVER OF JURY TRIAL............................................55
11.15 AMENDMENT AND RESTATEMENT.......................................55
11.16 REINSTATEMENT...................................................56
12. CROSS-GUARANTY........................................................56
12.1 CROSS-GUARANTY..................................................56
12.2 CONTRIBUTION WITH RESPECT TO GUARANTY OBLIGATIONS...............57
12.3 OBLIGATIONS ABSOLUTE............................................57
12.4 WAIVER..........................................................58
12.5 RECOVERY........................................................58
12.6 LIABILITY CUMULATIVE............................................58
-iv-
<PAGE>
INDEX OF EXHIBITS, SCHEDULES AND ANNEXES
Exhibit A - Form of Notice of Revolving Credit Advance
Exhibit B - Form of Notice of Conversion/Continuation
Exhibit C - Form of Revolving Credit Note
Exhibit D - Form of Collateral Certificate
Schedule 1.7 - Bank Accounts
Schedule 3.2 - Executive Offices
Schedule 3.4 - Projections and Pro Forma
Schedule 3.7 - Real Estate and Leases
Schedule 3.9 - Labor Matters
Schedule 3.10 - Ventures, Subsidiaries and Affiliates;
Outstanding Stock
Schedule 3.13 - Tax Matters
Schedule 3.14 - ERISA Plans
Schedule 3.15 - Litigation
Schedule 3.16 - Brokers
Schedule 3.17 - Employment Matters
Schedule 3.18 - Intellectual Property
Schedule 3.20 - Hazardous Materials
Schedule 3.21 - Insurance Policies
Schedule 3.23 - Government Contracts
Schedule 3.25 - Material Agreements, Licenses, etc.
Schedule 5.1 - Trade Names
Schedule 6.3 - Indebtedness
Schedule 6.4 - Affiliate and Employee Loans, Transactions and
Employment Agreements
Schedule 6.7 - Liens
Schedule 11.8 - Authorized Signatures
Annex A (Recitals) - Definitions
Annex B (Section 1.2) - Letters of Credit Documents
Annex C (Section 1.7) - Cash Management System
Annex D (Section 2.1(b)) - Schedule of Additional Closing Documents
Annex E (Section 4.1(a)) - Financial Statements and Projections-Reporting
Annex F (Section 4.1(b)) - Collateral Reports
Annex G (Section 6.20) - Financial Covenants
Annex H (Section 9.9) - Lenders' Account Information
Annex I (Section 11.10) - Notice Addresses
Annex J - Revolving Credit Loan Commitments
-v-
<PAGE>
This THIRD AMENDED AND RESTATED CREDIT AGREEMENT, dated as of May 6,
1997 among AMERICAN NUTRITION BARS, INC., a Utah corporation, GREAT AMERICAN
FOODS, INC., a Utah corporation, SCHIFF PRODUCTS, INC., a Utah corporation,
WEIDER NUTRITION GROUP, INC., a Utah corporation ("NUTRITION") (the foregoing
collectively referred to herein as "BORROWERS" and individually as a
"Borrower"), WEIDER NUTRITION INTERNATIONAL, INC., a Delaware corporation
("HOLDINGS"), WNG HOLDINGS (INTERNATIONAL) LTD., a Nevada corporation (the
foregoing (a) excluding Borrowers, collectively referred to herein as
"GUARANTORS" and individually as a "GUARANTOR" and (b) including Borrowers,
collectively referred to herein as "OBLIGORS" and individually as an "OBLIGOR"),
GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation (in its individual
capacity, "GE CAPITAL"), for itself, as Lender, and as Agent for Lenders, and
the other Lenders from time to time signatory hereto.
RECITALS
WHEREAS, Obligors and Publishing Obligors (as hereinafter defined)
are parties to a Second Amended and Restated Credit Agreement dated as of April
8, 1997 (as heretofore amended, supplemented or otherwise modified, the "PRIOR
CREDIT AGREEMENT") pursuant to which the Lenders signatory thereto provided to
Borrowers and Publishing Borrowers (as hereinafter defined) aggregate
commitments of up to One Hundred Fifty Million Dollars ($150,000,000) on the
terms and conditions set forth therein;
WHEREAS, pursuant to a Suspension and Termination Agreement of even
date herewith (the "TERMINATION AGREEMENT") among Obligors, Publishing Obligors,
Agent, Lenders and GE Capital, such Persons have agreed that (a) insofar as it
relates to the Obligors, the Prior Credit Agreement shall be amended and
restated hereby to reflect aggregate commitments of up to One Hundred Thirty
Million Dollars ($130,000,000) to be provided by Lenders to Borrowers on the
terms and conditions set forth herein and (b) insofar as it relates to
Publishing Obligors, the Prior Credit Agreement shall remain in effect subject
to the terms of the Termination Agreement;
WHEREAS, capitalized terms used in this Agreement shall have the
meanings ascribed to them in ANNEX A. All Schedules, Exhibits, Annexes and other
attachments hereto, or expressly identified to this Agreement, are incorporated
herein by reference, and taken together, shall constitute but a single
agreement. These Recitals shall be construed as part of the Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and for other good and valuable consideration,
the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 REVOLVING CREDIT ADVANCES. (a) Upon and subject to the terms and
conditions hereof, each Lender severally and not jointly agrees to make
available, from time to time, until the Revolving Commitment Termination Date,
for each Borrower's use and upon the request of Holdings therefor, its Pro Rata
Share of advances (each, a "REVOLVING CREDIT ADVANCE") in an aggregate
-1-
<PAGE>
amount which shall not at any given time exceed an amount equal to the sum of
(i) the Revolving Credit Loan Commitment LESS (ii) the amount of the Letter of
Credit Obligations outstanding at such time LESS (iii) such reserves as Agent
deems customary or appropriate for a transaction of the nature contemplated by
this Agreement and the other Loan Documents (collectively, "BORROWING
AVAILABILITY"); PROVIDED, THAT no Revolving Credit Advance shall be made to a
Borrower if, immediately prior and after giving actual and pro forma effect
thereto, such Borrower shall not be Solvent. Until all amounts outstanding in
respect of the Revolving Credit Loan shall become due and payable on the
Revolving Commitment Termination Date, Borrowers may from time to time borrow,
repay (subject to SECTION 1.12(C)) and reborrow under this SECTION 1.1(A). Each
Revolving Credit Advance shall be made on notice by Holdings to the individual
designated by Agent from time to time as its representative responsible for
receiving such notice, such notice to be given no later than (1) 11:00 a.m. (New
York time) on the Business Day of the proposed Revolving Credit Advance, in the
case of an Index Rate Loan, or (2) 11:00 a.m. (New York time) on the date which
is three (3) Business Days prior to the proposed Revolving Credit Advance, in
the case of a LIBOR Loan; PROVIDED, HOWEVER, that unless Holdings shall also
have complied with the requirements of SECTION 1.5(E), all such Revolving Credit
Advances shall bear interest by reference to the Index Rate. Each such notice (a
"NOTICE OF REVOLVING CREDIT ADVANCE") shall be substantially in the form of
EXHIBIT A hereto, specifying the information requested therein and such other
information as may be required by Agent and shall be given in writing (by
telecopy) or by telephone confirmed immediately in writing. Agent shall be
entitled to rely upon, and shall be fully protected under this Agreement in
relying upon, any Notice of Revolving Credit Advance believed by Agent to be
genuine and to assume that each Person executing and delivering the same was
duly authorized unless the responsible individual acting thereon for Agent shall
have, at the time of reliance thereon, actual knowledge to the contrary.
(b) Each Borrower shall execute and deliver to each Lender a third
amended and restated revolving credit note to evidence the Revolving Credit
Loan, such note to be in the principal amount of the Revolving Credit Loan
Commitment of such Lender and substantially in the form of EXHIBIT C hereto
(each a "REVOLVING CREDIT NOTE" and, collectively, the "REVOLVING CREDIT
NOTES"). The Revolving Credit Notes shall represent the obligation of each
Borrower to pay the amount of the Revolving Credit Loan Commitment or, if less,
the aggregate unpaid principal amount of all Revolving Credit Advances made by
Lenders to such Borrower and all other obligations with interest thereon as
prescribed in SECTION 1.5. The date and amount of each Revolving Credit Advance
and each payment of principal with respect thereto shall be recorded on the
books and records of Agent, which books and records shall constitute PRIMA FACIE
evidence of the accuracy of the information therein recorded. The entire unpaid
balance of the Revolving Credit Loan shall be immediately due and payable on the
Revolving Commitment Termination Date.
1.2 LETTERS OF CREDIT. Subject to the terms and conditions of ANNEX
B, Agent shall issue Letters of Credit or letter of credit guarantees in
accordance with such ANNEX B.
1.3 PREPAYMENT. (a) In the event that the outstanding balance of the
Revolving Credit Loan shall, at any time, exceed Borrowing Availability or any
other limitation contained in SECTION 1.1(A), Borrowers shall immediately repay
the Revolving Credit Loan in the amount of such excess.
-2-
<PAGE>
(b) Any prepayments required under CLAUSE (A) above shall be applied
as follows: FIRST, to Fees and reimbursable expenses of Agent then due and
payable pursuant to any of the Loan Documents; SECOND, to interest then due and
payable on Revolving Credit Advances made to the applicable Borrower; THIRD, to
the principal balance of Revolving Credit Advances outstanding to the applicable
Borrower until the same shall have been paid in full; FOURTH, to the Letter of
Credit Obligations of the applicable Borrower to provide cash collateral
therefor in the manner set forth in ANNEX B, until all such Letter of Credit
Obligations have been fully cash collateralized; FIFTH, to interest then due and
payable on the Revolving Credit Advances outstanding to each Borrower (or other
Borrower, as the case may be), PRO rata; SIXTH, to the principal balance of the
Revolving Credit Advances made to each Borrower (or other Borrower, as the case
may be), PRO RATA, until the same shall have been paid in full, and LAST to the
Letter of Credit Obligations of each Borrower (or other Borrower, as the case
may be), PRO RATA, to provide cash collateral therefor in the manner set forth
in ANNEX B, until all such Letter of Credit Obligations have been fully cash
collateralized. The Revolving Credit Loan Commitment shall not be permanently
reduced by the amount of any such prepayments.
(c) No prepayment fee or penalty (except as described in SECTION
1.12(C)) shall be payable in respect of any mandatory prepayment under this
SECTION 1.3.
1.4 USE OF PROCEEDS; OBLIGORS' REPRESENTATIVE. (a) Obligors shall
utilize the proceeds of Revolving Credit Advances solely for the financing of
ordinary working capital and general corporate needs and for other purposes not
prohibited by the terms hereof, including the financing of fees and expenses
incurred in connection with the consummation of the transactions contemplated
hereby, permitted Capital Expenditures, Permitted Acquisitions and permitted
intercompany loans (but excluding in any event any direct or indirect
redemption, purchase, repayment or defeasance of any Stock of any Obligor). In
addition to the foregoing, to the extent the proceeds of the IPO are
insufficient to repay the "Term Loan" (as defined in the Prior Credit Agreement)
in full on the Closing Date, proceeds of the initial Revolving Credit Advance
shall be utilized to make such repayment.
(b) Agent shall be entitled to rely upon, and shall be fully
protected in relying upon, any Notice of Revolving Credit Advance, Notice of
Conversion/Continuation or similar notice believed by Agent to be genuine. Agent
may assume that each Person executing and delivering such a notice was duly
authorized, unless the responsible individual acting thereon for Agent has
actual knowledge to the contrary. Each Obligor hereby designates Holdings as its
representative and agent on its behalf for the purposes of issuing Notices of
Revolving Credit Advances, giving instructions with respect to the disbursement
of the proceeds of the Revolving Credit Loan, selecting interest rate options,
requesting Letters of Credit, giving and receiving all other notices and
consents hereunder or under any of the other Loan Documents and taking all other
actions (including in respect of compliance with covenants) on behalf of any
Obligor or Obligors under the Loan Documents. Holdings hereby accepts such
appointment. Agent and each Lender may regard any notice or other
-3-
<PAGE>
communication pursuant to any Loan Document from Holdings as a notice or
communication from all Obligors, and may give any notice or communication
required or permitted to be given to any Obligor or Obligors hereunder to
Holdings on behalf of such Obligor or Obligors. Each Obligor agrees that each
notice, election, representation and warranty, covenant, agreement and
undertaking made on its behalf by Holdings shall be deemed for all purposes to
have been made by such Obligor and shall be binding upon and enforceable against
such Obligor to the same extent as if the same had been made directly by such
Obligor.
1.5 INTEREST ON REVOLVING CREDIT LOAN. (a) Borrowers shall pay
interest to Agent, for the ratable benefit of Lenders, in arrears on (i) the
first day of each month with respect to Index Rate Loans, commencing on June 1,
1997 and (ii) on the last day of each applicable LIBOR Period with respect to
LIBOR Loans, at a rate equal to (i) the Index Rate plus the applicable per annum
rate set forth in the following grid (the "INDEX Margin") or (ii) at Holdings'
election in accordance with SECTION 1.5(E), the applicable LIBOR Rate plus the
applicable per annum rate set forth in the following grid (the "LIBOR MARGIN";
the Index Margin, LIBOR Margin and L/C Margin (as hereinafter defined), each a
"MARGIN"), in each case based on the amounts outstanding from time to time under
the Revolving Credit Loan.
FUNDED DEBT TO REVOLVING CREDIT LOAN
EBITDA RATIO LIBOR MARGIN INDEX MARGIN
---------------- -------------- --------------
> 3.0 2.50 1.00
-
> 2.5 but < 3.0 2.25 0.75
-
> 2.0 but < 2.5 2.00 0.50
-
> 1.5 but < 2.0 1.50 0.00
-
< 1.5 1.25 0.00
As of the Closing Date, the effective Margin for the Revolving Credit Loan shall
be the Margin in the foregoing grid corresponding to a Funded Debt to EBITDA
ratio of greater than or equal to 3.0. Thereafter, determinations of each Margin
will be based on a Funded Debt to EBITDA ratio calculated in accordance with
paragraph (e) of ANNEX G. The initial adjustment (up or down) in the Margins
will be effective June 1, 1997 based on the Pro Forma and, thereafter, all
further adjustments (up or down) in the Margins will be implemented
prospectively (A) on a quarterly basis, effective on the first Business Day of
the first calendar month that occurs more than five (5) days after delivery to
Lenders of Holdings' quarterly Financial Statements for the preceding Fiscal
Quarter, commencing with such Financial Statements delivered for the Fiscal
Quarter ending May 31, 1997 and (B) after giving pro forma effect to each
Permitted Acquisition involving aggregate consideration in excess of $5,000,000
(including assumed or consolidated liabilities), effective on the first Business
Day of the first calendar month that occurs more than five (5) days after
delivery to Lenders of certificates and pro forma financial information required
to be delivered in respect of such Permitted Acquisitions. Concurrently with the
delivery of the Pro Forma and the Financial Statements described in the
foregoing clause (A), Holdings shall deliver to Agent and Lenders a certificate,
signed by its chief financial officer, setting forth in reasonable detail the
basis for the determination of each Margin.
-4-
<PAGE>
Failure to timely deliver any of the foregoing Pro Forma or Financial
Statements, certificates or pro forma financial information shall, in addition
to any other remedy provided for in this Agreement, result in an increase in the
Margins to the highest level set forth in the foregoing grid, until the first
Business Day of the first calendar month following the delivery of such
applicable information demonstrating that such an increase is not required. If a
Default or Event of Default shall have occurred or be continuing at the time any
reduction in the Margin is to be implemented, that reduction shall be deferred
until the first Business Day of the first calendar month following the date on
which such Default or Event of Default is waived or cured.
(b) If any payment on the Revolving Credit Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day (except as set forth in the
definition of LIBOR Period) and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension.
(c) All computations of interest shall be made by Agent on the basis
of a three hundred and sixty (360) day year, in each case for the actual number
of days occurring in the period for which such interest is payable. The Index
Rate shall be calculated based on the Index Rate as in effect each day. Each
determination by Agent of an interest rate hereunder shall be conclusive and
binding for all purposes, absent manifest error or bad faith.
(d) So long as any Default or Event of Default shall have occurred
and be continuing, and after written notice from Agent to Holdings, the interest
rates applicable to the Revolving Credit Loan and any other Obligations shall be
increased by two percent (2%) per annum above the rate of interest otherwise
applicable hereunder ("DEFAULT RATE").
(e) Provided no Default or Event of Default shall have occurred and
be continuing, Holdings may elect by 11:00 a.m. (New York time) on, the third
(3rd) Business Day prior to (i) the end of each LIBOR Period with respect to any
LIBOR Loans, or (ii) the date on which Holdings wishes to convert any Index Rate
Loan to a LIBOR Loan, with respect to an Index Rate Loan, to have all or some
portion of the Revolving Credit Loan bear interest at the LIBOR Rate for the
next succeeding LIBOR Period as designated by Holdings in such election. If no
election is received with respect to a LIBOR Loan by 11:00 A.M. (New York time)
on the third (3rd) Business Day prior to the end of the LIBOR Period with
respect to such LIBOR Loan (or a Default or Event of Default shall have occurred
and is continuing), such LIBOR Loan shall be converted to an Index Rate Loan at
the end of the LIBOR Period. Holdings shall make such election by notice to
Agent in writing, by telecopy, telex or cable. Holdings, on behalf of Borrowers,
shall have the option to (1) convert at any time all or any portion of the
Revolving Credit Loan, equal to $5,000,000 and integral multiples of $1,000,000
in excess of that amount, bearing interest at a rate determined by reference to
one basis to a rate determined by reference to an alternative basis or (2) upon
the expiration of any LIBOR Period applicable to a LIBOR Loan, to continue all
or any portion of the Revolving Credit Loan equal to $5,000,000 and integral
multiples of $1,000,000 in excess of that amount as a LIBOR Loan and the
succeeding Period(s) of such continued portion of the Revolving Credit Loan
shall commence on the last day of the LIBOR Period of the portion of the
Revolving Credit Loan to be continued;
-5-
<PAGE>
PROVIDED that LIBOR Loans may only be converted into Index Rate Loans on the
expiration date of a LIBOR Period applicable thereto; and PROVIDED, FURTHER,
that no portion of the Revolving Credit Loan may be continued as, or be
converted into, a LIBOR Loan when any Event of Default or Default has occurred
and is continuing. Each notice given by Holdings pursuant hereto (a "NOTICE OF
CONVERSION/CONTINUATION") shall be substantially in the form of EXHIBIT B
hereto, specifying the information requested therein and such other information
as may be required by Agent and shall be given in writing (by telecopy) or by
telephone confirmed immediately in writing. Agent shall be entitled to rely
upon, and shall be fully protected under this Agreement in relying upon, any
Notice of Conversion/Continuation believed by Agent to be genuine and to assume
that each Person executing and delivering the same was duly authorized unless
the responsible individual acting thereon for Agent shall have, at the time of
reliance thereon, actual knowledge to the contrary.
(f) Notwithstanding anything to the contrary set forth in this
SECTION 1.5, if, at any time until payment in full of all of the Obligations,
the rate of interest payable hereunder exceeds the highest rate of interest
permissible under any law which a court of competent jurisdiction shall, in a
final determination, deem applicable hereto (the "MAXIMUM LAWFUL RATE"), then in
such event and so long as the Maximum Lawful Rate would be so exceeded, the rate
of interest payable hereunder shall be equal to the Maximum Lawful Rate;
provided, HOWEVER, that if at any time thereafter the rate of interest payable
hereunder is less than the Maximum Lawful Rate, Borrowers shall continue to pay
interest hereunder at the Maximum Lawful Rate until such time as the total
interest received by Agent, on behalf of Lenders, from the making of such
advances hereunder is equal to the total interest which would have been received
had the interest rate payable hereunder been (but for the operation of this
paragraph) the interest rate payable since the Closing Date as otherwise
provided in this Agreement. Thereafter, the interest rate payable hereunder
shall be the rate of interest provided in SECTIONS 1.5(B) through (E) of this
Agreement, unless and until the rate of interest again exceeds the Maximum
Lawful Rate, in which event this paragraph shall again apply. In no event shall
the total interest received by any Lender pursuant to the terms hereof exceed
the amount which such Lender could lawfully have received had the interest due
hereunder been calculated for the full term hereof at the Maximum Lawful Rate.
In the event the Maximum Lawful Rate is calculated pursuant to this paragraph,
such interest shall be calculated at a daily rate equal to the Maximum Lawful
Rate divided by the number of days in the year in which such calculation is
made. In the event that a court of competent jurisdiction, notwithstanding the
provisions of this SECTION 1.5(f), shall make a final determination that a
Lender has received interest hereunder or under any of the other Loan Documents
in excess of the Maximum Lawful Rate, Agent shall, to the extent permitted by
applicable law, promptly apply such excess first to any interest due and not yet
paid hereunder in respect of the Revolving Credit Loan, then to the outstanding
principal of the Revolving Credit Loan, then to Fees and any other unpaid
Obligations and thereafter shall refund any excess to Borrowers or as a court of
competent jurisdiction may otherwise order.
1.6 FEES. As additional compensation for Lenders' costs and risks in
making the Revolving Credit Loan available to Borrowers, Borrowers agree to pay
to Agent, for the ratable benefit of Lenders, in arrears, on the first Business
Day of each month prior to the Revolving Commitment Termination Date or such
earlier date as the Lenders' obligations to make Revolving
-6-
<PAGE>
Credit Advances terminate or the Revolving Credit Loan becomes due and payable,
and on the Revolving Commitment Termination Date or such earlier date as the
Lenders' obligations to make Revolving Credit Advances terminate or the
Revolving Credit Loan becomes due and payable, a fee for Borrowers' non-use of
available funds (the "NON-USE FEE") in an amount equal to three-eighths of one
percent (.375%) per annum (calculated on the basis of a 360 day year and actual
days elapsed) of the difference between the respective daily averages of (i) the
Maximum Revolving Credit Loan (as it may be adjusted from time to time
hereunder) and (ii) the amount of the Revolving Credit Loan outstanding during
the period for which the Non-Use Fee is due.
1.7 CASH MANAGEMENT SYSTEMS. (a) Obligors shall maintain until the
Termination Date the cash management systems described on ANNEX C.
(b) If a Default shall occur and be continuing under SECTIONS 8.1(J)
or (K) or an Event of Default shall have occurred and be continuing, then in any
such case the Agent may (in its sole discretion) give the Activation Notice
referred to in ANNEX C.
1.8 RECEIPT OF PAYMENTS. Borrowers shall make each payment under
this Agreement not later than 1:00 p.m. (New York time) on the day when due in
lawful money of the United States of America in immediately available funds to
the Collection Account. For purposes of computing interest and fees and
determining the amount of funds available for borrowing by Borrowers pursuant to
SECTION 1.1(A), (a) all payments (including cash sweeps) consisting of cash,
wire or electronic transfers in immediately available funds shall be deemed
received on the date of deposit thereof in the Collection Account and notice to
Agent of such deposit before the time specified above, and (b) all payments
consisting of checks, drafts, or similar non-cash items shall be deemed received
on the day of receipt of good funds following deposit of any such payment in the
Collection Account and notice to Agent of such deposit.
1.9 APPLICATION AND ALLOCATION OF PAYMENTS. (a) So long as any
Default or Event of Default shall have occurred and be continuing, each Borrower
irrevocably waives the right to direct the application of any and all payments
at any time or times hereafter received from or on behalf of such Borrower and
each Borrower hereby irrevocably agrees that Agent shall have the continuing
exclusive right to apply any and all such payments against the then due and
payable Obligations of Borrowers and in repayment of the Revolving Credit Loan
as Agent may deem advisable notwithstanding any previous entry by Agent upon the
Loan Account or any other books and records. In the absence of a specific
determination by Agent with respect thereto, the same shall be applied in the
following order: (i) to then due and payable Fees and expenses; (ii) to then due
and payable interest payments on the Revolving Credit Loan; (iii) to Obligations
other than Fees, expenses and interest and principal payments; (iv) to then due
and payable principal payments on the Revolving Credit Loan; and (v) to all
other then due and payable Obligations. Agent is authorized and directed to, and
at its option may, make or cause to be made Revolving Credit Advances on behalf
of Borrowers for payment of all Fees, expenses, Charges, costs, principal,
interest, or other Obligations owing by Borrowers under this Agreement or any of
the other Loan Documents if and to the extent any such Borrower fails to
promptly pay any such amounts as and when due, even if such Revolving
-7-
<PAGE>
Credit Advance would cause total Revolving Credit Advances to exceed Borrowing
Availability or the Maximum Revolving Credit Loan amount. At Agent's option and
to the extent permitted by law, any advances so made shall be deemed Revolving
Credit Advances constituting part of the Revolving Credit Loan hereunder.
1.10 LOAN ACCOUNT AND ACCOUNTING. Agent shall maintain a loan
account (the "LOAN ACCOUNT") on its books to record: (a) all Revolving Credit
Advances, (b) all payments made by Borrowers and (c) all other appropriate
debits and credits as provided in this Agreement and the other Loan Documents
with respect to the Revolving Credit Loan or any other Obligations. All entries
in the Loan Account shall be made in accordance with Agent's customary
accounting practices as in effect from time to time. Borrowers shall pay all
Obligations as such amounts become due or are declared due pursuant to the terms
of this Agreement.
The balance in the Loan Account, as recorded on Agent's most recent
printout or other written statement, shall be presumptive evidence of the
amounts due and owing at such time to Agent and Lenders by Borrowers; PROVIDED,
THAT, any failure to so record or any error in so recording shall not limit or
otherwise affect Borrowers' obligations to pay the Obligations. Agent shall
render to Holdings a monthly accounting of transactions under the Revolving
Credit Loan setting forth the balance of the Loan Account. Each and every such
accounting shall (absent manifest error) be deemed final, binding and conclusive
upon Borrowers in all respects as to all matters reflected therein, unless
Holdings, within thirty (30) days after the date any such accounting is
rendered, shall notify Agent in writing of any objection which Borrowers may
have to any such accounting, describing the basis for such objection with
specificity. In that event, only those items expressly objected to in such
notice shall be deemed to be disputed by Borrowers.
1.11 ACCESS. Each Obligor shall (i) provide full access during
normal business hours, from time to time upon one (1) Business Day's prior
notice, to Agent and any of its officers, employees and agents, as frequently as
Agent determines, in its reasonable discretion, to be appropriate (unless a
Default or Event of Default shall have occurred and be continuing, in which
event Agent and Lenders and their respective officers, employees, designees,
agents and representatives shall have access at any and all times and without
any notice), to the properties, facilities, books, records, advisors and
employees (including officers) of Obligors and their Subsidiaries, to the
Collateral, to the accountants of Obligors and their Subsidiaries and to the
work papers of such accountants. In addition, during the pendency of an Event of
Default, the Agent and Lenders shall have access to the customers and suppliers
of Obligors and their Subsidiaries. Without limiting the generality of the
foregoing, Obligors shall (i) permit Agent, and any of its officers, employees,
agents and representatives, to inspect, audit and make extracts from all of the
records, files and books of account of Obligors and their Subsidiaries and (ii)
permit Agent, and any of its officers, employees, agents and representatives, to
inspect, review and evaluate the Accounts, Inventory at Obligors' and their
Subsidiaries' locations and at premises not owned by or leased to Obligors or
their Subsidiaries. Each Obligor shall make available to Agent and its counsel,
as quickly as is possible under the circumstances, copies of all books, records,
board minutes, contracts, insurance policies, environmental audits, business
plans, files, financial statements (actual and pro
-8-
<PAGE>
forma), filings with federal, state and local regulatory agencies, and other
instruments and documents which Agent may request. Each Obligor shall deliver
any document or instrument necessary for Agent, as it may from time to time
request, to obtain records from any service bureau or other Person which
maintains records for any Obligor. Each Obligor shall instruct their certified
public accountants and their banking and other financial institutions to make
available to Agent such information and records as Agent may reasonably request.
Agent will give Lenders at least ten (10) days' prior written notice of
regularly scheduled audits. Representatives of other Lenders may accompany
Agent's representatives on regularly scheduled audits at no charge to Obligors.
1.12 INDEMNITY. (a) Each Obligor shall jointly and severally
indemnify and hold each of Agent, Lenders and their respective Affiliates,
officers, directors, employees, attorneys, agents and representatives (each, an
"INDEMNIFIED PERSON"), harmless from and against any and all suits, actions,
proceedings, claims, damages, losses, liabilities and expenses (including
attorneys' fees and disbursements and other costs of investigation or defense,
including those incurred upon any appeal) which may be instituted or asserted
against or incurred by any such Indemnified Person as the result of credit
having been extended under this Agreement and the other Loan Documents or in
connection with or arising out of the transactions contemplated hereunder and
thereunder, (including any and all Environmental Liabilities and Costs);
PROVIDED, THAT no Obligor shall be liable for any indemnification to such
Indemnified Person to the extent that any such suit, action, proceeding, claim,
damage, loss, liability or expense results solely from such Indemnified Person's
gross negligence or willful misconduct, as finally determined by a court of
competent jurisdiction after all possible appeals have been exhausted. NEITHER
AGENT, ANY LENDER NOR ANY OTHER INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR
LIABLE TO ANY OTHER PARTY HERETO, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY
BENEFICIARY OF SUCH PARTY OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY
THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES
WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
(b) Each Obligor hereby acknowledges that Agent (i) is not now, and
has not ever been, in control of any of the Real Estate or any Obligor's
affairs, and (ii) does not have the capacity through the provisions of the Loan
Documents to influence any Obligor's conduct with respect to the ownership,
operation or management of any of its real property, including any of its Real
Estate.
(c) Borrowers understand that in connection with Lenders' arranging
to provide the LIBOR Rate interest option with respect to the Revolving Credit
Loan from time to time at the option of Borrowers on the terms provided herein,
Lenders may enter into funding arrangements with third parties ("FUNDING
ARRANGEMENTS") on terms and conditions which could result in substantial losses
to such Lenders if such LIBOR Rate funds do not remain outstanding at the
interest rates provided herein for the entire LIBOR Period with respect to which
the LIBOR Rate has been fixed. Consequently, in order to induce Lenders to
provide such LIBOR Rate option on the terms provided herein and in consideration
for the entering into by Lenders of Funding Arrangements from time to time in
contemplation thereof, if any LIBOR Rate funds are repaid in whole or in part
prior to the last
-9-
<PAGE>
day of any such LIBOR Period therefor, with respect to LIBOR Rate funds (whether
such repayment is made pursuant to any provision of this Agreement or any other
Loan Document or is the result of acceleration, by operation of law or
otherwise), Borrowers shall indemnify and hold harmless each Lender from and
against and in respect of any and all losses, costs and expenses resulting from,
or arising out of or imposed upon or incurred by such Lender by reason of the
liquidation or reemployment of funds acquired or committed to be acquired by
such Lender to fund such LIBOR Rate option pursuant to the Funding Arrangements.
The amount of any losses, costs or expenses resulting in an obligation of
Borrowers to make a payment pursuant to the foregoing sentence shall not include
any losses attributable to lost profit to Lenders but shall represent the
excess, if any, of (A) such Lender's cost of borrowing the LIBOR Rate funds
pursuant to the Funding Arrangements over (B) the return to such Lender on its
reasonable reinvestment of such funds; PROVIDED, HOWEVER, that if any Lender
terminates any Funding Arrangements in respect of the LIBOR Rate funds, the
amount of such losses, costs and expenses shall include the cost to such Lender
of such termination. In reinvesting any funds borrowed by any Lender pursuant to
the Funding Arrangements, such Lender shall take into consideration the
remaining maturity of such borrowings. As promptly as practicable under the
circumstances, each Lender shall provide Holdings with its written calculation
of all amounts payable pursuant to the next preceding sentence, and such
calculation shall be binding on the parties hereto unless Holdings shall object
thereto in writing within ten (10) Business Days of receipt thereof.
1.13 TAXES. (a) Any and all payments by each Borrower hereunder or
under the Revolving Credit Note shall be made, in accordance with this SECTION
1.13, free and clear of and without deduction for any and all present or future
Taxes except to the extent Borrowers are required to withhold such amounts
pursuant to SECTION 1.13(D). If any Borrower shall be required by law to deduct
any Taxes from or in respect of any sum payable hereunder or under the Revolving
Credit Note, (i) the sum payable shall be increased as much as shall be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this SECTION 1.13) Agent or Lenders,
as applicable, receive an amount equal to the sum they would have received had
no such deductions been made, (ii) such Borrower shall make such deductions, and
(iii) such Borrower shall pay the full amount deducted to the relevant taxing or
other authority in accordance with applicable law.
(b) Obligors shall indemnify and pay, within ten (10) days of demand
therefor, Agent and each Lender for the full amount of Taxes imposed as a result
of payments made by Obligors under any Loan Document (including any Taxes
imposed by any jurisdiction on amounts payable under this SECTION 1.13) paid by
Agent or such Lender, as appropriate, and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto, whether or not
such Taxes were correctly or legally asserted.
(c) Within thirty (30) days after the date of any payment of Taxes,
Holdings shall furnish to Agent, at its address referred to in SECTION 11.10,
the original or a certified copy of a receipt evidencing payment thereof.
-10-
<PAGE>
(d) Prior to becoming a Lender hereunder and within fifteen (15)
days after a reasonable written request from Holdings or Agent thereafter, each
Lender organized under the laws of a jurisdiction outside the United States (a
"FOREIGN LENDER") shall provide to Holdings and Agent a properly completed and
executed Internal Revenue Service Form 4224 or Form 1001 or other applicable
form, certificate or document prescribed by the Internal Revenue Service or the
United States certifying as to such Foreign Lender's entitlement to such
exemption from withholding with respect to payments to be made to such Foreign
Lender under this Agreement and under the Revolving Credit Notes (a "CERTIFICATE
OF EXEMPTION"). If a Foreign Lender does not provide a Certificate of Exemption
to Holdings and Agent within the time periods set forth in the preceding
paragraph, Borrowers shall withhold taxes from payments to such Foreign Lender
at the applicable statutory rate and Borrowers shall not be required pursuant to
SECTION 1.13 or otherwise to pay any additional amounts as a result of such
withholding; provided, however, that all such withholding shall cease upon
delivery by such Foreign Lender of a Certificate of Exemption to Holdings and
Agent.
1.14 CAPITAL ADEQUACY; INCREASED COSTS; ILLEGALITY. (a) In the event
that any Lender shall have determined that the adoption after the Closing Date
of any law, treaty, governmental (or quasi-governmental) rule, regulation,
guideline or order regarding capital adequacy, reserve requirements or similar
requirements or compliance by any Lender with any request or directive issued
after the Closing Date regarding capital adequacy, reserve requirements or
similar requirements (whether or not having the force of law and whether or not
failure to comply therewith would be unlawful) from any central bank or
governmental agency or body having jurisdiction does or would have the effect of
increasing the amount of capital, reserves or other funds required to be
maintained by such Lender and thereby reducing the rate of return on such
Lender's capital as a consequence of its obligations hereunder, then Borrowers
shall from time to time within fifteen (15) days after notice and demand on
Holdings by such Lender (together with the certificate referred to in the next
sentence and with a copy to Agent) pay to Agent, for the account of such Lender,
additional amounts sufficient to compensate such Lender for such reduction;
PROVIDED, HOWEVER, THAT, notwithstanding the foregoing, Borrowers shall have no
obligation to make any such payment in the event, if any, that such notice and
demand was sent by such Lender more than one-hundred and eighty (180) days after
it became or should reasonably have become aware of such law, treaty,
governmental (or quasi-governmental) rule, regulation, guideline or order. A
certificate as to the amount of such cost and showing the basis of the
computation of such cost submitted by such Lender to Borrowers and Agent shall,
absent manifest error, be final, conclusive and binding for all purposes.
(b) If, after the Closing Date due to either (i) the introduction of
or any change in or in the interpretation of any law or regulation or (ii) the
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), there shall be
any increase in the cost to any Lender of agreeing to make or making, funding or
maintaining any LIBOR Loan, then Borrowers shall from time to time, within
fifteen (15) days after notice by such Lender (with a copy of such demand to
Agent), pay to Agent for the account of such Lender additional amounts
sufficient to compensate such Lender for such increased cost; PROVIDED, HOWEVER,
THAT, notwithstanding the foregoing, Borrowers shall have no obligation to make
any such payment in the event, if any, that such notice and demand was sent by
such Lender more than one-
-11-
<PAGE>
hundred and eighty (180) days after it became or should reasonably have become
aware of such law, treaty, governmental (or quasi-governmental) rule,
regulation, guideline or order. A certificate as to the amount of such increased
cost and showing the basis of such computation, submitted to Holdings and Agent
by such Lender, shall be conclusive and binding on Borrowers for all purposes,
absent manifest error. Each Lender agrees that, as promptly as practicable after
it becomes aware of any circumstances referred to in CLAUSE (I) or (II) above
which would result in any such increased cost to such Lender, such Lender shall,
to the extent not inconsistent with such Lender's internal policies of general
application, use reasonable commercial efforts to minimize costs and expenses
incurred by it and payable to it by Borrowers pursuant to this SECTION 1.14(B).
(c) Notwithstanding anything to the contrary contained herein, if
the introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other Governmental
Authority shall assert that it is unlawful, for any Lender to agree to make or
to make or to continue to fund or maintain any LIBOR Loan, then, unless such
Lender is able to agree to make or to make or to continue to fund or to maintain
such LIBOR Loans at another branch or office of such Lender without, in such
Lender's opinion, adversely affecting it or its Pro Rata Share of the Revolving
Credit Loan or the income obtained therefrom, on notice thereof and demand
therefor by such Lender to Borrowers through Agent, (i) the obligation of such
Lender to agree to make or to make or to continue to fund or maintain LIBOR
Loans shall terminate and (ii) Borrowers shall forthwith prepay in full all
outstanding LIBOR Loans, together with interest accrued thereon, of such Lender
UNLESS Borrowers, within five (5) Business Days after the delivery of such
notice and demand, convert all LIBOR Loans into Index Rate Loans.
(d) Upon the Agent obtaining actual knowledge of the occurrence of
any of the events set forth in this SECTION 1.14, Agent shall promptly notify
Holdings of the occurrence of such event. Borrowers shall have the right within
five (5) days of receipt of such notice to convert any outstanding LIBOR Loans
to an Index Rate Loan.
1.15 REPLACEMENT OF LENDER IN RESPECT OF INCREASED COSTS. Within
fifteen (15) days after receipt by Holdings of written notice and demand from
any Lender (an "AFFECTED LENDER") for payment of additional amounts or increased
costs as provided in SECTION 1.13(A), 1.14(A) or 1.14(B), Holdings may, at its
option, notify Agent and such Affected Lender in writing of its intention to
replace the Affected Lender. So long as no Default or Event of Default shall
have occurred and be continuing, Holdings, with the prior written consent of
Agent, may obtain, at Borrowers' expense, a replacement Lender ("REPLACEMENT
LENDER") for the Affected Lender, which Replacement Lender must be satisfactory
to Agent. If Borrowers obtain a Replacement Lender within ninety (90) days
following notice of their intention to do so, the Affected Lender must sell and
assign its Pro Rata Share of the Revolving Credit Loan and Revolving Credit Loan
Commitment to such Replacement Lender for an amount equal to the principal
balance of the Revolving Credit Loan held by the Affected Lender and all accrued
interest and Fees with respect thereto through the date of such sale, PROVIDED
that Borrowers shall have reimbursed such Affected Lender for the additional
amounts or increased costs that it is entitled to receive under this Agreement
through the date of such sale and assignment.
-12-
<PAGE>
Notwithstanding the foregoing, Borrowers shall not have the right to obtain a
Replacement Lender if the Affected Lender rescinds its demand for increased
costs or additional amounts within fifteen (15) days following its receipt of
Borrowers' notice of intention to replace such Affected Lender. Furthermore, if
Borrowers give a notice of intention to replace and do not so replace such
Affected Lender within ninety (90) days thereafter, Borrowers' rights under this
SECTION 1.15 shall terminate and Borrowers shall promptly pay all increased
costs or additional amounts demanded by such Affected Lender pursuant to
SECTIONS 1.13(A), 1.14(a) and 1.14(B).
1.16 SINGLE LOAN.The Revolving Credit Loan, as advanced to each
Borrower, and all of the other Obligations of each Borrower arising under this
Agreement and the other Loan Documents shall constitute one general obligation
of that Borrower secured, until the Termination Date, by all of its Collateral.
2. CONDITIONS PRECEDENT
2.1 CONDITIONS TO REVOLVING CREDIT LOAN.
Notwithstanding any other provision of this Agreement and without
affecting in any manner the rights of Agent and Lenders hereunder, Obligors
shall have no rights under this Agreement (but shall have all applicable
obligations hereunder), and no Lender shall be obligated to make any Revolving
Credit Advance, or to take, fulfill, or perform any other action hereunder,
until the following conditions have been satisfied, in Agent's sole discretion,
or waived in writing by Agent and Requisite Lenders:
(a) AGREEMENT. This Agreement or counterparts hereof shall have been
duly executed by, and delivered to, Obligors, Agent and Lenders.
(b) LOAN DOCUMENTS. Agent shall have received such guaranties,
documents, instruments, agreements and legal opinions as Agent shall request in
connection with the transactions contemplated by this Agreement and the other
Loan Documents, including all guaranties, documents, instruments, agreements and
legal opinions listed in the Schedule of Documents attached hereto as ANNEX D,
each in form and substance satisfactory to Agent.
(c) GOVERNMENTAL APPROVALS. Evidence satisfactory to Agent that
Obligors have obtained consents and acknowledgments of all Persons whose
consents and acknowledgments may be required, including, but not limited to, all
requisite Governmental Authorities, to the terms, and to the execution and
delivery, of this Agreement, the other Loan Documents, the IPO Documents and the
consummation of the transactions contemplated hereby and thereby.
(d) TERM LOAN. The "Term Loan" (as defined in the Prior Credit
Agreement), together with all interest, fees, expenses and other amounts accrued
or payable with respect thereto, shall have been paid in full as of the Closing
Date, first, with the proceeds of the IPO and, to the extent necessary
thereafter, with the proceeds of the initial Revolving Credit Advance.
-13-
<PAGE>
(e) IPO. The IPO shall have been consummated in accordance with the
terms of the IPO Documents and all applicable laws, and, Holdings shall have
received proceeds of the IPO, net of all fees, commissions, costs and expenses,
of not less than $55,900,000, not more than $25,000,000 of which shall be
distributed to Parent as a dividend and not more than $17,000,000 of which shall
be transferred to Parent as payment in full of all intercompany loans owing from
the Obligors to Parent and the other Publishing Obligors as of the Closing Date.
Upon consummation of the IPO, Holdings shall be, and be qualified to be, listed
on the New York Stock Exchange. No claim, suit, proceeding, petition,
governmental investigation, injunction or any other litigation shall have been
commenced or threatened against any Obligor or any Affiliate thereof with
respect to the IPO.
(f) OPENING AVAILABILITY. After giving effect to Revolving Credit
Advances made and Letter of Credit Obligations incurred on the Closing Date and
the consummation of the IPO, Borrowing Availability as of the Closing Date shall
be at least $70,000,000 (on a pro forma basis, with trade payables being paid
currently, and expenses and liabilities being paid in the ordinary course of
business and without acceleration of sales).
(g) COMPLIANCE WITH LAWS. Agent shall have received evidence
satisfactory to Agent and its counsel that each Obligor and Subsidiary thereof
is in compliance in all material respects, with all applicable foreign, federal,
state and local laws and regulations, including those relating to labor and
environmental matters and ERISA.
(h) PRIOR CREDIT AGREEMENT. No "Default" or "Event of Default" (each
as defined in the Prior Credit Agreement) shall have occurred and be continuing
and all the Obligors party to the Prior Credit Agreement and the "Loan
Documents" (as defined in the Prior Credit Agreement) shall have complied in all
respects with the covenants and agreements contained therein or made pursuant
thereto, including with respect to the Collateral.
2.2 FURTHER CONDITIONS TO EACH REVOLVING CREDIT ADVANCE. It shall be
a further condition to the initial and each subsequent Revolving Credit Advance
that the following statements shall be true on the date of each such advance or
funding, as the case may be:
(a) (i) With respect to the initial Revolving Credit Advance, all of
each Obligor's representations and warranties contained herein or in any of the
other Loan Documents shall be true and correct on and as of the Closing Date and
(ii) with respect to each subsequent Revolving Credit Advance, all of each
Obligor's representations and warranties contained herein or in any of the other
Loan Documents, shall be true and correct in all material respects on the date
on which each such Revolving Credit Advance is made as though made on and as of
such date, except to the extent that any such representation or warranty
expressly relates to an earlier date and except for changes therein expressly
permitted or expressly contemplated by this Agreement.
(b) Obligors and each of the Subsidiaries thereof shall be in
compliance in all material respects with all of the covenants and other
agreements contained herein or in any of the
-14-
<PAGE>
other Loan Documents including, without limitation, taking any further action
required after the Closing Date under SECTION 2.1.
(c) No event shall have occurred and be continuing, or would result
from the making of any Revolving Credit Advance which constitutes or would
constitute a Default or an Event of Default.
(d) After giving effect to such Revolving Credit Advance the
aggregate principal amount of the Revolving Credit Loan shall not exceed the
maximum amount permitted by SECTION 1.1(A) without requiring that a payment be
made to Agent or any Lender.
The request by Holdings and acceptance by any Borrower of the proceeds of any
Revolving Credit Advance shall be deemed to constitute, as of the date of such
request or acceptance, (i) a representation and warranty by Obligors that the
conditions in this SECTION 2.2 have been satisfied and (ii) a reaffirmation by
Obligors of the granting and continuance of Agent's Liens, on behalf of itself
and Lenders, pursuant to the Collateral Documents.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Revolving Credit Loan and to incur
Letter of Credit Obligations, Obligors, jointly and severally, make the
following representations and warranties to Agent and each Lender, each and all
of which shall be true and correct as of the date of execution and delivery of
this Agreement, and shall survive the execution and delivery of this Agreement:
3.1 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each Obligor and the
Subsidiaries thereof (i) is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation and has
been duly qualified to conduct business and is in good standing in each other
jurisdiction where its ownership or lease of property or the conduct of its
business requires such qualification, except where the failure to so qualify
would not be reasonably likely to have a Material Adverse Effect; (ii) has the
requisite corporate power and authority and the legal right to own, pledge,
mortgage or otherwise encumber and operate its properties, to lease the property
it operates under lease and to conduct its business as now, heretofore and
proposed to be conducted; (iii) has all material licenses, permits, consents or
approvals from or by, and has made all material filings with, and has given all
notices to, all Governmental Authorities having jurisdiction, to the extent
required for such ownership, operation and conduct; (iv) is in compliance with
its certificate or articles of incorporation and by-laws; and (v) is in
compliance in all material respects with all applicable provisions of law.
3.2 EXECUTIVE OFFICES. The current location of each Obligor's
executive office and principal place of business is set forth on SCHEDULE 3.2
and, except as set forth on SCHEDULE 3.2, none of such locations have changed
within the past six (6) months.
3.3 CORPORATE POWER, AUTHORIZATION, ENFORCEABLE OBLIGATIONS. The
execution,
-15-
<PAGE>
delivery and performance by each Obligor of the Loan Documents and all
instruments and documents to be delivered by such Obligor, to the extent it is a
party thereto, hereunder and thereunder and the creation of all Liens provided
for herein and therein: (i) are within such Person's corporate power; (ii) have
been duly authorized by all necessary or proper corporate and shareholder
action; (iii) are not in contravention of any provision of such Person's
respective certificate or articles or incorporation or bylaws; (iv) will not
violate any law or regulation, or any order or decree of any court or
governmental instrumentality; (v) will not conflict with or result in the breach
or termination of, constitute a default under or accelerate any performance
required by, any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which such Person is a party or by which such Person or any of its
property is bound; (vi) will not result in the creation or imposition of any
Lien upon any of the property of such Person other than those in favor of Agent,
on behalf of itself and Lender, all pursuant to the Loan Documents; and (vii) do
not require the consent or approval of any Governmental Authority or any other
Person, except those referred to in SECTION 2.1(C), all of which will have been
duly obtained, made or complied with prior to the Closing Date. At or prior to
the Closing Date, each of the Loan Documents shall have been duly executed and
delivered for the benefit of or on behalf of each Obligor and each shall then
constitute a legal, valid and binding obligation of such Person, to the extent
it is a party thereto, enforceable against it in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting the rights of creditors generally or by application of
general principles of equity.
3.4 FINANCIAL STATEMENTS AND PROJECTIONS. All Financial Statements
(except for the Projections) concerning Obligors and their respective
Subsidiaries which will hereafter be furnished by or on behalf of any such
Persons to Agent or any Lender pursuant to this Agreement will be prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as disclosed therein and except, with respect to unaudited Financial
Statements, for the absence of footnotes and normal year-end audit adjustments)
and will present fairly in all material respects the financial position of the
corporations covered thereby as at the dates thereof and the results of their
operations for the periods then ended. The Projections attached to SCHEDULE 3.4
and those to be delivered after the Closing Date have been and will be prepared
by Holdings and its Subsidiaries in light of the then past operations of the
business of Holdings and its Subsidiaries. The Projections represent and will
represent as of the date thereof the good faith estimate of Holdings, Borrowers
and their senior management concerning the most probable course of their
businesses. The Pro Forma delivered on the Closing Date and attached to SCHEDULE
3.4 was prepared by Holdings giving PRO FORMA effect to the IPO, was based on
the unaudited consolidated and consolidating balance sheets of Holdings and its
Subsidiaries dated March 31, 1997, and was prepared in accordance with GAAP,
with only such adjustments thereto as would be required in accordance with GAAP.
3.5 COLLATERAL REPORTS. Holdings has delivered the Collateral
Reports identified on ANNEX F and each such Collateral Report conforms with the
description thereof contained on ANNEX F.
3.6 MATERIAL ADVERSE EFFECT. No Obligor or Subsidiary thereof, as of
May 31, 1996, had any obligations, contingent liabilities, or liabilities for
Charges, long-term leases or unusual
-16-
<PAGE>
forward or long-term commitments which are not reflected in the audited
consolidated balance sheet (or notes thereto) of Holdings and its Subsidiaries
for the Fiscal Year ended May 31, 1996 and which could, alone or in the
aggregate, be reasonably expected to have or result in a Material Adverse
Effect. As of the Closing Date, there has been no material adverse change in the
business, assets, operations, prospects or financial or other condition of any
Obligor or Subsidiary thereof since May 31, 1996.
3.7 OWNERSHIP OF PROPERTY; LIENS. (a) Except as described on
SCHEDULE 3.7 (or such other locations hereafter designated in writing by
Holdings as to which the provisions of SECTION 5.11 have been complied with),
the real estate ("REAL ESTATE") listed on SCHEDULE 3.7 constitutes all of the
real property owned, leased, or used in its business by each Obligor and its
Subsidiaries which is material to such Obligor or where material amounts of
Collateral are located. Each Obligor and Subsidiary thereof owns good and
marketable fee simple title to: (i) all of the owned Real Estate, and valid and
marketable leasehold interests in all of its Leases (both as lessor and lessee,
sublessee or assignee), all as described on SCHEDULE 3.7, and (ii) good and
marketable title to, or valid leasehold interests in, all of its other
properties and assets, and none of the properties and assets of any Obligor or
Subsidiary hereof are subject to any Liens, except Permitted Encumbrances.
Except as described on SCHEDULE 3.7, (i) no Obligor, Subsidiary thereof or other
party to any such Lease described on SCHEDULE 3.7 is in default in any material
respect of its obligations thereunder or has delivered or received any notice of
default under any such Lease (which has not been waived or cured), and no event
has occurred which, with the giving of notice, the passage of time or both,
would constitute a default under any such Lease; (ii) no Obligor or Subsidiary
thereof owns or holds or is obligated under or a party to, any option, right of
first refusal or any other contractual right to purchase, acquire, sell, assign
or dispose of any real property owned or leased by such Obligor or Subsidiary
except as set forth therein; and (iii) to Obligors' knowledge after reasonable
inquiry, no portion of any Real Estate owned or leased by any Obligor or
Subsidiary thereof has suffered any material damage by fire or other casualty
loss or a Release which has not heretofore either been repaired and restored to
its original condition or is in the process of being remedied in all material
respects. All material permits required to have been issued or appropriate to
enable the Real Estate owned or leased by such Obligor or Subsidiary to be
lawfully occupied and used for all of the purposes for which they are currently
occupied and used, have been lawfully issued and are, as of the Closing Date,
in full force and effect.
3.8 RESTRICTIONS; NO DEFAULT. No contract, lease, agreement or other
instrument to which any Obligor or Subsidiary thereof is a party or by which it
or any of its properties or assets is bound or affected and no provision of
applicable law or governmental regulation has or results in a Material Adverse
Effect, or is reasonably likely to have a Material Adverse Effect. No Obligor or
Subsidiary thereof is in default in any material respect, and to such Obligor's
or Subsidiary's knowledge no third party is in default in any material respect,
under or with respect to any contract, agreement, lease or other instrument to
which it is a party, which default is reasonably likely to have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.
3.9 LABOR MATTERS. There are no strikes or other labor disputes
against any
-17-
<PAGE>
Obligor or Subsidiary thereof that are pending or threatened. No hours worked by
and no payments made to employees of any Obligor or Subsidiary thereof have been
in violation of the Fair Labor Standards Act or any other applicable federal,
state, local or foreign law dealing with such matters. All payments due from
each Obligor or Subsidiary thereof on account of employee health and welfare
insurance have been paid or accrued as a liability on the books of such Obligor
or Subsidiary. Except as set forth on SCHEDULE 3.9, no Obligor or Subsidiary
thereof has any obligation under any collective bargaining agreement or any
employment agreement. To Obligors' knowledge after reasonable inquiry, there is
no organizing activity involving any Obligor or Subsidiary thereof pending or
threatened by any labor union or group of employees. Except as set forth on
SCHEDULE 3.9, there are no representation proceedings pending or threatened with
the National Labor Relations Board, and no labor organization or group of
employees of any Obligor or Subsidiary thereof has made a pending demand for
recognition. There are no material complaints or charges against any Obligor or
Subsidiary thereof pending or threatened to be filed with any federal, state,
local or foreign court, governmental agency or arbitrator based on, arising out
of, in connection with, or otherwise relating to the employment or termination
of employment by any Obligor or Subsidiary thereof of any individual.
3.10 VENTURES, SUBSIDIARIES AND AFFILIATES; OUTSTANDING STOCK AND
INDEBTEDNESS. Except as set forth on SCHEDULE 3.10, no Obligor has any
Subsidiaries or is engaged in any joint venture or partnership with any other
Person. Each person or group of persons (within the meaning of the Securities
Exchange Act of 1934, as amended) owning, directly or indirectly, five percent
(5%) or more of the issued and outstanding Stock of Holdings is named on
SCHEDULE 3.10, and the issued and outstanding Stock of each other Obligor and
Subsidiary thereof is owned by the Stockholders named on SCHEDULE 3.10. Except
as set forth on SCHEDULE 3.10, there are no outstanding rights to purchase,
options, warrants or similar rights or agreements pursuant to which any Obligor
or Subsidiary thereof may be required to issue or sell any Stock or other equity
security. As of the Closing Date, all outstanding Indebtedness and all Liens of
each Obligor and the Subsidiaries thereof are described in SECTION 6.3
(including SCHEDULE 6.3) and SECTION 6.7 (including SCHEDULE 6.7), respectively.
3.11 GOVERNMENT REGULATION. No Obligor or Subsidiary thereof is an
"investment company" or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms are defined in the
Investment Company Act of 1940 as amended. No Obligor or Subsidiary thereof is
subject to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Interstate Commerce Act or any other federal or state
statute that restricts or limits its ability to incur Indebtedness or to perform
its obligations hereunder, and the making of Revolving Credit Advances by
Lenders, the application of the proceeds and repayment thereof by such Obligor
or Subsidiary, the IPO, and the consummation of the transactions contemplated by
this Agreement, the other Loan Documents and the IPO Documents will not violate
any provision of any such statute or any rule, regulation or order issued by the
Securities and Exchange Commission.
3.12 MARGIN REGULATIONS. No Obligor or Subsidiary thereof is
engaged, nor will
-18-
<PAGE>
it engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
security" within the respective meanings of each of the quoted terms under
Regulation U or G of the Board of Governors of the Federal Reserve System (the
"FEDERAL RESERVE BOARD") as now and from time to time hereafter in effect. No
Obligor or Subsidiary thereof owns any "margin security", as that term is
defined in Regulations G and U of the Board of Governors of the Federal Reserve
System (the "FEDERAL RESERVE BOARD"), and the proceeds of the Revolving Credit
Advances will not be used, directly or indirectly, for the purpose of purchasing
or carrying any margin security, for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry any margin
security or for any other purpose which might cause any of the loans or other
extensions of credit under this Agreement to be considered a "purpose credit"
within the meaning of Regulation G, T, U or X of the Federal Reserve Board. No
Obligor or Subsidiary thereof will take or permit any agent acting on its behalf
to take any action which might cause this Agreement or any other Loan Document
or any document or instrument delivered pursuant hereto to violate any
regulation of the Federal Reserve Board.
3.13 TAXES. All federal, state, local and foreign tax returns,
reports and statements, including, but not limited to, informational returns
(Form 1120-S) required to be filed by each Obligor and Subsidiary thereof, have
been filed with the appropriate Governmental Authority and all Charges and other
impositions shown thereon to be due and payable have been paid prior to the date
on which any fine, penalty, interest or late charge may be added thereto for
nonpayment thereof, or any such fine, penalty, interest, late charge or loss has
been paid. Each Obligor and Subsidiary thereof has paid when due and payable all
Charges required to be paid by it, except for those being contested in
accordance with SECTION 5.2(B). Proper and accurate amounts have been withheld
by each Obligor or Subsidiary thereof from its respective employees for all
periods in full and complete compliance with the tax, social security and
unemployment withholding provisions of applicable federal, state, local and
foreign law and such withholdings have been timely paid to the respective
Governmental Authorities. SCHEDULE 3.13 sets forth those taxable years for which
any Obligor's tax returns are, as of the Closing Date, being audited by the IRS
or any other applicable Governmental Authority and any assessments or threatened
assessments in connection with such audit, or otherwise currently outstanding.
Except as described on SCHEDULE 3.13, no Obligor or Subsidiary thereof has
executed or filed with the IRS or any other Governmental Authority any agreement
or other document extending, or having the effect of extending, the period for
assessment or collection of any Charges. No Obligor or Subsidiary thereof has
filed a consent pursuant to IRC Section 341(f) or agreed to have IRC Section
341(f) (2) apply to any dispositions of subsection (f) assets (as such term is
defined in IRC Section 341(f)(4)). None of the property owned by any Obligor or
Subsidiary thereof is property which such Obligor or Subsidiary is required to
treat as being owned by any other Person pursuant to the provisions of IRC
Section 168(f)(8) of the Internal Revenue Code of 1954, as amended, and in
effect immediately prior to the enactment of the Tax Reform Act of 1986 or is
"tax-exempt use property" within the meaning of the IRC Section 168 (h). No
Obligor or Subsidiary thereof has agreed or been requested to make any
adjustment under IRC Section 481(a) by reason of a change in accounting method
or otherwise. Except as set forth on SCHEDULE 3.13, no Obligor or Subsidiary
thereof has any obligation under any written tax sharing agreement.
-19-
<PAGE>
3.14 ERISA. (a) SCHEDULE 3.14 lists all Plans maintained or
contributed to by any Obligor or Subsidiary thereof and all Qualified Plans
maintained or contributed to by any ERISA Affiliate. None of the Plans or
Qualified Plans constitute Title IV Plans, Multiemployer Plans, any multiple
employer plans subject to Section 4064 of ERISA, unfunded Pension Plans, Welfare
Plans or Retiree Welfare Plans. Each Qualified Plan has been determined by the
IRS to qualify under Section 401 of the IRC, and the trusts created thereunder
have been determined to be exempt from tax under the provisions of Section 501
of the IRC, and to each Obligor's knowledge after reasonable inquiry, nothing
has occurred which would cause the loss of such qualification or tax-exempt
status. Each Plan is in compliance with the applicable provisions of ERISA and
the IRC, including the filing of reports required under the IRC or ERISA which
are true and correct as of the date filed, and with respect to each Plan, all
required contributions and benefits have been paid in accordance with the
provisions of each such Plan. No Obligor or Subsidiary thereof has engaged in a
prohibited transaction, as defined in Section 4975 of the IRC or Section 406 of
ERISA, in connection with any Plan, which would subject such Obligor or
Subsidiary (after giving effect to any exemption) to a material tax on
prohibited transactions imposed by Section 4975 of the IRC, Section 502 of ERISA
or any other material liability.
(b) Except as set forth on SCHEDULE 3.14: (i) there are no pending,
or to the knowledge of any Obligor or Subsidiary thereof, threatened claims,
actions or lawsuits (other than claims for benefits in the normal course),
asserted or instituted against (x) any Plan or its assets, (y) any fiduciary
with respect to any Plan or (z) any Obligor, Subsidiary thereof or ERISA
Affiliate with respect to any Plan; (ii) within the last five years no Obligor,
Subsidiary thereof, or ERISA Affiliate has engaged in a transaction which
resulted in a Title IV Plan with Unfunded Liabilities being transferred outside
of the "controlled group" (within the meaning of Section 4001(a)(14) of ERISA)
of any such entity; (iii) each Obligor, Subsidiary thereof and ERISA Affiliate
has complied with the notice and contribution coverage requirements of the IRC
and the regulations thereunder except where the failure to comply could not have
or result in any Material Adverse Effect; and (iv) no liability under any Plan
has been funded, nor has such obligation been satisfied, with the purchase of a
contract from an insurance company that is not rated AAA by the Standard &
Poor's Corporation and the equivalent by each other nationally recognized rating
agency.
3.15 NO LITIGATION. Except as set forth on SCHEDULE 3.15 (other than
with respect to the IPO), no action, claim or proceeding is now pending or, to
the knowledge of any Obligor or Subsidiary thereof, threatened against such
Obligor or Subsidiary, at law, in equity or otherwise, before any court, board,
commission, agency or instrumentality of any federal, state, local or foreign
government or of any agency or subdivision thereof, or before any arbitrator or
panel of arbitrators, (i) which challenges such Obligor's or Subsidiary's right,
power or competence to enter into or perform any of its obligations under the
Loan Documents, or the validity or enforceability of any Loan Document or any
action taken thereunder, (ii) which is reasonably likely to have or result in a
Material Adverse Effect, nor to the knowledge of such Obligor or Subsidiary
after reasonable inquiry, does a state of facts exist which is reasonably likely
to give rise to such proceedings or (iii) which relates to the IPO.
-20-
<PAGE>
3.16 BROKERS. Except as set forth on SCHEDULE 3.16 with respect to
the IPO, no broker or finder acting on behalf of any Obligor or Affiliate
thereof brought about the obtaining, making or closing of the loans made
pursuant to this Agreement or the transactions contemplated by the Loan
Documents or the IPO Documents, and no Obligor or Subsidiary thereof has any
obligation to any Person in respect of any finder's or brokerage fees in
connection therewith.
3.17 EMPLOYMENT MATTERS. Except as set forth on SCHEDULE 3.17, there
are no (i) employment, consulting or management agreements covering management
of any Obligor or Subsidiary thereof, or (ii) collective bargaining agreements
or other labor agreements covering any employees of any Obligor or Subsidiary
thereof. A true and complete copy of each such agreement has been furnished to
Agent.
3.18 PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. Except as
otherwise set forth on SCHEDULE 3.18, each Obligor and Subsidiary thereof owns
or has valid, enforceable licenses to use all material licenses, patents, patent
applications, copyrights, service marks, trademarks, trademark applications, and
trade names necessary to continue to conduct its business as heretofore
conducted by it, now conducted by it and proposed to be conducted by it, each of
which is included, together with Copyright Office or Patent and Trademark Office
application or registration numbers, where applicable, on SCHEDULE 3.18.
SCHEDULE 3.18 (as the same may be updated periodically by Holdings in its
discretion) lists all tradenames or other names under which any Obligor or
Subsidiary thereof conducts business. Except as set forth in SCHEDULE 3.18
hereto, no Obligor has received any written notice that the conduct of its or
its Subsidiaries' business infringes upon any license, patent, copyright,
service mark, trademark, trade name, trade secret or other intellectual property
right of others. Except as set forth on SCHEDULE 3.18 hereto, no Obligor or
Subsidiary thereof has asserted any infringement claim against any other Person
regarding any license, patent, copyright, service mark, trademark, trade name,
trade secret or other intellectual property right of any Obligor or Subsidiary
thereof.
3.19 FULL DISCLOSURE. No information contained in this Agreement,
any of the other Loan Documents, the Projections, the Financial Statements, the
Collateral Reports or any written statement furnished by or on behalf of any
Obligors or Subsidiary thereof pursuant to the terms of this Agreement, which
has previously been delivered to Agent, contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading in light of the circumstances under
which they were made. The Liens granted to Agent, on behalf of itself and
Lenders, pursuant to the Collateral Documents will as of the Closing Date be
fully perfected first priority Liens in and to the Collateral described therein.
3.20 HAZARDOUS MATERIALS. Except as set forth on SCHEDULE 3.20, the
Real Estate is free of contamination from any Hazardous Material except in such
amounts as would not be reasonably likely to have a Material Adverse Effect. In
addition, SCHEDULE 3.20 discloses potential material environmental liabilities
of any Obligor or Subsidiary thereof of which any of them have knowledge (i)
related to noncompliance with the Environmental Laws, or (ii) associated with
the Real Estate. No Obligor or Subsidiary thereof has caused or suffered to
occur any Release with respect
-21-
<PAGE>
to any Hazardous Material at, under, above or within any real property which it
owns or leases. No Obligor or Subsidiary thereof is involved in operations which
are reasonably expected to lead to the imposition of any liability or Lien on
it, or any owner of any premises which it occupies, under any Environmental Law,
and no Obligor or Subsidiary thereof has permitted any tenant or occupant of
such premises to engage in any such activity. Holdings has provided to Agent
copies of all existing environmental reports, reviews and audits and all written
information pertaining to actual or potential Environmental Liabilities and
Costs, in each case relating to any Obligor or Subsidiary thereof.
3.21 INSURANCE POLICIES. SCHEDULE 3.21 (as the same may be updated
periodically by Holdings) lists all insurance of any nature maintained for
current occurrences by each Obligor or Subsidiary thereof, as well as a summary
of the terms of such insurance.
3.22 DEPOSIT AND DISBURSEMENT ACCOUNTS. As of the Closing Date
SCHEDULE 1.7 lists all banks and other financial institutions at which any
Obligor or Subsidiary thereof maintains deposits and/or other accounts,
including any disbursement accounts, and SCHEDULE 1.7 correctly identifies the
name, address and telephone number of each bank or other financial institution,
the name in which the account is held, a description of the purpose of the
account, and the complete account number.
3.23 GOVERNMENT CONTRACTS. Except as set forth on SCHEDULE 3.23, as
of the Closing Date no Obligor or Subsidiary thereof are a party to any contract
or agreement with the federal government which are subject to the Federal
Assignment of Claims Act (31 U.S.C. Section 3727) relative to the assignment of
the Accounts thereunder.
3.24 CUSTOMER AND TRADE RELATIONS. To each Obligor's knowledge,
there exists no actual or, to each Obligor's knowledge after reasonable inquiry,
threatened termination or cancellation of, or any material adverse modification
or change in: (a) the business relationship of any Obligor or Subsidiary thereof
with any customer or group of customers whose purchases individually or in the
aggregate are material to the operations of such Obligor and its Subsidiaries
taken as a whole; or (b) the business relationship of any Obligor or Subsidiary
thereof with any supplier material to the operations of such Obligor and its
Subsidiaries, taken as a whole.
3.25 AGREEMENTS AND OTHER DOCUMENTS. As of the Closing Date,
Holdings has provided to Agent or its counsel, on behalf of Lenders, accurate
and complete copies (or summaries) of all of the following agreements or
documents to which any Obligor or Subsidiary thereof is subject and each of
which are listed on SCHEDULE 3.25: (a) Plans; (b) supply agreements not
terminable by such Obligor or Subsidiary, as appropriate, within sixty (60) days
following written notice issued by such Obligor or Subsidiary; (c) purchase
agreements not terminable by such Obligor or Subsidiary, as appropriate, within
60 days following written notice issued by such Obligor or Subsidiary; (d)
leases of real property; (e) any lease of equipment having a remaining term of
one year or longer and requiring aggregate rental and other payments in excess
of $100,000 per annum; (f) material licenses and permits necessary for the
conduct of such Obligor's or Subsidiary's businesses; (g) employment,
consulting, severance, "golden parachute" and other similar agreements with any
officer of such
-22-
<PAGE>
Obligor or Subsidiary; (h) instruments or documents evidencing Indebtedness of
such Obligor or Subsidiary and any security interest granted by such Obligor or
Subsidiary with respect thereto; (i) agreements to acquire by asset purchase,
stock purchase, merger, consolidation or otherwise the business or all or
substantially all of the assets of any Person; and (j) instruments and
agreements evidencing the issuance of any equity securities, warrants, rights or
options to purchase equity securities of such Obligor or Subsidiary.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 REPORTS AND NOTICES. (a) Obligors hereby jointly and severally
covenant and agree that from and after the Closing Date and until the
Termination Date, Holdings shall deliver to Agent and/or Lenders, as required,
the Financial Statements, notices and Projections at the times, to the Persons
and in the manner set forth on ANNEX E.
(b) Obligors hereby jointly and severally covenant and agree that
from and after the Closing Date, Holdings shall deliver to Agent and/or Lenders,
as required, the various Collateral Reports at the times, to the Persons and in
the manner set forth on ANNEX F.
4.2 COMMUNICATION WITH ACCOUNTANTS. Each Obligor authorizes Agent
and each Lender to communicate directly with its independent certified public
accountants and tax advisors, including Deloitte & Touche, and authorizes those
accountants and advisors to disclose to Agent and each Lender any and all
Financial Statements and other supporting financial documents and schedules
relating to any Obligor or Subsidiary thereof (including, without limitation,
copies of any issued management letters) with respect to the business, financial
condition and other affairs of any Obligor or Subsidiary thereof. Concurrently
with the delivery of any annual audited Financial Statements of any Obligor,
such Obligor shall deliver a letter addressed to such accountants and tax
advisors instructing them to comply with the provisions of this SECTION 4.2 and
indicating that a primary intent of Obligors is for Lenders to, and that Lenders
will, rely upon Financial Statements opined on by such accountants.
5. AFFIRMATIVE COVENANTS
Obligors, jointly and severally, covenant and agree that, unless
Agent and Requisite Lenders shall otherwise consent in writing, from and after
the Closing Date and until the
Termination Date:
5.1 MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS. Each Obligor
shall, and shall cause each Subsidiary thereof, to: (a) do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence and its material rights and franchises; (b) continue to conduct its
business substantially as now conducted or as otherwise permitted hereunder; (c)
at all times and in all material respects maintain, preserve and protect all of
its copyrights, patents, trademarks, trade names and all other intellectual
property and rights as licensee or licensor thereof and preserve all the
remainder of its property, in use or useful in the conduct of its business and
keep
-23-
<PAGE>
the same in good repair, working order and condition (taking into consideration
ordinary wear and tear) and from time to time make, or cause to be made, all
necessary or appropriate repairs, replacements and improvements thereto
consistent with industry practices, so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
and (d) transact business only in such names as are set forth on SCHEDULE 5.1.
5.2 PAYMENT OF OBLIGATIONS. (a) Subject to SECTION 5.2(B), each
Obligor shall, and shall cause each Subsidiary thereof to, pay and discharge or
cause to be paid and discharged promptly all (i) Charges imposed upon it, its
income and profits, or any of its property (real, personal or mixed), and (ii)
lawful claims for labor, materials, supplies and services or otherwise, before
any thereof shall become in default.
(b) Any Obligor or Subsidiary thereof may in good faith contest, by
proper legal action or proceedings, the validity or amount of any Charges or
claims described in SECTION 5.2 (A); PROVIDED, THAT, at the time of commencement
of any such action or proceeding, and during the pendency thereof (i) adequate
reserves with respect thereto are maintained on the books of such Obligor in
accordance with GAAP, (ii) such contest operates to suspend collection of the
contested Charges or claims and such contest is maintained and prosecuted
continuously and with diligence, (iii) none of the Collateral would be subject
to forfeiture or loss or any Lien by reason of the institution or prosecution of
such contest, (iv) no Lien (other than inchoate Liens) shall exist, be imposed
or asserted for such Charges or claims during such action or proceeding, (v)
such Obligor or Subsidiary shall promptly pay or discharge such contested
Charges and all additional charges, interest, penalties and expenses, if any,
and shall deliver to Agent evidence acceptable to Agent of such compliance,
payment or discharge, if such contest is terminated or discontinued adversely to
such Obligor or Subsidiary, (vi) Agent has not advised Holdings or such other
Obligor in writing that Agent reasonably believes that nonpayment or
nondischarge thereof could have or result in a Material Adverse Effect, and
(vii) except as Agent may otherwise agree in writing, no Default or Event of
Default shall have occurred and be continuing.
5.3 BOOKS AND RECORDS. Each Obligor shall keep adequate records and
books of account with respect the business activities of such Obligor and its
Subsidiaries, in which proper entries, reflecting all financial transactions,
are made in accordance with GAAP and on a basis consistent with the Financial
Statements referred to in SECTION 3.4.
5.4 LITIGATION. Each Obligor shall notify Agent in writing, promptly
upon learning thereof, of any litigation commenced or threatened against such
Obligor or any Subsidiary thereof, and of the institution against it of any suit
or administrative proceeding that (a) involves an amount in excess of $100,000
not covered by insurance or (b) seeks injunctive relief or is reasonably likely
to have a Material Adverse Effect if adversely determined.
5.5 INSURANCE. (a) Obligors shall, at their sole cost and expense,
maintain the policies of insurance described on SCHEDULE 3.21 in form and with
insurers recognized as adequate by Agent and, in any event, shall at all times
maintain third party liability insurance covering all
-24-
<PAGE>
actions of Agent taken pursuant to the Loan Documents in, on or about any
premises where any Collateral may be located. Such policies shall be in such
amounts as are set forth on SCHEDULE 3.21 and, in no event, less than the
amounts maintained on the Closing Date. Holdings shall notify Agent promptly in
writing of any occurrence causing a material loss or decline in value of any
real or personal property and the estimated (or actual, if available) amount of
such loss or decline. Each Obligor hereby directs all present and future
insurers under its "All Risk" policies of insurance to pay all proceeds payable
thereunder directly to Agent, on behalf of itself and Lenders. Each Obligor
hereby irrevocably makes, constitutes and appoints Agent (and all officers,
employees or agents designated by Agent) so long as an Event of Default shall
have occurred and be continuing as such Obligor's true and lawful agent and
attorney-in-fact for the purpose of making, settling and adjusting claims under
the "All Risk" policies of insurance, endorsing the name of such Obligor or any
Subsidiary thereof on any check, draft, instrument or other item of payment for
the proceeds of such "All Risk" policies of insurance, and for making all
determinations and decisions with respect to such "All Risk" policies of
insurance. In the event any Obligor or Subsidiary thereof at any time or times
hereafter shall fail to obtain or maintain any of the policies of insurance
required above or to pay any premium in whole or in part relating thereto,
Agent, without waiving or releasing any Obligations or Default or Event of
Default hereunder, may at any time or times thereafter (but shall not be
obligated to) obtain and maintain such policies of insurance and pay such
premium and take any other action with respect thereto which Agent deems
advisable. Agent shall use its best efforts to give prior notice of such actions
to Obligors, but shall have no liability for its failure to do so. All sums so
disbursed, including attorneys, fees, court costs and other charges related
thereto, shall be payable, on demand, by Obligors to Agent and shall be
additional Obligations hereunder secured by the Collateral, PROVIDED, THAT, if
and to the extent Obligors fail to promptly pay any of such sums upon demand
therefor, Agent is authorized to, and at its option may, make or cause to be
made Revolving Credit Advances on behalf of Borrowers for payment thereof.
(b) Agent reserves the right at any time, upon any change in any
Obligor's risk profile (including, without limitation, any change in the product
mix maintained by any Obligor or any laws affecting the potential liability of
such Obligor), to require additional forms and limits of insurance to, in
Agent's reasonable opinion, ensure that each Obligor and Subsidiary thereof is
protected by insurance in amounts and with coverage customary for Persons
engaged in their businesses. Each Obligor shall, if so requested by Agent,
deliver to Agent, from time to time upon request of Agent, a report of a
reputable insurance broker, satisfactory to Agent, with respect to its insurance
policies.
(c) Holdings shall deliver to Agent endorsements (i) to all "All
Risk" and business interruption insurance of Obligors naming Agent, on behalf of
itself and Lenders, as loss payee, and (ii) to all general liability and other
liability policies of Obligors naming Agent, on behalf of itself and Lenders, as
additional insured.
5.6 COMPLIANCE WITH LAWS. (a) Each Obligor shall, and shall cause
each Subsidiary thereof to, comply in all material respects with all federal,
state and local laws and regulations applicable to it, including those relating
to licensing, environmental, consumer credit, truth-in-lending, ERISA and labor
matters.
-25-
<PAGE>
5.7 AGREEMENTS. Each Obligor shall, and shall cause each Subsidiary
thereof to, perform, within all required time periods (after giving effect to
any applicable grace periods), all of its obligations and enforce all of its
rights under each agreement to which it is a party, including any lease or
customer contracts to which it is a party, where the failure to do so is
reasonably likely to have a Material Adverse Effect. No Obligor or Subsidiary
thereof shall terminate or modify any provision of any agreement to which it is
a party which termination or modification is reasonably likely to have a
Material Adverse Effect.
5.8 SUPPLEMENTAL DISCLOSURE. At the request of Agent (in the event
that such information is not otherwise delivered by Holdings to Agent pursuant
to this Agreement), so long as there are Obligations outstanding hereunder, but
not more frequently than every fiscal quarter, Obligors will supplement each
schedule or representation herein with respect to any matter hereafter arising
which, if existing or occurring at the date of this Agreement, would have been
required to be set forth or described in such schedule or as an exception to
such representation or which is necessary to correct any information in such
schedule or representation which has been rendered inaccurate thereby; PROVIDED,
HOWEVER, THAT such supplement to such schedule or representation shall not be
deemed an amendment thereof unless expressly consented to in writing by Agent
and Requisite Lenders, and no such amendments, except as the same may be
consented to in a writing which expressly includes a waiver, shall be or be
deemed a waiver of any Default or Event of Default disclosed therein.
5.9 EMPLOYEE PLANS. Each Obligor shall notify Agent in writing of
(i) any and all claims, actions, or lawsuits asserted or instituted, and of any
threatened litigation or claims, against such Obligor, any Subsidiary thereof or
ERISA Affiliate in connection with any Plan maintained, at any time, by such
Obligor, Subsidiary or ERISA Affiliate, or to which such Obligor, Subsidiary or
ERISA Affiliate has or had at any time any obligation to contribute, or/and
against any such Plan itself, or against any fiduciary of or service provided to
any such Plan which is reasonably likely to result in liability in excess of
$100,000 in the aggregate and (ii) the occurrence of any "Reportable Event" with
respect to any Pension Plan of such Obligor, Subsidiary or ERISA Affiliate which
is reasonably likely to result in liability in excess of $100,000 in the
aggregate.
5.10 ENVIRONMENTAL MATTERS. Each Obligor shall, and shall cause each
Subsidiary thereof to, (i) comply in all material respects with the
Environmental Laws applicable to it, (ii) notify Agent promptly in writing after
such Obligor or Subsidiary becomes aware of any material Release upon any
premises owned or occupied by it, and (iii) promptly forward to Agent a copy of
any order, notice, permit, application, or any material communication or report
received by such Obligor or Subsidiary in connection with any such Release or
any other matter relating to the Environmental Laws that may adversely affect
such premises or such Obligor or Subsidiary. The provisions of this SECTION 5.10
shall apply whether or not the Environmental Protection Agency, any other
federal agency or any state, local or foreign environmental agency has taken or
threatened any action in connection with any Release or the presence of any
Hazardous Materials.
-26-
<PAGE>
5.11 LANDLORDS' AGREEMENTS AND BAILEE LETTERS AND MORTGAGEE
AGREEMENTS. Each Obligor shall use its good faith and commercially reasonable
efforts to obtain a landlord's agreement in form and substance acceptable to
Agent from the lessor of each leased premise currently being used by such
Obligor or any Subsidiary thereof and the lessor of any new leased premises, in
each case where Collateral is currently or may be located. Each Obligor shall
use its good faith and commercially reasonable efforts to obtain a bailee letter
in form and substance acceptable to Agent and with respect to any warehouse used
now or in the future, where Collateral is currently or may be located. Each
Obligor shall use its good faith and commercially reasonable efforts to obtain a
mortgagee's agreement in form and substance satisfactory to Agent from the
mortgagee, if any, of each owned premise currently being used by such Obligor or
any Subsidiary thereof, and the mortgagee of any new owned property subject to a
mortgage, in each case where Collateral is currently or may be located. With
respect to locations leased or owned on the Closing Date, in the event Obligors
are unable to obtain a landlord or mortgagee agreement or bailee letter as to
any location as of the Closing Date, until such time as such an agreement or
letter is obtained with respect to such location, Borrowing Availability will be
subject to a reserve equal to two (2) month's lease, rental or mortgage
payments. Except with respect to nonmaterial leases for locations where
Collateral will not be stored, no real property shall be leased or acquired by
any Obligor or Subsidiary thereof after the Closing Date, unless and until a
landlord agreement, as appropriate, shall first have been obtained with respect
to such location.
5.12 LEASED LOCATIONS OF COLLATERAL. Each Obligor shall timely and
fully pay and perform its obligations under all leases and other agreements with
respect to each leased location or public warehouse where any Collateral with a
value in excess of $200,000 is located. Holdings shall promptly deliver to Agent
copies of (i) any and all default notices received under or with respect to any
such leased location or public warehouse and (ii) such other notices or
documents as Agent may request in its reasonable discretion.
-27-
<PAGE>
6. NEGATIVE COVENANTS
Obligors, jointly and severally, covenant and agree that, without
the prior written consent of Agent and the Requisite Lenders, from and after the
Closing Date until the Termination Date:
6.1 MERGERS, SUBSIDIARIES, ETC. No Obligor shall, or shall cause or
permit any Subsidiary thereof to, directly or indirectly, by operation of law or
otherwise, merge with, consolidate with, acquire all or substantially all of the
assets or capital stock of, or otherwise combine with, any Person or form any
Subsidiary other than (i) a merger, consolidation or combination with, or the
acquisition of assets of, any Subsidiary of Holdings with or by any other
Subsidiary of Holdings or (ii) a merger, consolidation or other combination with
or the acquisition of assets or capital stock of another Person (other than
Holdings) not described in the preceding clause (i); PROVIDED, THAT if any
transaction described in the preceding clauses (i) or (ii) involves (A) a
Borrower, a Borrower shall be the surviving entity, (B) an Obligor (but not a
Borrower), an Obligor shall be the surviving entity or (C) a Subsidiary of
Holdings (but not a Borrower or an Obligor), a Subsidiary of Holdings shall be
the surviving entity.
Notwithstanding the foregoing, any merger, consolidation,
combination, or acquisition (each, a "PERMITTED ACQUISITION") with any Person or
of the assets of any Person permitted in accordance with clause (ii) above,
shall be subject to the following conditions precedent:
(a) Agent shall receive at least twenty (20) Business Days' prior
written notice of such Permitted Acquisition, which notice shall include a
reasonably detailed description of such Permitted Acquisition;
(b) such Permitted Acquisition shall only be of a Person engaged in,
or involve assets dedicated to, the same or a substantially similar business to
the businesses engaged in by one or more of Borrowers as of the Closing Date;
(c) such Permitted Acquisition shall not be with respect to Persons
or assets located in jurisdictions against which the United States has imposed
economic sanctions;
(d) such Permitted Acquisition will not subject Agent or any Lender
to regulatory or third party approvals in connection with the exercise of its
rights and remedies under this Agreement or any other Loan Documents other than
approvals applicable to the exercise of such rights and remedies with respect to
Obligors prior to such Permitted Acquisition;
(e) each such Permitted Acquisition of a Person shall be consensual
and shall have been approved by such Person's board of directors and, as
applicable, shareholders;
(f) no additional Indebtedness, contingent obligations or other
liabilities shall be incurred, assumed or otherwise be reflected on a
consolidated balance sheet of Holdings and
-28-
<PAGE>
its Subsidiaries after giving effect to such Permitted Acquisition, except (i)
obligations to trade creditors incurred in the ordinary course of business and
(ii) as permitted in accordance with SECTIONS 6.3 and 6.6;
(g) except as specified in clause (h) below, in the case of any
Permitted Acquisition of any Person, at or prior to the closing thereof the
Agent on behalf of the Lenders shall have received perfected Liens on all of
such Person's assets, real and personal, subject only to Liens permitted in
accordance with SECTION 6.7 hereof and other existing Liens approved in writing
in advance by Agent (which approval shall not be unreasonably withheld), and the
capital stock or other ownership interest of such Person shall be pledged and
delivered to Agent, for the benefit of Lenders, all on terms reasonably
acceptable to the Agent;
(h) in the case of any Permitted Acquisition of a Person located
outside of the United States as to which the application of clause (g) above
would result in a material incremental tax liability under Section 956 of the
IRC, the capital stock or other ownership interest of such Person shall be
contributed to WNG Holdings (International) Ltd. or another intermediate
domestic holding company approved in writing in advance by Agent (which approval
shall not be unreasonably withheld), all of the capital stock of which shall be
pledged to the Agent for the benefit of Lenders, and 65% of the capital stock or
other ownership interest of such Person to be acquired shall be pledged to the
Agent for the benefit of the Lenders, all on terms satisfactory to the Agent;
(i) at the time of such Permitted Acquisition and after giving
effect thereto, no Default or Event of Default shall have occurred and be
continuing;
(j) Concurrently with delivery of the notice referred to in CLAUSE
(A) above, Holdings shall have delivered to Agent, in form and substance
satisfactory to Agent a pro forma consolidated balance sheet of Holdings and its
Subsidiaries, based on recent financial data, which shall be complete and shall
accurately and fairly represent the assets, liabilities, financial position and
results of operations of Holdings and its Subsidiaries in accordance with GAAP
consistently applied, but taking into account such Permitted Acquisition and the
funding of all Revolving Credit Advances in connection therewith, together with
a certificate of Holdings' Chief Financial Officer stating that, based on such
pro forma balance sheet, Borrowing Availability shall be at least $15,000,000
(on a pro forma basis after giving effect to such Permitted Acquisition, with
trade payables being paid currently and expenses and liabilities being paid in
the ordinary course of business, and without acceleration of sales) after giving
effect to such Permitted Acquisition and all Revolving Credit Advances funded in
connection therewith;
(k) the aggregate principal amount of all Revolving Credit Advances
funded in connection with a Permitted Acquisition, together with all prior
Permitted Acquisitions, shall not exceed $50,000,000, subject to the further
limitations set forth in SECTION 6.21(IV); and
(l) reasonably prior to the date of such Permitted Acquisition,
Agent shall have received, in form and substance satisfactory to Agent, all
opinions, certificates, lien search results
-29-
<PAGE>
and other documents, including acquisition agreements, reasonably requested
by Agent, including proof of regulatory compliance.
6.2 INVESTMENTS; LOANS AND ADVANCES. Except (I) as otherwise
permitted by SECTION 6.1, 6.3, 6.4, or 6.21 and (II) for advances to suppliers
on an arm's length basis in connection with purchases in the ordinary course of
business, no Obligor shall, or shall cause or permit any Subsidiary thereof to,
make any investment in, or make or accrue loans or advances of money to any
Person, through the direct or indirect lending of money (including, without
limitation, the guarantee of any letters of credit issued for the benefit of
such Person), holding of securities or otherwise, other than (a) Accounts, (b)
investments in Obligors which are Subsidiaries of Holdings, (c) investments in
(i) marketable direct obligations issued or unconditionally guaranteed by the
United States of America or any agency thereof maturing within one year from the
date of acquisition thereof, (ii) commercial paper maturing no more than one
year from the date of creation thereof and currently having the highest rating
obtainable from either Standard & Poor's Corporation or Moody's Investors
Service, Inc., (iii) certificates of deposit, maturing no more than one year
from the date of creation thereof, issued by commercial banks incorporated under
the laws of the United States of America, each having combined capital, surplus
and undivided profits of not less than $300,000,000 and having a senior secured
rating of "A" or better by a nationally recognized rating agency, provided that
the aggregate amount invested in such certificates of deposit shall not at any
time exceed $100,000 for any one such certificate of deposit and $200,000 for
any one such bank, (iv) time deposits, maturing no more than 30 days from the
date of creation thereof with commercial banks or savings banks or savings and
loan associations each having membership either in the Federal Deposit Insurance
Corporation or in the Federal Savings and Loan Insurance Corporation and in
amounts not exceeding the maximum amounts of insurance thereunder, (v) money
market funds and (iv) in accordance with paragraph (d) of ANNEX C and (d) any
other type of investment, loan or advance not exceeding $1,500,000 in the
aggregate at any time outstanding.
6.3 INDEBTEDNESS. No Obligor shall, or shall cause or permit any
Subsidiary thereof to, create, incur, assume or permit to exist any
Indebtedness, except (i) obligations of Borrowers or Subsidiaries thereof in
connection with Letter of Credit Obligations, (ii) Indebtedness secured by Liens
permitted under SECTION 6.7, (iii) the Revolving Credit Loan and the other
Obligations, (iv) deferred taxes, (v) unfunded pension fund and other employee
benefit plan obligations and liabilities to the extent they are permitted to
remain unfunded under applicable law, (vi) existing Indebtedness set forth on
SCHEDULE 6.3 and refinancings thereof on terms and conditions acceptable to
Agent, in its reasonable discretion, determined in a timely manner, which shall
in any event be on terms no less favorable to Agent, any Lender and the
applicable Obligors, (vii) obligations under or in connection with foreign
exchange forward purchase agreements for purposes of hedging Inventory
purchases, (viii) lease payment obligations under leases which an Obligor or
Subsidiary thereof is permitted to enter into under the Loan Documents, (ix)
other unsecured Indebtedness which, when taken together with (a) all Guaranteed
Indebtedness described in clause (iv) of SECTION 6.6 and (b) all Indebtedness
secured by Liens described in clause (v) of SECTION 6.7, does not exceed
$1,000,000 in principal amount in the aggregate outstanding at any one time, (x)
unsecured Indebtedness not exceeding $3,000,000 in
-30-
<PAGE>
the aggregate at any time outstanding assumed in connection with Permitted
Acquisitions and subordinated in right of payment to the Obligations on terms
and conditions satisfactory to Agent and (xi) intercompany loans made in
accordance with SECTION 6.21.
6.4 EMPLOYEE LOANS AND AFFILIATE TRANSACTIONS. (a) No Obligor shall,
or shall cause or permit any Subsidiary thereof to, enter into or be a party to
any transaction with any Affiliate of any such Person, other than (i) as
permitted by SECTIONS 6.2, 6.4(B), 6.13 or 6.21, (ii) in the ordinary course of
and pursuant to the reasonable requirements of such Person's business and upon
fair and reasonable terms that are fully disclosed to Agent in advance and are
no less favorable to such Person than would be obtained in a comparable arm's
length transaction with a third party not an Affiliate of such Person, (iii)
loans to employees or other transactions between or among Obligors providing
goods and services des |
