<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 9, 1997
REGISTRATION NO. 333-37335
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
COLOR SPOT NURSERIES, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 5193 68-0363266
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Number) Identification Number)
</TABLE>
3478 BUSKIRK AVENUE
PLEASANT HILL, CA 94523
(510) 934-4443
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
MICHAEL F. VUKELICH
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
3478 BUSKIRK AVENUE
PLEASANT HILL, CA 94523
(510) 934-4443
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
COPIES TO:
STEVEN S. SIEGEL RANDALL C. BASSETT
BROWNSTEIN HYATT FARBER & STRICKLAND, LATHAM & WATKINS
P.C. 633 WEST FIFTH STREET, SUITE 4000
410 SEVENTEENTH STREET, 22ND FLOOR LOS ANGELES, CALIFORNIA 90071
DENVER, COLORADO 80202 TELEPHONE: (213) 485-1234
TELEPHONE: (303) 534-6335 FACSIMILE: (213) 891-8763
FACSIMILE: (303) 623-1956
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
---------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses of the Registrant in connection
with the issuance and distribution of the securities being registered, other
than underwriting discounts. Expenses other than registration, filing and
listing fees are estimated.
<TABLE>
<CAPTION>
<S> <C>
SEC Registration fee.............................................................. $ 44,541
NASD filing fee................................................................... 15,699
Blue sky fees and expenses........................................................ 5,000
Printing and engraving............................................................ *
Legal fees and expenses........................................................... 225,000
Accounting fees and expenses...................................................... 160,000
Transfer Agent fees............................................................... *
Miscellaneous..................................................................... *
----------
Total............................................................................. $ *
----------
----------
</TABLE>
- ------------------------
* To be supplied by amendment
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 102(b)(7) of the General Corporation Law of the State of Delaware
permits a Delaware corporation to limit the personal liability of its directors
in accordance with the provisions set forth therein. The Amended and Restated
Certificate of Incorporation of the Registrant provides that the personal
liability of its directors shall be limited to the fullest extent permitted by
applicable law.
Section 145 of the General Corporation Law of the State of Delaware contains
provisions permitting corporations organized thereunder to indemnify directors,
officers, employees or agents against expenses, judgments and fines reasonably
incurred and against certain other liabilities in connection with any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
person was or is a director, officer, employee or agent of the corporation. The
Amended and Restated Certificate of Incorporation of the Registrant provides for
indemnification of its directors and officers to the fullest extent permitted by
applicable law.
The forms of Underwriting Agreements attached hereto as Exhibit 1.1 and 1.2,
which provide for, among other things, the Registrant's sale to the Underwriters
of the securities being registered herein, will obligate the Underwriters under
certain circumstances to indemnify the Registrant and the Registrant's officers
and directors against certain liabilities under the Securities Act of 1933, as
amended (the "Securities Act"). In addition, the Registrant maintains an
officers and directors liability insurance policy.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
SALES OF SECURITIES OF COLOR SPOT NURSERIES, INC.
<TABLE>
<CAPTION>
NUMBER OF
RECIPIENT SHARES DATE AMOUNT PAID EXEMPTION
- ---------------------------------------------- ------------- --------- ------------- -------------
<S> <C> <C> <C> <C>
CSN, Inc...................................... 100 9/8/95 $ 1,000 4(2)
</TABLE>
II-1
<PAGE>
SALES OF SECURITIES OF CSN, INC.
<TABLE>
<CAPTION>
NUMBER OF
RECIPIENT SHARES DATE AMOUNT PAID EXEMPTION
- ------------------------------------------------------------- ---------- --------- ------------- ----------
<S> <C> <C> <C> <C>
Heller Equity Capital Corporation............................ 3,450,000 9/8/95 $ 5,000,000 4(2)
M.F. Vukelich Co............................................. 345,000 9/8/95 50,000 4(2)
Michael Vukelich............................................. 991,588 9/8/95 1,437,084 4(2)
Heller Equity Capital Corporation............................ 1,380,000 2/29/96 2,000,000 4(2)
Michael Vukelich............................................. 240,810 6/11/96 349,000 4(2)
Jerry Halamuda............................................... 86,250 6/11/96 125,000 4(2)
Gary E. Mariani.............................................. 86,250 6/11/96 125,000 4(2)
Gene Malcolm................................................. 69,000 6/11/96 100,000 4(2)
Steven Bookspan.............................................. 28,152 6/11/96 40,800 4(2)
Jim Tsurudome................................................ 17,250 6/11/96 25,000 4(2)
Michael T. Neenan............................................ 6,900 6/11/96 10,000 4(2)
Robert F. Strange............................................ 6,900 6/11/96 10,000 4(2)
Richard E. George............................................ 69,000 6/11/96 100,000 4(2)
Jerry Halamuda............................................... 206,382 12/31/96 299,104 Rule 701
Steven J. Bookspan........................................... 39,561 12/31/96 57,334 Rule 701
Gary Crook................................................... 39,561 12/31/96 57,335 Rule 701
David Grimshaw............................................... 39,561 12/31/96 57,335 Rule 701
Gene Malcolm................................................. 39,561 12/31/96 57,335 Rule 701
Michael T. Neenan............................................ 39,561 12/31/96 57,335 Rule 701
Robert T. Strange............................................ 39,561 12/31/96 57,335 Rule 701
Jim Tsurudome................................................ 39,561 12/31/96 57,335 Rule 701
John Negrete................................................. 17,250 12/31/96 25,000 Rule 701
Dennis Behan................................................. 6,900 12/31/96 10,000 Rule 701
Gary E. Mariani.............................................. 39,561 12/31/96 57,335 Rule 701
Richard E. George............................................ 39,561 12/31/96 57,335 Rule 701
KCSN Aquisition Company, L.P................................. 2,996,746 12/31/96 21,500,001 4(2)
Joseph Bradberry(1).......................................... 278,767 2/20/97 2,000,000 4(2)
KCSN Acquisition Company, L.P................................ 1,524,829 2/20/97 10,939,813 4(2)
Heller Equity Capital Corporation............................ 147,772 2/20/97 1,060,185 4(2)
Signature Trees(1)........................................... 55,753 3/14/97 400,000 4(2)
Michael Cerny................................................ 17,250 4/4/97 123,759 4(2)
Michael F. Vukelich.......................................... 68,095 2/20/07 489,497 4(2)
Jerry Halamuda............................................... 12,604 2/20/97 90,604 4(2)
Steven Bookspan.............................................. 8,625 2/20/97 62,000 4(2)
Dave Grimshaw................................................ 4,869 2/20/97 34,998 4(2)
Robert Strange............................................... 1,725 2/20/97 12,400 4(2)
Jim Tsurudome................................................ 1,380 2/20/97 9,920 4(2)
John Negrete................................................. 690 2/20/97 4,960 4(2)
Dennis Bahen................................................. 2,921 2/20/97 21,000 4(2)
Gary Mariani................................................. 17,737 2/20/97 127,502 4(2)
John Strange................................................. 1,380 6/1/97 9,920 4(2)
Mike Proffit................................................. 5,520 6/1/97 39,680 4(2)
Frank Preiss................................................. 207 6/1/97 1,488 4(2)
Dave Sabalka................................................. 2,829 6/1/97 20,336 4(2)
Paul Yeager.................................................. 207,000 6/1/97 1,488,000 4(2)
Tom Dickerson................................................ 13,800 6/1/97 99,200 4(2)
Homer Holler................................................. 3,450 6/1/97 24,800 4(2)
Jay Strass................................................... 3,450 6/1/97 24,800 4(2)
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
RECIPIENT SHARES DATE AMOUNT PAID EXEMPTION
- ------------------------------------------------------------- ---------- --------- ------------- ----------
Tom Harris................................................... 1,380 6/1/97 9,920 4(2)
<S> <C> <C> <C> <C>
Karla Vukelich............................................... 10,350 6/1/97 75,000 4(2)
Gary Costa................................................... 3,450 6/1/97 24,800 4(2)
Glen Hansen.................................................. 6,900 6/1/97 49,600 4(2)
David Harris................................................. 1,380 6/1/97 9,920 4(2)
Patty Nick................................................... 1,380 6/1/97 9,920 4(2)
Steve Pyle................................................... 1,380 6/1/97 9,920 4(2)
Peter Landowski.............................................. 1,380 6/1/97 9,920 4(2)
Peter Fontinos............................................... 1,380 6/1/97 9,920 4(2)
Robert Strange............................................... 1,380 6/1/97 9,920 4(2)
Ron Sims..................................................... 2,070 6/1/97 14,880 4(2)
Ken Lam...................................................... 1,173 6/1/97 8,432 4(2)
Clay Murphy.................................................. 15,862 7/31/97 250,000 4(2)
Fletcher Murphy.............................................. 6,273 7/31/97 100,000 4(2)
Craig Steinhart(2)........................................... 6,900 8/5/97 110,000 4(2)
Conrad Steinhart(2).......................................... 6,900 8/5/97 110,000 4(2)
Jody Wilkes(2)............................................... 3,450 8/5/97 55,000 4(2)
</TABLE>
- ------------------------
(1) Issued in connection with an acquisition valued at $7.17 per share.
(2) Issued in connection with an acquisition valued at $15.94 per share.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS:
The following exhibits are filed pursuant to Item 601 of Regulation S-K.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- ---------------------------------------------------------------------------------------------------
<C> <C> <S>
1.1 -- Form of Note Underwriting Agreement between the Registrant and the Underwriters.**
1.2 -- Form of Unit Underwriting Agreement between the Registrant and the Underwriters.
3.1 -- Form of Amended and Restated Certificate of Incorporation of the Registrant.
3.2 -- Amended and Restated Bylaws of the Registrant.**
3.3 -- Form of Certificate of Designation of the Series A Preferred Stock.
4.1 -- Form of Preferred Stock certificate.*
4.2 -- Form of Indenture (including form of Note).**
4.3 -- Form of Warrant Agreement (including form of Warrant).
5.1 -- Opinion of Brownstein Hyatt Farber & Strickland, P.C. regarding legality of securities being
registered.**
10.1 -- Amended and Restated Credit Agreement dated as of February 20, 1997.**
10.2 -- Recapitalization and Stock Purchase Agreement among the Registrant, Heller Equity Capital
Corporation ("Heller"), M.F. Vukelich Co., Michael F. Vukelich, Jerry Halamuda, Gary E. Mariani,
Steven J. Bookspan, Richard E. George and KCSN Acquisition Company, L.P. dated as of December 31,
1996.**
10.3 -- 8% Subordinated Convertible Note issued to Heller.**
10.4 -- Put/Call Option Agreement dated as of December 31, 1996.**
10.5 -- Stockholders Agreement dated as of December 31, 1996.**
10.6 -- Employee Stockholders Agreement dated as of June 1, 1997.**
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- ---------------------------------------------------------------------------------------------------
<C> <C> <S>
10.7 -- Employment Agreement with Michael F. Vukelich dated as of December 31, 1996.**
10.8 -- Employment Agreement with Jerry L. Halamuda dated as of December 31, 1996.**
10.9 -- 1996 Stock Incentive Plan.**
10.10 -- 1997 Stock Option Plan.**
10.11 -- Special Stock Option Plan.**
10.12 -- Form of Stock Purchase Option.**
10.13 -- Fee Agreement dated as of December 31, 1996 between Registrant and Kohlberg & Company, LLC.**
10.14 -- Merger Agreement dated as of February 20, 1997 for the acquisition of Lone Star Growers Co.**
10.15 -- Real Property Lease between M.F. Vukelich Co. and the Registrant dated December 1, 1995.**
10.16 -- Real Property Lease between Michael F. Vukelich as Guardian for Trisha Vukelich and the Registrant
dated December 31, 1995.**
10.17 -- Asset Purchase Agreement dated as of March 14, 1997 between Color Spot Christmas Trees, Inc. and
Signature Trees.**
10.18 -- 9% Subordinated Promissory Note issued to Oda Nursery, Inc.**
10.19 -- Stockholders Repurchase Agreement dated as of December 31, 1996.**
10.20 -- Second Amended and Restated Credit Agreement.
12.1 -- Computation of ratio of earnings to fixed charges.**
21.1 -- Subsidiaries of the Registrant.**
23.1 -- Consent of Arthur Andersen LLP.**
23.2 -- Consent of Moss Adams LLP.**
23.3 -- Consent of Jaynes, Reitmeier, Boyd & Therrell, P.C.**
23.4 -- Consent of Brownstein Hyatt Farber & Strickland, P.C.. (included in Exhibit 5.1).**
24.1 -- Power of Attorney (included in Part II of Registration Statement).**
25.1 -- Statement of Eligibility of Trustee.**
27.1 -- Financial Data Schedule.**
</TABLE>
- ------------------------
* To be filed by Amendment.
** Previously filed.
(B) FINANCIAL STATEMENT SCHEDULES.
Schedule II--Valuation and Qualifying Accounts
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreements, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to
II-4
<PAGE>
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to
be a part of this Registration Statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding), is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Pleasant
Hill, State of California, on December 9, 1997.
<TABLE>
<S> <C> <C>
COLOR SPOT NURSERIES, INC
By: /s/ MICHAEL F. VUKELICH
-----------------------------------------
Michael F. Vukelich
CHIEF EXECUTIVE OFFICER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ MICHAEL F. VUKELICH
- ------------------------------ Chief Executive Officer December 9, 1997
Michael F. Vukelich and Director
/s/ JERRY L. HALAMUDA*
- ------------------------------ President and Director December 9, 1997
Jerry L. Halamuda
/s/ PAUL D. YEAGER* Principal Financial
- ------------------------------ Officer and Principal December 9, 1997
Paul D. Yeager Accounting Officer
/s/ JAMES A. KOHLBERG*
- ------------------------------ Director December 9, 1997
James A. Kohlberg
/s/ SAMUEL P. FRIEDER*
- ------------------------------ Director December 9, 1997
Samuel P. Frieder
/s/ RANJIT S. BHONSLE*
- ------------------------------ Director December 9, 1997
Ranjit S. Bhonsle
/s/ GEOFFREY A. THOMPSON*
- ------------------------------ Director December 9, 1997
Geoffrey A. Thompson
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ RICHARD E. GEORGE*
- ------------------------------ Director December 9, 1997
Richard E. George
/s/ GARY E. MARIANI*
- ------------------------------ Director December 9, 1997
Gary E. Mariani
/s/ GEORGE T. BROPHY*
- ------------------------------ Director December 9, 1997
George T. Brophy
</TABLE>
*By: /s/ MICHAEL F. VUKELICH
-------------------------
Michael F. Vukelich December 9, 1997
ATTORNEY-IN-FACT
II-7
<PAGE>
COLOR SPOT NURSERIES, INC.
$40,000,000
40,000 UNITS CONSISTING OF
__% SERIES A CUMULATIVE PREFERRED STOCK AND
WARRANTS TO PURCHASE COMMON STOCK
UNDERWRITING AGREEMENT
__________, 1997
BT Alex. Brown Incorporated
130 Liberty Street
New York, New York 10006
Ladies and Gentlemen:
Color Spot Nurseries, Inc., a Delaware corporation (the
"Company"), hereby confirms its agreement with you (the "Underwriter"), as
set forth below.
1. THE SECURITIES. Subject to the terms and conditions herein
contained, the Company proposes to issue and sell to the Underwriter 40,000
units (the "Units"), consisting in the aggregate of 40,000 shares of its __%
Series A Cumulative Preferred Stock (the "Series A Preferred Stock") and
825,000 warrants (the "Warrants") to purchase an aggregate of 825,000 shares
of common stock, par value $.001 per share (the "Common Stock"), of the
Company. The terms of the Series A Preferred Stock shall be set forth in the
Certificate of Designation, Preferences and Relative, Participating Optional
and Other Special Rights of Preferred Stock and Qualifications, Limitations
and Restrictions of Series A Preferred Stock (the "Certificate of
Designation") of the Company. The Warrants are to be issued pursuant to a
Warrant Agreement (the "Warrant Agreement") to be dated as of _____________,
1997 between the Company and American Stock Transfer and Trust Company, as
warrant agent (the "Warrant Agent"). Shares of the Common Stock issuable
upon exercise of the Warrants are collectively referred to herein as the
"Warrant Shares." The Units, Series A Preferred Stock and the Warrants are
collectively referred to herein as the "Securities."
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to and agrees with the Underwriter that:
(a) A registration statement on Form S-1 (File No.
333-37335) with respect to the Securities has been prepared by the Company in
conformity with the requirements of the Securities Act of 1933, as amended
(the "Act"), and the Rules and Regulations (the "Rules and Regulations") of
the Securities and Exchange Commission (the "Commission") thereunder and has
been filed with the Commission. Copies of such registration statement,
including any
<PAGE>
amendments thereto, the preliminary prospectuses (meeting the requirements of
the Rules and Regulations) contained therein and the exhibits, financial
statements and schedules, as finally amended and revised, have heretofore
been delivered by the Company to you. Such registration statement, together
with any registration statement filed by the Company pursuant to Rule 462(b)
of the Act, herein referred to as the "Registration Statement," which shall
be deemed to include all information omitted therefrom in reliance upon Rule
430A and contained in the Prospectus referred to below, has become effective
under the Act and no post-effective amendment to the Registration Statement
has been filed as of the date of this Agreement. "Prospectus" means (a) the
form of prospectus first filed with the Commission pursuant to Rule 424(b)
with respect to the Securities or (b) the last preliminary prospectus
included in the Registration Statement filed prior to the time it becomes
effective or filed pursuant to Rule 424(a) under the Act that is delivered by
the Company to the Underwriter for delivery to purchasers of the Securities,
together with the term sheet or abbreviated term sheet filed with the
Commission pursuant to Rule 424(b)(7) under the Act. Each preliminary
prospectus included in the Registration Statement prior to the time it
becomes effective is herein referred to as a "Preliminary Prospectus."
(b) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own or lease its properties
and conduct its business as described in the Registration Statement. The
Company does not own or control, directly or indirectly, any corporation,
association or other entity other than the subsidiaries listed in Exhibit 21
to Item 16(a) of the Registration Statement. Each of the subsidiaries of the
Company as listed in Exhibit 21 to Item 16(a) of the Registration Statement
(collectively, the "Subsidiaries") has been duly organized and is validly
existing as a corporation in good standing under the laws of the jurisdiction
of its incorporation with corporate power and authority to own or lease its
properties and conduct its business as described in the Registration
Statement. The Company and each of the Subsidiaries are duly qualified to
transact business in the jurisdictions set forth opposite their names in
Schedule I hereto and, to the best of the Company's knowledge, in all other
jurisdictions in which the conduct of their business requires such
qualification. The outstanding shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued, are fully paid and
non-assessable and are owned by the Company or another Subsidiary free and
clear of all liens, encumbrances and equities and claims, except as described
in the Registration Statement; and no options, warrants or other rights to
purchase, agreements or other obligations to issue or other rights to convert
any obligations into shares of capital stock or ownership interests in the
Subsidiaries are outstanding. On or prior to the Closing Date, CSN, Inc., a
Delaware corporation, shall be merged with and into the Company and all of
the business operations of the Company are conducted through the Company and
its subsidiaries.
(c) The information set forth under "Capitalization" in the
Prospectus is true and correct. The outstanding shares of capital stock of
the Company have been duly authorized and validly issued and are fully paid
and non-assessable and were not issued in violation of any preemptive or
similar rights; and except as disclosed in the Prospectus or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus, all
of the outstanding shares of capital stock of the Company and each of the
Subsidiaries are free and clear of all liens,
2
<PAGE>
encumbrances, equities and claims or restrictions on transferability (other
than those imposed by the Act and the securities or "Blue Sky" laws of
certain jurisdictions) or voting. Except for the capital stock of the
Subsidiaries, the Company does not own, directly or indirectly, any shares of
stock or any other equity or long-term debt securities or have any equity
interest in any firm, partnership, joint venture or other entity. No holders
of securities of the Company are entitled to have such securities registered
under the Registration Statement.
(d) The Commission has not issued an order preventing or
suspending the use of any Prospectus relating to the proposed offering of the
Securities nor instituted proceedings for that purpose. The Registration
Statement contains, and the Prospectus and any amendments or supplements
thereto will contain, all statements which are required to be stated therein
by, and will conform to, the requirements of the Act and the Rules and
Regulations. The Registration Statement and any amendment thereto do not
contain, and will not contain, any untrue statement of a material fact and do
not omit, and will not omit, to state any material fact required to be stated
therein or necessary to make the statements therein not misleading. The
Prospectus and any amendments and supplements thereto do not contain, and
will not contain, any untrue statement of material fact; and do not omit, and
will not omit, to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the
Company makes no representations or warranties as to information contained in
or omitted from the Registration Statement or the Prospectus, or any such
amendment or supplement, in reliance upon, and in conformity with, written
information furnished to the Company by the Underwriter specifically for use
in the preparation thereof.
(e) The consolidated financial statements of the Company
and the Subsidiaries, together with related notes and schedules as set forth
in the Registration Statement, as well as the financial statements, together
with related notes and schedules, of Oda Nursery, Inc., Lone Star Growers
Co., Summersun Greenhouse Co., Wolfe Greenhouses, LLC, Signature Trees,
Peter's Wholesale Greenhouses, Inc., Sunnyside Plants, Inc. and Cracon Inc.
(collectively the "Acquired Entities") present fairly the financial position
and the results of operations and cash flows of the Company and the
consolidated Subsidiaries and the Acquired Entities, at the indicated dates
and for the indicated periods. Such financial statements and related
schedules have been prepared in accordance with generally accepted principles
of accounting, consistently applied throughout the periods involved, except
as otherwise noted therein, and all adjustments necessary for a fair
presentation of results for such periods have been made. The summary
financial and statistical data included in the Registration Statement
presents fairly the information shown therein and such data has been compiled
on a basis consistent with the financial statements presented therein and the
books and records of the Company. The pro forma financial statements and
other pro forma financial information included in the Registration Statement
and the Prospectus present fairly the information shown therein, have been
prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements, have been properly compiled on the
pro forma bases described herein, and, in the opinion of the Company, the
assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions
or circumstances referred to therein. No other financial statements or
schedules of the Company or any other
3
<PAGE>
entity are required to be included in the Registration Statement pursuant to
any requirement of the Act or any Rules or Regulations, including Rule 3-05
of Regulation S-X.
(f) Arthur Andersen LLP, Moss Adams LLP and Jaynes,
Reitmeier, Boyd & Therrell, P.C., who have certified certain of the financial
statements filed with the Commission as part of the Registration Statement,
are independent public accountants as required by the Act and the Rules and
Regulations.
(g) There is no action, suit, claim or proceeding pending
or, to the knowledge of the Company, threatened against the Company or any of
the Subsidiaries before any court or administrative agency or otherwise which
if determined adversely to the Company or any of the Subsidiaries might
result in any material adverse change in the business, properties, assets,
operations or financial condition of the Company and of the Subsidiaries
taken as a whole or might prevent the consummation of the transactions
contemplated hereby, except as set forth in the Registration Statement.
(h) The Company and the Subsidiaries have good and
marketable title to all of the properties and assets reflected in the
financial statements (or as described in the Registration Statement)
hereinabove described, subject to no lien, mortgage, pledge, charge or
encumbrance of any kind except those reflected in such financial statements
(or as described in the Registration Statement) or which are not material in
amount. The Company and the Subsidiaries occupy their leased properties
under valid and binding leases conforming in all material respects to the
description thereof set forth in the Registration Statement.
(i) The Company and the Subsidiaries have filed all
Federal, State, local and foreign income tax returns which have been required
to be filed and have paid all taxes indicated by said returns and all
assessments received by them or any of them to the extent that such taxes
have become due. All tax liabilities have been adequately provided for in
the financial statements of the Company.
(j) Since the respective dates as of which information is
given in the Registration Statement, as it may be amended or supplemented,
there has not been any material adverse change or any development involving a
prospective material adverse change in or affecting the business, properties,
assets, operations or financial condition of the Company and the Subsidiaries
taken as a whole, whether or not occurring in the ordinary course of
business, and there has not been any material transaction entered into or any
material transaction that is probable of being entered into by the Company or
the Subsidiaries, other than transactions in the ordinary course of business
and changes and transactions described in the Registration Statement, as it
may be amended or supplemented. The Company and the Subsidiaries have no
material contingent obligations which are not disclosed in the Company's
financial statements which are included in the Registration Statement.
(k) Neither the Company nor any of the Subsidiaries is or
with the giving of notice or lapse of time or both will be, in violation of
or in default under its charter or bylaws or under any agreement, lease,
contract, indenture or other instrument or obligation to
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which it is a party or by which it, or any of its properties, is bound or any
statute, judgment, decree, order, rule or regulation applicable to the
Company or any Subsidiary and which default is of material significance in
respect of the condition, financial or otherwise, of the Company and the
Subsidiaries taken as a whole or the business, properties, assets, operations
or financial condition of the Company and the Subsidiaries taken as a whole.
Except with respect to that certain Amended and Restated Credit Agreement,
dated as of February 20, 1997, as amended, the execution and delivery of this
Agreement and the consummation of the transactions herein contemplated and
the fulfillment of the terms hereof will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust or other agreement or instrument to
which the Company or any Subsidiary is a party, or of the charter or by-laws
of the Company or any order, rule or regulation applicable to the Company or
any Subsidiary of any court or of any regulatory body or administrative
agency or other governmental body having jurisdiction which conflict, breach
or default could reasonably be expected to have a material adverse effect on
the Company.
(l) The Company and each of the Subsidiaries hold all
material licenses, certificates and permits from governmental authorities
which are necessary to the conduct of their businesses; and neither the
Company nor any of the Subsidiaries has infringed any patents, patent rights,
trade names, trademarks or copyrights, which infringement is material to the
business of the Company and the Subsidiaries taken as a whole. The Company
knows of no material infringement by others of patents, patent rights, trade
names, trademarks or copyrights owned by or licensed to the Company or any
Subsidiary.
(m) Neither the Company nor any Subsidiary is an
"investment company" or an affiliated person of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms are defined under
the Investment Company Act of 1940, as amended (the "1940 Act"), and the
rules and regulations of the Commission thereunder.
(n) The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access
to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(o) The Company and each of the Subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks as is adequate
for the conduct of their respective businesses and the value of their
respective properties and as is customary for companies engaged in similar
industries.
(p) The Company is in compliance in all material respects
with all presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no
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"reportable event" (as defined in ERISA) has occurred with respect to any
"pension plan" (as defined in ERISA) for which the Company would have any
liability; the Company has not incurred and does not expect to incur
liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the
Internal Revenue Code of 1986, as amended, including the regulations and
published interpretations thereunder (the "Code"); and each "pension plan"
for which the Company would have any liability that is intended to be
qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act,
which would cause the loss of such qualification.
(q) The Company confirms as of the date hereof that it is
in compliance with all provisions of Section 1 of Laws of Florida, Chapter
92-198, AN ACT RELATING TO DISCLOSURE OF DOING BUSINESS WITH CUBA (Fla. Stat.
ch. 517.075). The Company further agrees that if it commences engaging in
business with the government of Cuba or with any person or affiliate located
in Cuba after the date the Registration Statement becomes or has become
effective with the Commission or with the Florida Department of Banking and
Finance (the "Department"), whichever date is later, or if the information
reported or incorporated by reference in the Prospectus, if any, concerning
the Company's business with Cuba or with any person or affiliate located in
Cuba changes in any material way, the Company will provide the Department
notice of such business or change, as appropriate, in a form acceptable to
the Department.
(r) The Certificate of Designation has been duly adopted by
the Company's Board of Directors in compliance with the Company's Certificate
of Incorporation and By-Laws.
(s) The Series A Preferred Stock has been duly and validly
authorized by the Company for issuance and sale to the Underwriter pursuant
to this Agreement and the Series A Preferred Stock, when issued and delivered
to and paid for by the Underwriter in accordance with the terms of this
Agreement, will be validly issued, fully paid and non-assessable and not
subject to any preemptive or similar rights.
(t) The Warrant Agreement has been duly and validly
authorized by the Company and, when executed and delivered by the Company
(assuming the due authorization, execution and delivery by the Warrant
Agent), will constitute a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights generally and (ii) general principles
of equity and the discretion of the court before which any proceeding
therefor may be brought.
(u) The Warrants have been duly and validly authorized by
the Company, and when issued and delivered in accordance with the terms of
the Warrant Agreement and delivered to and paid for by the Underwriter in
accordance with the terms hereof
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<PAGE>
will have been duly and validly issued and the issuance of such Warrants will
not be subject to any preemptive or similar rights.
(v) The Warrant Shares initially issuable upon exercise of
the Warrants have been duly and validly authorized and reserved for issuance
upon exercise of the Warrants and, when issued and delivered upon exercise of
the Warrants against payment of the Exercise Price (as defined in the Warrant
Agreement), the Warrant Shares will have been duly and validly issued and
will be fully paid and non-assessable, and the issuance of such Warrant
Shares will not be subject to any preemptive or similar rights.
(w) The Company has all requisite corporate power and
authority to enter into this Agreement, to issue and deliver the Securities
and Warrant Shares and to consummate the transactions contemplated hereby.
This Agreement has been duly authorized, executed and delivered by the
Company. No consent, approval, authorization or order of any court or
governmental agency or body is required for the performance of this Agreement
by the Company or the consummation by the Company of the transactions
contemplated hereby, except such as have been obtained and such as may be
required under state securities or "Blue Sky" laws in connection with the
purchase and distribution of the Securities by the Underwriter.
(x) Except as provided in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus),
there are no consensual encumbrances or restrictions on the ability of any
Subsidiary (i) to pay dividends or make any other distributions on such
Subsidiary's capital stock or to pay any indebtedness owed to the Company or
any other Subsidiary, (ii) to make any loans or advances to, or investments
in, the Company or any other Subsidiary, or (iii) to transfer any of its
property or assets to the Company or any other Subsidiary.
(y) The Securities, the Warrant Agreement and this
Agreement will conform in all material respects to the descriptions thereof
in the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
3. PURCHASE, SALE AND DELIVERY OF THE SECURITIES. On the basis of the
representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the Underwriter, and the Underwriter agrees to purchase
from the Company $40,000,000 aggregate amount of the Securities for
$____________. Certificates in definitive form for the Securities that the
Underwriter has agreed to purchase hereunder, and in such denomination or
denominations and registered in such name or names as the Underwriter
requests upon notice to the Company at least 48 hours prior to the Closing
Date, shall be delivered by or on behalf of the Company to the Underwriter,
against payment by or on behalf of the Underwriter of the purchase price
therefor by wire transfer payable in immediately available funds to the
account of the Company. Such delivery of and payment for the Securities
shall be made at the offices of ____________________________________________
_____________________, at 10:00 A.M., Eastern Standard Time, on ________
___,1997, or at such other place, time or date as the Underwriter and the
Company may agree upon or as the Underwriter may determine pursuant to
7
<PAGE>
Section 7(a) hereof, such time and date of delivery against payment being
herein referred to as the "Closing Date." The Company will make such
certificate or certificates for the Securities available for checking and
packaging by the Underwriter at the offices in New York, New York of BT Alex.
Brown at least 24 hours prior to the Closing Date.
4. OFFERING BY THE UNDERWRITER. After the Registration
Statement becomes effective, the Underwriter proposes to offer for sale to
the public the Securities at the price and upon the terms set forth in the
Prospectus.
8
<PAGE>
5. COVENANTS OF THE COMPANY. The Company covenants and agrees
with the Underwriter that:
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective at the time of execution of this
Agreement, and any amendments thereto, to become effective promptly. If
required, the Company will file the Prospectus and any amendment or
supplement thereto with the Commission in the manner and within the time
period required by Rule 424(b) under the Act. During any time when a
prospectus relating to the Securities is required to be delivered under the
Act, (i) the Company will comply with all requirements imposed upon it by the
Act and the Rules and Regulations to the extent necessary to permit the
continuance of sales of or dealings in the Securities in accordance with the
provisions hereof and of the Prospectus, as then amended or supplemented, and
(ii) the Company will not file with the Commission the Prospectus or any
amendment or supplement to such Prospectus or any amendment to the
Registration Statement of which the Underwriter shall not previously have
been advised and furnished a copy for a reasonable period of time prior to
the proposed filing and as to which filing the Underwriter shall not have
given its consent. The Company will prepare and file with the Commission, in
accordance with the Act and the Rules and Regulations, promptly upon the
reasonable request by the Underwriter or counsel for the Underwriter, any
amendments to the Registration Statement or amendments or supplements to the
Prospectus that may be necessary or advisable in connection with the
distribution of the Securities by the Underwriter, and will use its best
efforts to cause any such amendment to the Registration Statement to be
declared effective by the Commission promptly. The Company will advise the
Underwriter, promptly after it receives notice thereof, of the time when the
Registration Statement or any amendment thereto has been filed or declared
effective or the Prospectus or any amendment or supplement thereto has been
filed and will provide evidence satisfactory to the Underwriter of each such
filing or effectiveness.
(b) The Company will advise the Underwriter promptly (A)
when the Registration Statement or any post-effective amendment thereto shall
have become effective, (B) of receipt of any comments from the Commission,
(C) of any request of the Commission for amendment of the Registration
Statement or for supplement to the Prospectus or for any additional
information, and (D) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the use of the
Prospectus or of the institution of any proceedings for that purpose. The
Company will use its best efforts to prevent the issuance of any such stop
order preventing or suspending the use of the Prospectus and to obtain as
soon as possible the lifting thereof, if issued.
(c) The Company will deliver to, or upon the order of, the
Underwriter, from time to time, as many copies of any Preliminary Prospectus
as the Underwriter may reasonably request. The Company will deliver to, or
upon the order of, the Underwriter during the period when delivery of a
Prospectus is required under the Act, as many copies of the Prospectus in
final form, or as thereafter amended or supplemented, as the Underwriter may
reasonably request. The Company will deliver to the Underwriter at or before
the Closing Date, one copy of the Registration Statement and all amendments
thereto including all exhibits filed therewith, and will deliver to the
Underwriter such number of copies of the Registration
9
<PAGE>
Statement (including such number of copies of the exhibits filed therewith
that may reasonably be requested), and of all amendments thereto, as the
Underwriter may reasonably request.
(d) If during the period in which a prospectus is required
by law to be delivered by an Underwriter or dealer, any event shall occur as
a result of which, in the judgment of the Company or in the reasonable
opinion of the Underwriter, it becomes necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances existing at the time the Prospectus is delivered to a
purchaser, not misleading, or, if it is necessary at any time to amend or
supplement the Prospectus to comply with any law, the Company promptly will
prepare and file with the Commission an appropriate amendment to the
Registration Statement or supplement to the Prospectus so that the Prospectus
as so amended or supplemented will not, in the light of the circumstances
when it is so delivered, be misleading, or so that the Prospectus will comply
with the law.
(e) The Company will make generally available to its
security holders, as soon as it is practicable to do so, but in any event not
later than 15 months after the effective date of the Registration Statement,
an earning statement (which need not be audited) in reasonable detail,
covering a period of at least 12 consecutive months beginning after the
effective date of the Registration Statement, which earning statement shall
satisfy the requirements of Section 11(a) of the Act and Rule 158 of the
Rules and Regulations and will advise you in writing when such statement has
been so made available.
(f) The Company will, for a period ending on the date no
Securities are outstanding, deliver to the Underwriter copies of annual
reports and copies of all other documents, reports and information furnished
by the Company to its stockholders or filed with any securities exchange
pursuant to the requirements of such exchange or with the Commission pursuant
to the Act or the Exchange Act. During such time, the Company will deliver to
the Underwriter similar reports with respect to significant subsidiaries, as
that term is defined in the Rules and Regulations, which are not consolidated
in the Company's financial statements.
(g) The Company shall apply the net proceeds of its sale of
the Securities as set forth under "Use of Proceeds" in the Prospectus.
(h) The Company shall not invest, or otherwise use the
proceeds received by the Company from its sale of the Securities in such a
manner as would require the Company or any of the Subsidiaries to register as
an "investment company" under the 1940 Act and the rules and regulations
thereunder.
(i) The Company will cooperate with the Underwriter in
arranging for the qualification of the Securities for offering and sale under
the securities or "Blue Sky" laws of such jurisdictions as the Underwriter
may designate and will continue such qualifications in effect for as long as
may be necessary to complete the distribution of the Securities; PROVIDED,
HOWEVER, that in connection therewith the Company shall not be required to
qualify as a foreign corporation or to execute a general consent to service
of process in any jurisdiction.
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<PAGE>
(j) Prior to the Closing Date, the Company will furnish to
the Underwriter, as soon as they have been prepared, a copy of any unaudited
interim consolidated financial statements of the Company for any period
subsequent to the period covered by its most recent financial statements
appearing in the Registration Statement and Prospectus.
(k) The Company will not take, directly or indirectly, any
action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation of
the price of any securities of the Company.
6. EXPENSES. The Company agrees to pay all costs and expenses
incident to the performance of its obligations under this Agreement, whether
or not the transactions contemplated herein are consummated or this Agreement
is terminated pursuant to Section 10 hereof, including all costs and expenses
incident to (i) the printing, word processing, filing or other production of
documents with respect to the transactions, including any costs of printing
the registration statement originally filed with respect to the Securities
and any amendment thereto, any Preliminary Prospectus and the Prospectus and
any amendment or supplement thereto, any "Blue Sky" memoranda and the
Certificate of Designation, (ii) all arrangements relating to the delivery to
the Underwriter of copies of the foregoing documents, (iii) the fees and
disbursements of the counsel, the accountants and any other experts or
advisors retained by the Company, (iv) preparation (including printing),
issuance and delivery to the Underwriter of the Securities, (v) the
qualification of the Securities under state securities and "Blue Sky" laws,
including filing fees and fees and disbursements of counsel for the
Underwriter relating thereto, (vi) the filing fees of the Commission and the
National Association of Securities Dealers, Inc. relating to the Securities
(including the fees, disbursements and charges of counsel to the Underwriter
in connection therewith), (vii) expenses of the Company in connection with
any meetings with prospective investors in the Securities (viii) fees and
expenses of the transfer agent for the Series A Preferred Stock and of the
Warrant Agent; and (ix) any fees charged by investment rating agencies for
the rating of the Securities. If the sale of the Securities provided for
herein is not consummated because any condition to the obligations of the
Underwriter set forth in Section 7 hereof is not satisfied, because this
Agreement is terminated pursuant to Section 10 hereof or because of any
failure, refusal or inability on the part of the Company to perform all
obligations and satisfy all conditions on its part to be performed or
satisfied hereunder other than by reason of a default by the Underwriter, the
Company will reimburse the Underwriter upon demand (accompanied by
documentation) for all out-of-pocket expenses (including counsel fees and
disbursements) that shall have been incurred by the Underwriter in connection
with the proposed purchase and sale of the Securities.
7. CONDITIONS OF THE UNDERWRITER'S OBLIGATIONS. The obligation
of the Underwriter to purchase and pay for the Securities shall, in its sole
discretion, be subject to the following conditions:
(a) If the registration statement originally filed with
respect to the Securities or any amendment thereto filed prior to the Closing
Date has not been declared effective as of the time of execution hereof, the
Registration Statement or such amendment shall have been declared effective
not later than 10:00 a.m., New York City time, on the date on which
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<PAGE>
the amendment to the registration statement originally filed with respect to
the Securities or to the Registration Statement, as the case may be,
containing information regarding the initial public offering price of the
Securities has been filed with the Commission, or such later time and date as
shall have been consented to by the Underwriter; if required, the Prospectus
and any amendment or supplement thereto shall have been filed in accordance
with Rule 424(b) under the Act; no stop order suspending the effectiveness of
the Registration Statement or any amendment thereto and no proceedings for
those purposes shall have been instituted or, to the knowledge of the Company
or the Underwriter, threatened or are contemplated by the Commission; and the
Company shall have complied with or satisfactorily responded to any request
of the Commission for additional information.
(b) The Underwriter shall have received an opinion in form
and substance satisfactory to the Underwriter, dated the Closing Date, of
Brownstein, Hyatt, Farber & Strickland, P.C., counsel for the Company,
substantially in the form of Exhibit A hereto.
(c) The Underwriter shall have received an opinion, dated
the Closing Date, of Latham & Watkins, counsel for the Underwriter, with
respect to certain legal matters relating to this Agreement, and such other
related matters as the Underwriter may require. In rendering such opinion,
Latham & Watkins shall have received and may rely upon such certificates and
other documents and information as they may reasonably request to pass upon
such matters. In addition, in rendering their opinion, Latham & Watkins may
state that their opinion is limited to matters of New York and Delaware
General Corporation Law and federal law.
(d) The Underwriter shall have received from Arthur
Andersen LLP, Moss Adams LLP and Jaynes, Reitmeier, Boyd & Therell, P.C., a
letter or letters dated, respectively, the date hereof and the Closing Date,
each in form and substance satisfactory to the Underwriter.
(e) The representations and warranties of the Company
contained in this Agreement shall be true and correct in all material
respects as of the date hereof and as of the Closing Date; the Company shall
have performed all covenants and agreements and satisfied all conditions on
its part to be performed or satisfied hereunder at or prior to the Closing
Date; and subsequent to the date of the most recent financial statements in
the Prospectus, there shall have been no material adverse change in the
business, properties, assets, operations or financial condition of the
Company and the Subsidiaries, taken as a whole, except as set forth in, or
contemplated by, the Registration Statement and the Prospectus.
(f) The sale of the Securities by the Company hereunder
shall not be enjoined (temporarily or permanently) on the Closing Date.
(g) Subsequent to the effective date of the Registration
Statement, there shall not have occurred any material adverse change, or any
event that would have a
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<PAGE>
material adverse effect on the business, properties, assets, operations or
financial condition of the Company and the Subsidiaries, taken as a whole.
(h) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, except
in each case as described in or as contemplated by the Prospectus, none of
the Company or any of the Subsidiaries shall have incurred any liabilities or
obligations, direct or contingent (other than in the ordinary course of
business) that are material to the Company and the Subsidiaries, taken as a
whole, or entered into any transactions not in the ordinary course of
business that are material to the business, properties, assets, operations or
financial condition of the Company and the Subsidiaries, taken as a whole,
and, other than as contemplated by the Prospectus, there shall not have been
any change in the capital stock or long-term indebtedness of the Company or
the Subsidiaries that is material to the business, properties, assets,
operations or financial condition of the Company and the Subsidiaries, taken
as a whole.
(i) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, the
conduct of the business and operations of the Company or any of the
Subsidiaries has not been interfered with by strike, fire, flood, hurricane,
accident or other calamity (whether or not insured) or by any court or
governmental action, order or decree, and, except as otherwise stated
therein, the properties of the Company or any of the Subsidiaries have not
sustained any loss or damage (whether or not insured) as a result of any such
occurrence, except any such interference, loss or damage which would not have
a material adverse effect on the business, properties, assets, operations or
financial condition of the Company and the Subsidiaries, taken as a whole.
(j) The Underwriter shall have received a certificate,
dated the Closing Date, signed on behalf of the Company by its Chief
Executive Officer or President, and the Chief Financial Officer of the
Company, on behalf of the Company, to the effect that:
(i) The representations and warranties of the Company in this Agreement
are true and correct in all material respects as of the date hereof
and as if made on and as of the Closing Date, and the Company has
performed all covenants and agreements and satisfied hereunder all
conditions on its part to be performed or satisfied hereunder at or
prior to the Closing Date;
(ii) No stop order suspending the effectiveness of the Registration
Statement or any amendment thereto and no proceedings for such purpose
has been instituted or, to the knowledge of the Company, threatened or
are contemplated by the Commission;
(iii) Subsequent to the effective date of the Registration Statement, there
has not occurred any event or events that, individually or in the
aggregate, would have a material adverse effect on the business,
properties, assets, operations or financial condition of the Company
and the Subsidiaries, taken as a whole;
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(iv) Subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, except in each case as
described in or as contemplated by the Prospectus, none of the Company
or any of the Subsidiaries has incurred any liabilities or
obligations, direct or contingent (other than in the ordinary course
of business) that are material to the Company and the Subsidiaries,
taken as a whole, or entered into any transactions not in the ordinary
course of business that are material to the business, properties,
assets, operations or financial condition of the Company and the
Subsidiaries, taken as a whole, and, other than as contemplated by the
Prospectus, there shall not have been any change in the capital stock
or long-term indebtedness of the Company or the Subsidiaries that is
material to the business, properties, assets, operations or financial
condition of the Company and the Subsidiaries, taken as a whole;
(v) Subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, the conduct of the
business and operations of the Company or any of the Subsidiaries has
not been interfered with by strike, fire, flood, hurricane, accident
or other calamity (whether or not insured) or by any court or
governmental action, order or decree, and, except as otherwise stated
therein, the properties of the Company or any of the Subsidiaries have
not sustained any loss or damage (whether or not insured) as a result
of such occurrence, except any such interference, loss or damage which
would not have a material adverse effect on the business, properties,
assets, operations or financial condition of the Company and the
Subsidiaries, taken as a whole; and
(vi) The sale of the Securities by the Company hereunder has not been
enjoined (temporarily or permanently).
On or before the Closing Date, the Underwriter and counsel for
the Underwriter shall have received such further documents, opinions,
certificates and schedules or instruments relating to the business,
corporate, legal and financial affairs of the Company as they shall have
heretofore reasonably requested from the Company.
All such opinions, certificates, letters, schedules, documents
or instruments delivered pursuant to this Agreement will comply with the
provisions hereof only if they are reasonably satisfactory in all material
respects to the Underwriter and counsel for the Underwriter. The Company
shall furnish to the Underwriter such conformed copies of such opinions,
certificates, letters, schedules, documents and instruments in such
quantities as the Underwriter shall reasonably request.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless the
Underwriter, and each person, if any, who controls the Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, against
any losses, claims, damages or liabilities, joint or several, to which such
Underwriter or such controlling person may become
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subject under the Act, the Exchange Act or otherwise, insofar as any such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon:
(i) any untrue statement or alleged untrue statement of any material fact
contained in (A) the registration statement originally filed with
respect to the Securities or any amendment thereto or any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto or
(B) any application or other document, or any amendment or supplement
thereto, executed by the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in
order to qualify the Securities under the securities or "Blue Sky"
laws thereof or filed with the Commission or any securities
association or securities exchange (each an "Application"); or
(ii) the omission or alleged omission to state, in such registration
statement or any amendment thereto, any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto, or any Application,
a material fact required to be stated therein or necessary to make the
statements therein not misleading,
and will reimburse, as incurred, the Underwriter and each such controlling
person for any legal or other expenses incurred by the Underwriter or such
controlling person in connection with investigating, defending against or
appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action; PROVIDED, HOWEVER, the Company will not be
liable in any such case to the extent that any such loss, claim, damage, or
liability arises out of or is based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in such registration
statement or any amendment thereto, any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto, or any Application in
reliance upon and in conformity with written information furnished to the
Company by the Underwriter specifically for use therein; and PROVIDED,
FURTHER, that the Company will not be liable to the Underwriter or any person
controlling the Underwriter with respect to any such untrue statement or
omission made in any Preliminary Prospectus that is corrected in the
Prospectus (or any amendment or supplement thereto) if the person asserting
any such loss, claim, damage or liability purchased Securities from the
Underwriter in reliance upon the Preliminary Prospectus but was not sent or
given a copy of the Prospectus (as amended or supplemented) at or prior to
the written confirmation of the sale of such Securities to such person in any
case where such delivery of the Prospectus (as so amended or supplemented) is
required by the Act, unless such failure to deliver the Prospectus (as
amended or supplemented) was a result of noncompliance by the Company with
Section 5(c) of this Agreement. This indemnity agreement will be in addition
to any liability that the Company may otherwise have to the indemnified
parties. The Company shall not be liable under this Section 8 for any
settlement of any claim or action effected without its consent, which shall
not be unreasonably withheld.
(b) The Underwriter will indemnify and hold harmless each
of the Company, its directors, its officers who signed the Registration
Statement and each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act against
any losses, claims, damages or liabilities to which the Company or any such
director, officer or controlling person may become subject under the Act, the
Exchange Act,
15
<PAGE>
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement or any amendment thereto, any Preliminary Prospectus
or the Prospectus or any amendment or supplement thereto, or any Application
or (ii) the omission or the alleged omission to state therein a material fact
required to be stated in the Registration Statement or any amendment thereto,
any Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, or any Application, or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information
furnished to the Company by the Underwriter specifically for use therein;
and, subject to the limitation set forth immediately preceding this clause,
will reimburse, as incurred, any legal or other expenses incurred by the
Company or any such director, officer or controlling person in connection
with investigating or defending against or appearing as a third party witness
in connection with any such loss, claim, damage, liability or action in
respect thereof. This indemnity agreement will be in addition to any
liability that the Underwriter may otherwise have to the indemnified parties.
The Underwriter shall not be liable under this Section 8 for any settlement
of any claim or action effected without its consent, which shall not be
unreasonably withheld.
(c) Promptly after receipt by an indemnified party under
this Section 8 of notice of the commencement of any action for which such
indemnified party is entitled to indemnification under this Section 8, such
indemnified party will, if a claim in respect thereof is to be made against
the indemnifying party under this Section 8, notify the indemnifying party of
the commencement thereof; but the omission so to notify the indemnifying
party (i) will not relieve it from any liability under paragraph (a) or (b)
above unless and to the extent it did not otherwise learn of such action and
such failure results in the forfeiture by the indemnifying party of
substantial rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than
the indemnification obligation provided in paragraphs (a) and (b) above. In
case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party; PROVIDED, HOWEVER, that if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such
counsel with a conflict of interest, (ii) the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have been advised by counsel that there may be one or
more legal defenses available to it and/or other indemnified parties that are
different from or additional to those available to the indemnifying party, or
(iii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of the institution of such action,
then, in each such case, the indemnifying party shall not have the right to
direct the defense of such action on behalf of such indemnified party or
parties and such indemnified party or parties shall have the right to select
separate counsel to defend such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof and approval by such
indemnified party of
16
<PAGE>
counsel appointed to defend such action, the indemnifying party will not be
liable to such indemnified party under this Section 8 for any legal or other
expenses, other than reasonable costs of investigation, subsequently incurred
by such indemnified party in connection with the defense thereof, unless (i)
the indemnified party shall have employed separate counsel in accordance with
the proviso to the immediately preceding sentence (it being understood,
however, that in connection with such action the indemnifying party shall not
be liable for the expenses of more than one separate counsel (in addition to
local counsel) in any one action or separate but substantially similar
actions in the same jurisdiction arising out of the same general allegations
or circumstances, designated by the Underwriter in the case of paragraph (a)
of this Section 8 or the Company in the case of paragraph (b) of this Section
8, representing the indemnified parties under such paragraph (a) or paragraph
(b), as the case may be, who are parties to such action or actions) or (ii)
the indemnifying party has authorized in writing the employment of counsel
for the indemnified party at the expense of the indemnifying party. After
such notice from the indemnifying party to such indemnified party, the
indemnifying party will not be liable for the costs and expenses of any
settlement of such action effected by such indemnified party without the
consent of the indemnifying party, unless such indemnified party waived in
writing its rights under this Section 8, in which case the indemnified party
may effect such a settlement without such consent.
(d) In circumstances in which the indemnity agreement
provided for in the preceding paragraphs of this Section 8 is unavailable or
insufficient to hold harmless an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof), each
indemnifying party, in order to provide for just and equitable contribution,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect (i) the relative
benefits received by the indemnifying party or parties on the one hand and
the indemnified party on the other from the offering of the Securities or
(ii) if the allocation provided by the foregoing clause (i) is not permitted
by applicable law, not only such relative benefits but also the relative
fault of the indemnifying party or parties on the one hand and the
indemnified party on the other in connection with the statements or omissions
or alleged statements or omissions that resulted in such losses, claims,
damages or liabilities (or actions in respect thereof). The relative
benefits received by the Company on the one hand and the Underwriter on the
other shall be deemed to be in the same proportion as the total proceeds from
the offering (before deducting expenses) received by the Company bear to the
total underwriting discounts and commissions received by the Underwriter.
The relative fault of the parties shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand, or the Underwriter on
the other, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission, and any other
equitable considerations appropriate in the circumstances. The Company and
the Underwriter agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the first sentence of this paragraph (d).
Notwithstanding any other provision of this paragraph (d), the Underwriter
shall not be obligated to make contributions hereunder that in the aggregate
exceed
17
<PAGE>
the total underwriting discounts and commissions received by the Underwriter
under this Agreement, less the aggregate amount of any damages that the
Underwriter has otherwise been required to pay by reason of the untrue or
alleged untrue statements or the omissions or alleged omissions to state a
material fact, and no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. For
purposes of this paragraph (d), each person, if any, who controls the
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act shall have the same rights to contribution as the Underwriter,
and each director of the Company, each officer of the Company who signed the
Registration Statement and each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange
Act, shall have the same rights to contribution as the Company.
9. SURVIVAL CLAUSE. The respective representations,
warranties, agreements, covenants, indemnities and other statements of the
Company, its officers and the Underwriter set forth in this Agreement or made
by or on behalf of them, respectively, pursuant to this Agreement shall
remain in full force and effect, regardless of (i) any investigation made by
or on behalf of the Company, any of its officers or directors, the
Underwriter or any controlling person referred to in Section 8 hereof and
(ii) delivery of and payment for the Securities. The respective agreements,
covenants, indemnities and other statements set forth in Sections 6 and 8
hereof shall remain in full force and effect, regardless of any termination
or cancellation of this Agreement.
10. TERMINATION.
(a) This Agreement may be terminated in the sole discretion
of the Underwriter by notice to the Company given prior to the Closing Date
in the event that the Company shall have failed, refused or been unable to
perform all obligations and satisfy all conditions on its part to be
performed or satisfied hereunder at or prior thereto or, if at or prior to
the Closing Date:
(i) the Company shall have sustained any loss or interference with respect
to its businesses or properties from fire, flood, hurricane, accident
or other calamity, whether or not covered by insurance, or from any
labor dispute or any legal or governmental proceeding, which loss or
interference, in the sole judgment of the Underwriter, has had or has
a material adverse effect the business, properties, assets, operations
or financial condition of the Company and the Subsidiaries, taken as a
whole, or there shall have been, in the sole judgment of the
Underwriter, any material adverse change, or any development involving
a prospective material adverse change (including without limitation a
change in management or control of the Company), in the business,
properties, assets, operations or financial condition of the Company
and the Subsidiaries, taken as a whole, except in each case as
described in or contemplated by the Prospectus (exclusive of any
amendment or supplement thereto);
(ii) trading in securities generally on the New York Stock Exchange,
American Stock Exchange or the Nasdaq National Market shall have been
suspended or minimum or
18
<PAGE>
maximum prices shall have been established on any such exchange or
trading in securities of the Company shall have been suspended;
(iii) a banking moratorium shall have been declared by New York or United
States authorities; or
(iv) there shall have been (A) an outbreak or escalation of hostilities
between the United States and any foreign power, or (B) an outbreak or
escalation of any other insurrection or armed conflict involving the
United States or any other national or international calamity or
emergency, or (C) any material change in the financial markets of the
United States which, in the sole judgment of the Underwriter, makes it
impracticable or inadvisable to proceed with the public offering or
the delivery of the Securities as contemplated by the Registration
Statement, as amended as of the date hereof.
(b) Termination of this Agreement pursuant to this Section
10 shall be without liability of any party to any other party except as
provided in Section 9 hereof.
11. INFORMATION SUPPLIED BY THE UNDERWRITER. The statements set
forth in the last paragraph on the cover page of the Prospectus, the
stabilization legend on the page following the cover page of the Prospectus
and the first, second, third, fourth, fifth (other than the first sentence)
and sixth paragraphs under the heading "Underwriting" in the Prospectus (to
the extent such statements relate to the Underwriter) constitute the only
information furnished by the Underwriter to the Company for the purposes of
Sections 2(b) and 8 hereof. The Underwriter confirm that such statements (to
the extent such statements relate to the Underwriter) are correct.
12. NOTICES. All communications hereunder shall be in writing
and, if sent to the Underwriter, shall be mailed or delivered or telecopied
and confirmed in writing to BT Alex. Brown Incorporated, 300 South Grand
Avenue, 41st Floor, Los Angeles, California 90071, Attention: Corporate
Finance Department; if sent to the Company, shall be mailed or delivered or
telecopied and confirmed in writing to the Company at 3478 Buskirk Avenue,
Pleasant Hill, California 94523, Attention: Michael Vukelich; with a copy to
Brownstein Hyatt Farber & Strickland, P.C., 410 Seventeenth Street, 22nd
Floor, Denver, Colorado 80202, Attention: Steven S. Siegel, Esq.
13. SUCCESSORS. This Agreement shall inure to the benefit of
and be binding upon the Underwriter, the Company and their respective
successors and legal representatives, and nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any other person any
legal or equitable right, remedy or claim under or in respect of this
Agreement, or any provisions herein contained; this Agreement and all
conditions and provisions hereof being intended to be and being for the sole
and exclusive benefit of such persons and for the benefit of no other person
except that (i) the indemnities of the Company contained in Section 8 of
this Agreement shall also be for the benefit of any person or persons who
control the Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act and (ii) the indemnities of the Underwriter
contained in Section 8 of this Agreement shall also be for the benefit of the
directors of the Company, its officers who have signed the Registration
19
<PAGE>
Statement and any person or persons who control the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act. No
purchaser of Securities from the Underwriter will be deemed a successor
because of such purchase.
14. APPLICABLE LAW. The validity and interpretation of this
agreement, and the terms and conditions set forth herein shall be governed by
and construed in accordance with the laws of the state of New York, without
giving effect to any provisions relating to conflicts of law.
15. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
20
<PAGE>
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement between
the Company and the Underwriter.
Very truly yours,
COLOR SPOT NURSERIES, INC.
By:
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
BT ALEX. BROWN INCORPORATED
By:
Name:
Title:
21
<PAGE>
Exhibit A
Opinion of Brownstein, Hyatt, Farber & Strickland, P.C.
(a) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own or lease its properties
and conduct its business as described in the Registration Statement; to the
knowledge of such counsel, based solely upon a review of the corporate
records of the Company, the Company does not own or control, directly or
indirectly, any corporation, association or other entity other than the
subsidiaries listed in Exhibit 21 to Item 16(a) of the Registration Statement
(the "Subsidiaries"); each of the Subsidiaries has been duly organized and is
validly existing as a corporation or limited partnership in good standing
under the laws of the jurisdiction of its incorporation, with corporate or
partnership power and authority to own or lease its properties and conduct
its business as described in the Registration Statement (provided that such
counsel need not express any opinion as to the organization of Oda Nursery,
Inc.); the Company and each of the Subsidiaries are duly qualified to
transact business in the jurisdictions set forth on Schedule I hereto; the
outstanding shares of capital stock of each of the Subsidiaries have been
duly authorized and validly issued and are fully paid and nonassessable and,
based solely upon the review of the corporate or partnership records of each
such Subsidiary, are owned by the Company or a Subsidiary; to the knowledge
of such counsel, based solely upon the review of the corporate or
partnership records of each such Subsidiary, the outstanding shares of
capital stock of each of the Subsidiaries are owned free and clear of all
liens, encumbrances and equities and claims (other than those in favor of
Credit Agricole Indosuez, as agent for the Company's senior lenders and
those arising under applicable securities laws), and no options, warrants or
other rights to purchase, agreements or other obligations to issue or other
rights to convert any obligations into any shares of capital stock or of
ownership interests in the Subsidiaries are outstanding.
(b) The Company has authorized and outstanding capital
stock as set forth under the caption "Capitalization" in the Prospectus; the
authorized shares of the Company's Common Stock have been duly authorized;
the outstanding shares of the Company's Common Stock (i) issued in connection
with that certain Recapitalization dated as of December 31, 1996 (the
"Recapitalization") and (ii) issued since the date of the Recapitalization
have been duly authorized and validly issued and are fully paid and
nonassessable. Based solely upon the review of the Company's and the
Subsidiaries' minute books, to such counsel's knowledge, except as otherwise
stated in the Prospectus, all of the outstanding shares of capital stock of
the Subsidiaries are owned, directly or indirectly, by the Company, free and
clear of all perfected security interests and, to the knowledge of such
counsel, free and clear of all other restrictions on transferability (other
than those imposed by the Act and the securities or "Blue Sky" laws of
certain jurisdictions) or voting.
(c) Except as described in or contemplated by the
Prospectus, to the knowledge of such counsel, based solely on the review of
the corporate minute book of the
A-1
<PAGE>
Company, there are no outstanding securities of the Company convertible or
exchangeable into or evidencing the right to purchase or subscribe for any
shares of capital stock of the Company and there are no outstanding or
authorized options, warrants or rights of any character obligating the
Company to issue any shares of its capital stock or any securities
convertible or exchangeable into or evidencing the right to purchase or
subscribe for any shares of such stock; and except as described in the
Prospectus, to the knowledge of such counsel, no holder of any securities of
the Company or any other person has the right, contractual or otherwise,
which has not been satisfied or effectively waived, to cause the Company to
sell or otherwise issue to them, or to permit them to underwrite the sale of,
any shares of Common Stock or the right to have any shares of Common Stock or
other securities of the Company included in the Registration Statement or the
right, as a result of the filing of the Registration Statement, to require
registration under the Act of any shares of Common Stock or other securities
of the Company.
(d) The Registration Statement has become effective under
the Act and, to the knowledge of such counsel, no stop order proceedings with
respect thereto have been instituted or are pending or threatened under the
Act; and any required filing of the Prospectus pursuant to Rule 424(b) under
the Act has been made in accordance with Rules 424(b) and 430A under the Act.
(e) The Registration Statement, the Prospectus and each
amendment or supplement thereto comply as to form in all material respects
with the requirements of the Act and the applicable rules and regulations
thereunder (except that such counsel need express no opinion as to the
financial statements and related schedules therein, including the notes
thereto and supporting schedules and other financial and statistical data
included therein or omitted therefrom).
(f) The statements under the captions
"Management--Compensation Committee Interlocks and Insider Participation,"
"Management--Limitation on Directors' Liability and Indemnification,"
"Description of Capital Stock," "Description of Units," "Description of
Series A Preferred Stock," "Description of Warrants" and "Certain
Definitions" in the Prospectus, insofar as such statements constitute a
summary of documents referred to therein or matters of law, fairly summarize
in all material respects the information called for with respect to such
documents and matters.
(g) The information required to be set forth in the
Registration Statement in answer to Items 14 and 15 of Form S-1 to such
counsel's knowledge is accurately and adequately set forth therein in all
material respects.
(h) Such counsel knows of no material legal or governmental
proceedings pending or threatened against the Company or any of the
Subsidiaries except as set forth in the Prospectus.
(i) The execution and delivery of the Underwriting
Agreement and the consummation of the transactions herein contemplated do not
and will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, the charter or
A-2
<PAGE>
bylaws of the Company, or any agreement filed as an exhibit to the
Registration Statement which the Company or any of the Subsidiaries may be
bound or of any federal or New York statute, rule or regulation or Delaware
General Corporation Law known to such counsel to be applicable to the Company
(other than federal or state securities laws, which are specifically
addressed elsewhere herein) which conflict, breach or default could
reasonably be expected to have a material adverse effect on the Company.
(j) The Underwriting Agreement has been duly authorized,
executed and delivered by the Company.
(k) No approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory, administrative
or other governmental body by the Company is necessary in connection with the
execution and delivery of the Underwriting Agreement and the consummation of
the transactions herein contemplated (other than as may be required by the
NASD or as required by state securities and Blue Sky laws as to which such
counsel need express no opinion) except such as have been obtained or made,
specifying the same.
(l) The Company is not, and will not become, as a result of
the consummation of the transactions contemplated by the Underwriting
Agreement, and application of the net proceeds therefrom as described in the
Prospectus, required to register as an "investment company" or an affiliated
person of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the 1940 Act and the rules and
regulations thereunder.
(m) The Certificate of Designation has been duly adopted by
the Company's Board of Directors in compliance with the Company's Certificate
of Incorporation and By-Laws.
(n) The Series A Preferred Stock has been duly authorized
by the Company for issuance and sale to the Underwriter pursuant to the
Underwriting Agreement and are validly issued, fully paid and non-assessable
and, to the knowledge of such counsel, not subject to any preemptive or
similar rights.
(o) The Warrant Agreement has been duly and validly
authorized, executed and delivered by the Company and (assuming due
authorization, execution and delivery by the Warrant Agent) is the legally
valid and binding agreement of the Company, enforceable against the Company
in accordance with its terms, except that the enforcement thereof may be
subject to (i) bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) general principles of equity and the
discretion of the court before which any proceeding therefor may be brought.
(p) The Warrants have been duly and validly authorized,
issued and delivered in accordance with the terms of the Warrant Agreement,
and, to the knowledge of such counsel, the issuance of such Warrants is not
subject to any preemptive or similar rights.
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<PAGE>
(q) The Warrant Shares initially issuable upon exercise of
the Warrants have been duly and validly authorized and reserved for issuance
upon exercise of the Warrants and, when issued and delivered upon exercise of
the Warrants against payment of the Exercise Price as provided in the Warrant
Agreement, the Warrant Shares will have been duly and validly issued and will
be fully paid and non-assessable, and, to such counsel's knowledge, the
issuance of such Warrant Shares will not be subject to any preemptive or
similar rights.
(r) CSN, Inc., a Delaware corporation, has been merged with
and into the Company, with the Company surviving such merger, under the
General Corporation Law of the State of Delaware.
In addition to the matters set forth above, such counsel shall also
furnish a separate written opinion to the effect that nothing has come to the
attention of such counsel which leads them to believe that (i) the
Registration Statement, at the time it became effective under the Act (but
after giving effect to any modifications incorporated therein pursuant to
Rule 430A under the Act) and as of the Closing Date, contained an untrue
statement of a material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
and (ii) the Prospectus, or any supplement thereto, on the date it was filed
pursuant to the Rules and Regulations and as of the Closing Date, contained
an untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements, in the light of the circumstances
under which they are made, not misleading (except that such counsel need
express no opinion as to financial statements and related schedules therein,
including the notes thereto and supporting schedules and other financial and
statistical data included therein or omitted therefrom). With respect to
such statement, such counsel may state that their belief is based upon the
procedures set forth therein, but is without independent check and
verification.
A-4
<PAGE>
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
COLOR SPOT NURSERIES, INC.
Color Spot Nurseries, Inc., a corporation organized and existing
under the laws of the State of Delaware (the "Corporation"), hereby certifies
as follows:
1. The name of the Corporation is Color Spot Nurseries, Inc. The
original Certificate of Incorporation of the Corporation was filed with the
Secretary of State of Delaware on August 17, 1995.
2. This Amended and Restated Certificate of Incorporation restates
and integrates and further amends the Certificate of this Corporation as more
particularly set forth on EXHIBIT A.
3. The text of the Certificate of Incorporation as amended or
supplemented heretofore is restated as more particularly set forth on EXHIBIT A.
4. This Amended and Restated Certificate of Incorporation was duly
adopted by written consent of the stockholders in accordance with the applicable
provisions of Sections 228, 242 and 245 of the General Corporation Law of the
State of Delaware.
5. This Amended and Restated Certificate of Incorporation shall be
effective on the ___ day of , 1997.
IN WITNESS WHEREOF, Color Spot Nurseries, Inc. has caused this Certificate
to be signed by MICHAEL F. VUKELICH, its Chief Executive Officer, this ___ day
of , 1997.
COLOR SPOT NURSERIES, INC.
By
-------------------------------------
MICHAEL F. VUKELICH
Chief Executive Officer
1
<PAGE>
EXHIBIT A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
COLOR SPOT NURSERIES, INC.
ARTICLE I
The name of the corporation is COLOR SPOT NURSERIES, INC. (hereinafter
referred to as the "Corporation").
ARTICLE II
The address of the Corporation's registered office in the state of
Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle.
The name of its registered agent at such address is THE CORPORATION TRUST
COMPANY.
ARTICLE III
The nature of the business of the Corporation and the purposes for
which it is organized are to engage in any business and lawful act or activity
for which corporations may be organized under the General Corporation Law of the
State of Delaware and to possess and employ all powers and privileges now or
hereafter granted or available under the laws of the State of Delaware to such
corporations.
ARTICLE IV
Section 1. AUTHORIZED SHARES. The number of shares of capital
stock of all classes which the Corporation shall have authority to issue is
55,000,000 shares, consisting of 50,000,000 shares of Common Stock, par value
$0.001 per share (the "Common Stock"), and 5,000,000 shares of Preferred Stock,
par value $0.01 per share (the "Preferred Stock").
Section 2. DESIGNATIONS, POWERS, AND PREFERENCES. The
designations and the powers, preferences and rights, and the qualifications,
limitations or restrictions of the shares of each class of stock are as follows:
A. PREFERRED STOCK. Shares of Preferred Stock may be issued in
one or more series at such time or times as the Board of Directors may
determine. All shares of any one series of Preferred Stock shall be of equal
rank and identical in all respects except as to the dates from and after which
dividends thereon shall cumulate, if cumulative. The number of authorized
shares of Preferred Stock may be increased or decreased by the affirmative vote
of a majority of the capital
1
<PAGE>
stock of the Corporation entitled to vote without the separate vote of holders
of Preferred Stock as a class. Subject to the limitations hereof and the
limitations prescribed by law, the Board of Directors of the Corporation (the
"Board of Directors") is expressly authorized to fix from time to time, by
resolution or resolutions adopted prior to the issuance of and providing for the
establishment or issuance of any series of Preferred Stock, the designation of
such series and the powers, preferences and rights of such series, and the
qualifications, limitations or restrictions thereof. The authority of the Board
of Directors with respect to each such series shall include, but shall not be
limited to, determination of the following:
(i) The distinctive serial designation and number of
shares comprising each such series (provided that the aggregate number of
shares constituting all series of Preferred Stock shall not exceed the total
number of authorized shares of Preferred Stock pursuant to Section 1 of this
Article IV), which number may (except where otherwise provided by the Board
of Directors in creating such series) be increased or decreased (but not
below the number of shares of such series then outstanding) from time to time
by action of the Board of Directors;
(ii) The rate of dividends, if any, on the shares of
that series, whether dividends shall be noncumulative, cumulative to the
extent earned or cumulative (and, if cumulative, from which date or dates),
whether dividends shall be payable in cash, property, or rights, or in shares
of the Corporation's capital stock, and the relative priority, if any, of
payment of dividends on shares of that series over shares of any other series;
(iii) Whether the shares of that series shall be
redeemable and, if so, the terms and conditions of such redemption, including
the date or dates upon or after which they shall be redeemable, the event or
events upon or after which they shall be redeemable or at whose option they
shall be redeemable, and the amount per share payable upon redemption (which
amount may vary under different conditions and at different redemption dates)
or the property or rights, including securities of any other corporation,
payable upon redemption;
(iv) Whether that series shall have a sinking fund for
the redemption or purchase of shares of that series and, if so, the terms and
amounts payable into such sinking fund;
(v) The rights to which the holders of the shares of
that series shall be entitled in the event of voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, and the relative
rights of priority, if any, of payment of shares of that series in any such
event;
(vi) Whether the shares of that series shall be
convertible into or exchangeable for any other securities and, if so, the
terms and conditions of such conversion or exchange, including the rate or
rates of conversion or exchange, the date or dates upon or after which they
shall be convertible or exchangeable or at whose option they shall be
convertible or exchangeable, and the method, if any, of adjusting the rates
of conversion or exchange in the event of a stock split, stock dividend,
combination or reclassification of shares or similar event;
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(vii) Whether the issuance of any additional shares of
such series shall be subject to restrictions, or whether any shares of any other
series shall be subject to restrictions as to issuance, or as to the powers,
preferences or rights of any such other series;
(viii) Whether the shares of that series shall have
voting rights in addition to the voting rights provided by law, and, if so,
the terms of such voting rights, including, without limitation, the authority
to confer multiple votes per share, voting rights as to specified matters or
issues or, subject to the provisions of this Amended and Restated Certificate
of Incorporation, voting rights to be exercised either together with holders
of Common Stock as a single class, or independently as a separate class;
(ix) The rights of the holders of the shares of that
series to elect additional directors of the Corporation under specified
circumstances and the provisions under which such additional directors so
elected shall serve; and
(x) Any other preferences, privileges and powers and
relative, participating, optional or other special rights and qualifications,
limitations or restrictions of such series, as the Board of Directors may
deem advisable and as shall not be inconsistent with the provisions of this
Amended and Restated Certificate of Incorporation and to the full extent now
or hereafter permitted by the laws of the State of Delaware.
B. COMMON STOCK.
Subject to all of the rights of the Preferred Stock, and except as may
be provided with respect to the Preferred Stock herein, by law or by the Board
of Directors pursuant to this Article IV:
(i) Dividends may be declared and paid or set apart
for payment upon the Common Stock out of any assets or funds of the Corporation
legally available for the payment of dividends;
(ii) The holders of Common Stock shall have the right
to vote for the election of directors and on all other matters requiring
stockholder action, each share being entitled to one vote; and
(iii) Upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the net assets of the Corporation
shall be distributed pro rata to the holders of the Common Stock in accordance
with their respective rights and interests.
C. PREEMPTIVE RIGHTS. No holder of any stock of the
Corporation of any class shall have the preemptive right to subscribe for or
purchase any part of any new or additional issue of stock of any class
whatsoever of the Corporation, or of securities convertible into or exchangeable
3
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for stock of any class whatsoever, whether now or hereafter authorized, or
whether issued for cash or other consideration or by way of dividend.
ARTICLE V
The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors. For the management of the
business and for the conduct of the affairs of the Corporation, and in further
creation, definition, limitation and regulation of the powers of the Corporation
and of its directors and of its stockholders, it is further provided:
Section 1. ELECTIONS OF DIRECTORS. Elections of directors need
not be by written ballot unless the Bylaws of the Corporation shall so provide.
Section 2. NUMBER, ELECTION, AND TERMS OF DIRECTORS. Except as
otherwise fixed pursuant to the provisions of Article IV hereof relating to the
rights of the holders of any class or series of Preferred Stock to elect
additional directors under specified circumstances, the number of directors of
the Corporation shall be fixed from time to time exclusively by resolutions
adopted by the Board of Directors; provided, however, that no decrease in the
number of directors constituting the Board of Directors shall shorten the term
of any incumbent director.
The directors, other than those who may be elected by the holders of
any class or series of Preferred Stock, shall be classified, with respect to the
time for which they severally hold office, into three (3) classes, as nearly
equal in number as possible, as shall be provided in the manner specified in the
Bylaws of the corporation, Class I to hold office initially for a term expiring
at the annual meeting of stockholders to be held during the fiscal year ending
in 1998, Class II to hold office initially for a term expiring at the annual
meeting of stockholders to be held during the fiscal year ending in 1999, and
Class III to hold office initially for a term expiring at the annual meeting of
stockholders to be held during the fiscal year ending in 2000, with the members
of each class to hold office until their successors are elected and qualified.
At each annual meeting of the stockholders of the Corporation, the successors to
the class of directors whose term expires at that meeting shall be elected to
hold office for a term expiring at the annual meeting of stockholders held in
the third year following the year of their election.
Section 3. STOCKHOLDER NOMINATION OF DIRECTOR CANDIDATES. Advance
notice of nominations for the election of directors, other than by the Board of
Directors or a committee thereof, shall be given in the manner provided in the
Bylaws.
Section 4. NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Except as
otherwise fixed pursuant to the provisions of Article IV hereof relating to the
rights of the holders of any class or series of Preferred Stock to elect
directors under specified circumstances, newly created directorships resulting
from any increase in the number of directors and any vacancies on the Board of
Directors resulting from death, resignation, disqualification, removal or other
cause shall be filled solely by the affirmative vote of a majority of the
remaining directors then in office, even though less than a quorum of the Board
of Directors, or by a sole remaining director. Any director elected in
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accordance with the preceding sentence shall hold office for the remainder of
the full term of the class of directors in which the new directorship was
created or the vacancy occurred and until such directors successor shall have
been elected and qualified, or until such director's earlier resignation or
removal.
Section 5. STOCKHOLDER ACTION.
Except as otherwise prescribed by law and subject to the rights of
holders or any class or series of Preferred Stock, special meetings of
stockholders of the Corporation, for any purpose or purposes, may be called only
by the Chairman of the Board, if there be one, the President, or the Board of
Directors pursuant to a resolution approved by a majority of the entire Board of
Directors and shall be called by the Secretary or any Assistant Secretary, if
there be one, at the request in writing of a majority of the entire Board of
Directors or by holders of outstanding stock of the Corporation having not less
than the minimum number of votes that would be necessary to authorize such
action.
Section 6. BYLAW AMENDMENTS. The Board of Directors shall have
power to make, alter, amend and repeal the Bylaws (except so far as the
Bylaws adopted by the stockholders shall otherwise provide). Any Bylaws made
by the Board of Directors under the powers conferred hereby may be altered,
amended or repealed by the Board of Directors or by the stockholders of the
Corporation. Notwithstanding the foregoing and anything contained in this
Amended and Restated Certificate of Incorporation to the contrary, Section 7
of Article II and Section 3 of Article III of the Bylaws shall not be
altered, amended or repealed and no provision inconsistent therewith shall be
adopted without the affirmative vote of the holders of at least 66 2/3% of
the voting power of all the shares of capital stock of the Corporation
entitled to vote generally in the election of directors (the "Voting Stock"),
voting together as a single class.
Section 7. REMOVAL OF DIRECTORS. Any director, other than those
who may be elected by the holders of any class or series of Preferred Stock, or
the entire Board of Directors, may be removed from office only for cause by the
affirmative vote of the holders of at least a majority of the voting power of
all of the then outstanding shares of Voting Stock, voting together as a single
class.
Section 8. AMENDMENT, REPEAL, ETC. Notwithstanding any other
provision of this Amended and Restated Certificate of Incorporation or the
Bylaws (and notwithstanding the fact that a lesser percentage may be
specified by law), the affirmative vote of the holders of at least 66 2/3% of
the voting power of all the then outstanding shares of Voting Stock, voting
together as a single class, shall be required to alter, amend, adopt any
provision inconsistent with, or repeal, this Article V or any provision
hereof.
ARTICLE VI
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The Corporation expressly elects to be governed by Section 203 of the
General Corporation Law of the State of Delaware.
ARTICLE VII
SECTION 1. NATURE OF INDEMNITY. Each person who was or is made a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he (or a person of whom
he is the legal representative), is or was a director or officer of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, fiduciary, or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee,
fiduciary or agent or in any other capacity while serving as a director,
officer, employee, fiduciary or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent which it is empowered to do so by the
General Corporation Law of the State of Delaware, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than said law permitted the Corporation to provide prior to such
amendment) against all expense, liability and loss (including attorneys' fees
actually and reasonably incurred by such person in connection with such
proceeding and such indemnification shall inure to the benefit of his or her
heirs, executors and administrators; provided, however, that, except as provided
in Section 2 of this Article VII, the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding initiated by such
person only if such proceeding was authorized by the Board of Directors of the
Corporation. The right to indemnification conferred in this Article VII shall
be a contract right and, subject to Sections 2 and 5 of this Article VII, shall
include the right to payment by the Corporation of the expenses incurred in
defending any such proceeding in advance of its final disposition. The
Corporation may, by action of the Board of Directors, provide indemnification to
employees and agents of the Corporation with the same scope and effect as the
foregoing indemnification of directors and officers.
SECTION 2. PROCEDURE FOR INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Any indemnification of a director or officer of the Corporation under Section 1
of this Article VII or advance of expenses under Section 5 of this Article VII
shall be made promptly, and in any event within 30 days, upon the written
request of the director or officer. If a determination by the Corporation that
the director or officer is entitled to indemnification pursuant to this Article
VII is required, and the Corporation fails to respond within sixty days to a
written request for indemnity, the Corporation shall be deemed to have approved
the request. If the Corporation denies a written request for indemnification or
advancing of expenses, in whole or in part, or if payment in full pursuant to
such request is not made within 30 days, the right to indemnification or
advances as granted by this Article VII shall be enforceable by the director or
officer in any court of competent jurisdiction. Such person's costs and
expenses incurred in connection with successfully establishing his right to
indemnification, in whole or in part, in any such action shall also be
indemnified by the Corporation. It shall be a defense to
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any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any, has been tendered to the Corporation) that the
claimant has not met the standards of conduct which make it permissible under
the General Corporation Law of the State of Delaware for the Corporation to
indemnify the claimant for the amount claimed, but the burden of such defense
shall be on the Corporation. Neither the failure of the Corporation (including
the Board of Directors, independent legal counsel, or its stockholders) to have
made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he or she
has met the applicable standard of conduct set forth in the General Corporation
Law of the State of Delaware, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
SECTION 3. NONEXCLUSIVITY OF ARTICLE VII. The rights to
indemnification and the payment of expenses incurred in defending a
proceeding in advance of its final disposition conferred in this Article VII
shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of this Amended and Restated
Certificate of Incorporation, Bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
SECTION 4. INSURANCE. The Corporation may purchase and maintain
insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee, fiduciary, or agent of the Corporation or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him or her and incurred by him
or her in any such capacity, whether or not the Corporation would have the power
to indemnify such person against such liability under this Article VII.
SECTION 5. EXPENSES. Expenses incurred by any person described in
Section 1 of this Article VII in defending a proceeding shall be paid by the
Corporation in advance of such proceeding's final disposition unless otherwise
determined by the Board of Directors in the specific case upon receipt of an
undertaking by or on behalf of the director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the Corporation. Such expenses incurred by other employees and agents may be so
paid upon such terms and conditions, if any, as the Board of Directors deems
appropriate.
SECTION 6. EMPLOYEES AND AGENTS. Persons who are not covered by the
foregoing provisions of this Article VII and who are or were employees or agents
of the Corporation, or who are or were serving at the request of the Corporation
as employees or agents of another corporation, partnership, joint venture, trust
or other enterprise, may be indemnified to the extent authorized at any time or
from time to time by the Board of Directors.
SECTION 7. CONTRACT RIGHTS. The provisions of this Article VII shall
be deemed to be a contract right between the Corporation and each director or
officer who serves in any such capacity
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at any time while this Article VII and the relevant provisions of the General
Corporation Law of the State of Delaware or other applicable law are in effect,
and any repeal or modification of this Article VII or any such law shall not
affect any rights or obligations then existing with respect to any state of
facts or proceeding then existing.
SECTION 8. MERGER OR CONSOLIDATION. For purposes of this Article
VII, references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under this Article
VII with respect to the resulting or surviving corporation as he or she would
have with respect to such constituent corporation if its separate existence had
continued.
SECTION 9. LIMITATION OF LIABILITY. To the fullest permitted by the
General Corporation Law of the State of Delaware, no director shall be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director.
In accordance with the provisions of Section 103(d) of the General
Corporation Law of the State of Delaware, this Amended and Restated
Certificate of Incorporation shall become effective upon its filing date.
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IN WITNESS WHEREOF, Color Spot Nurseries, Inc. has caused this Amended
and Restated Certificate of Incorporation to be signed and acknowledged by its
President and attested by its Secretary and its corporate seal to be affixed
hereto this ___ day of _________, 1997.
COLOR SPOT NURSERIES, INC.
By:
-----------------------------------------
Michael Vukelich, Chief Executive Officer
ATTEST:
----------------------------------
Karla Vukelich, Secretary
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CERTIFICATE OF DESIGNATION, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL AND
OTHER SPECIAL RIGHTS OF PREFERRED
STOCK AND QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS
OF
___% SERIES A CUMULATIVE
PREFERRED STOCK
OF
COLOR SPOT NURSERIES, INC.
-------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
-------------------------
Color Spot Nurseries, Inc. (the "COMPANY"), a corporation organized
and existing under the General Corporation Law of the State of Delaware,
certifies that pursuant to the authority contained in Article IV of its
Amended and Restated Certificate of Incorporation (the "Certificate of
Incorporation") and in accordance with the provisions of Section 151 of the
General Corporation Law of the State of Delaware, the Board of Directors of
the Company by unanimous written consent dated _______________, 1997 duly
approved and adopted the following resolution (this "CERTIFICATE OF
DESIGNATION") which resolution remains in full force and effect on the date
hereof:
RESOLVED, that the Board of Directors does hereby designate,
create, authorize and provide for the issuance of __% Series A Cumulative
Preferred Stock due ______________, 2008 (the "SERIES A PREFERRED STOCK"),
par value $0.01 per share, with a liquidation preference of $1,000 per share,
consisting of 100,000 shares, having the following voting powers, preferences
and relative, participating, optional and other special rights, and
qualifications, limitations and restrictions thereof as follows:
1. DIVIDENDS.
1. The Holders of shares of the Series A Preferred Stock shall be
entitled to receive, when, as and if dividends are declared by the Board of
Directors out of funds of the Company legally available therefor, cumulative
preferential dividends from the issue date of the Series A Preferred Stock
accruing at the rate of __% per annum (subject to increase as set forth
below), payable quarterly in arrears on each _______________, _____________,
______________ and ______________ or, if any such date is not a Business Day,
on the next succeeding Business Day (each, a "DIVIDEND PAYMENT DATE"), to the
Holders of record as of the next preceding _______________, _______________,
_____________ and __________________ (each, a "RECORD DATE"). Upon an
Increased Dividend Triggering Event dividends on the Series A Preferred Stock
will accrue at the rate of __% per annum of the liquidation preference
thereof until such Increased Dividend Triggering Event is cured. Dividends
shall be payable in cash, except that on each Dividend Payment Date occurring
on or prior to ____________, 2003, dividends may be paid, at the Company's
option, by the issuance of additional shares of Series A Preferred Stock
(including
<PAGE>
fractional shares) having an aggregate Liquidation Preference equal to the
amount of such dividends. The issuance of such additional shares of Series A
Preferred Stock shall constitute "payment" of the related dividend for all
purposes of this Certificate of Designation. The first dividend payment
shall be payable on ___________, 1998. Dividends payable on the Series A
Preferred Stock shall be computed on the basis of a 360-day year consisting
of twelve 30-day months and shall be deemed to accumulate on a daily basis.
2. The rate of the cumulative preferential dividends of the Series
A Preferred Stock may be increased as hereinafter provided. Upon:
3. the failure of the Company to satisfy any mandatory
redemption or repurchase obligation with respect to the Series A
Preferred Stock;
4. the failure of the Company to make a Change of Control Offer
on the terms and in accordance with the provisions described below in
Section 5 hereof;
5. the failure of the Company to comply with any of the other
covenants or agreements set forth in this Certificate of Designation
(other than the payment of dividends) and the continuance of such failure
for 30 consecutive days or more; or
6. default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company or any of its
Subsidiaries (or the payment of which is guaranteed by the Company or any
of its Subsidiaries) whether such Indebtedness or guarantee now exists,
or is created after the Closing Date, which default (1) is caused by a
failure to pay principal of or premium, if any, or interest on such
Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "PAYMENT DEFAULT") or
(2) results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under
which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $5,000,000 or more (each of the events
described in clauses (i), (ii), (iii) and (iv) being referred to herein
as a "INCREASED DIVIDEND TRIGGERING EVENT");
then the cumulative preferential dividends of the Series A Preferred Stock
will accrue at a rate of __% of the Liquidation Preference per share per
annum from the date of such Increased Dividend Triggering Event until such
Increased Dividend Triggering Event is cured.
7. Dividends on the Series A Preferred Stock shall accumulate
whether or not the Company has earnings or profits, whether or not there are
funds legally available for the payment of such dividends and whether or not
dividends are declared. Dividends shall accumulate to the extent they are
not paid on the Dividend Payment Date for the period to which they relate.
The Company shall take all actions required or permitted under the Delaware
General Corporation Law (the "DGCL") to permit the payment of dividends on
the Series A Preferred Stock, including, without limitation, through the
revaluation of its assets in accordance with the DGCL, to make or keep funds
legally available for the payment of dividends.
8. No dividend whatsoever shall be declared or paid upon, or any
sum set apart for the payment of dividends upon, any outstanding share of the
Series A Preferred Stock with respect to any dividend period unless all
dividends for all preceding dividend periods have been declared and paid, or
declared and a sufficient sum set apart for the payment of such dividend,
upon all outstanding shares of Series A Preferred Stock. Unless full
cumulative dividends on all outstanding shares of Series A Preferred Stock
for all past dividend periods shall have been declared and paid, or declared
and a sufficient sum for
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the payment thereof set apart, then: (i) no dividend (other than a dividend
payable solely in shares of any class of stock ranking junior to the Series A
Preferred Stock as to the payment of dividends and as to rights in
liquidation, dissolution or winding up of the affairs of the Company ("JUNIOR
SECURITIES") shall be declared or paid upon, or any sum set apart for the
payment of dividends upon, any shares of Junior Securities; (ii) no other
distribution shall be declared or made upon, or any sum set apart for the
payment of any distribution upon, any shares of Junior Securities, other than
a distribution consisting solely of Junior Securities; (iii) no shares of
Junior Securities shall be purchased, redeemed or otherwise acquired or
retired for value (excluding an exchange for shares of other Junior
Securities) by the Company or any of its Subsidiaries; and (iv) no monies
shall be paid into or set apart or made available for a sinking or other like
fund for the purchase, redemption or other acquisition or retirement for
value of any shares of Junior Securities by the Company or any of its
Subsidiaries. Holders of the Series A Preferred Stock shall not be entitled
to any dividends, whether payable in cash, property or stock, in excess of
the full cumulative dividends as herein described.
1. DISTRIBUTIONS UPON LIQUIDATION, DISSOLUTION OR WINDING UP.
Upon any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Company or reduction or decrease in its
capital stock resulting in a distribution of assets to the holders of any
class or series of the Company's capital stock (a "REDUCTION OR DECREASE IN
CAPITAL STOCK"), each Holder of shares of the Series A Preferred Stock shall
be entitled to payment out of the assets of the Company available for
distribution of an amount equal to the Liquidation Preference per share of
Series A Preferred Stock held by such Holder, PLUS accumulated and unpaid
dividends, if any, to the date fixed for liquidation, dissolution, winding up
or reduction or decrease in capital stock, before any distribution is made on
any Junior Securities, including, without limitation, common stock of the
Company. After payment in full of the Liquidation Preference and all
accumulated dividends, if any, to which Holders of Series A Preferred Stock
are entitled, such Holders shall not be entitled to any further participation
in any distribution of assets of the Company. However, neither the voluntary
sale, conveyance, exchange or transfer (for cash, shares of stock, securities
or other consideration) of all or substantially all of the property or assets
of the Company nor the consolidation or merger of the Company with or into
one or more corporations shall be deemed to be a voluntary or involuntary
liquidation, dissolution or winding up of the Company or reduction or
decrease in capital stock, unless such sale, conveyance, exchange or transfer
shall be in connection with a liquidation, dissolution or winding up of the
business of the Company or reduction or decrease in capital stock.
2. REDEMPTION BY THE COMPANY.
1. On ________, 2008 (the "MANDATORY REDEMPTION DATE"), the Company
shall be required to redeem (subject to the legal availability of funds
therefor) all outstanding shares of Series A Preferred Stock at a price in
cash equal to the Liquidation Preference thereof, PLUS accumulated and unpaid
dividends, if any, to the date of redemption. The Company shall not be
required to make sinking fund payments with respect to the Series A Preferred
Stock. The Company shall take all actions required or permitted under the
DGCL to permit such redemption.
2. The Series A Preferred Stock may not be redeemed at the option
of the Company prior to _____________, 2002, except as set forth below. The
Series A Preferred Stock may be redeemed, in whole or in part, at the option
of the Company on or after _______________, 2002, at the Applicable
Redemption Price. At any time, or from time to time, on or prior to
__________, 2002, the Company may, at its option, use the net cash proceeds
of the first Public Equity Offering to redeem the Series A Preferred Stock at
a redemption price equal to __% of the Liquidation Preference together with
accrued and unpaid dividends, if any, to the date of redemption. In order to
effect the foregoing redemption with the proceeds
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<PAGE>
of such Public Equity Offering, the Company shall make such redemption not
more than 120 days after the consummation of such Public Equity Offering.
3. In case of redemption of less than all of the shares of
Series A Preferred Stock at the time outstanding, the shares to be redeemed
shall be selected PRO RATA or by lot as determined by the Company in its sole
discretion.
4. Notice of any redemption shall be sent by or on behalf of the
Company not less than 30 nor more than 60 days prior to the date specified
for redemption in such notice (including the Mandatory Redemption Date, the
"REDEMPTION DATE"), by first class mail, postage prepaid, to all Holders of
record of the Series A Preferred Stock at their last addresses as they shall
appear on the books of the Company; PROVIDED, HOWEVER, that no failure to
give such notice or any defect therein or in the mailing thereof shall affect
the validity of the proceedings for the redemption of any shares of Series A
Preferred Stock except as to the Holder to whom the Company has failed to
give notice or except as to the Holder to whom notice was defective. In
addition to any information required by law or by the applicable rules of any
exchange upon which Series A Preferred Stock may be listed or admitted to
trading, such notice shall state: (i) whether such redemption is being made
pursuant to the optional or the mandatory redemption provisions hereof;
(ii) the Redemption Date; (iii) the Applicable Redemption Price; (iv) the
number of shares of Series A Preferred Stock to be redeemed and, if less than
all shares held by such Holder are to be redeemed, the number of such shares
to be redeemed; (v) the place or places where certificates for such shares
are to be surrendered for payment of the Applicable Redemption Price,
including any procedures applicable to redemptions to be accomplished through
book-entry transfers; and (vi) that dividends on the shares to be redeemed
will cease to accumulate on the Redemption Date. Upon the mailing of any
such notice of redemption, the Company shall become obligated to redeem at
the time of redemption specified therein all shares called for redemption.
5. If notice has been mailed in accordance with Section 3(d) above
and provided that on or before the Redemption Date specified in such notice,
all funds necessary for such redemption shall have been set aside by the
Company, separate and apart from its other funds in trust for the PRO RATA
benefit of the Holders of the shares so called for redemption, so as to be,
and to continue to be available therefor, then, from and after the Redemption
Date, dividends on the shares of the Series A Preferred Stock so called for
redemption shall cease to accumulate, and said shares shall no longer be
deemed to be outstanding and shall not have the status of shares of Series A
Preferred Stock, and all rights of the Holders thereof as stockholders of the
Company (except the right to receive from the Company the Applicable
Redemption Price) shall cease. Upon surrender, in accordance with said
notice, of the certificates for any shares so redeemed (properly endorsed or
assigned for transfer, if the Company shall so require and the notice shall
so state), such shares shall be redeemed by the Company at the Applicable
Redemption Price. In case fewer than all the shares represented by any such
certificate are redeemed, a new certificate or certificates shall be issued
representing the unredeemed shares without cost to the Holder thereof.
6. Any funds deposited with a bank or trust company for the purpose
of redeeming Series A Preferred Stock shall be irrevocable except that:
7. the Company shall be entitled to receive from such bank or
trust company the interest or other earnings, if any, earned on any money
so deposited in trust, and the Holders of any shares redeemed shall have
no claim to such interest or other earnings; and
8. any balance of monies so deposited by the Company and
unclaimed by the Holders of the Series A Preferred Stock entitled thereto
at the expiration of two years from the applicable Redemption Date shall
be repaid, together with any interest or other earnings earned
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thereon, to the Company, and after any such repayment, the Holders of the
shares entitled to the funds so repaid to the Company shall look only to
the Company for payment without interest or other earnings.
9. No Series A Preferred Stock may be redeemed except with funds
legally available for the purpose. The Company shall take all actions
required or permitted under the DGCL to permit any such redemption.
10. Notwithstanding the foregoing provisions of this Section 3,
unless the full cumulative dividends on all outstanding shares of Series A
Preferred Stock shall have been paid or contemporaneously are declared and
paid for all past dividend periods, none of the shares of Series A Preferred
Stock shall be redeemed unless all outstanding shares of Series A Preferred
Stock are simultaneously redeemed.
11. All shares of Series A Preferred Stock redeemed pursuant to
this Section 3 shall be restored to the status of authorized and unissued
shares of preferred stock, without designation as to series and may
thereafter be reissued as shares of any series of preferred stock other than
shares of Series A Preferred Stock.
1. VOTING RIGHTS.
1. The Holders of record of shares of the Series A Preferred Stock
shall have no voting rights, except as required by law and as hereinafter
provided in this Section 4.
2. Upon the accumulation of accrued and unpaid dividends on the
outstanding Series A Preferred Stock in an amount equal to six full quarterly
dividends (whether or not consecutive) (the events described above being
referred to herein as a "VOTING RIGHTS TRIGGERING EVENT"), then the number of
members of the Company's Board of Directors will be immediately and
automatically increased by one unless there is a vacancy on the Company's
Board of Directors, and the Holders of a majority of the outstanding shares
of Series A Preferred Stock, voting as a separate class, will be entitled to
elect one member to the Board of Directors of the Company.
3. Whenever such voting right shall have vested, such right may be
exercised initially either at a special meeting of the Holders of Series A
Preferred Stock, called as hereinafter provided, or at any annual meeting of
stockholders held for the purpose of electing directors, and thereafter at
such annual meetings or by the written consent of the Holders of Series A
Preferred Stock. Such right of the Holders of Series A Preferred Stock to
elect a director may be exercised until all dividends in arrears shall have
been paid in full, at which time the right of the Holders of Series A
Preferred Stock to elect such director shall cease, the term of such director
previously elected shall thereupon terminate, and the authorized number of
directors of the Company shall thereupon return to the number of authorized
directors otherwise in effect, but subject always to the same provisions for
the renewal and divestment of such special voting rights in the case of any
such future dividend arrearage or defaults or any such failure to make
redemption payments.
4. At any time when such voting right shall have vested in the
Holders of Series A Preferred Stock and if such right shall not already have
been initially exercised, a proper officer of the Company shall, upon the
written request of Holders of record of 10% or more of the Series A Preferred
Stock then outstanding, addressed to the Secretary of the Company, call a
special meeting of Holders of Series A Preferred Stock. Such meeting shall
be held at the earliest practicable date upon the notice required for annual
meetings of stockholders at the place for holding annual meetings of
stockholders of the Company or, if none, at a place designated by the
Secretary of the Company. If such meeting shall not be
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called by the proper officers of the Company within 30 days after the
personal service of such written request upon the Secretary of the Company,
or within 30 days after mailing the same within the United States, by
registered mail, addressed to the Secretary of the Company at its principal
office (such mailing to be evidenced by the registry receipt issued by the
postal authorities), then the Holders of record of 10% of the shares of
Series A Preferred Stock then outstanding may designate in writing a Holder
of Series A Preferred Stock to call such meeting at the expense of the
Company, and such meeting may be called by such person so designated upon the
notice required for annual meetings of stockholders and shall be held at the
place for holding annual meetings of the Company or, if none, at a place
designated by such Holder. Any Holder of Series A Preferred Stock that would
be entitled to vote at such meeting shall have access to the stock books of
the Company for the purpose of causing a meeting of stockholders to be called
pursuant to the provisions of this Section. Notwithstanding the provisions
of this paragraph, however, no such special meeting shall be called if any
such request is received less than 90 days before the date fixed for the next
ensuing annual or special meeting of stockholders. Any action required to be
taken at a meeting of Holders may be taken without a meeting, without prior
notice and without a vote, if a consent or consents in writing, setting forth
the action so taken, shall be signed by the holders of a majority of the
outstanding shares of Series A Preferred Stock.
5. If any director so elected by the Holders of Series A Preferred
Stock shall cease to serve as a director before his term shall expire, the
Holders of Series A Preferred Stock then outstanding may, at a special
meeting of the Holders called as provided above, elect a successor to hold
office for the unexpired term of the director whose place shall be vacant.
6. The Company shall not, without the affirmative vote or consent
of the Holders of a majority of the shares of Series A Preferred Stock then
outstanding (with shares held by the Company or any of its Affiliates not
being considered to be outstanding for this purpose):
7. authorize, create (by way of reclassification or otherwise)
or issue any Parity Securities or any obligation or security convertible
into or evidencing the right to purchase any Parity Securities;
8. amend or otherwise alter its Certificate of Incorporation in
any manner that adversely affects the rights of Holders of Series A
Preferred Stock;
9. amend or otherwise alter this Certificate of Designation
(including the provisions of Section 5 hereof) in any manner; or
10. waive any existing Voting Rights Triggering Event, Increased
Dividend Triggering Event or compliance with any provision of this
Certificate of Designation.
11. Without the consent of each Holder affected, an amendment or
waiver of the Company's Certificate of Incorporation or of this Certificate
of Designation may not (with respect to any shares of Series A Preferred
Stock held by a non-consenting Holder):
12. alter the voting rights with respect to the Series A
Preferred Stock or reduce the number of shares of Series A Preferred Stock
whose Holders must consent to an amendment, supplement or waiver;
13. reduce the Liquidation Preference of or change the Mandatory
Redemption Date of any share of Series A Preferred Stock or alter the
provisions with respect to the redemption of the Series A Preferred Stock
(except as provided above with respect to Section 5 hereof);
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14. reduce the rate of or change the time for payment of
dividends on any share of Series A Preferred Stock;
15. waive the consequences of any failure to pay dividends
on the Series A Preferred Stock;
16. make any share of Series A Preferred Stock payable in any
form other than that stated in this Certificate of Designation;
17. make any change in the provisions of this Certificate of
Designation relating to waivers of the rights of Holders of Series A
Preferred Stock to receive the Liquidation Preference and dividends on the
Series A Preferred Stock;
18. waive a redemption payment with respect to any share of
Series A Preferred Stock (except as provided above with respect to
Section 5 hereof); or
19. make any change in the foregoing amendment and waiver
provisions.
20. The Company shall not, without the consent of at least
two-thirds of the then outstanding shares of Series A Preferred Stock (with
shares held by the Company or its Affiliates not being considered to be
outstanding for this purpose), authorize, create (by way of reclassification
or otherwise) or issue any Senior Securities or any obligation or security
convertible into or evidencing a right to purchase any Senior Securities.
21. The Company in its sole discretion may without the vote or
consent of any Holders of the Series A Preferred Stock amend or supplement
this Certificate of Designation:
22. to cure any ambiguity, defect or inconsistency;
23. to provide for uncertificated Series A Preferred
Stock in addition to or in place of certificated Series A Preferred
Stock; or
24. to make any change that would provide any additional
rights or benefits to the Holders of the Series A Preferred Stock;
provided that any such amendment or supplement does not adversely affect the
legal rights under this Certificate of Designation of any Holder.
1. CHANGE OF CONTROL.
1. Upon the occurrence of a Change of Control, each Holder of
shares of Series A Preferred Stock shall have the right to require the
Company to repurchase all or any part (but not, in the case of any Holder
requiring the Company to purchase less than all of the shares of Series A
Preferred Stock held by such Holder, any fractional shares) of such Holder's
Series A Preferred Stock pursuant to the offer described below (the "CHANGE
OF CONTROL OFFER") at an offer price in cash equal to 101% of the aggregate
Liquidation Preference thereof plus accumulated and unpaid dividends, if any,
thereon to the date of purchase (the "CHANGE OF CONTROL PAYMENT").
2. The Change of Control Offer shall include all instructions and
materials necessary to enable Holders to tender their shares of Series A
Preferred Stock.
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3. The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in
connection with the repurchase of the Series A Preferred Stock as a result of
a Change of Control.
4. Within 90 days following any Change of Control, the Company
shall send, by first-class mail, a notice to each Holder stating:
5. that the Change of Control Offer is being made pursuant to
this Section 5 and that all shares of Series A Preferred Stock tendered
will be accepted for payment;
6. the purchase price and the purchase date, which shall be no
earlier than 30 days nor later than 60 days from the date such notice is
mailed (the "CHANGE OF CONTROL PAYMENT DATE");
7. that any share of Series A Preferred Stock not tendered will
continue to accumulate dividends;
8. that, unless the Company fails to pay the Change of Control
Payment, all shares of Series A Preferred Stock accepted for payment
pursuant to the Change of Control Offer shall cease to accumulate
dividends after the Change of Control Payment Date;
9. that Holders electing to have any shares of Series A
Preferred Stock purchased pursuant to a Change of Control Offer will be
required to surrender the shares of Series A Preferred Stock, with the
form entitled "OPTION OF HOLDER TO ELECT PURCHASE" which shall be
included with the Notice of Change of Control completed, to the Paying
Agent at the address specified in the notice prior to the close of
business on the third Business Day preceding the Change of Control
Payment Date;
10. that Holders will be entitled to withdraw their election if
the Paying Agent receives, not later than the close of business on the
second Business Day preceding the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth the name
of the Holder, the number of shares of Series A Preferred Stock delivered
for purchase, and a statement that such Holder is withdrawing his election
to have such shares purchased; and
11. the circumstances and relevant facts regarding such Change of
Control (including, but not limited to, information with respect to PRO
FORMA historical financial information after giving effect to such Change
of Control and information regarding the Person or Persons acquiring
control).
12. On the Change of Control Payment Date, the Company shall, to
the extent lawful, (i) accept for payment all shares of Series A Preferred
Stock or portions thereof properly tendered pursuant to the Change of Control
Offer, (ii) deposit with the Paying Agent an amount equal to the Change of
Control Payment in respect of all shares of Series A Preferred Stock or
portions thereof so tendered and (iii) deliver or cause to be delivered to
the Paying Agent the shares of Series A Preferred Stock so accepted together
with an Officers' Certificate stating the aggregate Liquidation Preference of
the shares of Series A Preferred Stock or portions thereof being purchased by
the Company. The Paying Agent shall promptly mail to each Holder of Series A
Preferred Stock so tendered the Change of Control Payment for such Series A
Preferred Stock, and the Transfer Agent shall promptly authenticate and mail
(or cause to be transferred by book entry) to each Holder a new certificate
representing the shares of Series A Preferred Stock equal in
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Liquidation Preference amount to any unpurchased portion of the shares of
Series A Preferred Stock surrendered, if any. The Company shall publicly
announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
13. Prior to complying with the provisions of this Section 5, but
in any event within 90 days following a Change of Control, the Company shall
either repay all outstanding Indebtedness or obtain the requisite consents,
if any, under all agreements governing outstanding Indebtedness to permit the
repurchase of Series A Preferred Stock required by this Section 5.
14. The Company shall not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Section 5 applicable to a Change of Control
Offer made by the Company and purchases all shares of Series A Preferred
Stock validly tendered and not withdrawn under such Change of Control Offer.
1. CERTAIN COVENANTS.
1. RESTRICTED PAYMENTS. The Company and its Restricted
Subsidiaries may not, directly or indirectly:
(i) declare or pay any dividend or make any distribution in
respect of any Equity Interests of the Company that are Junior Securities
or of any of its Subsidiaries other than dividends or distributions
payable (A) in Junior Securities of the Company that are not Disqualified
Capital Stock or (B) to the Company or any Subsidiary;
(ii) purchase, redeem or otherwise acquire or retire for value
any Equity Interests of the Company that are Junior Securities or of any
of its Subsidiaries or other Affiliates of the Company (other than any
such Equity Interests owned by the Company or any Subsidiary);
(iii) make any Investment (other than Permitted Investments);
each of the foregoing actions set forth in clauses (i), (ii) and (iii) above
being referred to as a "STOCK RESTRICTED PAYMENT," unless, at the time of
such Stock Restricted Payment:
(A) no Increased Dividend Triggering Event or Voting Rights
Triggering Event has occurred and is continuing or would occur as a
consequence thereof;
(B) the Company could incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with the
"Incurrence of Additional Indebtedness and Issuance of Disqualified Capital
Stock" covenant of Section 6(b); and
(C) such Stock Restricted Payment, together with the aggregate of
all other Stock Restricted Payments made by the Company and its Subsidiaries
after the Issue Date (the amount expended for such purposes if other than in
cash, being the fair market value of such property as determined reasonably
and in good faith by the Board of Directors of the Company), is less than the
sum of: (w) 50% of the cumulative Consolidated Net Income (or if cumulative
Consolidated Net Income shall be a loss, minus 100% of such loss) of the
Company earned subsequent to the Issue Date and on or prior to the date the
Stock Restricted Payment occurs (the "REFERENCE DATE") (treating such period
as a single accounting period); plus (x) 100% of the aggregate net cash
proceeds received by the Company from any Person (other than a Subsidiary of
the
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Company) from the issuance and sale subsequent to the Issue Date and on
or prior to the Reference Date of Qualified Capital Stock of the Company
(excluding net cash proceeds received from the sale of Capital Stock to
employees of the Company and any of its Subsidiaries after the Issue Date
to the extent such amounts have been applied in accordance with clause (3)
of the following paragraph); plus (y) without duplication of any amounts
included in clause (C) (x) above, 100% of the aggregate net cash proceeds
of any equity contribution received by the Company from a holder of the
Company's Capital Stock (excluding, in the case of clauses (C) (x) and
(y), any net cash proceeds from a Public Equity Offering to the extent
used to redeem the Notes or the Series A Preferred Stock); plus (z)
aggregate net cash proceeds received by the Company or any of its
Subsidiaries as a distribution or repayment with respect to, or from the
sale of, Investments (other than Permitted Investments) made after the
Issue Date up to the original amount of such Investments.
Notwithstanding the foregoing, the provisions set forth above in
the immediately preceding paragraph will not prohibit: (1) the payment of
any dividend within 60 days after the date of declaration thereof, if at such
date of declaration such payment would have complied with the provisions of
this Certificate of Designation; (2) so long as no Increased Dividend
Triggering Event or Voting Rights Triggering Event shall have occurred and be
continuing, the acquisition of any Junior Securities of the Company either
(i) solely in exchange for shares of Qualified Capital Stock of the Company,
or (ii) through the application of net proceeds of a substantially concurrent
sale for cash (other than to a Subsidiary of the Company) of shares of
Qualified Capital Stock of the Company; (3) so long as no Increased Dividend
Triggering Event or Voting Rights Triggering Event shall have occurred and be
continuing, repurchases by the Company of Capital Stock of the Company from
employees of the Company or any of its Subsidiaries or their authorized
representatives upon the death, disability or termination of employment of
such employees or pursuant to a written contract or plan, in an aggregate
amount not to exceed $1,000,000 in any calendar year plus an aggregate amount
of net cash proceeds received by the Company subsequent to the Issue Date
from the sale of Capital Stock to employees of the Company and any of its
Subsidiaries to the extent such proceeds have not been included in making the
calculation in clause (C) of the immediately preceding paragraph; (4) the
payment of cash dividends on the Series A Preferred Stock; and (5) the
repurchase of Series A Preferred Stock after a Change of Control. In
determining the aggregate amount of Stock Restricted Payments made subsequent
to the Issue Date in accordance with clause (C) of the immediately preceding
paragraph, amounts expended pursuant to clauses (1), (2), (3) and (4) shall
be included in such calculation.
The Board of Directors may designate any Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause an Increased
Dividend Triggering Event. For purposes of making such determination, all
outstanding Investments by the Company and its Subsidiaries (except to the
extent repaid in cash) in such Subsidiary so designated will be deemed to be
Stock Restricted Payments at the time of such designation and will reduce the
amount available for Stock Restricted Payments under the first paragraph of
this covenant. All such outstanding Investments will be deemed to constitute
Investments in an amount equal to the greatest of (x) the net book value of
such Investments at the time of such designation, (y) the fair market value
of such Investments at the time of such designation and (z) the original fair
market value of such Investments at the time they were made. Such designation
will only be permitted if such Stock Restricted Payment would be permitted at
such time.
2. INCURRENCE OF ADDITIONAL INDEBTEDNESS AND ISSUANCE OF
DISQUALIFIED CAPITAL STOCK. The Company will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly, create, incur,
assume, guarantee, acquire, become liable, contingently or otherwise, with
respect to, or otherwise become responsible for payment of (collectively,
"INCUR") any Indebtedness (other than Permitted Indebtedness) or issue any
Disqualified Capital Stock; PROVIDED, HOWEVER, that if no Increased Dividend
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Triggering Event or Voting Rights Triggering Event shall have occurred and be
continuing at the time of or as a consequence of the incurrence of any such
Indebtedness or the issuance of Disqualified Capital Stock, the Company may
incur Indebtedness (including, without limitation, Acquired Indebtedness) or
issue Disqualified Capital Stock and Restricted Subsidiaries of the Company
may incur Acquired Indebtedness, in each case if on the date of the
Incurrence of such Indebtedness, or the issuance of Disqualified Capital
Stock, after giving effect to the incurrence or issuance thereof, the
Consolidated Fixed Charge Coverage Ratio of the Company is greater than 2.0
to 1.0.
3. MERGER, CONSOLIDATION AND SALE OF ASSETS. The Company may not
consolidate or merge with or into (whether or not the Company is the
surviving corporation), or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its properties or assets in one or
more related transactions, to another corporation, Person or entity unless
(i) the Company is the surviving corporation or the entity or the Person
formed by or surviving any such consolidation or merger (if other than the
Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; (ii) if the Company is not the Surviving Corporation, the Series A
Preferred Stock shall be converted into or exchanged for and shall become
shares of such successor, transferee or resulting Person, having in respect
of such successor, transferee or resulting Person the same powers,
preferences and relative participating, optional or other special rights and
the qualifications, limitations or restrictions thereon, that the Series A
Preferred Stock had immediately prior to such transaction; (iii) immediately
after such transaction no Increased Dividend Triggering Event or Voting
Rights Triggering Event exists; and (iv) the Company or the entity or Person
formed by or surviving any such consolidation or merger (if other than the
Company), or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made will, at the time of such transaction
and after giving PRO FORMA effect thereto as if such transaction had occurred
at the beginning of the applicable four-quarter period, be permitted to incur
at least $1.00 of additional Indebtedness pursuant to the Consolidated Fixed
Charge Coverage Ratio set forth in the "Incurrence of Additional Indebtedness
and Issuance of Disqualified Capital Stock" covenant of Section 6(b).
4. TRANSACTIONS WITH AFFILIATES.
(1) The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, enter into or permit to
exist any transaction or series of related transactions (including, without
limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) with, or for the benefit of, any of its Affiliates
(each an "AFFILIATE TRANSACTION"), other than (x) Affiliate Transactions
permitted under paragraph (2) below and (y) Affiliate Transactions on terms
that are no less favorable than those that might reasonably have been
obtained in a comparable transaction at such time on an arm's-length basis
from a Person that is not an Affiliate of the Company or such Restricted
Subsidiary. All Affiliate Transactions (and each series of related Affiliate
Transactions which are similar or part of a common plan) involving aggregate
payments or other property with a fair market value in excess of $1,000,000
shall be approved by the Board of Directors of the Company or such Restricted
Subsidiary, as the case may be, such approval to be evidenced by a Board
Resolution stating that such Board of Directors has determined that such
transaction complies with the foregoing provisions. If the Company or any
Restricted Subsidiary of the Company enters into an Affiliate Transaction (or
a series of related Affiliate Transactions related to a common plan) that
involves an aggregate fair market value of more than $5,000,000, the Company
or such Restricted Subsidiary, as the case may be, shall, prior to the
consummation thereof, obtain a favorable opinion as to the fairness of such
transaction or series of related transactions to the Company or the relevant
Restricted Subsidiary, as the case may be, from a financial point of view,
from an Independent Financial Advisor and file
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the same with the Board of Directors.
(2) The restrictions set forth in clause (1) above shall not apply
to (i) reasonable fees and compensation paid to and indemnity provided on
behalf of, officers, directors, employees or consultants of the Company or
any Restricted Subsidiary of the Company (including customary provisions
contained in employment agreements with executive officers of the Company) as
determined in good faith by the Company's Board of Directors or senior
management; (ii) transactions exclusively between or among the Company and
any of its Wholly Owned Restricted Subsidiaries or exclusively between or
among such Wholly Owned Restricted Subsidiaries, provided such transactions
are not otherwise prohibited by this Certificate of Designation; (iii) any
agreement as in effect as of the Issue Date or any amendment thereto or any
transaction contemplated thereby (including pursuant to any amendment
thereto) in any replacement agreement thereto so long as any such amendment
or replacement agreement is not more disadvantageous to the holders of Series
A Preferred Stock in any material respect than the original agreement as in
effect on the Issue Date; (iv) Stock Restricted Payments permitted by this
Certificate of Designation; (v) the payments by the Company under that
certain lease of its Richmond, California facility between the Company and M.
F. Vukelich Co. dated as of December 1, 1995, as amended on December 13,
1995; and (vi) the payments by the Company under that certain residential
lease rental agreement and deposit receipt between the Company and Michael F.
Vukelich, as guardian of Trisha Vukelich, dated as of December 13, 1995.
5. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company will not, and will not cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or permit
to exist or become effective any encumbrance or restriction on the ability of
any Restricted Subsidiary of the Company to (a) pay dividends or make any
other distributions on or in respect of its Capital Stock; (b) make loans or
advances or to pay any Indebtedness or other obligation owed to the Company
or any other Restricted Subsidiary of the Company; or (c) transfer any of its
property or assets to the Company or any other Restricted Subsidiary of the
Company, except for such encumbrances or restrictions existing under or by
reason of: (1) applicable law; (2) this Certificate of Designation; (3)
customary non-assignment provisions of any contract or any lease governing a
leasehold interest of any Restricted Subsidiary of the Company; (4) any
instrument governing Acquired Indebtedness, which encumbrance or restriction
is not applicable to any Person, or the properties or assets of any Person,
other than the Person or the properties or assets of the Person so acquired;
(5) agreements existing on the Issue Date to the extent and in the manner
such agreements are in effect on the Issue Date; (6) an agreement governing
Indebtedness incurred to Refinance the Indebtedness issued, assumed or
incurred pursuant to an agreement referred to in clause (4) or (5) above;
PROVIDED, HOWEVER, that the provisions relating to such encumbrance or
restriction contained in any such Indebtedness are no less favorable to the
Company in any material respect as determined by the Board of Directors of
the Company in their reasonable and good faith judgment than the provisions
relating to such encumbrance or restriction contained in agreements referred
to in such clause (4) or (5); (7) Indebtedness or other contractual
requirements of a Receivables Subsidiary in connection with a Qualified
Receivables Transaction, provided that such restrictions apply only to such
Receivables Subsidiary; or (8) purchase money obligations for property
acquired in the ordinary course of business that impose restrictions of the
nature described in clause (c) above on the property so acquired.
6. LIMITATION ON PREFERRED STOCK OF RESTRICTED SUBSIDIARIES. The
Company will not permit any of its Restricted Subsidiaries to issue any
Preferred Stock (other than to the Company or to a Wholly Owned Restricted
Subsidiary of the Company) or permit any Person (other than the Company or a
Wholly Owned Restricted Subsidiary of the Company) to own any Preferred Stock
of any Restricted Subsidiary of the Company.
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7. REPORTS.
8. The Company will mail to holders of Series A
Preferred Stock within 15 days after it files them with the
Commission copies of the annual and quarterly reports and the
information, documents, and other reports that the Company is
required to file with the Commission pursuant to Section 13(a)
or 15(d) of the Exchange Act ("SEC REPORTS"). In the event
the Company is not required or shall cease to be required to
file SEC Reports, pursuant to the Exchange Act, the Company
will nevertheless continue to file such reports with the
Commission (unless the Commission will not accept such a
filing). In the event the Company is not required or shall
cease to be required to file SEC Reports and the Commission
will not accept the filing of SEC Reports, so long as any
Series A Preferred Stock are outstanding, the Company will
furnish copies of such SEC Reports to the holders of Series A
Preferred Stock at the time the Company is required to make
such information available to investors who request it in
writing.
9. The Company shall deliver to the Holders, within 90
days after the end of each fiscal year, an Officers'
Certificate stating that a review of the activities of the
Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing officers
with a view to determining whether the Company has kept,
observed, performed and fulfilled its obligations under this
Certificate of Designation and further stating, as to each
such officer signing such certificate, that to the best of his
or her knowledge the Company has kept, observed, performed and
fulfilled each and every covenant contained in this
Certificate of Designation and is not in default in the
performance or observance of any of the terms, provisions and
conditions of this Certificate of Designation (or, if any such
default shall have occurred, describing all such defaults of
which he or she may have knowledge and what action the Company
is taking or proposes to take with respect thereto) and that
to the best of his or her knowledge no event has occurred and
remains in existence by reason of which payments on account of
the Liquidation Preference of or dividends, if any, on the
Series A Preferred Stock is prohibited or if such event has
occurred, a description of the event and what action the
Company is taking or proposes to take with respect thereto.
10. The Company shall, so long as any of the shares of
Series A Preferred Stock are outstanding, deliver to the
Holders, forthwith upon any Executive Officer of the Company
becoming aware of any default under this Certificate of
Designation, an Officers' Certificate specifying such default
and what action the Company is taking or proposes to take with
respect thereto.
11. CONFLICTS WITH BY-LAWS. If any provisions of the
Company's By-laws conflict in any way with this Certificate of
Designation, the Company shall, so long as any of the shares
of Series A Preferred Stock are outstanding, take all
necessary actions to amend such By-laws and thereby resolve
the conflict.
1. PAYMENT.
1. All amounts payable in cash with respect to the Series A
Preferred Stock shall be payable in United States dollars at the office or
agency of the Company maintained for such purpose within the City and State
of New York or, at the option of the Company, payment of dividends (if any)
may be made by check mailed to the Holders of the Series A Preferred Stock at
their respective addresses set forth in the register of Holders of Series A
Preferred Stock maintained by the Transfer Agent, PROVIDED that all cash
payments with respect to the Global Shares (as defined below) and shares of
Series A Preferred Stock the Holders of which have given wire transfer
instructions to the Company shall be required to be made by
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wire transfer of immediately available funds to the accounts specified by the
Holders thereof.
2. Any payment on the Series A Preferred Stock due on any day that
is not a Business Day need not be made on such day, but may be made on the
next succeeding Business Day with the same force and effect as if made on
such due date.
3. The Company has initially appointed the Transfer Agent to act as
the "PAYING AGENT." The Company may at any time terminate the appointment of
any Paying Agent and appoint additional or other Paying Agents, PROVIDED that
until the Series A Preferred Stock has been delivered to the Company for
cancellation, or moneys sufficient to pay the Liquidation Preference and
accumulated dividends on the Series A Preferred Stock have been made
available for payment and either paid or returned to the Company as provided
in this Certificate of Designation, it shall maintain an office or agency in
the Borough of Manhattan, The City of New York.
4. Dividends payable on the Series A Preferred Stock on any
redemption date or repurchase date that is a Dividend Payment Date shall be
paid to the Holders of record as of the immediately preceding Record Date.
5. All moneys and shares of Series A Preferred Stock deposited with
any Paying Agent or then held by the Company in trust for the payment of the
Liquidation Preference and dividends on any shares of Series A Preferred
Stock which remain unclaimed at the end of two years after such payment has
become due and payable shall be repaid to the Company, and the Holder of such
shares of Series A Preferred Stock shall thereafter look only to the Company
for payment thereof.
1. OFFICERS' CERTIFICATE.
Each Officers' Certificate provided for in this Certificate of
Designation shall include:
1. a statement that the officer making such certificate or opinion
has read such covenant or condition;
2. a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
3. a statement that, in the opinion of such officer, he or she has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been satisfied; and
4. a statement as to whether or not, in the opinion of such officer,
such condition or covenant has been satisfied.
1. EXCLUSION OF OTHER RIGHTS.
Except as may otherwise be required by law, the shares of Series A
Preferred Stock shall not have any voting powers, preferences and relative,
participating, optional or other special rights, other than those
specifically set forth in this Certificate of Designation (as such
Certificate of Designation may be amended from time to time) and in the
Certificate of Incorporation. The shares of Series A Preferred Stock shall
have no preemptive or subscription rights.
2. HEADINGS OF SUBDIVISIONS.
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The headings of the various subdivisions hereof are for convenience of
reference only and shall not affect the interpretation of any of the
provisions hereof.
3. SEVERABILITY OF PROVISIONS.
If any voting powers, preferences and relative, participating, optional
and other special rights of the Series A Preferred Stock and qualifications,
limitations and restrictions thereof set forth in this Certificate of
Designation (as it may be amended from time to time) is invalid, unlawful or
incapable of being enforced by reason of any rule of law or public policy,
all other voting powers, preferences and relative, participating, optional
and other special rights of Series A Preferred Stock and qualifications,
limitations and restrictions thereof set forth in this Certificate of
Designation (as so amended) which can be given effect without the invalid,
unlawful or unenforceable voting powers, preferences and relative,
participating, optional and other special rights of Series A Preferred Stock
and qualifications, limitations and restrictions thereof shall, nevertheless,
remain in full force and effect, and no voting powers, preferences and
relative, participating, optional or other special rights of Series A
Preferred Stock and qualifications, limitations and restrictions thereof
herein set forth shall be deemed dependent upon any other such voting powers,
preferences and relative, participating, optional or other special rights of
Series A Preferred Stock and qualifications, limitations and restrictions
thereof unless so expressed herein.
4. FORM OF SECURITIES.
1. The series a Preferred Stock shall initially be issued in the form
of one or more Global Preferred Shares (the "GLOBAL SHARES"). The Global
Shares shall be deposited on the Closing Date with, or on behalf of, The
Depository Trust Company (the "DEPOSITARY") and registered in the name of
Cede & Co., as nominee of the Depositary (such nominee being referred to as
the "GLOBAL SHARE HOLDER").
2. So long as the Global Share Holder is the registered owner of any
Series A Preferred Stock, the Global Share Holder will be considered the sole
Holder under this Certificate of Designation of any shares of Series A
Preferred Stock evidenced by the Global Shares. Beneficial owners of Shares
of Series A Preferred Stock evidenced by the Global Shares shall not be
considered the owners or Holders thereof under this Certificate of
Designation for any purpose. The Company shall not have any responsibility or
liability for any aspect of the records of the depositary relating to the
Series A Preferred Stock.
3. Payments in respect of the Liquidation Preference, dividends on any
Series A Preferred Stock registered in the name of the Global Share Holder on
the applicable record date shall be payable by the Company to or at the
direction of the Global Share Holder in its capacity as the registered Holder
under this Certificate of Designation. The Company may treat the persons in
whose names Series A Preferred Stock, including the Global Shares, are
registered as the owners thereof for the purpose of receiving such payments.
The Company does not and will not have any responsibility or liability for
the payments of such amounts to beneficial holders of Series A Preferred
Stock.
4. Any person having a beneficial interest in a Global Share may, upon
request to the Company, exchange such beneficial interest for Series A
Preferred Stock in the form of registered definitive certificates
("CERTIFICATED SECURITIES"). Upon any such issuance, the Company shall
register such Certificated Securities in the name of, and cause the same to
be delivered to, such person or persons (or the nominee of any thereof). If
(i) the Company notifies the Holders in writing that the Depository is no
longer willing or able to act as a depository and the Company is unable to
locate a qualified successor within 90 days or (ii) the Company, at its
option, notifies the Holders in writing that it elects to cause the issuance
of Series A Preferred Stock in the form of Certificated Securities, then,
upon surrender by the Global Share
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Holder of its Global Shares, Series A Preferred Stock in such form will be
issued to each person that the Global Share Holder and the Depositary
identify as being the beneficial owner of the related Series A Preferred
Stock. If the Company elects to pay dividends on the Series A Preferred
Stock by issuing additional Series A Preferred Stock, fractional shares, if
any, issued in connection with any such dividend payment may be issued to
holders of Series A Preferred Stock as Certificated Securities.
1. CERTAIN DEFINITIONS.
Unless the context otherwise requires, the terms defined in this
Section 13 shall have, for all purposes of this resolution, the meanings
herein specified (with terms defined in the singular having comparable
meanings when used in the plural).
"ACQUIRED INDEBTEDNESS" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary
of the Company or at the time it merges or consolidates with the Company or
any of its Restricted Subsidiaries or assumed in connection with the
acquisition of assets from such Person and in each case not incurred by such
Person in connection with, or in anticipation or contemplation of, such
Person becoming a Restricted Subsidiary of the Company or such acquisition,
merger or consolidation.
"AFFILIATE" means, with respect to any specified Person, any other
Person who directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, such
specified Person. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities,
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative of the foregoing.
"APPLICABLE REDEMPTION PRICE" means a price per Share equal to the
following redemption prices specified below (expressed as percentages of the
Liquidation Preference thereof), in each case, together with accumulated and
unpaid dividends, if any, to the date of redemption if redeemed during the
12-month period commencing on _________ of each of the years set forth below:
Redemption
Year Rate
----- ------------
2002 . . . . . . . . . . . . %
2003 . . . . . . . . . . . . %
2004 . . . . . . . . . . . . %
2005 . . . . . . . . . . . . %
2006 and thereafter 100.00%
"ASSET ACQUISITION" means (a) an Investment by the Company or any
Restricted Subsidiary of the Company in any other Person pursuant to which
such Person shall become a Restricted Subsidiary of the Company or of any
Restricted Subsidiary of the Company, or shall be merged with or into the
Company or any Restricted Subsidiary of the Company, or (b) the acquisition
by the Company or any Restricted Subsidiary of the Company of the assets of
any Person (other than a Restricted Subsidiary of the Company) which
constitute all or substantially all of the assets of such Person or comprises
any division or line of business of such Person or any other properties or
assets of such Person other than in the ordinary course of business.
"ASSET SALE" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary
course of business), assignment or other transfer
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for value by the Company or any of its Restricted Subsidiaries (including any
Sale and Leaseback Transaction) to any Person other than the Company or a
Wholly Owned Restricted Subsidiary of the Company of (a) any Capital Stock of
any Restricted Subsidiary of the Company; or (b) any other property or assets
of the Company or any Restricted Subsidiary of the Company other than in the
ordinary course of business; PROVIDED, HOWEVER, that Asset Sales shall not
include (i) a transaction or series of related transactions for which the
Company or its Restricted Subsidiaries receive aggregate consideration of
less than $500,000; (ii) the sale, lease, conveyance, disposition or other
transfer of all or substantially all of the assets of the Company as
permitted under "Merger, Consolidation and Sale of Assets;" (iii) sales of
accounts receivable and related assets of the type specified in the
definition of "Qualified Receivables Transaction" to a Receivables Subsidiary
in connection with a Qualified Receivables Transaction; and (iv) sales of
Permitted Investments.
"BOARD OF DIRECTORS" means, as to any Person, the board of directors of
such Person or any duly authorized committee thereof.
"BOARD RESOLUTION" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such
Person to have been duly adopted by the Board of Directors of such Person and
to be in full force and effect on the date of such certification, and
delivered to the Trustee.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CAPITALIZED LEASE OBLIGATION" means, as to any Person, the obligations
of such Person under a lease that are required to be classified and accounted
for as capital lease obligations under GAAP and, for purposes of this
definition, the amount of such obligations at any date shall be the
capitalized amount of such obligations at such date, determined in accordance
with GAAP.
"CAPITAL STOCK" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other
equivalents (however designated and whether or not voting) of corporate
stock, including each class of Common Stock and Preferred Stock of such
Person and (ii) with respect to any Person that is not a corporation, any and
all partnership or other equity interests of such Person.
"CASH EQUIVALENTS" means (i) marketable direct obligations issued by,
or unconditionally guaranteed by, the United States Government or issued by
any agency thereof and backed by the full faith and credit of the United
States, in each case maturing within one year from the date of acquisition
thereof; (ii) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any
public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's Corporation ("S&P")
or Moody's Investors Service, Inc. ("Moody's"); (iii) commercial paper
maturing no more than one year from the date of creation thereof and, at the
time of acquisition, having a rating of at least A-1 from S&P or at least P-1
from Moody's; (iv) certificates of deposit or bankers' acceptances maturing
within one year from the date of acquisition thereof issued by any bank
organized under the laws of the United States of America or any state thereof
or the District of Columbia or any U.S. branch of a foreign bank having at
the date of acquisition thereof combined capital and surplus of not less than
$250,000,000; (v) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clause (i) above
entered into with any bank meeting the qualifications
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specified in clause (iv) above; and (vi) investments in money market funds
which invest substantially all their assets in securities of the types
described in clauses (i) through (v) above.
"CHANGE OF CONTROL" means the occurrence of one or more of the
following events: (i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all
of the assets of the Company to any Person or group of related Persons for
purposes of Section 13(d) of the Exchange Act (a "GROUP"), together with any
Affiliates thereof (whether or not otherwise in compliance with the
provisions of the Indenture); (ii) the approval by the holders of Capital
Stock of the Company of any plan or proposal for the liquidation or
dissolution of the Company (whether or not otherwise in compliance with the
provisions of the Indenture); (iii) any Person or Group (other than the
Permitted Holder(s)) shall become the owner, directly or indirectly,
beneficially or of record, of shares representing more than 50% of the
aggregate ordinary voting power represented by the issued and outstanding
Capital Stock of the Company; or (iv) the replacement of a majority of the
Board of Directors of the Company over a two-year period from the directors
who constituted the Board of Directors of the Company at the beginning of
such period, and such replacement shall not have been approved by a vote of
at least a majority of the Board of Directors of the Company then still in
office who either were members of such Board of Directors at the beginning of
such period or whose election as a member of such Board of Directors was
previously so approved.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" of any Person means any and all shares, interests or
other participations in, and other equivalents (however designated and
whether voting or non-voting) of such Person's common stock, whether
outstanding on the Issue Date or issued after the Issue Date, and includes,
without limitation, all Series And classes of such common stock.
"CONSOLIDATED EBITDA" means, with respect to any Person, for any
period, the sum (without duplication) of (i) Consolidated Net Income and (ii)
to the extent Consolidated Net Income has been reduced thereby, (A) all
income taxes of such Person and its Restricted Subsidiaries paid or accrued
in accordance with GAAP for such period (other than income taxes attributable
to extraordinary, unusual or nonrecurring gains or losses or taxes
attributable to sales or dispositions outside the ordinary course of
business), (B) Consolidated Interest Expense, (C) Consolidated Non-cash
Charges LESS any non-cash items increasing Consolidated Net Income for such
period, all as determined on a consolidated basis for such Person and its
Restricted Subsidiaries in accordance with GAAP, (D) any expenses or charges
related to the termination of the Fee Agreement and (E) any write-off of
deferred financing costs in connection with the refinancing of the Company's
credit agreement in existence prior to the Credit Agreement and any
refinancings of the Credit Agreement.
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO" means, with respect to any
Person, the ratio of Consolidated EBITDA of such Person during the four full
fiscal quarters (the "FOUR QUARTER PERIOD") ending on or prior to the date of
the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio (the "TRANSACTION DATE") to Consolidated Fixed Charges
of such Person for the Four Quarter Period. In addition to and without
limitation of the foregoing, for purposes of this definition, "Consolidated
EBITDA" and "CONSOLIDATED FIXED CHARGES" shall be calculated after giving
effect on a PRO FORMA basis for the period of such calculation to (i) the
incurrence or repayment of any Indebtedness of such Person or any of its
Restricted Subsidiaries (and the application of the proceeds thereof) giving
rise to the need to make such calculation and any incurrence or repayment of
other Indebtedness (and the application of the proceeds thereof), other than
the incurrence or repayment of Indebtedness in the ordinary course of
business for working capital purposes pursuant to working capital facilities,
occurring during the Four Quarter Period or at any time subsequent
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to the last day of the Four Quarter Period and on or prior to the Transaction
Date, as if such incurrence or repayment, as the case may be (and the
application of the proceeds thereof), occurred on the first day of the Four
Quarter Period and (ii) any Asset Sales or Asset Acquisitions (including,
without limitation, any Asset Acquisition giving rise to the need to make
such calculation as a result of such Person or one of its Restricted
Subsidiaries (including any Person who becomes a Restricted Subsidiary as a
result of the Asset Acquisition) incurring, assuming or otherwise being
liable for Acquired Indebtedness and also including any Consolidated EBITDA
(provided that such Consolidated EBITDA shall be included only to the extent
includable pursuant to the definition of "Consolidated Net Income")
attributable to the assets which are the subject of the Asset Acquisition or
Asset Sale during the Four Quarter Period) occurring during the Four Quarter
Period or at any time subsequent to the last day of the Four Quarter Period
and on or prior to the Transaction Date, as if such Asset Sale or Asset
Acquisition (including the incurrence, assumption or liability for any such
Acquired Indebtedness) occurred on the first day of the Four Quarter Period.
If such Person or any of its Restricted Subsidiaries directly or indirectly
guarantees Indebtedness of a third Person, the preceding sentence shall give
(without duplication) effect to the incurrence of such guaranteed
Indebtedness as if such Person or any Restricted Subsidiary of such Person
had directly incurred or otherwise assumed such guaranteed Indebtedness.
Furthermore, in calculating "CONSOLIDATED FIXED CHARGES" for purposes of
determining the denominator (but not the numerator) of this "CONSOLIDATED
FIXED CHARGE COVERAGE RATIO," (1) interest on outstanding Indebtedness
determined on a fluctuating basis as of the Transaction Date and which will
continue to be so determined thereafter shall be deemed to have accrued at a
fixed rate per annum equal to the rate of interest on such Indebtedness in
effect on the Transaction Date; (2) if interest on any Indebtedness actually
incurred on the Transaction Date may optionally be determined at an interest
rate based upon a factor of a prime or similar rate, a eurocurrency interbank
offered rate, or other rates, then the interest rate in effect on the
Transaction Date will be deemed to have been in effect during the Four
Quarter Period; and (3) notwithstanding clause (1) above, interest on
Indebtedness determined on a fluctuating basis, to the extent such interest
is covered by agreements relating to Interest Swap Obligations, shall be
deemed to accrue at the rate per annum resulting after giving effect to the
operation of the operation of such agreements.
"CONSOLIDATED FIXED CHARGES" means, with respect to any Person for any
period, the sum ( without duplication) of (i) Consolidated Interest Expense,
plus (ii) the product of (x) the amount of all dividend payments on any
series of Preferred Stock of such Person (other than dividends paid in
Qualified Capital Stock) paid, accrued or scheduled to be paid or accrued
during such period times (y) a fraction, the numerator of which is one and
the denominator of which is one minus the then current effective consolidated
federal, state and local tax rate of such Person, expressed as a decimal.
"CONSOLIDATED INTEREST EXPENSE" means, with respect to any Person for
any period, the sum of (without duplication): (i) the aggregate of the
interest expense of such Person and its Restricted Subsidiaries of such
period determined on a consolidated basis in accordance with GAAP, including
without limitation, (a) any amortization of debt discount and amortization or
write-off of deferred financing costs (excluding any write-off of deferred
financing costs in connection with the refinancing of the Company's credit
agreement in existence prior to the Credit Agreement or any refinancing of
the Credit Agreement), (b) the net costs under Interest Swap Obligations, (c)
all capitalized interest and (d) the interest portion of any deferred payment
obligation; and (ii) the interest component of Capitalized Lease Obligations
paid, accrued and/or scheduled to be paid or accrued by such Person and its
Restricted Subsidiaries during such period as determined on a consolidated
basis in accordance with GAAP.
"CONSOLIDATED NET INCOME" means, with respect to any Person, for any
period, the aggregate net income (or loss) of such Person and its Restricted
Subsidiaries for such period on a consolidated basis, determined in
accordance with GAAP; PROVIDED that there shall be excluded
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therefrom (a) after-tax gains from Asset Sales or abandonments or reserves
relating thereto, (b) after-tax items classified as extraordinary or
nonrecurring gains, (c) the net income of any Person acquired in a "pooling
of interests" transaction accrued prior to the date it becomes a Restricted
Subsidiary of the referent Person or is merged or consolidated with the
referent Person or any Restricted Subsidiary of the referent Person, (d) the
net income (but not loss) of any Restricted Subsidiary of the referent Person
to the extent that the declaration of dividends or similar distributions by
that Restricted Subsidiary of that income is restricted by a contract,
operation of law or otherwise, (e) the net income of any Person, other than a
Restricted Subsidiary of the referent Person, except to the extent of cash
dividends or distributions paid to the referent Person or to a Wholly Owned
Restricted Subsidiary of the referent Person by such Person, (f) any
restoration to income of any contingency reserve, except to the extent that
provision for such reserve was made out of Consolidated Net Income accrued at
any time following the Issue Date, (g) income or loss attributable to
discontinued operations (including, without limitation, operations disposed
of during such period whether or not such operations were classified as
discontinued), and (h) in the case of a successor to the referent Person by
consolidation or merger or as a transferee of the referent Person's assets,
any earnings of the successor corporation prior to such consolidation, merger
or transfer of assets.
"CONSOLIDATED NON-CASH CHARGES" means, with respect to any Person, for
any period, the aggregate depreciation, amortization and other non-cash
expenses of such Person and its Restricted Subsidiaries reducing Consolidated
Net Income of such Person and its Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP (excluding any
such charges constituting an extraordinary item or loss or any such charge
which requires an accrual of or a reserve for cash charges for any future
period).
"CREDIT AGENT" means, at any time, the then-acting Administrative
Agent as defined in and under the Credit Agreement, which initially shall be
Credit Agricole Indosuez. The Company shall promptly notify the Trustee of
any change in the Credit Agent.
"CREDIT AGREEMENT" means the Second Amended and Restated Credit
Agreement dated as of __________, 1997, between the Company, the lenders
party thereto in their capacities as lenders thereunder and Credit Agricole
Indosuez, as agent, together with the related documents thereto (including,
without limitation, any guarantee agreements and security documents), in each
case as such agreements may be amended (including any amendment and
restatement thereof), supplemented or otherwise modified from time to time,
including any agreement extending the maturity of, refinancing, replacing or
otherwise restructuring (including increasing the amount of available
borrowings thereunder (PROVIDED that such increase in borrowings is Permitted
Indebtedness or is permitted by the "Incurrence of Additional Indebtedness
and Issuance of Disqualified Capital Stock" covenant of Section 6(b)) or
adding Restricted Subsidiaries of the Company as additional guarantors
thereunder) all or any portion of the Indebtedness under such agreement or
any successor or replacement agreement and whether by the same or any other
agent, lender or group of lenders.
"CURRENCY AGREEMENT" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Company or any Restricted Subsidiary of the Company against fluctuations in
currency values.
"DISQUALIFIED CAPITAL STOCK" means that portion of any Capital Stock
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, other than in connection with a
Change of Control, pursuant to a sinking fund obligation or otherwise, or is
redeemable at the sole option of the holder thereof on or prior to the date
of redemption for the Series A Preferred Stock as set forth in this
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Certificate of Designation.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock or that are measured by the value of
Capital Stock (but excluding any debt security that is convertible into or
exchangeable for Capital Stock).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
or any successor statute or statutes thereto.
"FAIR MARKET VALUE" means, with respect to any asset or property, the
price which could be negotiated in an arm's-length, free market transaction,
for cash, between a willing seller and a willing and able buyer, neither of
whom is under undue pressure or compulsion to complete the transaction. Fair
market value shall be determined by the Board of Directors of the Company
acting reasonably and in good faith and shall be evidenced by a Board
Resolution of the Board of Directors of the Company delivered to the Trustee.
"FEE AGREEMENT" means that certain fee agreement between the Company
and Kohlberg & Company, LLC dated as of December 31, 1996, as amended.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment
of the accounting profession of the United States, which are in effect as of
the Issue Date.
"HOLDER" means the record holder of one or more Shares of Series A
Preferred Stock, as shown on the books and records of the Transfer Agent.
"INDEBTEDNESS" means with respect to any Person, without duplication,
(i) all Obligations of such Person for borrowed money, (ii) all Obligations
of such Person evidenced by bonds, debentures, notes or other similar
instruments, (iii) all Capitalized Lease Obligations of such Person, (iv) all
Obligations of such Person issued or assumed as the deferred purchase price
of property, all conditional sale obligations and all Obligations under any
title retention agreement (but excluding trade accounts payable and other
accrued liabilities arising in the ordinary course of business that are not
overdue by 90 days or more or are being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted and
excluding long-term, deferred purchase price obligations for trees, PROVIDED
that such obligations for trees are not recorded as liabilities on such
Person's balance sheet in accordance with GAAP), (v) all Obligations for the
reimbursement of any obligor on any letter of credit, banker's acceptance or
similar credit transaction, (vi) guarantees and other contingent obligations
in respect of Indebtedness referred to in clauses (i) through (v) above and
clause (viii) below, (vii) all Obligations of any other Person of the type
referred to in clauses (i) through (vi) which are secured by any lien on any
property or asset of such Person, the amount of such Obligation being deemed
to be the lesser of the fair market value of such property or asset or the
amount of the Obligation so secured, (viii) all Obligations under Currency
Agreements and Interest Swap Obligations of such Person and (ix) all
Disqualified Capital Stock issued by such Person with the amount of
Indebtedness represented by such Disqualified Capital Stock being equal to
the greater of its voluntary or involuntary liquidation preference and its
maximum fixed repurchase price, but excluding accrued dividends, if any. For
purposes hereof, the "maximum fixed repurchase price" of any Disqualified
Capital Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Capital Stock as
if such Disqualified Capital Stock were purchased on any date on which
Indebtedness shall be required to
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be determined pursuant to the Indenture, and if such price is based upon, or
measured by, the fair market value of such Disqualified Capital Stock, such
fair market value shall be determined reasonably and in good faith by the
Board of Directors of the issuer of such Disqualified Capital Stock.
"INDENTURE" means that certain indenture between the Company and U.S.
Trust Company of California, N.A. dated as of December __, 1997, as amended
or supplemented from time to time.
"INDEPENDENT FINANCIAL ADVISOR" means a firm (i) which does not, and
whose directors, officers and employees or Affiliates do not, have a direct
or indirect financial interest in the Company (other than an interest in less
than 5% of the Company's Common Stock after such time as the Company's Common
Stock is publicly traded) and (ii) which, in the judgment of the Board of
Directors of the Company, is otherwise independent and qualified to perform
the task for which it is to be engaged.
"INTEREST SWAP OBLIGATIONS" means the obligations of any Person
pursuant to any arrangement with any other Person, whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest
on a stated notional amount in exchange for periodic payments made by such
other Person calculated by applying a fixed or a floating rate of interest on
the same notional amount and shall include, without limitation, interest rate
swaps, caps, floors, collars and similar agreements.
"INVESTMENT" means, with respect to any Person, any direct or indirect
loan or other extension of credit (including, without limitation, a
guarantee) or capital contribution to (by means of any transfer of cash or
other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition by such Person of
any Capital Stock, bonds, notes, debentures or other securities or evidences
of Indebtedness issued by, any Person. "Investment" shall exclude extensions
of trade credit by the Company and its Restricted Subsidiaries on
commercially reasonable terms in accordance with normal trade practices of
the Company or such Restricted Subsidiary, as the case may be. For the
purposes of the "Restricted Payments" covenant, (i) "Investment" shall
include and be valued at the fair market value of the net assets of any
Restricted Subsidiary at the time that such Restricted Subsidiary is
designated as an Unrestricted Subsidiary and shall exclude the fair market
value of the net assets of any Unrestricted Subsidiary at the time that such
Unrestricted Subsidiary is designated as a Restricted Subsidiary and (ii) the
amount of any Investment shall be the original cost of such Investment plus
the cost of all additional Investments by the Company or any of its
Restricted Subsidiaries, without any adjustments for increases or decreases
in value, or write-ups, write-downs or write-offs with respect to such
Investment, reduced by the payment of dividends or distributions in
connection with such Investment or any other amounts received in respect of
such Investment; PROVIDED that no such payment of dividends or distributions
or receipt of any such other amounts shall reduce the amount of any
Investment if such payment of dividends or distributions or receipt of any
such amounts would be included in Consolidated Net Income. If the Company or
any Restricted Subsidiary of the Company sells or otherwise disposes of any
Common Stock of any direct or indirect Restricted Subsidiary of the Company
such that, after giving effect to any such sale or disposition, the Company
no longer owns, directly or indirectly, 100% of the outstanding Common Stock
of such Restricted Subsidiary, the Company shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the fair
market value of the Common Stock of such Restricted Subsidiary not sold or
disposed of.
"ISSUE DATE" means the date of original issuance of the Series A
Preferred Stock.
"LEGAL HOLIDAY" means a Saturday or Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized
by law, regulation or executive order to
22
<PAGE>
remain closed.
"LIEN" means any lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind (including any conditional sale
or other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest).
"LIQUIDATION PREFERENCE" means $1,000 per share of Series A Preferred
Stock.
"NOTES" means the Company's ___% Senior Subordinated Notes due 2007.
"OBLIGATIONS" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"OFFICERS' CERTIFICATE" means a certificate signed on behalf of the
Company by two officers of the Company, one of whom must be the principal
executive officer, the principal financial officer or the principal
accounting officer of the Company that meets the requirements of Section 9.
"PARITY SECURITIES" means any class or series of Capital Stock of the
Company ranking on a parity with the Series A Preferred Stock.
"PERMITTED HOLDER(S)" means KCSN Acquisition Company, L.P. and its
Affiliates, Kohlberg & Company, LLC and its Affiliates, and Michael F.
Vukelich and his Affiliates.
"PERMITTED INDEBTEDNESS" means, without duplication, each of the
following:
1) Indebtedness under the Notes and the Indenture;
2) Indebtedness incurred pursuant to the Credit Agreement in
an aggregate principal amount at any time outstanding not
to exceed $150.0 million, less the amount of all
mandatory principal payments actually made by the Company
in respect of the Term Loan Facility (excluding any such
payments to the extent refinanced at the time of payment
under a replaced Credit Agreement), PROVIDED that (1) not
more than $110.0 million of borrowings under the Credit
Agreement are used to make Asset Acquisitions and (2) not
more than $90.0 million of borrowings under the Credit
Agreement are used for any other purpose;
3) other Indebtedness of the Company and its Restricted
Subsidiaries outstanding on the Issue Date reduced by the
amount of any scheduled amortization payments or
mandatory prepayments when actually paid or permanent
reductions thereon;
4) Interest Swap Obligations of the Company covering
Indebtedness of the Company or any of its Restricted
Subsidiaries and Interest Swap Obligations of any
Restricted Subsidiary of the Company covering
Indebtedness of such Restricted Subsidiary; PROVIDED,
HOWEVER, that such Interest Swap Obligations are entered
into to protect the Company and its Restricted
Subsidiaries from fluctuations in interest rates on
Indebtedness incurred in accordance with the Indenture to
the extent the notional principal amount of such Interest
Swap Obligation does not exceed the principal amount of
the Indebtedness to which such Interest Swap Obligation
relates;
5) Indebtedness under Currency Agreements; PROVIDED that in
the case of Currency Agreements which relate to
Indebtedness, such Currency Agreements do not increase
the Indebtedness of the
23
<PAGE>
Company and its Restricted Subsidiaries outstanding other than as a
result of fluctuations in foreign currency exchange rates or by reason of
fees, indemnities and compensation payable thereunder;
6) Indebtedness of a Wholly Owned Restricted Subsidiary of the Company to the
Company or to a Wholly Owned Restricted Subsidiary of the Company for so
long as such Indebtedness is held by the Company or a Wholly Owned
Restricted Subsidiary of the Company, in each case subject to no Lien held
by a Person other than the Company or a Wholly Owned Restricted Subsidiary
of the Company (other than the Lien of the Credit Agent under the Credit
Agreement); PROVIDED that if as of any date any Person other than the
Company or a Wholly Owned Restricted Subsidiary of the Company owns or
holds any such Indebtedness or holds a Lien in respect of such
Indebtedness, such date shall be deemed the incurrence of Indebtedness not
constituting Permitted Indebtedness by the issuer of such Indebtedness;
7) Indebtedness of the Company to a Wholly Owned Restricted Subsidiary of the
Company for so long as such Indebtedness is held by a Wholly Owned
Restricted Subsidiary of the Company, in each case subject to no Lien;
PROVIDED that (a) any Indebtedness of the Company to any Wholly Owned
Restricted Subsidiary of the Company is unsecured and subordinated,
pursuant to a written agreement, to the Company's obligations under the
Indenture and the Notes and (b) if as of any date any Person other than a
Wholly Owned Restricted Subsidiary of the Company owns or holds any such
Indebtedness or any Person holds a Lien in respect of such Indebtedness,
such date shall be deemed the incurrence of Indebtedness not constituting
Permitted Indebtedness by the Company;
8) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently (except
in the case of daylight overdrafts) drawn against insufficient funds in the
ordinary course of business; PROVIDED, HOWEVER, that such Indebtedness is
extinguished within two business days of incurrence;
9) Indebtedness of the Company or any of its Restricted Subsidiaries
represented by letters of credit for the account of the Company or such
Restricted Subsidiary, as the case may be, in order to provide security for
workers' compensation claims, payment obligations in connection with self-
insurance or similar requirements in the ordinary course of business;
10) Refinancing Indebtedness;
11) Indebtedness incurred in a Qualified Receivables Transaction that is
without recourse to the Company or to any Restricted Subsidiary of the
Company or their assets (other than a Receivables Subsidiary and its
assets); and
12) additional Indebtedness of the Company and its Restricted Subsidiaries in
an aggregate principal amount not to exceed $25,000,000 at any one time
outstanding.
"PERMITTED INVESTMENTS" means (i) Investments by the Company or any
Restricted Subsidiary of the Company in any Person that is or will become
immediately after such Investment a Wholly Owned Restricted Subsidiary of the
Company or that will merge or consolidate into the Company or a Wholly Owned
Restricted Subsidiary of the Company; (ii) Investments in the Company by any
Restricted Subsidiary of the Company; (iii) investments in cash and Cash
Equivalents; (iv) loans and advances to employees and officers of the Company
and its Restricted Subsidiaries in the ordinary
24
<PAGE>
course of business for bona fide business purposes not in excess of
$2,000,000 at any one time outstanding; (v) Currency Agreements and Interest
Swap Obligations entered into in the ordinary course of the Company's or its
Restricted Subsidiaries' businesses and otherwise in compliance with the
Indenture; (vi) Investments in securities of trade creditors or customers
received pursuant to any plan of reorganization or similar arrangement upon
the bankruptcy or insolvency of such trade creditors or customers; (vii)
Investments made by the Company or its Restricted Subsidiaries as a result of
consideration received in connection with an Asset Sale; (viii) Investment by
the Company or a Wholly Owned Restricted Subsidiary of the Company in a
Receivables Subsidiary or any Investment by a Receivables Subsidiary in any
other Person in connection with a Qualified Receivables Transaction; (ix)
notes received from management as payment for purchases of Capital Stock; and
(x) additional Investments by the Company or any Restricted Subsidiary of the
Company in an aggregate amount, based on original cost, not to exceed
$1,000,000 at any one time outstanding.
"PERSON" means an individual, partnership, corporation, unincorporated
organization, trust or joint venture, limited liability company or a
governmental agency or political subdivision thereof.
"PREFERRED STOCK" of any Person means any Capital Stock of such
Person that has preferential rights to any other Capital Stock of such Person
with respect to dividends or redemptions or upon liquidation.
"PUBLIC EQUITY OFFERING" means an underwritten public offering of
Qualified Capital Stock of the Company sold by the Company after the Issue
Date pursuant to a registration statement filed with the Commission in
accordance with the Securities Act.
"QUALIFIED CAPITAL STOCK" means any Capital Stock that is not
Disqualified Capital Stock.
"QUALIFIED RECEIVABLES TRANSACTION" means any transaction or series of
transactions that may be entered into by the Company or any of its Restricted
Subsidiaries pursuant to which the Company or any of its Restricted
Subsidiaries may sell, convey or otherwise transfer to (i) a Receivables
Subsidiary (in the case of a transfer by the Company or any of its Restricted
Subsidiaries) and (ii) any other Person (in the case of a transfer by a
Receivables Subsidiary), or may grant a security interest in, any accounts
receivable (whether now existing or arising in the future) of the Company or
any of its Restricted Subsidiaries, and any assets related thereto including,
without limitation, all collateral securing such accounts receivable, all
contracts and all guarantees or other obligations in respect of such accounts
receivable, proceeds of such accounts receivable and other assets which are
customarily transferred or in respect of which security interests are
customarily granted in connection with asset securitization transactions
involving accounts receivable.
"RECEIVABLES SUBSIDIARY" means a Wholly Owned Restricted Subsidiary
of the Company that engages in no activities other than in connection with
the financing of accounts receivable and that is designated by the Board of
Directors of the Company (as provided below) as a Receivables Subsidiary (a)
which has no Indebtedness or any other Obligations (contingent or otherwise)
which (i) is guaranteed by the Company or any other Restricted Subsidiary of
the Company (excluding guarantees of Obligations (other than the principal
of, and interest on, Indebtedness) pursuant to representations, warranties,
covenants and indemnities entered into in the ordinary course of business in
connection with a Qualified Receivables Transaction), (ii) is recourse to or
obligates the Company or any other Restricted Subsidiary of the Company in
any way other than pursuant to representations, warranties, covenants and
indemnities entered into in the ordinary course of business in connection
with a Qualified Receivables
25
<PAGE>
Transaction or (iii) subjects any property or asset of the Company or any
other Restricted Subsidiary of the Company, directly or indirectly,
contingently or otherwise, to the satisfaction thereof, other than pursuant
to representations, warranties, covenants and indemnities entered into in the
ordinary course of business in connection with a Qualified Receivables
Transaction, (b) with which neither the Company nor any other Restricted
Subsidiary of the Company has any material contract, agreement, arrangement
or understanding other than on terms no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time from
Persons who are not Affiliates of the Company, other than fees payable in the
ordinary course of business in connection with servicing accounts receivable
and (c) with which neither the Company nor any other Restricted Subsidiary of
the Company has any obligation to maintain or preserve such Restricted
Subsidiary's financial condition or cause such Restricted Subsidiary to
achieve certain levels of operating results. Any such designation by the
Board of Directors of the Company shall be evidenced to the Transfer Agent by
filing with the Transfer Agent a Board Resolution of the Board of Directors
of the Company giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions.
"REFINANCE" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, pre-pay, redeem, defease or retire,
or to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"REFINANCING INDEBTEDNESS" means any Refinancing by the Company or
any Restricted Subsidiary of the Company of Indebtedness incurred in
accordance with the "Incurrence of Additional Indebtedness and Issuance of
Disqualified Capital Stock" covenant of Section 6(b) (other than pursuant to
clause (ii), (iv), (v), (vi), (vii), (viii), (ix), (xi) or (xii) of the
definition of Permitted Indebtedness), in each case that does not (1) result
in an increase in the aggregate principal amount of Indebtedness of such
Person as of the date of such proposed Refinancing (plus the amount of any
premium required to be paid under the terms of the instrument governing such
Indebtedness and plus the amount of reasonable expenses incurred by the
Company in connection with such Refinancing) or (2) create Indebtedness with
(A) a Weighted Average Life to Maturity that is less than the Weighted
Average Life to Maturity of the Indebtedness being Refinanced or (B) a final
maturity earlier than the final maturity of the Indebtedness being
Refinanced.
"RESTRICTED SUBSIDIARY" of any Person means any Subsidiary of such
Person which is not an Unrestricted Subsidiary.
"SALE AND LEASEBACK TRANSACTION" means any direct or indirect
arrangement with any Person or to which any such Person is a party, providing
for the leasing to the Company or a Restricted Subsidiary of any property,
whether owned by the Company or any Restricted Subsidiary at the Issue Date
or later acquired, which has been or is to be sold or transferred by the
Company or such Restricted Subsidiary to such Person or to any other Person
from whom funds have been or are to be advanced by such Person on the
security of such Property.
"SENIOR SECURITIES" means any class or series of Capital Stock of
the Company ranking senior to the Series A Preferred Stock with respect to
dividends or upon liquidation.
"SUBSIDIARY," with respect to any Person, means (i) any corporation
of which the outstanding Capital Stock having at least a majority of the
votes entitled to be cast in the election of directors under ordinary
circumstances shall at the time be owned, directly or indirectly, by such
Person or (ii) any other Person of which at least a majority of the voting
interest under ordinary circumstances is at the time, directly or indirectly,
owned by such Person.
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<PAGE>
"TERM LOAN FACILITY" means one or more term loan facilities under
the Credit Agreement.
"TRANSFER AGENT" means the entity designated from time to time by
the Company to act as the registrar and transfer agent for the Series A
Preferred Stock.
"TRUSTEE" means U.S. Trust Company of California, N.A.
"UNRESTRICTED SUBSIDIARY" of any Person means (i) any Subsidiary of
such Person that at the time of determination shall be or continue to be
designated an Unrestricted Subsidiary by the Board of Directors of such
Person in the manner provided below and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary
(including any newly acquired or newly formed Subsidiary) to be an
Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of, or
owns or holds any Lien on any property of, the Company or any other
Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so
designated; PROVIDED that (x) the Company certifies to the Transfer Agent
that the Company's investment in such Unrestricted Subsidiary is a Permitted
Investment or that such designation complies with the "Restricted Payments"
covenant and (y) each Subsidiary to be so designated and each of its
Subsidiaries has not at the time of designation, and does not thereafter,
create, incur, issue, assume, guarantee or otherwise become directly or
indirectly liable with respect to any Indebtedness pursuant to which the
lender has recourse to any of the assets of the Company or any of its
Restricted Subsidiaries. The Board of Directors may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary only if (x) immediately
after giving effect to such designation, the Company is able to incur at
least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in
compliance with the "Incurrence of Additional Indebtedness and Issuance of
Disqualified Capital Stock" covenant of Section 6(b) and (y) immediately
before and immediately after giving effect to such designation, no Default or
Event of Default shall have occurred and be continuing. Any such designation
by the Board of Directors shall be evidenced to the Trustee by promptly
filing with the Transfer Agent a copy of the Board Resolution giving effect
to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing provisions.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the
then outstanding aggregate principal amount of such Indebtedness into (b) the
sum of the total of the products obtained by multiplying (i) the amount of
each then remaining installment, sinking fund, serial maturity or other
required payment of principal, including payment at final maturity, in
respect thereof, by (ii) the number of years (calculated to the nearest
one-twelfth) which will elapse between such date and the making of such
payment.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" of any Person means any
Restricted Subsidiary of such Person of which all the outstanding voting
securities (other than in the case of a foreign Restricted Subsidiary,
directors' qualifying shares or an immaterial amount of shares required to be
owned by other Persons pursuant to applicable law) are owned by such Person
or any Wholly Owned Restricted Subsidiary of such Person.
27
<PAGE>
IN WITNESS WHEREOF, the Company has caused this certificate to be
duly executed by Michael F. Vukelich, Chief Executive Officer, and attested
by __________________, its [assistant secretary], this ___ day of
_______________, 1997.
COLOR SPOT NURSERIES, INC.
By:___________________________________
Michael F. Vukelich
Chief Executive Officer
ATTEST:
By:
[name]
[title]
1
<PAGE>
- -------------------------------------------------------------------------------
WARRANT AGREEMENT
Dated as of _______________ __, 1997
by and between
COLOR SPOT NURSERIES, INC.
and
AMERICAN STOCK TRANSFER AND TRUST COMPANY,
as Warrant Agent
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
WARRANT AGREEMENT, dated as of ______________ __, 1997, between Color
Spot Nurseries, Inc., a Delaware corporation (the "COMPANY"), and American Stock
Transfer and Trust Company, as warrant agent (the "WARRANT AGENT").
WHEREAS, the Company has entered into an underwriting agreement (the
"UNDERWRITING AGREEMENT"), dated _____________ __, 1997 with BT Alex. Brown (the
"UNDERWRITER") in which the Company has agreed to sell to the Underwriter
$40,000,000 aggregate principal amount of units (the "UNITS"), consisting of
40,000 shares of the Company's __% Series A Cumulative Preferred Stock (the
"PREFERRED STOCK") and 825,000 warrants, as hereinafter described (the
"WARRANTS"), to purchase up to an aggregate of 825,000 shares of common stock,
par value $0.001 per share (the "COMMON STOCK"), of the Company (the Common
Stock issuable upon exercise of the Warrants being referred to herein as the
"WARRANT SHARES"). The Preferred Stock will be governed by the Company's
Certificate of Designation, Preferences and Relative, Participating, Optional
and Other Special Rights of Preferred Stock and Qualifications, Limitations and
Restrictions relating to the Preferred Stock (the "CERTIFICATE OF DESIGNATION").
The transfer agent for the Preferred Stock will be American Stock Transfer and
Trust Company (the "TRANSFER AGENT") unless and until a successor is selected by
the Company pursuant to the Certificate of Designation. Each Unit shall consist
of one share of Preferred Stock and 20.625 Warrants. Each Warrant entitles the
holder of the Warrant upon exercise to receive from the Company, as adjusted as
provided herein, one fully paid and nonassessable share of Common Stock of the
Company in exchange for the Exercise Price (as hereinafter defined), as provided
herein;
WHEREAS, the Warrants and the Preferred Stock will be sold in units
and shall be immediately separately transferable; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance of Warrant Certificates (as hereinafter defined) and other matters as
provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. APPOINTMENT OF WARRANT AGENT. The Company hereby appoints
the Warrant Agent to act as agent for the Company in accordance with the
instructions set forth hereinafter in this Agreement, and the Warrant Agent
hereby accepts such appointment.
SECTION 2. ISSUANCE OF WARRANTS. Warrants shall be originally issued
in connection with the issuance of the Units and shall be immediately separately
transferable from the Preferred Stock.
SECTION 3. WARRANT CERTIFICATES. The Warrants will be issued in
global form (the "GLOBAL WARRANTS"), substantially in the form of Exhibit A
(including the text accompanying footnotes 1 and 2 thereto but excluding such
footnotes), and in definitive form (the "DEFINITIVE WARRANTS"), substantially in
the form of Exhibit A (not including footnotes 1 and 2 thereto or the text
accompanying such footnotes). Each Definitive Warrant shall represent such of
the outstanding Warrants as shall be specified therein and each Global Warrant
shall provide that it shall represent the aggregate amount of outstanding
Warrants from time to time endorsed thereon and that the aggregate amount of
outstanding Warrants represented thereby may from time to time be reduced or
increased, as appropriate. Any endorsement of a Global Warrant to reflect the
amount of any increase or decrease in the amount of outstanding Warrants
represented thereby shall be made by the Warrant Agent and the depositary with
respect to the Global Warrants (the "DEPOSITARY") in accordance with
instructions given by the holder
<PAGE>
thereof. The Depository Trust Company shall act as the Depositary until a
successor shall be appointed by the Company and the Warrant Agent. Upon
request, a holder may receive from the Depositary and the Warrant Agent
separate Definitive Warrants as set forth in Section 7 below. Any
certificates (the "WARRANT CERTIFICATES") evidencing the Global Warrants or
the Definitive Warrants to be delivered pursuant to this Agreement shall be
substantially in the form set forth in Exhibit A attached hereto.
SECTION 4. EXECUTION OF WARRANT CERTIFICATES. Warrant Certificates
shall be signed on behalf of the Company by its Chairman of the Board, Chief
Executive Officer, Chief Financial Officer, President or Vice President and
Secretary or an Assistant Secretary. Each such signature upon the Warrant
Certificates may be in the form of a facsimile signature of the present or any
future Chairman of the Board, Chief Executive Officer, Chief Financial Officer,
President or Vice President and Secretary or Assistant Secretary and may be
imprinted or otherwise reproduced on the Warrant Certificates and for that
purpose the Company may adopt and use the facsimile signature of any person who
shall have been Chairman of the Board, Chief Executive Officer, Chief Financial
Officer, President or Vice President and Secretary or Assistant Secretary,
notwithstanding the fact that at the time the Warrant Certificates shall be
countersigned and delivered or disposed of he or she shall have ceased to hold
such office.
In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been countersigned by the Warrant Agent, or
disposed of by the Company, such Warrant Certificates nevertheless may be
countersigned and delivered or disposed of as though such person had not ceased
to be such officer of the Company; and any Warrant Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Warrant Certificate, shall be a proper officer of the Company to sign such
Warrant Certificate, although at the date of the execution of this Warrant
Agreement any such person was not such officer.
Warrant Certificates shall be dated the date of countersignature by
the Warrant Agent.
SECTION 5. LEGENDING OF WARRANTS.
Upon original issuance, the Warrant Certificates will bear the
following legend (the "WARRANT LEGEND"):
THE COMMON STOCK, PAR VALUE $0.001, OF THE COMPANY (THE "COMMON
STOCK") FOR WHICH THIS WARRANT IS EXERCISABLE MAY NOT BE OFFERED OR SOLD IN
THE UNITED STATES ABSENT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") AND ANY APPLICABLE STATE SECURITIES LAWS OR
AN APPLICABLE EXEMPTION FROM REGISTRATION REQUIREMENTS. ACCORDINGLY, NO
WARRANT HOLDER SHALL BE ENTITLED TO EXERCISE SUCH HOLDER'S WARRANTS AT ANY
TIME UNLESS, AT THE TIME OF EXERCISE, (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT RELATING TO THE SHARES OF COMMON STOCK ISSUABLE UPON THE
EXERCISE OF THIS WARRANT (THE "WARRANT SHARES") HAS BEEN FILED WITH, AND
DECLARED EFFECTIVE BY, THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC"),
AND NO STOP ORDER SUSPENDING THE EFFECTIVENESS OF SUCH REGISTRATION
STATEMENT HAS BEEN ISSUED BY THE SEC OR (ii) THE ISSUANCE OF THE WARRANT
SHARES IS PERMITTED PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT.
2
<PAGE>
SECTION 6. REGISTRATION AND COUNTERSIGNATURE. The Warrant Agent, on
behalf of the Company, shall number and register the Warrant Certificates in a
register as they are issued by the Company.
Warrant Certificates shall be manually countersigned by the Warrant
Agent and shall not be valid for any purpose unless so countersigned. The
Warrant Agent shall, upon written instructions of the Chairman of the Board,
Chief Executive Officer, President, Vice President or the Chief Financial
Officer of the Company, initially countersign and deliver Warrants entitling the
holders thereof to purchase not more than the number of Warrant Shares referred
to above in the first recital hereof and shall countersign and deliver Warrants
as otherwise provided in this Agreement.
The Company and the Warrant Agent may deem and treat the registered
holder(s) of the Warrant Certificates as the absolute owner(s) thereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone), for all purposes, and neither the Company nor the Warrant Agent shall
be affected by any notice to the contrary.
SECTION 7. REGISTRATION OF TRANSFERS AND EXCHANGES.
(a) TRANSFER AND EXCHANGE OF DEFINITIVE WARRANTS. When Definitive
Warrants are presented to the Warrant Agent with a request:
(i) to register the transfer of the Definitive Warrants; or
(ii) to exchange such Definitive Warrants for an equal number of Definitive
Warrants of other authorized denominations,
the Warrant Agent shall register the transfer or make the exchange as requested
if its requirements for such transactions are met; PROVIDED, HOWEVER, that the
Definitive Warrants presented or surrendered for registration of transfer or
exchange shall be duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Warrant Agent, duly executed by the holder
thereof or by his attorney, duly authorized in writing. Upon any such
registration of transfer, a new Definitive Warrant shall be issued to the
transferee(s) and the surrendered Definitive Warrant shall be cancelled by the
Warrant Agent. Cancelled Definitive Warrants shall thereafter be disposed of in
a manner satisfactory to the Company.
(b) EXCHANGE OR TRANSFER OF A DEFINITIVE WARRANT FOR A BENEFICIAL
INTEREST IN A GLOBAL WARRANT. A Definitive Warrant may be exchanged for a
beneficial interest in a Global Warrant upon satisfaction of the requirements
set forth below. Upon receipt by the Warrant Agent of a Definitive Warrant,
duly endorsed or accompanied by appropriate instruments of transfer, in form
satisfactory to the Warrant Agent, together with written instructions directing
the Warrant Agent to make, or to direct the Depositary to make, an endorsement
on the Global Warrant to reflect an increase in the number of Warrants
represented by the Global Warrant, then the Warrant Agent shall cancel such
Definitive Warrant and cause, or direct the Depositary to cause, in accordance
with the standing instructions and procedures existing between the Depositary
and the Warrant Agent, the number of Warrants represented by the Global Warrant
to be increased accordingly. If no Global Warrants are then outstanding, the
Company shall issue and the Warrant Agent shall countersign a new Global Warrant
representing the appropriate number of Warrants and Warrant Shares.
3
<PAGE>
(c) TRANSFER AND EXCHANGE OF GLOBAL WARRANTS. The transfer and
exchange of Global Warrants or beneficial interests therein shall be effected
through the Depositary, in accordance with this Warrant Agreement and the
procedures of the Depositary therefor.
(d) EXCHANGE OF A BENEFICIAL INTEREST IN A GLOBAL WARRANT FOR A
DEFINITIVE WARRANT.
(i) Any person having a beneficial interest in a Global Warrant may upon
request exchange such beneficial interest for a Definitive Warrant.
Upon receipt by the Warrant Agent of written instructions or such
other form of instructions as is customary for the Depositary from the
Depositary or its nominee on behalf of any person having a beneficial
interest in a Global Warrant then the Warrant Agent shall cause, in
accordance with the standing instructions and procedures existing
between the Depositary and Warrant Agent, the number of Warrants
represented by the Global Warrant to be reduced and, following such
reduction, the Company shall execute and the Warrant Agent shall
countersign and deliver to the transferee a Definitive Warrant.
(ii) Definitive Warrants issued in exchange for a beneficial interest in a
Global Warrant pursuant to this Section 7(d) shall be registered in
such names as the Depositary, pursuant to instructions from its direct
or indirect participants or otherwise, shall instruct the Warrant
Agent. The Warrant Agent shall deliver such Definitive Warrants to
the persons in whose names such Warrants are so registered.
(e) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL WARRANTS.
Notwithstanding any other provisions of this Warrant Agreement (other than the
provisions set forth in subsection (f) of this Section 7), a Global Warrant may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) COUNTERSIGNING OF DEFINITIVE WARRANTS IN ABSENCE OF DEPOSITARY.
If at any time:
(i) the Depositary for the Global Warrants notifies the Company that the
Depositary is unwilling or unable to continue as Depositary for the
Global Warrants and a successor Depositary for the Global Warrants is
not appointed by the Company within 90 days after delivery of such
notice; or
(ii) the Company, in its sole discretion, notifies the Warrant Agent in
writing that it elects to cause the issuance of Definitive Warrants
under this Warrant Agreement,
then the Company shall execute, and the Warrant Agent, upon written instructions
signed by two officers of the Company, shall countersign and deliver Definitive
Warrants, in an aggregate number equal to the number of Warrants represented by
Global Warrants, in exchange for such Global Warrants.
(g) CANCELLATION OF GLOBAL WARRANT. At such time as all beneficial
interests in Global Warrants have either been exchanged for Definitive Warrants,
redeemed, repurchased or cancelled, all Global Warrants shall be returned to or
retained and cancelled by the Warrant Agent.
(h) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF WARRANTS.
4
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(i) To permit registrations of transfers and exchanges, the Company shall
execute and the Warrant Agent is hereby authorized to countersign, in
accordance with the provisions of Section 6 and this Section 7,
Definitive Warrants and Global Warrants as required pursuant to the
provisions of this Section 7.
(ii) All Definitive Warrants and Global Warrants issued upon any
registration of transfer or exchange of Definitive Warrants or Global
Warrants shall be the valid obligations of the Company, entitled to
the same benefits under this Warrant Agreement, as the Definitive
Warrants or Global Warrants surrendered upon such registration of
transfer or exchange.
(iii) Prior to due presentment for registration of transfer of any
Warrant, the Warrant Agent and the Company may deem and treat the
person in whose name any Warrant is registered as the absolute
owner of such Warrant and neither the Warrant Agent nor the
Company shall be affected by notice to the contrary.
(iv) No service charge shall be made to a holder for any registration,
transfer or exchange.
SECTION 8. TERMS OF WARRANTS; EXERCISE OF WARRANTS. Subject to the
terms of this Agreement, each Warrant holder shall have the right, which may be
exercised until 5:00 p.m., New York, New York time on __________ __, 2002 (the
"EXPIRATION DATE"), to exercise each Warrant and receive from the Company the
number of fully paid and nonassessable Warrant Shares which the holder may at
the time be entitled to receive on exercise of such Warrants and payment of the
Exercise Price then in effect for such Warrant Shares; PROVIDED, HOWEVER, that
no Warrant holder shall be entitled to exercise such holder's Warrants at any
time unless, at the time of exercise, (i) a registration statement under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), relating to the
Warrant Shares has been filed with, and declared effective by, the Securities
and Exchange Commission (the "SEC"), and no stop order suspending the
effectiveness of such registration statement has been issued by the SEC or (ii)
the issuance of the Warrant Shares is permitted pursuant to an exemption from
the registration requirements of the Securities Act. Each Warrant, when
exercised, will entitle the holder thereof to purchase one fully paid and
nonassessable share of Common Stock at the Exercise Price. Any Warrant not
exercised prior to the Expiration Date shall become void and all rights
thereunder and all rights in respect thereof under this Agreement shall cease as
of such time. No adjustments as to dividends will be made upon exercise of the
Warrants.
The Warrants may be exercised by surrendering to the Warrant Agent the
Warrant Certificates evidencing the Warrants to be exercised with the
accompanying form of election to purchase properly completed and executed,
together with payment of the Exercise Price. Payment of the Exercise Price may
be made (A) by tendering Warrants having a fair market value equal to the
Exercise Price, (B) in the form of cash or by certified or official bank check
payable to the order of the Company or (C) by any combination of Warrants and
cash. For purposes of clause (A) above, the fair market value of the Warrants
shall be determined as follows: (A) if the Common Stock is publicly traded and
listed on the Nasdaq National Market or a national securities exchange, the fair
market value shall be equal to the number of shares represented by such Warrant
multiplied by the greater of (1) the difference between (a) the average closing
price as quoted on the Nasdaq National Market of the Common Stock for each of
the ten trading days immediately prior to the exercise date (or, if the Common
Stock is listed on a national securities exchange, the average closing price as
reported on such national securities exchange during such ten trading day
period) and (b) the Exercise Price, and (2) zero; or (B) if the Common Stock is
not publicly traded, or otherwise is not listed on a national securities
exchange, the fair market value of the Warrants
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<PAGE>
shall be equal to the value per share as determined in good faith by the
Board of Directors of the Company (the "BOARD OF DIRECTORS").
In the event that Warrants are surrendered by a Warrant holder in
payment of the Exercise Price, the Warrant Agent shall notify the Company of
such, which notice shall also include the amount of the Exercise Price and the
amount of cash, if any, received by the Warrant Agent as partial payment of the
Exercise Price. Within a reasonable time of receiving such notice, the Company
shall advise the Warrant Agent whether the Warrant Agent has received payment in
full of the Exercise Price.
Subject to the provisions of Section 10 hereof, upon such surrender of
Warrants and payment of the Exercise Price, the Company shall issue and cause to
be delivered with all reasonable dispatch to or upon the written order of the
holder and in such name or names as the Warrant holder may designate, a
certificate or certificates for the number of full Warrant Shares issuable upon
the exercise of such Warrants together with cash, if any, as provided in Section
16 hereof; PROVIDED, HOWEVER, that if any consolidation, merger or lease or sale
of assets is proposed to be effected by the Company as described in subsection
(i) of Section 14 hereof, or a tender offer or an exchange offer for shares of
Common Stock of the Company shall be made, upon such surrender of Warrants and
payment of the Exercise Price as aforesaid, the Successor (as hereinafter
defined), the Company or the Warrant Agent, as applicable, shall, as soon as
possible, but in any event not later than two business days thereafter, issue
and cause to be delivered the full number of Warrant Shares issuable upon the
exercise of such Warrants in the manner described in this sentence together with
cash, if any, as provided in Section 16 hereof. Such certificate or
certificates shall be deemed to have been issued and any person so designated to
be named therein shall be deemed to have become a holder of record of such
Warrant Shares as of the date of the surrender of such Warrants and payment of
the Exercise Price. No fractional shares shall be issued upon exercise of any
Warrants in accordance with Section 16 hereof. The Company will pay to the
holder of the Warrant at the time of exercise an amount in cash equal to the
current market value of any such fractional share of Common Stock less a
corresponding fraction of the Exercise Price.
The Warrants shall be exercisable, at the election of the holders
thereof, either in full or from time to time in part (in whole shares) and, in
the event that a certificate evidencing Warrants is exercised in respect of
fewer than all of the Warrant Shares issuable on such exercise at any time prior
to the Expiration Date, a new certificate evidencing the remaining Warrant or
Warrants will be issued, and the Warrant Agent is hereby irrevocably authorized
to countersign and to deliver the required new Warrant Certificate or
Certificates pursuant to the provisions of this Section and of Section 4 of this
Agreement, and the Company, whenever required by the Warrant Agent, will supply
the Warrant Agent with Warrant Certificates duly executed on behalf of the
Company for such purpose.
All Warrant Certificates surrendered upon exercise of Warrants shall
be cancelled by the Warrant Agent. Such cancelled Warrant Certificates shall be
held by the Warrant Agent until termination of its duties hereunder, at which
time it shall deliver such cancelled Warrants to any successor Warrant Agent, if
applicable, otherwise to the Company. Upon receipt by the Company, such
cancelled Warrant Certificates shall then be disposed of by the Company in
accordance with applicable law. The Warrant Agent shall account promptly to the
Company with respect to Warrants exercised and concurrently pay to the Company
all monies received by the Warrant Agent for the purchase of the Warrant Shares
through the exercise of such Warrants.
All certificates representing Warrant Shares issued in a transaction
exempt from registration under the Securities Act pursuant to Section 4(2)
thereof shall bear the following legend:
6
<PAGE>
THIS SECURITY MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND ANY
APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION FROM
REGISTRATION REQUIREMENTS.
The Warrant Agent shall keep copies of this Agreement and any notices
given or received hereunder available for inspection by the holders during
normal business hours at its office. The Company shall supply the Warrant Agent
from time to time with such numbers of copies of this Agreement as the Warrant
Agent may request.
SECTION 9. REPORTS. Whether or not required by the rules and
regulations of the SEC, so long as any Warrants are outstanding, the Company
shall furnish to the Warrant Agent and mail to the holders of Warrants within 15
days after it files them with the Commission copies of the annual and quarterly
reports and the information, documents, and other reports that the Company is
required to file with the Commission pursuant to Section 13(a) or 15(d) of the
Exchange Act ("SEC Reports"). In the event the Company is not required or shall
cease to be required to file SEC Reports, pursuant to the Securities Exchange
Act of 1934, as amended from time to time (the "Exchange Act"), the Company will
nevertheless continue to file such reports with the Commission (unless the
Commission will not accept such a filing). In the event the Company is not
required or shall cease to be required to file SEC Reports and the Commission
will not accept the filing of SEC Reports, so long as any Warrants are
outstanding, the Company will furnish copies of such SEC Reports to the holders
of Warrants at the time the Company is required to make such information
available to investors who request it in writing.
SECTION 10. PAYMENT OF TAXES. No service charge shall be made to any
holder of a Warrant for any exercise, exchange or registration of transfer of
Warrant Certificates, and the Company will pay all documentary stamp taxes
attributable to the initial issuance of Warrant Shares upon the exercise of
Warrants; PROVIDED, HOWEVER, that the Company shall not be required to pay any
tax or taxes which may be payable in respect of any transfer involved in the
issue of any Warrant Certificates or any certificates for Warrant Shares in a
name other than that of the registered holder of a Warrant Certificate
surrendered upon the exercise of a Warrant, and the Company shall not be
required to issue or deliver such Warrant Certificates unless or until the
person or persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
SECTION 11. MUTILATED OR MISSING WARRANT CERTIFICATES. If any of the
Warrant Certificates shall be mutilated, lost, stolen or destroyed, the Company
may in its discretion issue and the Warrant Agent may countersign, in exchange
and substitution for and upon cancellation of the mutilated Warrant Certificate,
or in lieu of and in substitution for the Warrant Certificate lost, stolen or
destroyed, a new Warrant Certificate of like tenor and representing an
equivalent number of Warrants, but only upon receipt of evidence satisfactory to
the Company and the Warrant Agent of such loss, theft or destruction of such
Warrant Certificate and indemnity and security therefor, if requested, also
satisfactory to them. Applicants for such substitute Warrant Certificates shall
also comply with such other reasonable regulations and pay such other reasonable
charges as the Company or the Warrant Agent may prescribe.
SECTION 12. RESERVATION OF WARRANT SHARES. The Company will at all
times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock or authorized and issued
Common Stock held in its treasury, for the purpose of enabling it to satisfy
7
<PAGE>
any obligation to issue Warrant Shares upon exercise of Warrants, the maximum
number of shares of Common Stock which may then be deliverable upon the
exercise of all outstanding Warrants.
The Company or the transfer agent for the Common Stock (the "COMMON
STOCK TRANSFER AGENT") and every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of any of the rights of
purchase represented by the Warrants will be irrevocably authorized and directed
at all times to reserve such number of authorized shares as shall be required
for such purpose. The Company will keep a copy of this Agreement on file with
the Common Stock Transfer Agent and with every subsequent transfer agent for any
shares of the Company's capital stock issuable upon the exercise of the rights
of purchase represented by the Warrants. The Warrant Agent is hereby
irrevocably authorized to requisition from time to time from such Common Stock
Transfer Agent the stock certificates required to honor outstanding Warrants
upon exercise thereof in accordance with the terms of this Agreement. The
Company will supply such Common Stock Transfer Agent with duly executed
certificates for such purposes and will provide or otherwise make available any
cash which may be payable as provided in Section 16 hereof. The Company will
furnish such Common Stock Transfer Agent a copy of all notices of adjustments
and certificates related thereto, transmitted to each holder pursuant to Section
17 hereof.
The Company covenants that all Warrant Shares which may be issued upon
exercise of Warrants will be, upon payment of the Exercise Price and issuance
thereof, fully paid, nonassessable, free of preemptive rights and free from all
taxes, liens, charges and security interests with respect to the issue thereof.
SECTION 13. OBTAINING STOCK EXCHANGE LISTINGS. The Company shall also
from time to time take all action necessary so that the Warrant Shares, promptly
upon their issuance upon the exercise of Warrants, will be listed on the Nasdaq
National Market or such other principal securities exchanges, interdealer
quotation systems and markets within the United States of America, if any, on
which other shares of Common Stock are then listed or quoted.
SECTION 14. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES
ISSUABLE. The Exercise Price and the number of Warrant Shares issuable upon the
exercise of each Warrant are subject to adjustment from time to time upon the
occurrence of the events enumerated in this Section 14. For purposes of this
Section 14, "COMMON STOCK" means the Common Stock and any other stock of the
Company, however designated, that has the right (subject to any prior rights of
any class or series of preferred stock) to participate in any distribution of
the assets or earnings of the Company without limit as to per share amount.
(a) ADJUSTMENT FOR CHANGE IN CAPITAL STOCK.
If the Company:
(i) pays a dividend or makes a distribution on its Common Stock
in shares of its Common Stock;
(ii) subdivides its outstanding shares of Common Stock into a
greater number of shares;
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<PAGE>
(iii) combines its outstanding shares of Common Stock into a
smaller number of shares;
(iv) makes a distribution on its Common Stock in shares of its
capital stock other than Common Stock; or
(v) issues by reclassification of its Common Stock any shares
of its capital stock,
then the Exercise Price and the number and kind of shares of capital stock of
the Company issuable upon the exercise of a Warrant (as in effect immediately
prior to such action) shall be proportionately adjusted so that the holder of
any Warrant thereafter exercised may receive the aggregate number and kind of
shares of capital stock of the Company which he would have owned immediately
following such action if such Warrant had been exercised immediately prior to
such action.
The adjustment shall become effective immediately after the record
date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
If after an adjustment a holder of a Warrant upon exercise may receive
shares of two or more classes or series of capital stock of the Company, the
Company shall determine the allocation of the adjusted Exercise Price between
the classes or series of capital stock. After such allocation, the exercise
privilege and the Exercise Price of each class or series of capital stock shall
thereafter be subject to adjustment on terms comparable to those applicable to
Common Stock in this Section 14.
Such adjustment shall be made successively whenever any event listed
above shall occur.
(b) ADJUSTMENT FOR RIGHTS ISSUE.
If the Company distributes any rights, options or warrants to all
holders of its Common Stock entitling them for a period expiring within 60 days
after the record date mentioned below to purchase shares of Common Stock or
securities convertible into, or exchangeable or exercisable for, Common Stock at
a price per share (or with an initial conversion, exchange or exercise price)
less than the current market price per share on that record date, the Exercise
Price shall be adjusted in accordance with the following formula:
O + N X P
-----
E1 = E x M
---------
O + N
where:
E1 = the adjusted Exercise Price.
E = the current Exercise Price.
O = the number of shares of Common Stock outstanding on the record date.
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<PAGE>
N = the number of additional shares of Common Stock offered.
P = the offering price per share of the additional shares.
M = the current market price per share of Common Stock on the record date.
The adjustment pursuant to this subsection (b) shall be made
successively whenever any such rights, options or warrants are issued and shall
become effective immediately after the record date for the determination of
stockholders entitled to receive the rights, options or warrants. If at the end
of the period during which such rights, options or warrants are exercisable, not
all rights, options or warrants shall have been exercised, the Exercise Price
shall be immediately readjusted to what it would have been if "N" in the above
formula had been the number of shares actually issued.
(c) ADJUSTMENT FOR OTHER DISTRIBUTIONS.
If the Company distributes to all holders of its Common Stock any of
its assets (including cash), debt securities, preferred stock or any rights or
warrants to purchase debt securities, assets or other securities of the Company,
the Exercise Price shall be adjusted in accordance with the following formula:
E1 = E x M - F
-----
M
where:
E1 = the adjusted Exercise Price.
E = the current Exercise Price.
M = the current market price per share of Common Stock on the record date
mentioned below.
F = the fair market value on the record date of the assets, securities,
rights or warrants applicable to one share of Common Stock. The Board
of Directors shall determine the fair market value.
The adjustment pursuant to this subsection (c) shall be made
successively whenever any such distribution is made and shall become effective
immediately after the record date for the determination of stockholders entitled
to receive the distribution.
Notwithstanding the foregoing, if "F" in the above formula equals or
exceeds "M" in the above formula, then "M" in the above formula shall be equal
to the fair market value per share of the Common Stock on the record date as
determined in good faith by the Board of Directors and described in a Board
resolution which shall be filed with the Warrant Agent.
This subsection (c) does not apply to rights, options or warrants
referred to in subsection (b) of this Section 14.
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<PAGE>
(d) CURRENT MARKET PRICE.
In subsections (b) and (c) of this Section 14 and in Section 16 the
current market price per share of Common Stock on any date is the average of
the Quoted Prices of the Common Stock for 30 consecutive trading days
commencing 45 trading days before the date in question. The "QUOTED PRICE"
of the Common Stock is the last reported sales price of the Common Stock as
reported by the Nasdaq National Market or if the Common Stock is listed on a
securities exchange, the last reported sales price of the Common Stock on
such exchange which shall be for consolidated trading if applicable to such
exchange, or if not so reported or listed, the last reported bid price of the
Common Stock. In the absence of one or more such quotations, the Board of
Directors shall determine the current market price on such basis as it in
good faith considers appropriate.
(e) WHEN DE MINIMIS ADJUSTMENT MAY BE DEFERRED.
No adjustment in the Exercise Price need be made unless the
adjustment would require an increase or decrease of at least 1% in the
Exercise Price. Any adjustments that are not made shall be carried forward
and taken into account in any subsequent adjustment.
All calculations under this Section 14 shall be made to the nearest
1/1000th of a cent or to the nearest 1/1000th of a share, as the case may be.
(f) WHEN NO ADJUSTMENT REQUIRED.
No adjustment need be made for a transaction referred to in
subsections (a), (b) or (c) of this Section 14 if Warrant holders are to
participate in the transaction on a basis and with notice that the Board of
Directors determines to be fair and appropriate in light of the basis and
notice on which holders of Common Stock participate in the transaction.
No adjustment need be made for rights to purchase Common Stock
pursuant to any of the Company's plan for reinvestment of dividends or
interest.
No adjustment need be made for a change in the par value, or from
par value to no par value, or from no par value to par value, of the Common
Stock.
To the extent the Warrants become convertible into cash, no
adjustment need be made thereafter as to the cash. Interest will not accrue
on the cash.
Notwithstanding any other provision of this Section 14, if an
adjustment to the Exercise Price would reduce the Exercise Price below the
then par value per share of the Common Stock, then the Company shall prior to
such adjustment to the Exercise Price reduce the par value per share of the
Common Stock so that the Exercise after such adjustment would exceed the par
value per share of Common Stock. The Company hereby covenants not to take
any action to increase the par value per share of the Common Stock.
(g) NOTICE OF ADJUSTMENT.
Whenever the Exercise Price or the number of Warrants issuable upon
exercise of each Warrant is adjusted, the Company shall provide the notices
required by Section 17 hereof.
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(h) NOTICE OF CERTAIN TRANSACTIONS.
If:
(i) The Company takes any action that would require an
adjustment in the Exercise Price pursuant to subsections (a), (b) or (c) of
this Section 14 and if the Company does not arrange for Warrant holders to
participate pursuant to subsection (f) of this Section 14;
(ii) The Company takes any action that would require a
supplemental Warrant Agreement pursuant to subsection (i) of this Section
14; or
(iii) there is a liquidation or dissolution of the Company,
the Company shall mail to Warrant holders and the Warrant Agent a notice
stating the proposed record date for a dividend or distribution or the
proposed effective date of a subdivision, combination, reclassification,
consolidation, merger, transfer, lease, liquidation or dissolution. The
Company shall mail the notice at least 15 days before such date. Failure to
mail the notice or any defect in it shall not affect the validity of the
transaction.
(i) REORGANIZATION OF THE COMPANY.
(1) If the Company consolidates or merges with or into, or
transfers or leases all or substantially all its assets to, any person,
upon consummation of such transaction the Warrants shall automatically
become exercisable for the kind and amount of securities, cash or other
assets which the holder of a Warrant would have owned immediately after the
consolidation, merger, transfer or lease if the holder had exercised the
Warrant immediately before the record date (or, if none, the effective
date) of the transaction. Concurrently with the consummation of such
transaction, the corporation formed by or surviving any such consolidation
or merger if other than the Company, or the person to which such sale or
conveyance shall have been made (any such person, the "SUCCESSOR"), shall
enter into a supplemental Warrant Agreement so providing and further
providing for adjustments which shall be as nearly equivalent as may be
practical to the adjustments provided for in this Section 14. The
Successor shall mail to Warrant holders a notice describing the
supplemental Warrant Agreement. If the issuer of securities deliverable
upon exercise of Warrants under the supplemental Warrant Agreement is an
affiliate of the formed, surviving, transferee or lessee corporation, that
issuer shall join in the supplemental Warrant Agreement.
(2) If this subsection (i) applies, subsections (a), (b) and (c)
of this Section 14 do not apply.
(j) WARRANT AGENT'S DISCLAIMER.
The Warrant Agent has no duty to determine when an adjustment under
this Section 14 should be made, how it should be made or what it should be.
The Warrant Agent has no duty to determine whether any provisions of a
supplemental Warrant Agreement under subsection (i) of this Section 14 are
correct. The Warrant Agent makes no representation as to the validity or
value of any securities or assets issued upon exercise of Warrants. The
Warrant Agent shall not be responsible for the Company's failure to comply
with this Section 14.
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(k) WHEN ISSUANCE OR PAYMENT MAY BE DEFERRED.
In any case in which this Section 14 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event (i) issuing to the holder of any Warrant exercised after such record
date the Warrant Shares and other capital stock of the Company, if any,
issuable upon such exercise over and above the Warrant Shares and other
capital stock of the Company, if any, issuable upon such exercise on the
basis of the Exercise Price and (ii) paying to such holder any amount in cash
in lieu of a fractional share pursuant to Section 16 hereof; PROVIDED,
HOWEVER, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such
additional Warrant Shares, other capital stock and cash upon the occurrence
of the event requiring such adjustment.
(l) ADJUSTMENT IN NUMBER OF SHARES.
Upon each adjustment of the Exercise Price pursuant to this Section
14, each Warrant outstanding prior to the making of the adjustment in the
Exercise Price shall thereafter evidence the right to receive upon payment of
the adjusted Exercise Price that number of shares of Common Stock (calculated
to the nearest thousandth) obtained from the following formula:
N(1)= N x E
-------
E(1)
where:
N(1) = the adjusted number of Warrant Shares issuable upon exercise of a
Warrant by payment of the adjusted Exercise Price.
N = the number of Warrant Shares previously issuable upon exercise of a
Warrant by payment of the Exercise Price prior to adjustment.
E(1) = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
(m) FORM OF WARRANTS.
Irrespective of any adjustments in the Exercise Price or the number
or kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement.
SECTION 15. NO DILUTION OR IMPAIRMENT. (a) If any event shall
occur as to which the provisions of Section 14 are not strictly applicable
but the failure to make any adjustment would adversely affect the purchase
rights represented by the Warrants in accordance with the essential intent
and principles of such Section 14, then, in each such case, the Company shall
appoint an investment banking firm of recognized national standing, or any
other financial expert that does not (or whose directors, officers,
employees, affiliates or stockholders do not) have a direct or material
indirect financial interest in the
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<PAGE>
Company or any of its subsidiaries, who has not been, and, at the time it is
called upon to give independent financial advice to the Company, is not (and
none of its directors, officers, employees, affiliates or stockholders are) a
promoter, director or officer of the Company or any of its subsidiaries,
which shall give their opinion upon the adjustment, if any, on a basis
consistent with the essential intent and principles established in Section
14, necessary to preserve, without dilution, the purchase rights, represented
by the Warrants. Upon receipt of such opinion, the Company will promptly
mail a copy thereof to the holders of the Warrants and shall make the
adjustments described therein.
(b) The Company will not, by amendment of its certificate of
incorporation or through any consolidation, merger, reorganization, transfer
of assets, dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the
terms of the Warrants, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the holder of the
Warrants against dilution or other impairment. Without limiting the
generality of the foregoing, the Company (1) will take all such action as may
be necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of Common Stock on the exercise of
the Warrants from time to time outstanding and (2) will not take any action
which results in any adjustment of the Exercise Price if the total number of
Warrant Shares issuable after the action upon the exercise of all of the
Warrants would exceed the total number of shares of Common Stock then
authorized by the Company's certificate of incorporation and available for
the purposes of issue upon such exercise. A consolidation, merger,
reorganization or transfer of assets involving the Company covered by Section
14(i) shall not be prohibited by or require any adjustment under this Section
15.
SECTION 16. FRACTIONAL INTERESTS. The Company shall not be
required to issue fractional Warrant Shares on the exercise of Warrants. If
more than one Warrant shall be presented for exercise in full at the same
time by the same holder, the number of full Warrant Shares which shall be
issuable upon the exercise thereof shall be computed on the basis of the
aggregate number of Warrant Shares purchasable on exercise of the Warrants so
presented. If any fraction of a Warrant Share would, except for the
provisions of this Section 16, be issuable on the exercise of any Warrants
(or specified portion thereof), the Company shall notify the Warrant Agent in
writing of the amount to be paid in lieu of the fraction of a Warrant Share
and concurrently pay or provide to the Warrant Agent for payment to the
Warrant holder an amount in cash equal to the product of (i) such fraction of
a Warrant Share and (ii) the difference of the current market price of a
share of Common Stock over the Exercise Price.
SECTION 17. NOTICES TO WARRANT HOLDERS. Upon any adjustment of the
Exercise Price or the number of Warrant Shares issuable upon the exercise of
each Warrant pursuant to Section 14 hereof, the Company shall within 15 days
thereafter (i) cause to be filed with the Warrant Agent a certificate of a
firm of independent public accountants of recognized standing selected by the
Board of Directors (who may be the regular auditors of the Company) setting
forth the Exercise Price after such adjustment and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculations are based and setting forth the number of Warrant Shares (or
portion thereof) issuable after such adjustment in the Exercise Price, upon
exercise of a Warrant and payment of the adjusted Exercise Price, which
certificate shall be conclusive evidence of the correctness of the matters
set forth therein, and (ii) cause to be given to each of the registered
holders of the Warrant Certificates at such registered holder's address
appearing on the Warrant register written notice of such adjustments by
first-class mail, postage prepaid. Where appropriate, such notice may be
given in advance and included as a part of the notice required to be mailed
under the other provisions of this Section 17.
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In case:
(a) the Company shall authorize the issuance to all holders of
shares of Common Stock of rights, options or warrants to subscribe for or
purchase shares of Common Stock or of any other subscription rights or
warrants; or
(b) the Company shall authorize the distribution to all holders of
shares of Common Stock of evidences of its indebtedness or assets (other than
cash dividends or cash distributions payable out of consolidated earnings or
earned surplus or dividends payable in shares of Common Stock or
distributions referred to in subsection (a) of Section 14 hereof); or
(c) of any consolidation or merger to which the Company is a party
and for which approval of any shareholders of the Company is required, or of
the conveyance or transfer of the properties and assets of the Company
substantially as an entirety, or of any reclassification or change of Common
Stock issuable upon exercise of the Warrants (other than a change in par
value, or from par value to no par value, or from no par value to par value,
or as a result of a subdivision or combination), or a tender offer or
exchange offer for shares of Common Stock; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(e) the Company or any subsidiary of the Company shall authorize a
tender offer for all or any portion of the Common Stock;
(f) a Change of Control (as defined in the Certificate of
Designation) occurs; or
(g) the Company proposes to take any action (other than actions of
the character described in Section 14(a)) which would require an adjustment
of the Exercise Price pursuant to Section 14;
then the Company shall cause to be filed with the Warrant Agent and shall
cause to be given to each of the registered holders of the Warrant
Certificates at his address appearing on the Warrant register, at least 15
days prior to the applicable record date hereinafter specified, or promptly
in the case of events for which there is no record date, by first-class mail,
postage prepaid, a written notice stating (i) the date as of which the
holders of record of shares of Common Stock to be entitled to receive any
such rights, options, warrants or distribution are to be determined, or (ii)
the initial expiration date set forth in any tender offer or exchange offer
for shares of Common Stock, or (iii) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up is expected to become effective or consummated, and the date as of
which it is expected that holders of record of shares of Common Stock shall
be entitled to exchange such shares for securities or other property, if any,
deliverable upon such reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up. The failure to give the
notice required by this Section 17 or any defect therein shall not affect the
legality or validity of any distribution, right, option, warrant,
consolidation, merger, conveyance, transfer, lease, dissolution, liquidation
or winding up, or the vote upon any action.
Nothing contained in this Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the holders thereof the
right to vote or to consent or to receive notice as
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shareholders in respect of the meetings of shareholders or the election of
Directors of the Company or any other matter, or any rights whatsoever as
shareholders of the Company.
SECTION 18. MERGER, CONSOLIDATION OR CHANGE OF NAME OF WARRANT
AGENT. Any corporation into which the Warrant Agent may be merged or with
which it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Warrant Agent shall be a party, or any corporation
succeeding to the business of the Warrant Agent, shall be the successor to
the Warrant Agent hereunder without the execution or filing of any paper or
any further act on the part of any of the parties hereto, PROVIDED that such
corporation would be eligible for appointment as a successor warrant agent
under the provisions of Section 21 hereof. In case at the time such
successor to the Warrant Agent shall succeed to the agency created by this
Agreement, and in case at that time any of the Warrant Certificates shall
have been countersigned but not delivered, any such successor to the Warrant
Agent may adopt the countersignature of the original Warrant Agent; and in
case at that time any of the Warrant Certificates shall not have been
countersigned, any successor to the Warrant Agent may countersign such
Warrant Certificates either in the name of the predecessor Warrant Agent or
in the name of the successor to the Warrant Agent; and in all such cases such
Warrant Certificates shall have the full force and effect provided in the
Warrant Certificates and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed
and at such time any of the Warrant Certificates shall have been
countersigned but not delivered, the Warrant Agent whose name has been
changed may adopt the countersignature under its prior name, and in case at
that time any of the Warrant Certificates shall not have been countersigned,
the Warrant Agent may countersign such Warrant Certificates either in its
prior name or in its changed name, and in all such cases such Warrant
Certificates shall have the full force and effect provided in the Warrant
Certificates and in this Agreement.
SECTION 19. WARRANT AGENT. The Warrant Agent undertakes the duties
and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Warrants, by their
acceptance thereof, shall be bound:
(a) The statements contained herein and in the Warrant
Certificates shall be taken as statements of the Company. The Warrant
Agent assumes no responsibility for the correctness of any of the same
except such as describe the Warrant Agent or action taken or to be taken by
it. The Warrant Agent assumes no responsibility with respect to the
distribution of the Warrant Certificates except as herein otherwise
provided.
(b) The Warrant Agent shall not be responsible for any failure
of the Company to comply with any of the covenants contained in this
Agreement or in the Warrant Certificates to be complied with by the
Company.
(c) The Warrant Agent may consult at any time with counsel
satisfactory to it (who may be counsel for the Company) and the Warrant
Agent shall incur no liability or responsibility to the Company or to any
holder of any Warrant Certificate in respect of any action taken, suffered
or omitted by it hereunder in good faith and in accordance with the opinion
or the advice of such counsel.
(d) The Warrant Agent shall incur no liability or responsibility
to the Company or to any holder of any Warrant Certificate for any action
taken in reliance on any Warrant Certificate, certificate of shares of
Common Stock, notice, resolution, waiver, consent, order,
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certificate, or other paper, document or instrument believed by it to be
genuine and to have been signed, sent or presented by the proper party or
parties. The Warrant Agent shall not be bound by any notice or demand, or
any waiver, modification, termination or revision of this Agreement or any
of the terms hereof, unless evidenced by a writing between the Company and
the Warrant Agent.
(e) The Company agrees to pay to the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the
execution of this Agreement and the performance of its responsibilities
hereunder, to reimburse the Warrant Agent for all expenses, taxes
(including withholding taxes) and governmental charges and other charges of
any kind and nature incurred by the Warrant Agent in the execution,
delivery and performance of its responsibilities under this Agreement and
to indemnify the Warrant Agent and save it harmless against any and all
liabilities, including judgments, costs and counsel fees, for anything done
or omitted by the Warrant Agent in the execution, delivery and performance
of its responsibilities under this Agreement except as a result of its
gross negligence or bad faith.
(f) The Warrant Agent shall be under no obligation to institute
any action, suit or legal proceeding or to take any other action likely to
involve expense unless the Company or one or more registered holders of
Warrant Certificates shall furnish the Warrant Agent with reasonable
security and indemnity for any costs and expenses which may be incurred,
but this provision shall not affect the power of the Warrant Agent to take
such action as it may consider proper, whether with or without any such
security or indemnity. All rights of action under this Agreement or under
any of the Warrants may be enforced by the Warrant Agent without the
possession of any of the Warrant Certificates or the production thereof at
any trial or other proceeding relative thereto, and any such action, suit
or proceeding instituted by the Warrant Agent shall be brought in its name
as Warrant Agent and any recovery of judgment shall be for the ratable
benefit of the registered holders of the Warrants, as their respective
rights or interests may appear.
(g) Except as prohibited by law, the Warrant Agent, and any
stockholder, director, officer or employee of the Warrant Agent, may buy,
sell or deal in any of the Warrants or other securities of the Company or
become pecuniarily interested in any transaction in which the Company may
be interested, or contract with or lend money to the Company or otherwise
act as fully and freely as though it were not Warrant Agent under this
Agreement. Nothing herein shall preclude the Warrant Agent from acting in
any other capacity for the Company or for any other legal entity.
(h) The Warrant Agent shall act hereunder solely as agent for
the Company, and its duties shall be determined solely by the provisions
hereof. The Warrant Agent shall not be liable for anything which it may do
or refrain from doing in connection with this Agreement except for its own
gross negligence or bad faith.
(i) The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of any Warrant Certificate to make or cause to
be made any adjustment of the Exercise Price or number of the Warrant
Shares or other securities or property deliverable as provided in this
Agreement, or to determine whether any facts exist which may require any of
such adjustments, or with respect to the nature or extent of any such
adjustments, when made, or with respect to the method employed in making
the same. The Warrant Agent shall not be
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<PAGE>
accountable with respect to the validity or value or the kind or amount of
any Warrant Shares or of any securities or property which may at any time
be issued or delivered upon the exercise of any Warrant or with respect to
whether any such Warrant Shares or other securities will when issued be
validly issued and fully paid and nonassessable, and makes no
representation with respect thereto.
(j) In the absence of bad faith on its part, the Warrant Agent
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Warrant Agent and conforming to the requirements
of this Warrant Agreement. However, the Warrant Agent shall examine the
certificates and opinions to determine whether or not they conform to the
requirements of this Agreement.
(k) The Warrant Agent may rely and shall be fully protected in
relying upon any document believed by it to be genuine and to have been
signed or presented by the proper person.
SECTION 20. REGISTRATION RIGHTS.
(a) PIGGY-BACK REGISTRATION. If at any time the Company shall
determine to file a registration statement under the Securities Act relating to
a proposed sale to the public of Common Stock either for its own account or the
account of a holder or holders (other than on Form S-8 or S-4 or any successor
form), the Company shall:
(1) promptly give to each holder of a Warrant or Warrant Share
written notice thereof (which notice will include a list of the
jurisdictions in which the Company intends to attempt to qualify such
securities under the applicable blue sky or other state securities laws,
the proposed offering price, and the plan of distribution);
(2) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting involved
therein, all the Warrant Shares specified in a written request or requests,
made within 20 days after such written notice from the Company, by any
holder or holders of Warrant Shares;
(3) use its best efforts to cause the managing underwriter or
underwriters of such proposed underwritten offering to permit the Warrant
Shares requested to be included in the registration statement for such
offering to be included on the same terms and conditions as the Common
Stock included therein. Notwithstanding the foregoing, if the managing
underwriter or underwriters of such offering deliver a written opinion to
the holders of such Warrant Shares that marketing considerations require a
limitation on the number of shares of Common Stock offered pursuant to any
registration statement subject to this Section 20(a), then subject to the
advice of said managing underwriter or underwriters as to the size and
composition of the offering, the Company will include Common Stock in such
registration in accordance with the following priorities: (i) first,
Common Stock to be sold for the account of the Company; (ii) second, Common
Stock to be sold for the account of any holder who has exercised demand
registration rights, and (iii) third, pro rata with respect to all holders
of Common Stock of the Company who have requested to be included in the
registration pursuant to this Section or pursuant to other, analogous
piggy-back registration provisions of other agreements, in proportion to
the number of shares each such holder requested to be included in the
offering pursuant to their piggy-back
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rights. The Company will bear all Registration Expenses (as hereinafter
defined) in connection with a piggy-back registration.
Holders of Warrant Shares may exercise piggy-back registration
rights under this Section at any time or from time to time.
(b) DEMAND REGISTRATION RIGHTS.
(i) After the initial underwritten public offering of the Common
Stock, when the Company receives from the holder(s) of 50% or more of the
outstanding Warrants Shares a written request that the Company effect a
registration or qualification of such Warrant Shares (a "Demand Registration"),
the Company will:
(1) promptly give written notice of the proposed registration or
qualification to all other holders of Warrants and Warrant Shares, which
holders of Warrant Shares may request in writing within 10 days after
receipt of such notice that the Warrant Shares held by them be included in
such Demand Registration, and the number of Warrant Shares requested to be
so included shall be deemed a part of such Demand Registration; and
(2) as soon as practicable, use its best efforts to effect such
registration or qualification (including, without limitation, the execution
of an undertaking to file post-effective amendments, appropriate
qualification under the applicable blue sky or other state securities laws
and appropriate compliance with exemptive regulations issued under the
Securities Act and any other governmental requirements or regulations) as
may be so requested and as is reasonably necessary to permit or facilitate
the sale and distribution of all or such portion of such holder's or
holders' Warrant Shares as is specified in such request; PROVIDED that the
Company will not be obligated to effect more than one Demand Registration
pursuant to a request under this Section.
Subject to the foregoing provisions, the Company will file a
registration statement covering the Warrant Shares so requested to be
registered as soon as practicable (which shall be on Form S-3, if available,
unless the Company otherwise elects), but in any event within three months,
after receipt of the request or requests of the initiating holders.
(ii) If the holder or holders of a majority in number of the Warrant
Shares to be registered in a Demand Registration under this Section 20(b) so
elect, the offering of such Warrant Shares pursuant to such Demand
Registration shall be in the form of an underwritten offering. In such
event, if the managing underwriter or underwriters of such offering advise
the Company and the holders in writing that in their opinion the number of
Warrant Shares requested to be included in such offering is sufficiently
large so as to adversely affect the success of the offering, then the Company
will include in such registration the maximum amount of Warrant Shares which
in the opinion of such managing underwriter or underwriters can be sold
without any such adverse effect. Subject to the advice of the managing
underwriter or underwriters concerning the size and composition of the
offering, the Company will include in such registration, first, Warrant
Shares, allocated PRO RATA among such holders (based upon the number of
Warrant Shares requested to be included in such Demand Registration). If all
Warrant Shares requested to be sold are included therein, the Company may
include other shares of Common Stock in such offering as determined by the
Company.
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(iii) If any Demand Registration is to be in the form of an
underwritten offering, the investment banker or bankers and manager or
managers that will administer the offering will be selected by the Company;
PROVIDED that such investment bankers and managers must be reasonably
satisfactory to the holders of a majority in number of the Warrant Shares to
be included in such offering.
(iv) A registration of Warrant Shares will not count as a Demand
Registration (A) until it has become effective and has remained effective for
180 days or until all Warrant Shares included therein have been sold, if
earlier, and (B) if any of the Warrant Shares requested to be included
therein may not be included in such registration under the circumstances
contemplated by Section 20(b)(ii). The Company will pay all Registration
Expenses in connection with any registration initiated as a Demand
Registration, whether or not it becomes effective.
(c) RESTRICTIONS ON PUBLIC SALE BY HOLDERS OF WARRANT SHARES. Each
holder of Warrants or Warrant Shares whether or not its Warrant Shares are
covered by a registration statement filed pursuant to Section 20(a) or (b)
agrees not to effect any public sale or distribution of securities of the
Company of the same class as the securities included in such registration
statement, including a sale pursuant to Rule 144 under the Securities Act
(except as part of such underwritten registration), during the 90-day period
following, the effective date of the registration statement for each
underwritten offering made pursuant to such registration statement unless the
Company and the managing underwriter otherwise agree in writing. The
foregoing provisions shall not apply, however, to any holder of Warrant
Shares if such holder is prevented by an applicable statute or regulation
from entering into any such agreement.
(d) REGISTRATION PROCEDURES.
In connection with the Company's registration obligations pursuant
to Section 20 hereof, the Company will use its best efforts to effect such
registration to permit the sale of such Common Stock in accordance with the
intended method or methods of disposition thereof, and pursuant thereto the
Company will as expeditiously as possible:
(i) before filing a registration statement or prospectus or any
amendments or supplements thereto, furnish to the holders of the Common Stock
covered by such registration statement and the underwriters, if any, copies
of all such documents proposed to be filed, which documents will be made
available for prior review by such holders and underwriters, and the Company
will not file any registration statement or amendment thereto or any
prospectus or any supplement thereto to which the holders of a majority in
number of the Common Stock covered by such registration statement or the
underwriters, if any, shall reasonably object; provided that in the event the
Company seeks confidential treatment with the SEC for any document to be
filed, the Company need not provide such document to any such holder unless
such holder enters into an appropriate confidentiality agreement;
(ii) prepare and file with the SEC such amendments and
post-effective amendments to any registration statement, and such supplements
to the prospectus, as may be reasonably requested by any holder of Common
Stock or any underwriter of Common Stock or as may be required by the rules,
regulations or instructions applicable to the registration form utilized by
the Company or by the Securities Act or otherwise necessary to keep such
registration statement effective for the applicable period and cause the
prospectus as so supplemented to be filed pursuant to Rule 424 under the
Securities Act; and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement during the applicable period in accordance with the intended
methods of disposition by the sellers thereof set forth in such registration
statement or supplement to the prospectus;
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(iii) notify the selling holders of Common Stock and the managing
underwriters, if any, promptly, and (if requested by any such person) confirm
such advice in writing,
(1) when the prospectus or any prospectus supplement or
post-effective amendment has been filed, and, with respect to the
registration statement or any post-effective amendment, when the same has
become effective,
(2) of any request by the SEC for amendments or supplements to
the registration statement or the prospectus or for additional information,
(3) of the issuance by the SEC of any stop order suspending the
effectiveness of the registration statement or the initiation of any
proceedings for that purpose,
(4) if at any time the representations and warranties of the
Company contemplated by paragraph (xiv) below cease to be true and correct,
(5) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Common Stock for sale
in any jurisdiction or the initiation or threatening of any proceeding for
such purpose, and
(6) of the existence of any fact which results in the
registration statement, the prospectus or any document incorporated therein
by reference containing an untrue statement of material fact or omitting to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading;
(iv) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of the registration statement at the
earliest possible moment;
(v) if reasonably requested by the managing underwriter or
underwriters or a holder of Common Stock being sold in connection with an
underwritten offering, promptly incorporate in a prospectus supplement or
post-effective amendment such necessary information as the managing
underwriters or the holders of a majority in number of the Common Stock being
sold reasonably request to have included therein relating to the plan of
distribution with respect to such Common Stock, including, without
limitation, information with respect to the amount of Common Stock being sold
to such underwriters, the purchase price being paid therefor by such
underwriters and with respect to any other terms of the underwritten (or best
efforts underwritten) offering of the Common Stock to be sold in such
offering; and make all required filings of such prospectus supplement or
post-effective amendment as soon as notified of the matters to be
incorporated in such prospectus supplement or post-effective amendment;
(vi) at the request of any selling holder of Common Stock,
furnish to such selling holder of Common Stock and each managing underwriter,
without charge, at least one copy of the registration statement and any
post-effective amendment thereto, including financial statements and
schedules, all documents incorporated therein by reference and all exhibits
(including those incorporated by reference);
(vii) deliver to each selling holder of Common Stock and the
underwriters, if any, without charge, as many copies of the prospectus
(including each preliminary prospectus) and any amendment or supplement
thereto as such persons may reasonably request; the Company consents to the
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use of the prospectus or any amendment or supplement thereto by each of the
selling holders of Common Stock and the underwriters, if any, in connection
with the offering and sale of the Common Stock covered by the prospectus or
any amendment or supplement thereto;
(viii) prior to any public offering of Common Stock, register or
qualify or cooperate with the selling holders of Common Stock, the
underwriters, if any, and their respective counsel in connection with the
registration or qualification of such Common Stock for offer and sale under
the securities or blue sky laws of such jurisdictions as any seller or
underwriter reasonably requests in writing and do any and all other acts or
things reasonably necessary or advisable to enable the disposition in such
jurisdictions of the Common Stock covered by the registration statement;
PROVIDED that the Company will not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified or to take any
action which would subject it to general service of process in any such
jurisdiction where it is not then so subject;
(ix) cooperate with the selling holders of Common Stock and the
managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Common Stock to be sold and not bearing
any restrictive legends; and enable such Common Stock to be in such
denominations and registered in such names as the managing underwriters may
request at least two business days prior to any sale of Common Stock to the
underwriters;
(x) use its best efforts to cause the Common Stock covered by
the applicable registration statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary to enable
the seller or sellers thereof and the underwriters, if any, to consummate the
disposition of such Common Stock;
(xi) if any fact contemplated by paragraph (iii)(6) above shall
exist, prepare a supplement or post-effective amendment to the registration
statement or the related prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchasers of the Common Stock, the prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading;
(xii) cause all Common Stock covered by the registration
statement to be listed on each securities exchange on which similar
securities issued by the Company are then listed, if requested by the holders
of a majority in number of such Common Stock or by the managing underwriters,
if any;
(xiii) not later than the effective date of the applicable
registration statement, provide a CUSIP number for all Common Stock and
provide the applicable trustee(s) or transfer agent(s) with printed
certificates for the Common Stock which are in a form eligible for deposit
with the Depositary;
(xiv) enter into agreements (including underwriting agreements)
and take all other appropriate actions in order to expedite or facilitate the
disposition of such Common Stock and in such connection, whether or not an
underwriting agreement is entered into and whether or not the registration is
an underwritten registration:
(1) make such representations and warranties to the holders of
such Common Stock and the underwriters, if any, in form, scope and
substance as are customarily made by issuers to underwriters in primary
underwritten offerings;
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(2) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions shall be reasonably satisfactory in
form, scope and substance to the managing underwriters, if any) addressed
to each selling holder and the underwriters, if any, covering the matters
customarily covered in opinions requested in underwritten offerings and
such other matters as may be reasonably requested by such holders and
underwriters;
(3) obtain "cold comfort" letters and updates thereof from the
Company's independent certified public accountants addressed to the selling
holders of Common Stock and the underwriters, if any, such letters to be in
customary form and covering matters of the type customarily covered in
"cold comfort" letters to underwriters in connection with primary
underwritten offerings;
(4) if an underwriting agreement is entered into, cause the same
to set forth in full the indemnification provisions and procedures of
Section 20(f) hereof (or such other substantially similar provisions and
procedures as the underwriters shall reasonably request) with respect to
all parties to be indemnified pursuant to said Section; and
(5) deliver such documents and certificates as may be reasonably
requested by the holders of a majority of the Common Stock being sold and
the managing underwriters, if any, to evidence compliance with paragraph
(xi) above and with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company.
The above shall be done at the effectiveness of such registration statement,
each closing under any underwriting or similar agreement as and to the extent
required thereunder and from time to time as may reasonably be requested by
any selling holder in connection with the disposition of Common Stock
pursuant to such registration statement, all in a manner consistent with
customary industry practice;
(xv) make available to a representative of the holders of a
majority in number of the Common Stock, any underwriter participating in any
disposition pursuant to such registration statement, and any attorney or
accountant retained by the sellers or underwriter all financial and other
records, pertinent corporate documents and properties of the Company, and
cause the Company's officers, directors and employees to supply all
information reasonably requested by any such representative, underwriter,
attorney or accountant in connection with the registration, with respect to
each at such time or times as the Company shall reasonably determine;
PROVIDED that any records, information or documents that are designated by
the Company in writing as confidential shall be kept confidential by such
persons unless disclosure of such records, information or documents is
required by court or administrative order;
(xvi) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make generally available to
its security holders earnings statements satisfying the provisions of Section
11(a) of the Securities Act, no later than 30 days after the end of any
12-month period (or 45 or 90 days if the end of such 12-month period
coincides with the end of a fiscal quarter or fiscal year, respectively, of
the Company) (1) commencing at the end of any month in which Common Stock are
sold to underwriters in an underwritten offering, or, if not sold to
underwriters in such an offering, (2) beginning with the first month
commencing after the effective date of the registration statement, which
statements shall cover said 12-month periods; and
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(xvii) cooperate and assist in any filings required to be made
with the NASD and in the performance of any due diligence investigation by
any underwriter (including any "qualified independent underwriter" that is
required to be retained in accordance with the rules and regulations of the
NASD).
The Company may require each seller of Common Stock as to which any
registration is being effected to furnish to the Company such information
regarding such seller and the distribution of such securities as the Company
may from time to time reasonably request in writing.
Each holder of Warrants or Warrant Shares agrees by acquisition of
such Warrants or Warrant Shares that, upon receipt of any notice from the
Company of the happening of any event of the kind described in paragraph (xi)
above, such holder will forthwith discontinue disposition of Common Stock
until such holder's receipt of the copies of the supplemented or amended
prospectus contemplated by paragraph (xi) above, or until it is advised in
writing by the Company that the use of the prospectus may be resumed, and has
received copies of any additional or supplemental filings which are
incorporated by reference in the prospectus, and, if so directed by the
Company, such holder will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies then in such holder's
possession, of the prospectus covering such Common Stock current at the time
of receipt of such notice. In the event the Company shall give any such
notice, the time period mentioned in Section 20(b)(iv) hereof shall be
extended by the number of days during the period from and including the date
of the giving of such notice to and including the date when each seller of
Common Stock covered by such registration statement either receives the
copies of the supplemented or amended prospectus contemplated by paragraph
(xi) above or is advised in writing by the Company that the use of the
prospectus may be resumed.
(e) REGISTRATION EXPENSES
(i) All expenses incident to the Company's performance of or
compliance with this Agreement will be paid by the Company, regardless
whether the registration statement becomes effective, including, without
limitation:
(1) all registration and filing fees (including, without
limitation, with respect to filings required to be made with the NASD);
(2) fees and expenses of compliance with securities or blue sky
laws (including, without limitation, fees and disbursements of one counsel
for the underwriters and selling holders in connection with blue sky
qualifications of the Common Stock and determination of their eligibility
for investment under the laws of such jurisdictions as the managing
underwriters or holders of Common Stock being sold may designate);
(3) printing (including, without limitation, expenses of
printing or engraving certificates for the Common Stock in a form eligible
for deposit with the Depositary and of printing prospectuses), messenger,
telephone and delivery expenses;
(4) fees and disbursements of counsel for the Company, for the
underwriters and for the selling holders of the Common Stock (subject to
the provisions of Section 20(e)(ii) hereof);
24
<PAGE>
(5) fees and disbursements of all independent certified public
accountants of the Company (including, without limitation, the expenses of
any special audit and "cold comfort" letters required by or incident to
such performance);
(6) fees and disbursements of underwriters (excluding discounts,
commissions or fees of underwriters, selling brokers, dealer managers or
similar securities industry professionals relating to the distribution of
the Common Stock or legal expenses of any person other than the Company,
the underwriters and the selling holders);
(7) securities acts liability insurance if the Company so
desires or if the underwriters or selling holders of Common Stock holding a
majority in number of such Common Stock so require;
(8) fees and expenses of other persons retained by the Company;
and
(9) fees and expenses associated with any NASD filing required
to be made in connection with the registration statement, including, if
applicable, the fees and expenses of any "qualified independent
underwriter" (and its counsel) that is required to be retained in
accordance with the rules and regulations of the NASD
(all such expenses being herein called "Registration Expenses").
The Company will, in any event, pay its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit, the fees and expenses incurred in connection with the listing of the
securities to be registered on each securities exchange on which similar
securities issued by the Company are then listed, rating agency fees and the
fees and expenses of any person, including special experts, retained by the
Company.
(ii) In connection with each registration statement required
hereunder, the Company will reimburse the holders of Common Stock being
registered pursuant to such registration statement for the reasonable fees
and disbursements of not more than one counsel (or more than one counsel if a
legal opinion is required from more than one counsel by the terms of any
underwriting agreement relating to the registered offering or if a conflict
exists among such selling holders in the exercise of the reasonable judgment
of counsel for the selling holders and counsel for the Company, provided that
such selling holders shall use their best efforts to minimize any such
conflict) chosen by the holders of a majority of such Common Stock.
(f) INDEMNIFICATION.
(i) INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify
and hold harmless each holder of Warrant Shares, its officers, directors,
employees and agents and each person who controls such holder within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act
(each such person being sometimes hereinafter referred to as an "Indemnified
Holder"), against any losses, claims, damages or liabilities, joint or several,
to which such Indemnified Holder may become subject under the Securities Act,
the Exchange Act or otherwise, insofar as any such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon:
25
<PAGE>
(1) Any untrue statement or alleged untrue statement of any
material fact contained in (A) the registration statement originally filed
with respect to the Warrant Shares or any amendment thereto or any
preliminary prospectus or prospectus or any amendment or supplement thereto
or (B) any application or other document, or any amendment or supplement
thereto, executed by the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order
to qualify the Warrant Shares under the securities or "Blue Sky" laws
thereof or filed with the SEC or any securities association or securities
exchange (each an "Application"); or
(2) The omission or alleged omission to state, in such
registration statement or any amendment thereto, any preliminary prospectus
or prospectus or any amendment or supplement thereto, or any Application, a
material fact required to be stated therein or necessary to make the
statements therein not misleading,
and will reimburse, as incurred, the Indemnified Holders for any legal or
other expenses incurred by the Indemnified Holders in connection with
investigating, defending against or appearing as a third-party witness in
connection with any such loss, claim, damage, liability or action; PROVIDED,
HOWEVER, the Company will not be liable in any such case to the extent that
any such loss, claim, damage, or liability arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement or any amendment thereto, any preliminary
prospectus or prospectus or any amendment or supplement thereto, or any
Application in reliance upon and in conformity with written information
furnished to the Company by the Indemnified Holders specifically for use
therein; and PROVIDED, FURTHER, that the Company will not be liable to the
Indemnified Holders with respect to any such untrue statement or omission
made in any preliminary prospectus that is corrected in the prospectus (or
any amendment or supplement thereto) if the person asserting any such loss,
claim, damage or liability purchased Common Stock from the Indemnified Holder
in reliance upon the preliminary prospectus but was not sent or given a copy
of the prospectus (as amended or supplemented) at or prior to the written
confirmation of the sale of such Common Stock to such person in any case
where such delivery of the prospectus (as so amended or supplemented) is
required by the Securities Act, unless such failure to deliver the prospectus
(as amended or supplemented) was a result of the Company not delivering a
corrected prospectus to the Indemnified Holder. This indemnity agreement
will be in addition to any liability that the Company may otherwise have to
the indemnified parties. The Company shall not be liable under this Section
for any settlement of any claim or action effected without its consent, which
shall not be unreasonably withheld.
(ii) INDEMNIFICATION BY HOLDER OF WARRANT SHARES. Each holder of
Warrant Shares severally agrees to indemnify and hold harmless the Company,
its directors and officers and each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20
of the Exchange Act to the same extent as the foregoing indemnity from the
Company to such holder, but only with respect to information relating to such
holder furnished in writing by such holder expressly for use in any
registration statement or prospectus, or any amendment or supplement thereto,
or any preliminary prospectus. In case any action or proceeding shall be
brought against the Company or its directors or officers or any such
controlling person, in respect of which indemnity may be sought against a
holder of Warrant Shares, such holder shall have the rights and duties given
the Company and the Company or its directors or officers or such controlling
person shall have the rights and duties given to each holder by the preceding
paragraph. In no event shall the liability of any selling holder of Warrant
Shares hereunder be greater in amount than the dollar amount of the proceeds
received by such holder upon the sale of the Warrant Shares giving rise to
such indemnification obligation.
26
<PAGE>
The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in the distribution, to the same extent
as provided above with respect to information so furnished in writing by such
persons specifically for inclusion in any prospectus or registration
statement or any amendment or supplement thereto, or any preliminary
prospectus.
(iii) NOTIFICATION. Promptly after receipt by an indemnified
party under this Section 20(f) of notice of the commencement of any action
for which such indemnified party is entitled to indemnification under this
Section 20(f), such indemnified party will, if a claim in respect thereof is
to be made against the indemnifying party under this Section 20(f), notify
the indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party (i) will not relieve it from any liability
under paragraph (i) or (ii) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by
the indemnifying party of substantial rights and defenses and (ii) will not,
in any event, relieve the indemnifying party from any obligations to any
indemnified party other than the indemnification obligation provided in
paragraphs (i) and (ii) above. In case any such action is brought against
any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party; PROVIDED, HOWEVER,
that if (i) the use of counsel chosen by the indemnifying party to represent
the indemnified party would present such counsel with a conflict of interest,
(ii) the defendants in any such action include both the indemnified party and
the indemnifying party and the indemnified party shall have been advised by
counsel that there may be one or more legal defenses available to it and/or
other indemnified parties that are different from or additional to those
available to the indemnifying party, or (iii) the indemnifying party shall
not have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of the
institution of such action, then, in each such case, the indemnifying party
shall not have the right to direct the defense of such action on behalf of
such indemnified party or parties and such indemnified party or parties shall
have the right to select separate counsel to defend such action on behalf of
such indemnified party or parties. After notice from the indemnifying party
to such indemnified party of its election so to assume the defense thereof
and approval by such indemnified party of counsel appointed to defend such
action, the indemnifying party will not be liable to such indemnified party
under this Section 8 for any legal or other expenses, other than reasonable
costs of investigation, subsequently incurred by such indemnified party in
connection with the defense thereof, unless (i) the indemnified party shall
have employed separate counsel in accordance with the proviso to the
immediately preceding sentence (it being understood, however, that in
connection with such action the indemnifying party shall not be liable for
the expenses of more than one separate counsel (in addition to local counsel)
in any one action or separate but substantially similar actions in the same
jurisdiction arising out of the same general allegations or circumstances,
designated by the majority of the Indemnified Holders in the case of
paragraph (i) of this Section 20(f) or the Company in the case of paragraph
(ii) of this Section 20(f), representing the indemnified parties under such
paragraph (i) or paragraph (ii), as the case may be, who are parties to such
action or actions) or (ii) the indemnifying party has authorized in writing
the employment of counsel for the indemnified party at the expense of the
indemnifying party. After such notice from the indemnifying party to such
indemnified party, the indemnifying party will not be liable for the costs
and expenses of any settlement of such action effected by such indemnified
party without the consent of the indemnifying party, unless such indemnified
party waived in writing its rights under this Section 20(f), in which case
the indemnified party may effect such a settlement without such consent.
27
<PAGE>
(iv) CONTRIBUTION. If the indemnification provided for in this
Section 20(f) is unavailable to an indemnified party under Section 20(f)(i)
or Section 20(f)(ii) hereof (other than by reason of exceptions provided in
those Sections) in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the Company, on the one hand, and of the
Indemnified Holder, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The
relative fault of the Company, on the one hand, and of the Indemnified
Holder, on the other hand, shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Indemnified Holder and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by
a party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the limitations set
forth in the second paragraph of Section 20(f)(i) hereof, any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim.
The Company and each holder of Warrant Shares agree that it would
not be just and equitable if contribution pursuant to this Section were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this
Section, an Indemnified Holder shall not be required to contribute any amount
in excess of the amount by which the total price at which the Securities sold
by such Indemnified Holder or its affiliated Indemnified Holders and
distributed to the public were offered to the public exceeds the amount of
any damages which such Indemnified Holder, or its affiliated Indemnified
Holders, has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(g) SUCCESSORS. The provisions of this Section 20 shall inure to
the benefit of the successors of the holders of Warrants or Warrant Shares if
such successor purchased such Warrants or Warrant Shares in a transaction
exempt from registration under the Securities Act other than pursuant to Rule
144.
SECTION 21. CHANGE OF WARRANT AGENT. If the Warrant Agent shall
become incapable of acting as Warrant Agent or shall resign as provided
below, the Company shall appoint a successor to such Warrant Agent. If the
Company shall fail to make such appointment within a period of 30 days after
it has been notified in writing of such incapacity by the Warrant Agent or by
the registered holders of a majority of Warrants, then the registered holder
of any Warrant Certificate may apply to any court of competent jurisdiction
for the appointment of a successor to the Warrant Agent. Pending appointment
of a successor to such Warrant Agent, either by the Company or by such a
court, the duties of the Warrant Agent after the effective date of its
resignation or after the date it becomes incapable of acting as Warrant Agent
shall be carried out by the Company. After appointment, the successor to the
Warrant Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Warrant Agent without
further act or deed; but the former Warrant Agent shall, conditioned upon
receiving a receipt therefore and a release from the Company of its
obligations hereunder, deliver and transfer to the successor to the Warrant
Agent any property at the time held by it hereunder and execute and deliver
28
<PAGE>
any further assurance, conveyance, act or deed necessary for the purpose.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the appointment
of a successor to the Warrant Agent.
The Warrant Agent may resign at any time and be discharged from the
obligations hereby created by so notifying the Company in writing at least 30
days in advance of the proposed effective date of its resignation. If no
successor Warrant Agent accepts the engagement hereunder by such time, the
Company shall act as Warrant Agent and, at such time, the former Warrant
Agent shall, conditioned upon receiving a receipt therefore and a release
from the Company of its obligations hereunder, deliver and transfer to the
Company any property at the time held by it hereunder and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose.
SECTION 22. NOTICES TO THE COMPANY AND WARRANT AGENT. Any notice or
demand authorized by this Agreement to be given or made by the Warrant Agent
or by the registered holder of any Warrant Certificate to or on the Company
shall be sufficiently given or made when and if deposited in the mail,
registered, postage prepaid, addressed (until another address is filed in
writing by the Company with the Warrant Agent), as follows:
Color Spot Nurseries, Inc.
3478 Buskirk Avenue
Pleasant Hill, California 94523
Telecopier No.: (510) 935-0799
Attention: Chief Executive Officer
with a copy to:
Brownstein Hyatt Farber & Strickland, P.C.
410 Seventeenth Street, 22nd Floor
Denver, Colorado 80202
Telecopier No.: (303) 623-1956
Attention: Steven S. Siegel, Esq.
Any notice pursuant to this Agreement to be given by the Company or
by the registered holder(s) of any Warrant Certificate to the Warrant Agent
shall be sufficiently given when and if deposited in the mail, registered,
postage prepaid, addressed (until another address is filed in writing by the
Warrant Agent with the Company) to the Warrant Agent at the Warrant Agent
Office as follows:
American Stock Transfer and Trust Company
400 Wall Street
New York, New York 10005
Telecopier No.: (___) ___-____
Attention: Michael Karfunkel
Notice may also be given by facsimile transmission (effective when
receipt is acknowledged) or by overnight delivery service (effective the next
business day).
SECTION 23. SUPPLEMENTS AND AMENDMENTS. The Company and the Warrant
Agent may from time to time supplement or amend this Agreement without the
consent of any holders of Warrant
29
<PAGE>
Certificates in order to cure any ambiguity or to correct or supplement any
provision contained herein which may be defective or inconsistent with any
other provision herein, or to make any other provisions in regard to matters
or questions arising hereunder which the Company and the Warrant Agent may
deem necessary or desirable and which, in either case, shall not in any way
materially adversely affect the interests of the holders of Warrant
Certificates. Any amendment or supplement to this Agreement that has a
material adverse effect on the interests of holders of the Warrants or, in
the case of Section 20, Warrant Shares shall require the written consent of
registered holders of a majority of the then outstanding Warrants or, in the
case of Section 20, Warrant Shares (excluding Warrants and Warrant Shares
held by the Company or any of its Affiliates). The consent of each holder of
a Warrant affected shall be required for any amendment pursuant to which the
Exercise Price would be increased or the number of Warrant Shares purchasable
upon exercise of Warrants would be decreased (other than in accordance with
Section 14, 15 or 16 hereof).
SECTION 24. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder, including, without limitation, any Successor under Section 14(i)
of this Agreement.
SECTION 25. TERMINATION. This Agreement shall terminate on the
later of (i) 5:00 p.m., New York, New York time on ______________, 2002 and
(ii) the date on which none of the Warrant Shares are entitled to the
benefits of Section 20.
SECTION 26. GOVERNING LAW; JURISDICTION. This Agreement and each
Warrant Certificate issued hereunder shall be deemed to be a contract made
under the laws of the State of New York and for all purposes shall be
governed by and construed in accordance with the internal laws of said State.
The parties hereto irrevocably consent to the jurisdiction of the courts of
the State of New York and any federal court located in such state in
connection with any action, suit or proceeding arising out of or relating to
this Agreement.
SECTION 27. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any person or corporation other than the
Company, the Warrant Agent and the registered holders of the Warrant
Certificates any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of
the Company, the Warrant Agent and the registered holders of the Warrant
Certificates.
SECTION 28. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
SECTION 29. FURTHER ASSURANCES. From time to time on and after the
date hereof, the Company shall deliver or cause to be delivered to the
Warrant Agent such further documents and instruments and shall do and cause
to be done such further acts as the Warrant Agent shall reasonably request
(it being understood that the Warrant Agent shall have no obligation to make
such request) to carry out more effectively the provisions and purposes of
this Agreement, to evidence compliance herewith or to assure itself that it
is protected hereunder.
30
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
COLOR SPOT NURSERIES, INC.
By:
------------------------------
Michael F. Vukelich
Chief Executive Officer
AMERICAN STOCK TRANSFER AND TRUST COMPANY
By:
------------------------------
Authorized Signatory
<PAGE>
Form of Initial Warrant Certificate EXHIBIT A
[Face]
THE COMMON STOCK, PAR VALUE $0.001, OF THE COMPANY (THE "COMMON STOCK") FOR
WHICH THIS WARRANT IS EXERCISABLE MAY NOT BE OFFERED OR SOLD IN THE UNITED
STATES ABSENT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") AND ANY APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION FROM REGISTRATION REQUIREMENTS. ACCORDINGLY, NO WARRANT HOLDER SHALL
BE ENTITLED TO EXERCISE SUCH HOLDER'S WARRANTS AT ANY TIME UNLESS, AT THE TIME
OF EXERCISE, (I) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT RELATING TO
THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THIS WARRANT (THE
"WARRANT SHARES") HAS BEEN FILED WITH, AND DECLARED EFFECTIVE BY, THE SECURITIES
AND EXCHANGE COMMISSION (THE "SEC"), AND NO STOP ORDER SUSPENDING THE
EFFECTIVENESS OF SUCH REGISTRATION STATEMENT HAS BEEN ISSUED BY THE SEC OR (II)
THE ISSUANCE OF THE WARRANT SHARES IS PERMITTED PURSUANT TO AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
No. ___________ Warrant Certificate _________ Warrants
COLOR SPOT NURSERIES, INC.
This Warrant Certificate certifies that _________, or its registered
assigns, is the registered holder of Warrants expiring ___________ __, 2002 (the
"WARRANTS"), to purchase shares of the common stock, par value $.001 (the
"COMMON STOCK"), of Color Spot Nurseries, Inc., a Delaware corporation (the
"COMPANY"). Each Warrant entitles the registered holder upon exercise at any
time until 5:00 p.m. New York, New York time on _____________ __, 2002, to
receive from the Company one fully paid and nonassessable share of Common Stock
(the "WARRANT SHARES") at the initial exercise price (the "EXERCISE PRICE") of
$.01 per share (A) by tendering Warrants having a fair market value equal to the
Exercise Price, (B) in the form of cash or by certified or official bank check
payable to the order of the Company in the amount of the Exercise Price or (C)
by any combination of Warrants and cash, equal to the exercise price, and upon
surrender of this Warrant Certificate and such payment of the Exercise Price at
the office or agency of the Warrant Agent (as hereinafter defined), but only
subject to the conditions set forth herein and in the Warrant Agreement referred
to below. The Exercise Price and number of Warrant Shares issuable upon
exercise of the Warrants are subject to adjustment upon the occurrence of
certain events set forth in the warrant agreement (the "WARRANT AGREEMENT"),
dated as of _______________ __, 1997, between the Company and American Stock
Transfer and Trust Company, as warrant agent (the "WARRANT AGENT"). All
capitalized terms not defined herein shall have the meanings assigned to such
terms in the Warrant Agreement.
No Warrant may be exercised after 5:00 p.m., New York, New York Time
on _____________ __, 2002 and to the extent not exercised by such time such
Warrants shall become void.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the following pages hereof and such further provisions
shall for all purposes have the same effect as though fully set forth at this
place.
This Warrant Certificate shall not be valid unless countersigned by
the Warrant Agent.
A-1
<PAGE>
This Warrant Certificate shall be governed and construed in accordance
with the internal laws of the State of New York.
A-2
<PAGE>
IN WITNESS WHEREOF, Color Spot Nurseries, Inc. has caused this Warrant
Certificate to be signed by its [Chief Executive Officer, President, Chief
Financial Officer or Secretary].
Dated: ___________ __, 1997
COLOR SPOT NURSERIES, INC.
By:
----------------------------------------
[name]
[title]
Countersigned:
AMERICAN STOCK TRANSFER AND TRUST COMPANY,
as Warrant Agent
By:
-------------------------------
Authorized Signatory
A-3
<PAGE>
Form of Warrant Certificate
[Reverse]
[Unless and until it is exchanged in whole or in part for Warrants in
definitive form, this Warrant may not be transferred except as a whole by the
depositary to a nominee of the depositary or by a nominee of the depositary to
the depositary or another nominee of the depositary or by the depositary or any
such nominee to a successor depositary or a nominee of such successor
depositary. The Depository Trust Company ("DTC") (55 Water Street, New York,
New York) shall act as the depositary until a successor shall be appointed by
the Company and the Warrant Agent. Unless this certificate is presented by an
authorized representative of DTC to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.](1)
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring ____________ __, 2002 entitling the holder
upon exercise to receive shares of Common Stock of the Company, and are issued
or to be issued pursuant to the Warrant Agreement duly executed and delivered by
the Company to the Warrant Agent, which Warrant Agreement is hereby incorporated
by reference in and made a part of this instrument and is hereby referred to for
a description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Warrant Agent, the Company and the holders (the
words "HOLDERS" or "HOLDER" meaning the registered holders or registered holder)
of the Warrants.
Warrants may be exercised at any time until 5:00 p.m., New York, New
York time on ___________ __, 2002. The holder of Warrants evidenced by this
Warrant Certificate may exercise them by surrendering this Warrant Certificate,
with the form of election to purchase set forth hereon properly completed and
executed, together with payment of the Exercise Price (A) by tendering Warrants
having a fair market value equal to the Exercise Price, (B) in the form of cash
or by certified or official bank check payable to the order of the Company in
the amount of the Exercise Price or (C) by any combination of Warrants and cash,
equal to the Exercise Price, at the office of the Warrant Agent. In the event
that upon any exercise of Warrants evidenced hereby the number of Warrants
exercised shall be less than the total number of Warrants evidenced hereby,
there shall be issued to the holder hereof or his assignee a new Warrant
Certificate evidencing the number of Warrants not exercised. No adjustment
shall be made for any dividends on any Common Stock issuable upon exercise of
this Warrant.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be adjusted. No fractions of a share of Common
Stock will be issued upon the exercise of any Warrant, but the Company will pay
the cash value thereof determined as provided in the Warrant Agreement.
- ----------------------
(1). This paragraph is to be included only if the Warrant is in global form.
A-4
<PAGE>
The Warrant Agreement provides that the Company shall be bound by
certain registration obligations with respect to the Common Stock issuable upon
exercise of the Warrants, as set forth in the Warrant Agreement.
Warrant Certificates, when surrendered at the office of the Warrant
Agent by the registered holder thereof in person or by legal representative or
attorney duly authorized in writing, may be exchanged, in the manner and subject
to the limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder(s) thereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
A-5
<PAGE>
Form of Election to Purchase
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive __________ shares of Common
Stock and herewith (check item) tenders payment for such shares to the order of
Color Spot Nurseries, Inc. in the amount of $_______ (the "PURCHASE PRICE") in
accordance with the terms hereof.
/ / Warrants having a fair market value (as defined in the Warrant
Agreement) equal to the Purchase Price.
/ / Cash or certified or official bank check payable to the order of the
Company in an amount equal to the Purchase Price.
/ / (A) Warrants having a fair market value (as defined in the Warrant
Agreement) and (B) cash, in an aggregate amount equal to the Purchase
Price.
The undersigned requests that a certificate for such shares be
registered in the name of _______________________________, whose address is
______________________________________ and that such shares be delivered to
___________________________ whose address is ________________________________.
If said number of shares is less than all of the shares of Common
Stock purchasable hereunder, the undersigned requests that a new Warrant
Certificate representing the remaining balance of such shares be registered in
the name of _____________________, whose address is __________________, and
that such Warrant Certificate be delivered to ________________, whose address is
_____________________.
Date: ____________________
Your Signature:________________________________
(Sign exactly as your name appears on the face of
this Warrant)
Signature Guarantee:
A-6
<PAGE>
SCHEDULE OF EXCHANGES OF GLOBAL WARRANTS (2)
The following exchanges of a part of this Global Warrant for definitive Warrants
have been made:
<TABLE>
<CAPTION>
Amount of decrease Number of Warrants
in Number of Amount of increase in in this Global Warrant Signature of
Warrants in this Number of Warrants following such authorized officer of
Date of Exchange Global Warrant in this Global Warrant decrease or increase Warrant Agent
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
- ----------------------
(2). This is to be included only if the Warrant is in global form.
A-7
<PAGE>
WARRANT AGREEMENT
TABLE OF CONTENTS
Page
SECTION 1. Appointment of Warrant Agent . . . . . . . . . . . . . . . . . . 1
SECTION 2. Issuance of Warrants . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 3. Warrant Certificates . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 4. Execution of Warrant Certificates. . . . . . . . . . . . . . . . 2
SECTION 5. Legending of Warrants. . . . . . . . . . . . . . . . . . . . . . 2
SECTION 6. Registration and Countersignature. . . . . . . . . . . . . . . . 3
SECTION 7. Registration of Transfers and Exchanges. . . . . . . . . . . . . 3
(a) Transfer and Exchange of Definitive Warrants. . . . . . . . . . . . 3
(b) Exchange or Transfer of a Definitive Warrant for a Beneficial
Interest in a Global Warrant. . . . . . . . . . . . . . . . . . . . 3
(c) Transfer and Exchange of Global Warrants. . . . . . . . . . . . . . 4
(d) Exchange of a Beneficial Interest in a Global Warrant for a
Definitive Warrant. . . . . . . . . . . . . . . . . . . . . . . . . 4
(e) Restrictions on Transfer and Exchange of Global Warrants. . . . . . 4
(f) Countersigning of Definitive Warrants in Absence of Depositary. . . 4
(g) Cancellation of Global Warrant. . . . . . . . . . . . . . . . . . . 4
(h) Obligations with Respect to Transfers and Exchanges of Warrants . . 4
SECTION 8. Terms of Warrants; Exercise of Warrants. . . . . . . . . . . . . 5
SECTION 9. Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 10. Payment of Taxes. . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 11. Mutilated or Missing Warrant Certificates . . . . . . . . . . . 7
SECTION 12. Reservation of Warrant Shares . . . . . . . . . . . . . . . . . 7
SECTION 13. Obtaining Stock Exchange Listings . . . . . . . . . . . . . . . 8
SECTION 14. Adjustment of Exercise Price and Number of Warrant Shares
Issuable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(a) Adjustment for Change in Capital Stock. . . . . . . . . . . . . . . 8
i
<PAGE>
(b) Adjustment for Rights Issue . . . . . . . . . . . . . . . . . . . . 9
(c) Adjustment for Other Distributions. . . . . . . . . . . . . . . . . 10
(d) Current Market Price. . . . . . . . . . . . . . . . . . . . . . . . 10
(e) When De Minimis Adjustment May Be Deferred. . . . . . . . . . . . . 11
(f) When No Adjustment Required . . . . . . . . . . . . . . . . . . . . 11
(g) Notice of Adjustment. . . . . . . . . . . . . . . . . . . . . . . . 11
(h) Notice of Certain Transactions. . . . . . . . . . . . . . . . . . . 11
(i) Reorganization of the Company . . . . . . . . . . . . . . . . . . . 12
(j) Warrant Agent's Disclaimer. . . . . . . . . . . . . . . . . . . . . 12
(k) When Issuance or Payment May Be Deferred. . . . . . . . . . . . . . 12
(l) Adjustment in Number of Shares. . . . . . . . . . . . . . . . . . . 13
(m) Form of Warrants. . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 15. No Dilution or Impairment . . . . . . . . . . . . . . . . . . . 13
SECTION 16. Fractional Interests. . . . . . . . . . . . . . . . . . . . . . 14
SECTION 17. Notices to Warrant Holders. . . . . . . . . . . . . . . . . . . 14
SECTION 18. Merger, Consolidation or Change of Name of Warrant Agent. . . . 15
SECTION 19. Warrant Agent . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 20. Registration Rights . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 21. Change of Warrant Agent . . . . . . . . . . . . . . . . . . . . 28
SECTION 22. Notices to the Company and Warrant Agent. . . . . . . . . . . . 28
SECTION 23. Supplements and Amendments. . . . . . . . . . . . . . . . . . . 29
SECTION 24. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 25. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 26. Governing Law; Jurisdiction . . . . . . . . . . . . . . . . . . 30
SECTION 27. Benefits of this Agreement. . . . . . . . . . . . . . . . . . . 30
SECTION 28. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 29. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . 30
EXHIBIT A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
ii
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
COLOR SPOT NURSERIES, INC.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of December __, 1997
CREDIT AGRICOLE INDOSUEZ, as Administrative Agent,
IBJ SCHRODER BANK & TRUST COMPANY, as Syndication Agent
and
BANKBOSTON, N.A., as Documentation Agent
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. Amount and Terms of Credit....................................2
1.01. Commitments...................................................3
1.02. Minimum Amount of Each Borrowing; Maximum Number of
Borrowings....................................................6
1.03. Notice of Borrowings..........................................6
1.04. Disbursement of Funds.........................................7
1.05. Notes.........................................................8
1.06. Conversions..................................................10
1.07. Pro Rata Borrowings..........................................11
1.08. Interest.....................................................11
1.09. Interest Periods.............................................12
1.10. Special Provisions Governing Reserve Adjusted
Eurodollar Loans.............................................13
1.11. Capital Requirements.........................................17
1.12. Total Loan Commitments; Limitations on Outstanding
Loan Amounts.................................................18
1.13. Letters of Credit............................................18
SECTION 2. Commitments..................................................29
2.01. Voluntary Reduction of Commitments...........................29
2.02. Adjustments; Termination of Commitments, etc.................29
2.03. Commitment Fee...............................................30
SECTION 3. Payments.....................................................30
3.01. Scheduled Payments...........................................30
3.02. Voluntary Prepayments........................................31
3.03. Mandatory Prepayments; Reduction of Commitments..............32
3.04. Application of Mandatory Prepayments.........................36
3.05. Reduction of Total Revolving Loan Commitment, etc............37
3.06. Method and Place of Payment..................................37
3.07. Net Payments.................................................38
3.08. Reserve Account; Prepayment Collateral Account...............40
SECTION 4. Conditions Precedent.........................................41
4.01. Conditions Precedent to Initial Loans........................41
4.02. Conditions Precedent to All Loans............................47
4.03. Additional Conditions Precedent to Acquisition Term Loans
and Supplemental Term Loans..................................48
SECTION 5. Representations, Warranties and Agreements...................52
5.01. Status.......................................................52
<PAGE>
5.02. Power and Authority; Business................................53
5.03. No Violation.................................................53
5.04. Litigation...................................................54
5.05. Use of Proceeds..............................................54
5.06. Governmental Approvals, etc..................................54
5.07. Investment Company Act; Public Utility Holding Company
Act .........................................................55
5.08. True and Complete Disclosure.................................55
5.09. Financial Condition; Financial Statements;
Projections..................................................56
5.10. Security Interests...........................................57
5.11. Tax Returns and Payments.....................................58
5.12. ERISA........................................................58
5.13. Capital Stock; Subsidiaries, etc.............................58
5.14. Proprietary Rights...........................................59
5.15. Compliance with Laws, etc....................................59
5.16. Properties...................................................60
5.17. Securities...................................................60
5.18. Collective Bargaining Agreements; Labor Matters..............60
5.19. Indebtedness Outstanding.....................................61
5.20. Environmental Protection.....................................61
5.21. Environmental Investigations.................................63
5.22. Insurance....................................................63
5.23. Governmental Regulation......................................63
5.24. Absence of Events of Default.................................63
5.25. Performance of Agreements....................................63
5.26. Securities Activities........................................64
SECTION 6. Affirmative Covenants........................................64
6.01. Information Covenants........................................64
6.02. Books, Records and Inspections...............................69
6.03. Maintenance of Property; Insurance...........................69
6.04. Payment of Taxes.............................................70
6.05. Corporate Franchises.........................................70
6.06. Compliance with Statutes, etc................................70
6.07. ERISA........................................................71
6.08. Performance of Obligations...................................71
6.09. Fiscal Year; Fiscal Quarters................................71
6.10. Use of Proceeds..............................................72
6.11. Interest Rate Protection.....................................72
6.12. No Further Negative Pledges, etc.............................72
6.13. Bank Meeting.................................................72
6.14. Additional Collateral; Further Assurances....................73
6.15. Environmental Events.........................................74
-ii-
<PAGE>
SECTION 7. Negative Covenants...........................................76
7.01. Capital Expenditures.........................................76
7.02. Total Interest Coverage Ratio................................76
7.03. Fixed Charge Coverage Ratio..................................78
7.04. Leverage Ratio...............................................79
7.05. Consolidated Net Worth.......................................80
7.07. Indebtedness.................................................83
7.08. Investments..................................................84
7.09. Prepayments of Indebtedness..................................85
7.10. Dividends, etc...............................................85
7.11. Disposition of Assets........................................86
7.12. Contingent Obligations.......................................87
7.13. Merger and Consolidations....................................87
7.14. Amendments to Organizational Documents.......................88
7.15. ERISA........................................................88
7.16. No Non-Wholly Owned Subsidiaries.............................88
7.17. Changes in Business..........................................88
7.18. Amendments or Waivers of Certain Documents...................88
7.19. Transactions with Affiliates.................................88
7.20. Capital Structure............................................89
7.21. Sale and Lease-Backs.........................................89
7.22. Clean-down Period............................................89
7.23. Certain Payments.............................................90
SECTION 8. Events of Default............................................90
8.01. Payments.....................................................90
8.02. Representations, etc.........................................90
8.03. Covenants....................................................91
8.04. Default Under Other Agreements...............................91
8.05. Bankruptcy, etc..............................................91
8.06. Security Documents; Guarantees...............................92
8.07. Subordination................................................92
8.08. Judgments....................................................93
8.09. Ownership....................................................93
8.10. Certain Actions Following an Event of Default................93
SECTION 9. Definitions..................................................94
SECTION 10. The Agent...................................................127
10.01. Appointment.................................................127
10.02. Delegation of Duties........................................127
10.03. Exculpatory Provisions......................................128
10.04. Reliance by the Agent.......................................128
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<PAGE>
10.05. Notice of Default..........................................128
10.06. Non-Reliance on Administrative Agent and Other
Banks......................................................129
10.07. Indemnification............................................129
10.08. The Agents in Their Individual Capacities..................130
10.09. Successor Agent............................................130
10.10. Resignation, Transfer by Agent.............................130
10.11. Syndication Agent and Documentation Agent..................131
SECTION 11. Miscellaneous..............................................131
11.01. Payment of Expenses, etc...................................131
11.02. Right of Setoff............................................132
11.03. Notices....................................................132
11.04. Benefit of Agreement.......................................134
11.05. No Waiver; Remedies Cumulative.............................136
11.06. Payments Pro Rata..........................................137
11.07. Calculations; Computations.................................137
11.08. Governing Law; Submission to Jurisdiction;Venue;
Service of Process.........................................138
11.09. Counterparts...............................................138
11.10. Headings Descriptive.......................................138
11.11. Amendment or Waiver........................................139
11.12. Survival...................................................139
11.13. Domicile of Loans..........................................139
11.14. Waiver of Jury Trial.......................................139
11.15. Independence of Covenants..................................139
11.16. Reinstatement..............................................139
-iv-
<PAGE>
SCHEDULES
Schedule A - List of Banks
Schedule 4.01(j) - Financial Statements
Schedule 4.01(l) - Litigation
Schedule 4.01(m) - Restrictions on Borrower's Ability to Grant Liens
Schedule 4.01(p) - Required Consents
Schedule 4.03 - Permitted Business Acquisitions
Schedule 5.10A - Exceptions to Perfected Security Interests
Schedule 5.10B - Prior Liens
Schedule 5.10C - Required Filings and Recordings
Schedule 5.13 - Subsidiaries
Schedule 5.16 - Real Property Owned and Leased
Schedule 5.17 - Capital Stock
Schedule 5.19 - Indebtedness
Schedule 5.20 - Environmental Exceptions
Schedule 5.22 - Insurance
Schedule 11.03 - Bank Addresses
-v-
<PAGE>
EXHIBITS
Exhibit 1.03-1 - Form of Notice of Revolving Loan Borrowing
Exhibit 1.03-2 - Form of Notice of Acquisition Loan Borrowing
Exhibit 1.03-3 - Form of Notice of Supplemental Revolving Loan
Borrowing
Exhibit 1.03-4 - Form of Notice of Supplemental Term Loan Borrowing
Exhibit 1.05(a)(i) - Form of Revolving Note
Exhibit 1.05(a)(ii) - Form of Acquisition Term Note
Exhibit 1.05(a)(iii) - Form of Supplemental Revolving Note
Exhibit 1.05(a)(iv) - Form of Supplemental Term Note
Exhibit 4.01(b) - Form of Officer's Certificate
Exhibit 4.03(b)(iv) - Form of Officer's Certificate -- Permitted Business
Acquisitions
Exhibit 6.01(p) - Form of Borrowing Base Certificate
Exhibit 7.14 - Form of Amended and Restated Certificate of
Incorporation of the Borrower
Exhibit 9A - Form of Security Agreement
Exhibit 9B - Form of Subsidiary Guarantee
Exhibit 9C - Form of Trademark Security Agreement
Exhibit 11.04(c) - Form of Assignment Agreement
-vi-
<PAGE>
COLOR SPOT NURSERIES, INC.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
This Second Amended and Restated Credit Agreement is dated as of December
__, 1997, and amends and restates, in its entirety, the Credit Agreement dated
as of December 31, 1996 (the "ORIGINAL CREDIT AGREEMENT"), as amended and
restated by the Amended and Restated Credit Agreement dated as of February 20,
1997 (the "AMENDED CREDIT AGREEMENT") among Color Spot Nurseries, Inc., a
Delaware corporation (the "BORROWER"), Credit Agricole Indosuez (formerly the
New York branch of Banque Indosuez) ("INDOSUEZ"), IBJ Schroder Bank & Trust
Company ("IBJS"), BankBoston, N.A. ("BKOB") and the other lending institutions
listed in Schedule A (each a "BANK"), Indosuez, as the administrative agent (the
"ADMINISTRATIVE AGENT") for itself and the other Banks, IBJS as the syndication
agent (the "SYNDICATION AGENT") for itself and the other Banks and BKOB as the
documentation agent (the "DOCUMENTATION AGENT") for itself and the other Banks
and, together with the Administrative Agent and the Syndication Agent, the
"AGENTS"). Unless otherwise defined herein, all capitalized terms used herein
are as defined in Section 9.
R E C I T A L S:
WHEREAS, the Original Credit Agreement was entered into on December 31,
1996 (the "EFFECTIVE DATE") in order (a) to finance a recapitalization of CSN,
Inc., a Delaware corporation ("Holdings") pursuant to a Recapitalization and
Stock Purchase Agreement dated as of December 31,1996 (the "RECAPITALIZATION
AGREEMENT") among Holdings, KCSN Acquisition Company, L.P., a Delaware limited
partnership ("KCSN"), Heller Equity Capital Corporation, a Delaware corporation
("HELLER") and certain other shareholders of Holdings, (b) to provide working
capital for the Borrower and its Subsidiaries and (c) with respect to the
Acquisition Term Loans, to provide financing for certain business acquisitions
by the Borrower; and
WHEREAS, in connection with, and immediately following the consummation of,
the Recapitalization (i) substantially all of the assets of Holdings were
assigned to the Borrower, (ii) the Borrower's name was changed from Color Spot
Watsonville, Inc. to its current name of Color Spot Nurseries, Inc. and (iii)
Holdings' name was changed from Color Spot Nurseries, Inc. to its current name
of CSN, Inc.; and
WHEREAS, pursuant to the Original Credit Agreement (i) on the Effective
Date, the Initial Borrowers incurred Term A Loans in the aggregate principal
amount of $18,000,000 (collectively, the "ORIGINAL TERM A LOANS"), Term B Loans
in an aggregate principal amount of $16,250,000 (collectively, the "ORIGINAL
TERM B LOANS") and Revolving Loans in the aggregate principal amount of
$3,000,000; and (ii) thereafter, the Borrower incurred Acquisition
<PAGE>
Term Loans in the aggregate principal amount of $3,200,000 (collectively, the
"ORIGINAL ACQUISITION TERM LOANS"), all of which amounts remain outstanding as
of the date hereof; and
WHEREAS, in connection with the Borrower's acquisition of Lone Star Growers
Co. and certain other companies the Amended Credit Agreement was entered into on
February 20, 1997 and amended on March 20, 1997, July 31, 1997, August 11, 1997
and September 3, 1997, to increase the Banks' commitments under the Original
Credit Agreement and to incur additional Loans from the Banks, and specifically
(i) to replace the Original Term A Loans with the Existing Term A Loans in the
aggregate principal amount of $35,000,000; (ii) to replace the Original Term B
Loans with the Existing Term B Loans in the aggregate principal amount of
$55,000,000; (iii) to replace the Original Total Revolving Loan Commitment with
an increased Existing Revolving Loan Commitment in the amount of $37,500,000;
and
WHEREAS, the Borrower proposes to offer for sale $40,000,000 of its Series
A Preferred Stock and the related warrants to purchase common stock of the
Borrower and $85,000,000 of high yield debt securities (the "PUBLIC FINANCING"),
in connection with which, Holdings will be merged with and into the Borrower and
will cease to have a separate existence; and
WHEREAS, in connection with the foregoing, the Borrower desires to increase
the Banks' commitments under the Amended Credit Agreement and to incur
additional Loans from the Banks, and specifically (i) to repay the Existing Term
A Loans, Existing Term B Loans, Existing Acquisition Term Loans and the
Revolving Loans outstanding on the Closing Date (the "EXISTING REVOLVING LOANS")
with the proceeds of the Public Financing, (ii) to replace the Existing
Revolving Loan Commitment with an increased Revolving Loan Commitment in the
amount of $40,000,000; (iii) to replace the Existing Acquisition Term Loan
Commitment with an Acquisition Term Loan Commitment in the amount of
$75,000,000; and (iv) to replace the Existing Term A Loan Commitment and the
Existing Term B Loan Commitment with a Supplemental Loan Commitment in the
amount of $35,000,000 (which can be drawn down by the Borrower as either
revolving loans or acquisition term loans); and
WHEREAS, the Borrower desires to use the proceeds of the Revolving Loans to
provide working capital for the Borrower and its Subsidiaries; and
WHEREAS, the Banks are willing to make available the additional credit
facilities provided for herein on the terms and conditions set forth herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
SECTION 1. AMOUNT AND TERMS OF CREDIT.
-2-
<PAGE>
1.01 COMMITMENTS. Subject to and upon the terms and conditions set forth
herein, each Bank severally agrees, (i) in the case of any Borrowing under the
Revolving Portion at any time and from time to time on and after the Closing
Date and prior to the Revolving Loan Commitment Termination Date, (ii) in the
case of any Borrowings under the Acquisition Portion from time to time on and
after the Closing Date and prior to the Acquisition Term Loan Commitment
Termination Date in connection with Permitted Business Acquisitions, and (iii)
in the case of any Borrowing under the Supplemental Portion from time to time on
and after the Closing Date and prior to the Supplemental Revolving Loan
Commitment Termination Date in connection with working capital needs of the
Borrower or prior to the Supplemental Term Loan Commitment Termination Date in
connection with Permitted Business Acquisitions, as the case may be, to make
Loans to the Borrower, as specified below, which Loans shall be drawn under the
Loan Facility (including the Revolving Portion, the Acquisition Portion and the
Supplemental Portion thereof), as set forth below:
(a) Loans under the Revolving Portion of the Loan Facility (each a
"REVOLVING LOAN") (i) shall be made to the Borrower at any time and from
time to time on and after the Closing Date and prior to the Revolving Loan
Commitment Termination Date; (ii) except as hereinafter provided, shall
initially be made as Base Rate Loans until 30 days after the Closing Date
or such earlier time as (x) Indosuez shall have completed any intended
syndication of its interest in the Loans (as to which the Administrative
Agent shall promptly notify the Borrower) or (y) is otherwise assented to
by the Administrative Agent, and thereafter, at the Borrower's option and
subject to the terms hereof, may be Base Rate Loans or Reserve Adjusted
Eurodollar Loans; PROVIDED, HOWEVER, that, notwithstanding anything to the
contrary set forth above, in the event that the Administrative Agent shall
not have notified the Borrower that it has completed any intended
syndication as of the date on which the Borrower becomes entitled to elect
Reserve Adjusted Eurodollar Loans, then for a further period of one month
(or such longer period as the Administrative Agent and the Borrower agree),
the Borrower shall only be entitled to elect Reserve Adjusted Eurodollar
Loans which have an Interest Period which terminates on or before the end
of such one-month period; and PROVIDED, FURTHER, that all Revolving Loans
made by each Bank shall, unless otherwise specifically provided herein, (A)
consist entirely of Loans of the same Type; (B) may be repaid and
reborrowed in accordance with the provisions hereof; and (C) shall not
exceed for any Bank at any time outstanding the Revolving Loan Commitment
of such Bank at such time; and PROVIDED, FURTHER, that all Revolving Loans
made by all Banks pursuant to the same Borrowing shall, unless otherwise
specifically provided herein, not be made pursuant to a particular Notice
of Borrowing if (A) the sum of (x) the aggregate principal amount of
Revolving Loans then outstanding, after giving effect to the Revolving Loan
requested by the relevant Notice of Borrowing, (y) the aggregate principal
amount of Supplemental Revolving Loans then outstanding and (z) the then
outstanding Letters of Credit Usage, related to either the Revolving
Portion or the Supplemental Portion of the Loan Facility, would exceed the
Borrowing Base as then calculated pursuant to Section 6.01(m) or (B) the
sum of (x) the aggregate principal amount of Revolving Loans then
-3-
<PAGE>
outstanding, after giving effect to the Revolving Loan requested by the
relevant Notice of Borrowing, and (y) the then outstanding Letters of
Credit Usage related to the Revolving Portion of the Credit Facility, would
exceed the Total Revolving Loan Commitment.
(b) Loans under the Acquisition Portion of the Loan Facility
(together with the Outstanding Acquisition Term Loans, each an "ACQUISITION
TERM LOAN") shall be made to the Borrower from time to time on or after the
Closing Date and prior to the Acquisition Term Loan Commitment Termination
Date (the date of each Borrowing of an Acquisition Term Loan an
"ACQUISITION TERM LOAN CLOSING DATE") to effect Permitted Business
Acquisitions; PROVIDED, HOWEVER, if the Borrower shall have executed a
letter of intent with respect to a Permitted Business Acquisition prior to
the Acquisition Term Loan Commitment Termination Date, the Acquisition Term
Loan Commitment shall remain available to finance such proposed Permitted
Business Acquisition until the earlier of (i) the expiration of such letter
of intent by its terms, and (ii) ninety days after the Acquisition Term
Loan Commitment Termination Date. Acquisition Term Loans (i) except as
hereinafter provided, shall initially be made as Base Rate Loans until 30
days after the Closing Date, with respect to the Acquisition Term Loans
made as of the Closing Date, and until 30 days after the applicable
Acquisition Term Loan Closing Date in all other case, or, in each case,
such earlier time as (x) Indosuez shall have completed any intended
syndication of its interest in the Acquisition Term Loan made on such date
(as to which the Administrative Agent shall promptly notify the Borrower)
or (y) is otherwise assented to by the Administrative Agent, and
thereafter, at the Borrower's option and subject to the terms hereof, may
be Base Rate Loans or Reserve Adjusted Eurodollar Loans; PROVIDED, HOWEVER,
that, notwithstanding anything to the contrary set forth above, in the
event that the Administrative Agent shall not have notified the Borrower
that it has completed any intended syndication as of the date on which the
Borrower becomes entitled to elect Reserve Adjusted Eurodollar Loans, then
for a further period of one month (or such longer period as the
Administrative Agent and the Borrower agree), the Borrower shall only be
entitled to elect Reserve Adjusted Eurodollar Loans which have an Interest
Period which terminates on or before the end of such one-month period; and
PROVIDED, FURTHER, that all Acquisition Term Loans made by each Bank shall,
unless otherwise specifically provided herein, (i) consist entirely of
Loans of the same Type; and (ii) shall not exceed for such Bank at any time
outstanding the Acquisition Term Loan Commitment of such Bank at such time;
and PROVIDED, FURTHER, that all Acquisition Term Loans made by all Banks
pursuant to the same Borrowing, shall unless otherwise specifically
provided herein, not be made pursuant to a particular Notice of Borrowing
if the aggregate principal amount of Acquisition Term Loans then
outstanding, after giving effect to the Acquisition Term Loan requested by
the relevant Notice of Borrowing, would exceed the Total Acquisition Term
Loan Commitment.
(c) Loans under the Supplemental Portion of the Loan Facility may be
made as either term loans (together with the outstanding Supplemental Term
Loans, each a
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"SUPPLEMENTAL TERM LOAN") or as revolving loans (each a "Supplemental
Revolving Loan").
(d) Supplemental Term Loans shall be made to the Borrower from time
to time after the Closing Date and prior to the Supplemental Term Loan
Commitment Termination Date (the date of each Borrowing of a Supplemental
Term Loan, a "SUPPLEMENTAL TERM LOAN CLOSING DATE") to effect Permitted
Business Acquisitions; PROVIDED, HOWEVER, if the Borrower shall have
executed a letter of intent with respect to a Permitted Business
Acquisition prior to the Supplemental Term Loan Commitment Termination
Date, the Supplemental Term Loan Commitment shall remain available to
finance such proposed Permitted Business Acquisition until the earlier of
(i) the expiration of such letter of intent by its terms, and (ii) ninety
days after the Supplemental Term Loan Commitment Termination Date; and
PROVIDED, FURTHER, that all Supplemental Term Loans made by each Bank
pursuant to the same Borrowing shall, unless otherwise specifically
provided herein, (i) consist entirely of Loans of the same Type; and (ii)
together with all Supplemental Revolving Loans made by such Bank, shall not
exceed the Supplemental Loan Commitment of such Bank at such time; and
PROVIDED, FURTHER, that all Supplemental Term Loans made by all Banks
pursuant to the same Borrowing shall, unless otherwise specifically
provided herein, shall not be made pursuant to a particular Notice of
Borrowing if (i) the sum of (x) the aggregate principal amount of
Supplemental Term Loans then outstanding, after giving effect to the
Supplemental Term Loan requested by the relevant Notice of Borrowing, (y)
the aggregate principal amount of Supplemental Revolving Loans then
outstanding, and (z) the then outstanding Letters of Credit Usage related
to the Supplemental Portion of the Credit Facility, would exceed the Total
Supplemental Loan Commitment or (ii) if there is any Unutilized Acquisition
Commitment then outstanding which has not been terminated.
(e) Supplemental Revolving Loans shall be made to the Borrower at any
time and from time to time after the Closing Date and prior to the
Supplemental Revolving Loan Commitment Termination Date; PROVIDED, HOWEVER,
that all Supplemental Revolving Loans made by each Bank pursuant to the
same Borrowing shall, unless otherwise specifically provided herein, (i)
consist entirely of Loans of the same Type; (ii) may be repaid and
reborrowed in accordance with the provisions hereof; (iii) together with
all Supplemental Term Loans made by such Bank, shall not exceed the
Supplemental Loan Commitment of such Bank at such time; and PROVIDED,
FURTHER, that all Supplemental Revolving Loans made by all Banks pursuant
to the same Borrowing shall, unless otherwise specifically provided herein,
not be made pursuant to a particular Notice of Borrowing (i) if the sum of
(x) the aggregate principal amount of Supplemental Revolving Loans then
outstanding, (y) the aggregate principal amount of Supplemental Terms Loans
then outstanding and (z) the then outstanding Letters of Credit Usage
related to the Supplemental Portion of the Credit Facility, after giving
effect to the Supplemental Revolving Loan requested by the relevant Notice
of Borrowing, would exceed the Supplemental Loan Commitment, (ii) if the
sum of (x) the aggregate principal
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amount of Supplemental Revolving Loans then outstanding, after giving
effect to the Supplemental Revolving Loan requested by the relevant Notice
of Borrowing, (y) the aggregate principal amount of Revolving Loans then
outstanding and (z) the then outstanding Letters of Credit Usage related to
either the Revolving Portion or the Supplemental Portion of the Credit
Facility, would exceed the Borrowing Base as then calculated pursuant to
Section 6.01(m) or (iii) if there is any Unutilized Revolver Commitment
then outstanding.
1.02 MINIMUM AMOUNT OF EACH BORROWING; MAXIMUM NUMBER OF BORROWINGS. The
minimum aggregate principal amount of any Loan shall be the Minimum Borrowing
Amount (other than a Borrowing of Revolving Loans or of Supplemental Revolving
Loans consisting entirely of Base Rate Loans such that the total amount of
Revolving Loans or Supplemental Revolving Loans, as the case may be, to be
outstanding after giving effect to such Borrowing shall be equal to the Total
Revolving Loan Commitment or the Total Supplemental Revolving Loan Commitment,
as the case may be), and Borrowings in excess thereof shall be in integral
multiples of $100,000; PROVIDED, HOWEVER, that (i) the Banks' Acquisition Term
Loan Commitments shall terminate, on a pro rata basis, with respect to any
portion of the Total Acquisition Term Loan Commitments not utilized by the
Borrower on or before the Acquisition Term Loan Commitment Termination Date and
(ii) the Banks' Supplemental Term Loan Commitments shall terminate, on a pro
rata basis, with respect to any portion of the Total Acquisition Term Loan
Commitments not used by the Borrower on or before the Supplemental Term Loan
Commitment Termination Date. More than one Borrowing may be incurred on any
date; PROVIDED, HOWEVER, that at no time shall there be more than eight
Borrowings of Reserve Adjusted Eurodollar Loans outstanding.
1.03 NOTICE OF BORROWINGS. Subject to Sections 1.01(a), (b), (d) and (e),
after the Closing Date, whenever the Borrower desires that the Banks make
Reserve Adjusted Eurodollar Loans under any of the Revolving Portion, the
Acquisition Portion or the Supplemental Portion of the Loan Facility it shall
give the Administrative Agent at the Agent's Office at least three Business
Days' prior written notice (or telephonic notice promptly confirmed in writing)
of each such Borrowing of Reserve Adjusted Eurodollar Loans; PROVIDED that
notice given later than 1:00 P.M. (New York time) shall be deemed to have been
given on the following Business Day. Whenever the Borrower desires that the
Banks make Base Rate Loans under any of the Revolving Portion, the Acquisition
Portion or the Supplemental Portion of the Loan Facility it shall give the
Administrative Agent at the Agent's office not later than 1:00 P.M. (New York
time) on the date of such Borrowing written notice (or telephonic notice
promptly confirmed in writing) of each such Borrowing of Base Rate Loans. Each
such notice, which, in the case of either a Loan under the Revolving Portion or
a Supplemental Revolving Loan under the Supplemental Portion of the Loan
Facility, shall be substantially in the form of Exhibit 1.03-1 (each a "NOTICE
OF REVOLVING LOAN BORROWING"), in the case of a Loan under the Acquisition
Portion of the Loan Facility shall be substantially in the form of Exhibit
1.03-2 (each a "NOTICE OF ACQUISITION LOAN BORROWING", in the case of a
Supplemental Revolving Loan under the Supplemental Portion of the Loan Facility
shall be substantially in the form of Exhibit 1.03-03
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(each a "NOTICE OF SUPPLEMENTAL REVOLVING LOAN BORROWING") and, in the case of a
Supplemental Term Loan under the Supplemental Portion of the Loan Facility shall
be substantially in the form of Exhibit 1.03-4 (each a "NOTICE OF SUPPLEMENTAL
TERM LOAN BORROWING") and, together with a Notice of Revolving Loan Borrowing, a
Notice of Acquisition Loan Borrowing and a Notice of Supplemental Revolving Loan
Borrowing, each a "NOTICE OF BORROWING"), shall be irrevocable, shall be deemed
a representation by the Borrower that all conditions precedent to such Borrowing
set forth in Section 4.02 and, in the case of a Loan under the Acquisition
Portion or a Supplemental Term Loan under the Supplemental Portion that all
conditions set forth in Section 4.03, have been satisfied and shall specify (i)
the aggregate principal amount in Dollars of the Loans to be made pursuant to
such Borrowing, (ii) the date of Borrowing (which shall be a Business Day),
(iii) whether the respective Borrowing shall consist of Base Rate Loans or
Reserve Adjusted Eurodollar Loans and, if Reserve Adjusted Eurodollar Loans, the
Interest Period to be initially applicable thereto and (iv) the account to which
funds advanced under such Borrowing shall be deposited. The Administrative
Agent shall as promptly as practicable give each Bank written notice (or
telephonic notice promptly confirmed in writing) of each proposed Borrowing, of
such Bank's proportionate share thereof and of the other matters covered by the
Notice of Borrowing.
1.04 DISBURSEMENT OF FUNDS.
(a) No later than 2:00 P.M. (New York time) on the date specified in
each Notice of Borrowing, each Bank will make available to the
Administrative Agent in New York its pro rata portion of each Borrowing
requested to be made on such date in the manner provided below.
(b) Each Bank shall make available all amounts it is to fund under
any Borrowing on or after the Closing Date in immediately available funds
to the Administrative Agent to the account specified therefor by the
Administrative Agent (or, if no account is so specified at the Agent's
Office), and the Administrative Agent will make such funds available to the
Borrower no later than 4:00 P.M. (New York time) on the date specified in
the Notice of Borrowing by depositing to the account specified therefor by
the Borrower (or, if no account is so specified to its account at the
Agent's Office) the aggregate of the amounts so made available in the type
of funds received. Unless the Administrative Agent shall have been
notified by any Bank prior to the date of any such Borrowing that such Bank
does not intend to make available to the Administrative Agent its portion
of the Borrowing or Borrowings to be made on such date, the Administrative
Agent may assume that such Bank has made such amount available to the
Administrative Agent on such date of Borrowing, and the Administrative
Agent, in reliance upon such assumption, may (in its sole discretion and
without any obligation to do so) make available to the Borrower a
corresponding amount. If such corresponding amount is not in fact made
available to the Administrative Agent by such Bank and the Administrative
Agent has made available such corresponding amount to the Borrower, the
Administrative Agent shall be entitled to recover such corresponding amount
from such
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Bank. If such Bank does not pay such corresponding amount forthwith upon
the Administrative Agent's demand therefor, the Administrative Agent shall
promptly notify the Borrower, and the Borrower shall on such Business Day
pay such corresponding amount to the Administrative Agent. The
Administrative Agent shall also be entitled to recover from such Bank or
the Borrower, as the case may be, interest on such corresponding amount in
respect of each day from the date such corresponding amount was made
available by the Administrative Agent to the Borrower to the date such
corresponding amount is recovered by the Administrative Agent, (i) if paid
by such Bank, at a rate per annum equal to the overnight Federal Funds Rate
or (ii) if paid by the Borrower (and/or any other Credit Party), at a rate
per annum equal to the then applicable rate of interest, calculated in
accordance with Section 1.08, for the respective Loans. The Administrative
Agent shall also be entitled to recover from any Bank an amount equal to
any other losses incurred by the Administrative Agent as a result of the
failure of such Bank to provide any amount as provided in this Agreement.
(c) Nothing herein shall be deemed to relieve any Bank from its
obligation to fulfill its Commitments hereunder or to prejudice any rights
which the Borrower or any other Credit Party may have against any Bank as a
result of any default by such Bank hereunder.
1.05 NOTES.
(a) The Borrower's obligation to pay the principal of and interest on
all the Loans made to it by each Bank are or shall be evidenced, as the
case may be, (i) in the case of Revolving Loans, by a promissory note
(each, a "REVOLVING NOTE"), substantially in the form of
Exhibit 1.05(a)(i), duly executed and delivered by the Borrower, with
blanks appropriately completed in conformity herewith; (ii) in the case of
Acquisition Term Loans, by a promissory note (each, an "ACQUISITION TERM
NOTE"), substantially in the form of Exhibit 1.05(a)(ii), duly executed and
delivered by the Borrower with blanks appropriately completed in conformity
herewith; (iii) in the case of Supplemental Revolving Loans, by a
promissory note (each, a "SUPPLEMENTAL REVOLVING NOTE"), substantially in
the form of Exhibit 1.05(a)(iii), duly executed and delivered by the
Borrower, with blanks appropriately completed in conformity herewith; and
(iv) in the case of Supplemental Term Loans, by a promissory note (each, a
"SUPPLEMENTAL TERM NOTE"), substantially in the form of
Exhibit 1.05(a)(iv), duly executed and delivered by the Borrower, with
blanks appropriately completed in conformity herewith.
(b) The Revolving Notes issued to each Bank shall (i) be executed by
the Borrower, (ii) be payable to the order of such Bank, (iii) be dated the
Closing Date, (iv) be in a stated principal amount equal to the Revolving
Loan Commitment of such Bank, and be payable in the aggregate principal
amount of the outstanding Revolving Loans evidenced thereby, (v) mature,
with respect to each Revolving Loan evidenced thereby, on the Revolving
Loan Maturity Date, (vi) be subject to mandatory prepayment as
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provided in Section 3.03, (vii) bear interest as provided in the
appropriate clause of Section 1.08 in respect of the Base Rate Loans and
the Reserve Adjusted Eurodollar Loans, as the case may be, evidenced
thereby, and (viii) be entitled to the benefits of this Agreement and the
other applicable Credit Documents. On the Closing Date, upon delivery of
the Revolving Notes, the Existing Revolving Notes shall be returned to the
Borrower marked "Canceled".
(c) The Acquisition Term Note of the Borrower issued to each Bank
shall (i) be executed by the Borrower, (ii) be payable to the order of such
Bank, (iii) be dated the Closing Date, (iv) be in a stated principal amount
equal to the Acquisition Term Loan Commitment of such Bank and be payable
in the aggregate principal amount of the outstanding Acquisition Term Loans
evidenced thereby, (v) mature, with respect to each Acquisition Term Loan
evidenced thereby, on the Acquisition Term Loan Maturity Date, (vi) be
subject to mandatory prepayment as provided in Section 3.03, (vii) bear
interest as provided in the appropriate clause of Section 1.08 in respect
of the Base Rate Loans and the Reserve Adjusted Eurodollar Loans, as the
case may be, evidenced thereby, and (viii) be entitled to the benefits of
this Agreement and the other applicable Credit Documents. On the Closing
Date, upon delivery of the Acquisition Term Notes, the Existing Acquisition
Term Notes shall be returned to the Borrower marked "Canceled". At any
time after the Acquisition Term Loan Commitment Termination Date, at the
Borrower's option or at the request of the Administrative Agent, each
Acquisition Term Note shall be exchanged for a note in the form of Exhibit
1.05(a)(iv) and meeting the above requirements, except that such
replacement note should be in a stated principal amount equal to the
aggregate principal amount of the Acquisition Term Loans made by such Bank
(or its assignor).
(d) The Supplemental Revolving Notes issued to each Bank shall (i) be
executed by the Borrower, (ii) be payable to the order of such Bank,
(iii) be dated the Closing Date, (iv) be in a stated principal amount equal
to the Supplemental Loan Commitment of such Banks, and be payable in the
aggregate principal amount of the Supplemental Revolving Loans evidenced
thereby, (v) mature, with respect to each Supplemental Revolving Loan
evidenced thereby, on the Supplemental Revolving Loan Maturity Date, (vi)
be subject to mandatory prepayment as provided in Section 3.03, (vii) bear
interest as provided in the appropriate clause of Section 1.08 in respect
of the Base Rate Loans and the Reserve Adjusted Eurodollar Loans, as the
case may be, evidenced thereby, and (viii) be entitled to the benefits of
this Agreement and other applicable Credit Documents. At any time after
the Supplemental Term Loan Commitment Termination Date, at the Borrower's
option or at the request of the Administrative Agent, each Supplemental
Revolving Note shall be exchanged for a note in the form of Exhibit
1.05(a)(iii) and meeting the above requirements, except that such
replacement note should be in a stated principal amount equal to the
Supplemental Revolving Loan Commitment of such Bank on the Supplemental
Term Loan Commitment Termination Date.
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(e) The Supplemental Term Notes issued to each Bank shall (i) be
executed by the Borrower, (ii) be payable to the order of such Bank,
(iii) be dated the Closing Date, (iv) be in a stated principal amount equal
to the Supplemental Loan Commitment of such Bank, and be payable in the
aggregate principal amount of the Supplemental Term Loans evidenced
thereby, (v) mature, with respect to each Supplemental Term Loan evidenced
thereby, on the Supplemental Term Loan Maturity Date, (vi) be subject to
mandatory prepayment as provided in Section 3.03, (vii) bear interest as
provided in the appropriate clause of Section 1.08 in respect of the Base
Rate Loans and the Reserve Adjusted Eurodollar Loans, as the case may be,
evidenced thereby, and (viii) be entitled to the benefits of this Agreement
and other applicable Credit Documents. At any time after the Supplemental
Term Loan Commitment Termination Date, at the Borrower's option or at the
request of the Administrative Agent, each Supplemental Term Note shall be
exchanged for a note in the form of Exhibit 1.05(a)(iv) and meeting the
above requirements, except that such replacement note should be in a stated
principal amount equal to the aggregate principal amount of the
Supplemental Term Loans made by such Bank (or its assignor).
(f) Each Bank will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will, prior to any
transfer of any of its Notes, endorse on the reverse side thereof the
outstanding principal amount of the Loans evidenced thereby. Failure to
make any such notation shall not affect the obligations of the Borrower or
any other Credit Party hereunder or under any other applicable Credit
Document in respect of such Loans.
1.06 CONVERSIONS; CONTINUATIONS. The Borrower shall have the option to
convert on any Business Day commencing 30 days after the Closing Date or such
earlier date as Indosuez shall have completed any intended syndication of its
interest in the Loans (as to which the Administrative Agent shall promptly
notify the Borrower), all or a portion (which portion shall not be less than the
Minimum Borrowing Amount) of the outstanding Loans owing by the Borrower
pursuant to a single Portion of the Loan Facility into a Borrowing or Borrowings
pursuant to such Portion of another Type of Loan, or to continue all or a
portion of such Borrowings as the same Type of Loan; PROVIDED, HOWEVER, that,
notwithstanding anything to the contrary set forth above, in the event that the
Administrative Agent shall not have notified the Borrower that it has completed
any intended syndication as of the date on which the Borrower becomes entitled
to elect Reserve Adjusted Eurodollar Loans, then for a further period of one
month, the Borrower shall only be entitled to elect Reserve Adjusted Eurodollar
Loans which have an Interest Period which terminates on or before the end of
such one-month period; and PROVIDED, FURTHER, that (a) except as otherwise
provided in Section 1.10(b), Reserve Adjusted Eurodollar Loans may be converted
into Base Rate Loans or continued as Reserve Adjusted Eurodollar Loans only on
the last day of an Interest Period applicable to such Reserve Adjusted
Eurodollar Loans, (b) no such partial conversion of Reserve Adjusted Eurodollar
Loans shall reduce the outstanding principal amount of Reserve Adjusted
Eurodollar Loans under the Loan Facility (or portion thereof) made pursuant to a
single Borrowing to less than the Minimum
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Borrowing Amount, (c) a Loan may only be converted into or continued as Reserve
Adjusted Eurodollar Loans if no Default or Event of Default is in existence on
the date of the conversion or continuation, (d) Borrowings resulting from
conversions or continuations pursuant to this Section 1.06 shall be limited in
amount and number as provided in Section 1.02 and (e) all or a portion of the
outstanding principal amount of Base Rate Loans may not be converted into
Reserve Adjusted Eurodollar Loans if such Base Rate Loans or portion thereof
will mature within one month of such proposed conversion. Each such
conversion/continuation shall be effected by the Borrower by giving the
Administrative Agent at the Agent's Office prior to 1:00 P.M. (New York time) at
least three Business Days' (or on the same Business Day in the case of a
conversion into Base Rate Loans) prior written notice (or telephonic notice
promptly confirmed in writing) (each a "NOTICE OF CONVERSION/CONTINUATION"),
specifying the Loans to be so converted or continued, the Type of Loans into
which such Loans will be converted or continued, the proposed
conversion/continuation date, and, if to be converted into or continued as
Reserve Adjusted Eurodollar Loans, the Interest Period to be initially
applicable thereto. The Administrative Agent shall give each Bank notice as
promptly as practicable of any such proposed conversion or continuation
affecting any of its Loans. Notwithstanding the foregoing or the provisions of
Section 1.09, if a Default or Event of Default is in existence at the time any
Interest Period in respect of any Borrowing of Reserve Adjusted Eurodollar Loans
is to expire, such Loans may not be continued as Reserve Adjusted Eurodollar
Loans but instead shall be automatically converted on the last day of such
Interest Period into Base Rate Loans, unless the Administrative Agent shall
otherwise elect. If no Notice of Conversion/Continuation has been duly
delivered with respect to a Reserve Adjusted Eurodollar Loan on or before the
third Business Day prior to the last day of the Interest Period applicable
thereto, such Reserve Adjusted Eurodollar Loan shall be automatically converted
into a Base Rate Loan.
1.07 PRO RATA BORROWINGS. All Borrowings under this Agreement shall be
loaned by the Banks pro rata on the basis of their Revolving Loan Commitments,
their Acquisition Term Loan Commitments or their Supplemental Loan Commitments,
as the case may be. No Bank shall be responsible for any default by any other
Bank in its obligation to make Loans hereunder, and each Bank shall be obligated
to make the Loans provided to be made by it hereunder, regardless of the failure
of any other Bank to fulfill its commitments hereunder.
1.08 INTEREST.
(a) The unpaid principal amount of each Base Rate Loan shall bear
interest from the date of the Borrowing thereof until maturity (whether by
acceleration or otherwise), or unless sooner converted into a Reserve
Adjusted Eurodollar Loan, at a rate per annum equal to the sum of (i) the
Base Rate in effect from time to time PLUS (ii) the Base Rate Margin.
(b) The unpaid principal amount of each Reserve Adjusted Eurodollar
Loan shall bear interest from the date of the Borrowing thereof until
maturity (whether by acceleration or otherwise), or unless sooner converted
into a Base Rate Loan, at a rate per
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annum equal to the sum of (i) the relevant Eurodollar Rate PLUS (ii) the
Eurodollar Rate Margin.
(c) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan shall bear interest (A) in the case of
Base Rate Loans, at a rate per annum equal to the sum of (1) the Base Rate
in effect from time to time PLUS (2) the Base Rate Margin PLUS (3) 2% per
annum, and (B) in the case of Reserve Adjusted Eurodollar Loans, at a rate
per annum equal to the sum of (1) the relevant Eurodollar Rate PLUS (2) the
Eurodollar Rate Margin PLUS (3) 2% per annum.
(d) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable (i) in respect of each Base Rate Loan, quarterly in arrears on the
last Business Day of each March, June, September and December commencing
March 31, 1998; (ii) in respect of each Reserve Adjusted Eurodollar Loan,
in arrears on the last day of each Interest Period applicable thereto and,
in the case of an Interest Period in excess of three months, on each date
occurring at three-month intervals after the first day of such Interest
Period; and (iii) in respect of each Loan, on any prepayment (on the
amounts prepaid), at maturity (whether by acceleration or otherwise) and,
after such maturity, on demand.
(e) All computations of interest hereunder shall be made in
accordance with Section 11.07.
(f) The Administrative Agent, upon determining the interest rate for
any Borrowing of Reserve Adjusted Eurodollar Loans for any Interest Period,
shall promptly notify the Borrower and the Banks thereof. Such
determination shall, absent manifest error, be final, conclusive and
binding upon all parties hereto.
1.09 INTEREST PERIODS. At the time the Borrower gives a Notice of
Borrowing or Notice of Conversion/Continuation in respect of the making of,
conversion into, or continuation of, a Borrowing of Reserve Adjusted Eurodollar
Loans, it shall have the right to elect, by giving the Administrative Agent
written notice (or telephonic notice promptly confirmed in writing), the
Interest Period applicable to such Borrowing, which Interest Period shall, at
the option of the Borrower, be a period of one, two, three or six months.
Notwithstanding anything to the contrary contained above:
(a) the initial Interest Period for any Borrowing of Reserve Adjusted
Eurodollar Loans shall commence on the date of such Borrowing (including
the date of any conversion from a Borrowing of Base Rate Loans) and each
Interest Period occurring thereafter (including continuations thereof) in
respect of such Borrowing shall commence on the date on which the next
preceding Interest Period expires;
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(b) if any Interest Period relating to a Borrowing of Reserve
Adjusted Eurodollar Loans begins on a date for which there is no
numerically corresponding date in the calendar month in which such Interest
Period ends, such Interest Period shall end on the last Business Day of
such calendar month;
(c) if any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; PROVIDED, HOWEVER, that if any Interest Period in
respect of a Reserve Adjusted Eurodollar Loan would otherwise expire on a
day which is not a Business Day but is a day of the month after which no
further Business Day occurs in such month, such Interest Period shall
expire on the next preceding Business Day;
(d) no Interest Period shall extend beyond, as applicable, the
Revolving Loan Maturity Date (in the case of Revolving Loans), the
Acquisition Term Loan Maturity Date (in the case of Acquisition Term
Loans), Supplemental Revolving Loan Maturity Date (in the case of
Supplemental Revolving Loans) or Supplemental Term Loan Maturity Date (in
the case of Supplemental Term Loans); and
(e) no Interest Period with respect to any Borrowing of Reserve
Adjusted Eurodollar Loans shall extend beyond any date upon which the
Borrower is required to make a scheduled payment of principal with respect
to the Acquisition Term Loans or the Supplemental Term Loans, as the case
may be, if, after giving effect to the selection of such Interest Period,
the aggregate principal amount of Acquisition Term Loans or Supplemental
Term Loans, as the case may be, maintained as Reserve Adjusted Eurodollar
Loans with Interest Periods ending after such date of scheduled payment of
principal would exceed the amount of Acquisition Term Loans or Supplemental
Term Loans, as the case may be, permitted to be outstanding after such
scheduled payment of principal.
1.10 SPECIAL PROVISIONS GOVERNING RESERVE ADJUSTED EURODOLLAR LOANS.
Notwithstanding other provisions of this Agreement, the following provisions
shall govern with respect to Reserve Adjusted Eurodollar Loans as to the matters
covered:
(a) On an Interest Rate Determination Date, the Administrative Agent
shall determine (which determination shall, absent demonstrable error, be
final, conclusive and binding upon all parties hereto) the interest rate
which shall apply to the Reserve Adjusted Eurodollar Loans for which an
interest rate is then being determined for the applicable Interest Period
and shall promptly give notice thereof (in writing or by telephone promptly
confirmed in writing) to the Borrower and to each Bank.
(b) In the event that (i) in the case of clause (A) below, the
Administrative Agent or (ii) in the case of clause (B) or (C) below, any
Bank shall have determined (which
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determination shall, absent demonstrable error, be final, conclusive and
binding upon all parties hereto):
(A) on any date for determining the Eurodollar Rate for any
Interest Period that, by reason of any changes arising on or after the
Closing Date affecting the interbank Eurodollar market, adequate and
fair means do not exist for ascertaining the applicable interest rate
on the basis provided for in the definition of Eurodollar Rate;
(B) at any time that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with
respect to any Reserve Adjusted Eurodollar Loans or its obligation to
make Reserve Adjusted Eurodollar Loans because of any change since the
Closing Date (including any changes proposed or published prior to the
Closing Date, except that any such proposed or published changes as to
which the Administrative Agent had actual knowledge prior to the
Closing Date shall only be included if the Administrative Agent has
notified the Borrower of such proposed or published changes in writing
on or before the Closing Date) in any applicable law, governmental
rule, regulation, guideline, request or order (or in the
interpretation or administration thereof and including the
introduction of any new law or governmental rule, regulation,
guideline, request or order) (such as, for example, but not limited to
a change in official reserve requirements, but, in all events,
excluding reserves required under Regulation D to the extent included
in the computation of the Eurodollar Rate) and excluding any change in
the basis of taxation of payments to any Bank of the principal or
interest on the Notes or any other amounts payable hereunder, such
changes being provided for exclusively by Section 3.07; or
(C) at any time that the making or continuance of any Reserve
Adjusted Eurodollar Loan has become unlawful by compliance by such
Bank in good faith with any applicable law, governmental rule,
regulation, guideline, request or order (or would conflict with any
such applicable law, governmental rule, regulation, guideline, request
or order, whether or not having the force of law and even though the
failure to comply therewith would not be unlawful);
then, and in any such event, the Administrative Agent in the case of clause
(A) above or such Bank in the case of clause (B) or (C) above shall on such
date give notice (by telephone confirmed in writing) in accordance with
Section 1.10(h) to the Borrower of the Loan affected and, in the case of
clause (B) or (C) to the Administrative Agent, of such determination (which
notice the Administrative Agent shall promptly transmit to each of the
other Banks). Thereafter (1) in the case of clause (A) above, Reserve
Adjusted Eurodollar Loans shall no longer be available until such time as
the Administrative Agent notifies the Borrower and the Banks that the
circumstances giving rise to such notice by the Administrative Agent no
longer exist, and any Notice of Borrowing or Notice of
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Conversion/Continuation given by the Borrower with respect to the borrowing
of or conversion into (including continuance of) Reserve Adjusted
Eurodollar Loans which have not yet been incurred shall be deemed rescinded
by the Borrower, (2) in the case of clause (B) above, the Borrower shall
pay to such Bank, within 10 Business Days of written demand therefor, such
additional amounts as shall be required to compensate such Bank for such
increased costs or reductions in amounts receivable hereunder (a written
notice pursuant to Section 1.10(h) as to the additional amounts owed to
such Bank, showing the basis for the calculation thereof, submitted to the
Borrower by such Bank shall, absent demonstrable error, be final,
conclusive and binding upon all parties hereto) and (3) in the case of
clause (C) above, the Borrower shall take one of the actions specified in
Section 1.10(d) as promptly as possible and, in any event, within the time
period required by law.
(c) At any time that any Reserve Adjusted Eurodollar Loan is affected
by the circumstances described in Section 1.10(b)(B), the Borrower may
either (i) if a Notice of Borrowing or Notice of Conversion/Continuation
has been given with respect to the affected Reserve Adjusted Eurodollar
Loan, cancel such Notice of Borrowing or Notice of Conversion/Continuation
by giving the Administrative Agent telephonic notice (promptly confirmed in
writing) thereof on the same date (if the Borrower has been notified by not
later than 3:00 P.M. (New York time) or the next Business Day if otherwise)
that the Borrower was notified by a Bank pursuant to Section 1.10(b)(B) or
(C), or (ii) if the affected Reserve Adjusted Eurodollar Loan is then
outstanding, upon at least one Business Day's notice to the Administrative
Agent, either require the affected Bank to convert each such Reserve
Adjusted Eurodollar Loan into a Base Rate Loan, or prepay such Reserve
Adjusted Eurodollar Loan; PROVIDED, HOWEVER, that if more than one Bank is
affected at any time, then all affected Banks must be treated the same
pursuant to this Section 1.10(c); and PROVIDED, FURTHER, that the Borrower
shall compensate any such affected Banks as set forth in Section 1.10(f).
(d) At any time that any Reserve Adjusted Eurodollar Loan is affected
by the circumstances described in Section 1.10(b)(C), the Borrower shall
either (i) if a Notice of Borrowing or Notice of Conversion/Continuation
has been given with respect to the affected Reserve Adjusted Eurodollar
Loan, be deemed to have canceled said Notice of Borrowing or Notice of
Conversion/Continuation or (ii) if the affected Reserve Adjusted Eurodollar
Loan is then outstanding, either permit the affected Bank to convert each
such Reserve Adjusted Eurodollar Loan into a Base Rate Loan, or prepay such
Reserve Adjusted Eurodollar Loan; PROVIDED, HOWEVER, that if more than one
Bank is affected at any time, then all affected Banks must be treated the
same pursuant to this Section 1.10(d); and PROVIDED, FURTHER, that the
Borrower shall compensate any such affected Banks as set forth in Section
1.10(f).
(e) Each Bank agrees that, as promptly as practicable after it has
actual knowledge of the occurrence of any event or the existence of a
condition that would cause
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it to be an affected Bank under Section 1.10(b)(B) or (C), it will, to the
extent not inconsistent with such Bank's internal policies or any legal or
regulatory restrictions, use reasonable efforts to make, fund or maintain
the affected Reserve Adjusted Eurodollar Loans of such Bank through another
lending office of such Bank if as a result thereof the additional moneys
which would otherwise be required to be paid in respect of such Loans
pursuant to Section 1.10(b)(B) would be materially reduced or the
illegality or other adverse circumstances which would otherwise require
conversion or prepayment of such Loans pursuant to Section 1.10(b)(C) would
cease to exist, and if, as determined by such Bank, in its reasonable
discretion, the making, funding or maintaining of such Loans through such
other lending office would not otherwise adversely affect such Loans or
such Bank. The Borrower hereby agrees to pay all reasonable out-of-pocket
expenses incurred by any Bank in utilizing another lending office of such
Bank pursuant to this Section 1.10(e).
(f) The Borrower shall compensate each Bank, within 10 Business Days
after a written request by such Bank (which request shall be accompanied by
a written notice pursuant to Section 1.10(h) setting forth in reasonable
detail the calculation of such amounts), for all reasonable out-of-pocket
losses, expenses and liabilities (including, without limitation, such
factors as any interest paid by such Bank to lenders of funds borrowed by
it to make or carry its Reserve Adjusted Eurodollar Loans and any loss
sustained by such Bank in connection with re-employment of such funds
(based upon the difference between the amount earned in connection with the
re-employment of such funds and the amount payable by the Borrower if such
funds had been borrowed or remained outstanding)) ("BREAKAGE COSTS") which
such Bank may sustain with respect to the Borrower's Reserve Adjusted
Eurodollar Loans: (i) if for any reason (other than a default or error by
such Bank) a Borrowing of any Reserve Adjusted Eurodollar Loan does not
occur on a date specified therefor in a Notice of Borrowing or a Notice of
Conversion/Continuation or in a telephonic request for borrowing or
conversion or continuation, or a successive Interest Period in respect of
any such Reserve Adjusted Eurodollar Loan does not commence after notice
therefor is given pursuant to Section 1.06; or (ii) subject to Section
3.08, if any payment, prepayment or conversion (as required by Section
3.01, 3.02 or 3.03(a) through (e), inclusive, or 3.03(h) or (i), by
acceleration or otherwise) of any of such Bank's Reserve Adjusted
Eurodollar Loans occurs on a date which is not the last day of the Interest
Period applicable to that Loan; or (iii) if any prepayment of any such
Bank's Reserve Adjusted Eurodollar Loans is not made on any date specified
in a notice of prepayment given by the Borrower; or (iv) as a consequence
of any other failure by the Borrower to repay such Bank's Reserve Adjusted
Eurodollar Loans when required by the terms of this Agreement.
(g) Any Bank claiming any additional amounts payable pursuant to this
Section 1.10 agrees to use reasonable efforts (consistent with such Bank's
internal policies and with legal and regulatory restrictions) to designate
a different lending office if the making of such a designation would avoid
the need for, or reduce the amount of,
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any such additional amounts and would not, in the reasonable judgment of
such Bank, be in any way otherwise disadvantageous to such Bank.
(h) Each Bank shall notify the Borrower of any event occurring after
the date hereof entitling such Bank to compensation under this Sections
1.10(a) through (g) as promptly as practicable, but in any event within 90
days after such Bank obtains actual knowledge thereof; PROVIDED, HOWEVER,
that if any Bank fails to give such notice within 90 days after it obtains
actual knowledge of such an event, such Bank shall, with respect to
compensation payable pursuant to this Section 1.10 in respect of any costs
or other amounts resulting from or relating to such event, only be entitled
to payment under this Section 1.10 for such costs or other amounts from and
after the date 90 days prior to the date that such Bank does give such
notice. Each Bank will furnish to the Borrower a certificate setting forth
in reasonable detail the basis and amount of each request by such Bank for
compensation under this Section 1.10. Determinations by any Bank for
purposes of this Section 1.10, including of the effect of any regulatory
change pursuant to Section 1.10(b)(B) on its costs of maintaining Loans or
its obligation to make Loans, or on amounts receivable by it in respect of
Loans, and of the amounts required to compensate such Bank under this
Section 1.10, shall be made on a reasonable basis.
1.11 CAPITAL REQUIREMENTS.
(a) If any Bank shall have determined in good faith that the adoption
or effectiveness after the Closing Date of any applicable law, governmental
rule, regulation, guideline, request or order regarding capital adequacy,
or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration
thereof, or compliance by such Bank or such Bank's parent with any request
or directive regarding capital adequacy (whether or not having the force of
law) of any such authority, central bank or comparable agency has or would
have the effect of reducing the rate of return on the capital or assets of
such Bank or such Bank's parent as a consequence of such Bank's obligations
hereunder to a level below that which such Bank or such Bank's parent could
have achieved but for such adoption, effectiveness or change or as a
consequence of an increase in the amount of capital required to be
maintained by such Bank as a consequence of such Bank's obligations
hereunder (including in each case, without limitation, with respect to any
of such Bank's Commitments or any Loan), then from time to time, within 15
Business Days after demand by such Bank (with a copy to the Administrative
Agent), the Borrower shall pay to such Bank such additional amount or
amounts as will compensate such Bank or such Bank's parent, as the case may
be, for such reduction.
(b) Each Bank, upon determining in good faith that any additional
amounts will be payable pursuant to Section 1.11(a), will give prompt
written notice thereof to the Borrower, but in any event within 90 days
after such Bank obtains actual knowledge of
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an event described in Section 1.11(a) pursuant to which additional amounts
will be payable thereunder; PROVIDED, HOWEVER, that if any Bank fails to
give such notice within 90 days after it obtains actual knowledge of such
an event, such Bank shall, with respect to compensation payable pursuant to
this Section 1.11 in respect of any costs or other amounts resulting from
or relating to such event, be entitled to payment under this Section 1.11
only for such costs or other amounts from and after the date 90 days prior
to the date that such Bank does give such notice. Each Bank will furnish
to the Borrower a certificate setting forth in reasonable detail the basis
and amount of each request by such Bank for compensation under this Section
1.11. Determinations by any Bank for purposes of this Section 1.11,
including of the effect of any regulatory change pursuant to Section
1.11(a) on its rate of return or in the amount of capital required to be
maintained by it, and of the amounts required to compensate such Bank under
this Section 1.11, shall be made on a reasonable basis.
1.12 TOTAL LOAN COMMITMENTS; LIMITATIONS ON OUTSTANDING LOAN AMOUNTS. As
of the Closing Date, the amount of (a) the Total Commitment is $150,000,000,
(b) the Total Revolving Loan Commitment is $40,000,000, (c) the Total
Acquisition Term Loan Commitment is $75,000,000, and (d) the Total Supplemental
Loan Commitment is $35,000,000. Anything contained in this Agreement to the
contrary notwithstanding, (i) in no event shall the sum of the aggregate
principal amount of all outstanding Revolving Loans, Acquisition Term Loans,
Supplemental Revolving Loans and Supplemental Term Loans of any Bank at any time
exceed such Bank's portion of the Total Commitment, (ii) in no event shall the
sum of the aggregate principal amount of all Revolving Loans, Acquisition Term
Loans, Supplemental Revolving Loans and Supplemental Term Loans from all Banks
at any time exceed the Total Commitment, (iii) in no event shall the Total
Revolver Utilization exceed the Total Revolving Loan Commitment, (iv) in no
event shall the Total Acquisition Utilization exceed the Total Acquisition Term
Loan Commitment, and (v) in no event shall the Total Supplemental Utilization
exceed the Total Supplemental Loan Commitment.
1.13 LETTERS OF CREDIT
(a) LETTERS OF CREDIT; PARTICIPATION; ADDITIONAL COLLATERAL UPON
DEFAULT.
(i) Subject to the terms and conditions of this Agreement, so
long as no Default or Event of Default exists hereunder, and in
reliance upon the representations and warranties of the Borrower set
forth herein and in the other Credit Documents, in addition to
requesting that the Banks make Revolving Loans or Supplemental
Revolving Loans pursuant to Section 1.03, the Borrower may request,
from time to time, in accordance with the provisions of this Section
1.13, that one or more Issuing Banks issue Letters of Credit for the
account of the Borrower; PROVIDED, THAT:
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(w) the Borrower shall specify in such request whether such
Letter of Credit is to be issued under the Revolving Portion
or the Supplemental Portion of the Loan Facility; and
(x) the Borrower shall not request that any Bank issue any
Letter of Credit and a Bank shall not be required to issue
any Letter of Credit, if after giving effect to such
issuance the sum of (a) the Letters of Credit Usage on the
date of such issuance, after giving effect to the issuance
of all Letters of Credit subject to outstanding requests for
issuance of a Letter of Credit, plus (b) the aggregate
principal amount of Revolving Loans or Supplemental
Revolving Loans, as the case may be, then outstanding, after
giving effect to the making of all Revolving Loans or
Supplemental Revolving Loans, as the case may be, then
requested by all outstanding but unfunded Notices of
Borrowing, would exceed the lesser of (x) the Borrowing Base
as shown in the Borrowing Base Certificate that was last
required to be delivered pursuant to Section 6.01 or (y) the
Total Revolving Loan Commitment or the Total Supplemental
Revolving Loan Commitment, as the case may be; and
(y) In no event shall any Issuing Bank issue any Letter of
Credit having an expiration date which is (x) later than
thirty (30) Business Days prior to the Revolving Loan
Maturity Date or Supplemental Revolving Loan Maturity Date,
as the case may be, after giving effect to any possible
renewal of such Letter of Credit, or (y) more than one year
after its date of issuance; PROVIDED that, subject to the
foregoing clause (ii)(x), this clause (ii)(y) shall not
prevent any Issuing Bank from issuing a Letter of Credit
which is subject to renewal for periods not exceeding one
year per renewal; and
(z) In no event shall any Issuing Bank issue any Letter of
Credit if, after giving effect to such issuance and the
issuance of all other requested Letters of Credit, the then
outstanding Letters of Credit Usage in respect of all
Letters of Credit would exceed $5,000,000.
(ii) Upon the issuance of any Letter of Credit, a participation
therein, in an amount equal to each Bank's PRO RATA share (determined
on the basis of such Bank's Revolving Loan Commitment or Supplemental
Revolving Loan Commitment, as the case may be) (such participation of
each Bank in each Letter of Credit being hereinafter referred to as
its "Letter of Credit Participation"), shall
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automatically be deemed granted by the Issuing Bank to each Bank on
the date of such issuance and the Banks shall automatically be
obligated, as set forth in Section 1.13(e), to reimburse the Issuing
Bank to the extent of such pro rata share for all obligations incurred
by the Issuing Bank to third parties in respect of such Letter of
Credit not reimbursed by the Borrower. The Issuing Bank will send to
each Bank (and the Administrative Agent if the Issuing Bank is not the
Administrative Agent) a confirmation regarding the participation in
Letters of Credit outstanding during such month.
(iii) Notwithstanding the foregoing, upon the occurrence and
during the continuation of any Event of Default hereunder, the
Administrative Agent or the Required Banks may, by notice to the
Borrower, require that any outstanding Letters of Credit be cash
collateralized, and upon receipt of such notice, the Borrower shall,
within five Business Days of such notice, deliver to the
Administrative Agent an amount equal to the sum of (x) the maximum
aggregate amount that is or at any time thereafter may become
available to be drawn under any such outstanding Letters of Credit and
(y) the aggregate amount of all drawings under such Letters of Credit
which have been honored by Issuing Banks with respect thereto and not
theretofore reimbursed by the Borrower; PROVIDED, that any such cash
collateralized Letters of Credit shall be excluded from the
calculation of Letters of Credit Usage for purposes of determining the
availability of Letters of Credit under Section 1.13(a)(x) and for
purposes of Section 3.03(a) or (b).
(iv) The Administrative Agent is hereby authorized and directed
in the event of such Event of Default and requirement of cash
collateral to create a segregated cash collateral account bearing
interest payable to the Borrower at a rate per annum equal to the
Federal Funds Rate (a "LETTER OF CREDIT CASH COLLATERAL ACCOUNT"), and
to deposit in such account any amounts received from the Borrower
pursuant to the foregoing. Funds on deposit from time to time in any
Letter of Credit Cash Collateral Account (the "LETTER OF CREDIT CASH
COLLATERAL") shall be held by the Administrative Agent for the benefit
of the Banks hereunder, including Issuing Banks, in respect of their
participation in Letters of Credit and as Banks hereunder and as
security for the payment and performance of the Obligations in
accordance with the Security Documents, including the Borrower's
obligations under Section 1.13(d), shall be subject to the sole
dominion and control of the Administrative Agent and the Borrower
shall have no right of withdrawal from the Letter of Credit Cash
Collateral Account. Notwithstanding any provision in this Agreement
or in any Security Document, after payment of any costs of collection
and reasonable expenses of the Administrative Agent in connection with
the establishment of the Letter of Credit Cash Collateral Account,
Letter of Credit Cash Collateral shall be applied by the
Administrative Agent as follows: FIRST, to reimburse any Banks
(including any
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Issuing Banks) for any drawings (or participation in such) on such
Letters of Credit which have not been repaid by the Borrower, such
reimbursement to be made from time to time until no Letters of Credit
are outstanding; SECOND, only after no Letters of Credit remain
outstanding and any unreimbursed drawings (or participations in such)
of any Bank (including any Issuing Bank) have been fully repaid and
all fees payable under this Section 1.13 have been paid, to the
payment, in accordance with the Security Documents, of any of the
remaining Obligations then due and payable; and FINALLY, after its
application in accordance with the foregoing, returned to the
Borrower.
(b) REQUEST FOR ISSUANCE Whenever the Borrower desires the issuance
of a Letter of Credit it shall deliver to the Administrative Agent, at the
Agent's Office, an application requesting issuance of a Letter of Credit no
later than 1:00 P.M. (New York time) at least three Business Days, or such
shorter period as may be agreed to by any Issuing Bank in any particular
instance, in advance of the proposed date of issuance. The request for
issuance with respect to any Letter of Credit shall specify (i) the
proposed date of issuance (which shall be a business day under the laws of
the jurisdiction of the Issuing Bank) of such Letter of Credit, (ii) the
face amount of such Letter of Credit, (iii) the expiration date of such
Letter of Credit and (iv) the name and address of the beneficiary of such
Letter of Credit. As soon as practicable after delivery of such request
for issuance of a Letter of Credit, the Issuing Bank for such Letter of
Credit shall be determined as provided in Section 1.13(c). Prior to the
date of issuance, the Borrower shall specify a precise description of the
documents and the verbatim text of any certificate to be presented by the
beneficiary of such Letter of Credit which, if presented by such
beneficiary prior to the expiration date of the Letter of Credit, would
require the Issuing Bank to make payment under the Letter of Credit;
PROVIDED that the Issuing Bank, in its sole judgment, may require such
changes in any such documents and certificates as it reasonably believes to
be necessary to comply with laws, customs or practices or to achieve
clarity; and PROVIDED, FURTHER, that no Letter of Credit shall require
payment against a conforming draft to be made thereunder earlier than 1:00
P.M. in the time zone of the Issuing Bank on the Business Day (which shall
be a business day under the laws of the jurisdiction of the Issuing Bank)
next succeeding the Business Day (which shall be a business day under the
laws of the jurisdiction of the Issuing Bank) that such draft is presented.
In determining whether to pay under the Letter of Credit, the Issuing Bank
shall be responsible only to determine that the documents and certificates
required to be delivered under the Letter of Credit have been delivered and
that they comply on their face with the requirements of that Letter of
Credit. Without limiting the foregoing, the determination of whether a
demand has been made prior to the expiration of a Letter of Credit and
whether a demand is in proper and sufficient form for compliance with the
Letter of Credit shall be made by the Issuing Bank in accordance with
Section 1.13(k). The Issuing Bank is authorized without reference to or
approval by the Borrower to set forth the terms appearing on the relevant
application for the Letter of Credit in the Letter of Credit and to modify
or alter such terms in such language as the Issuing Bank may
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deem appropriate, with such variations from such terms as such Bank may, in
accordance with Section 1.13(k), determine are necessary to comply with
laws, customs or practices or to achieve clarity and are not materially
inconsistent with such terms. Promptly after receipt of a request for
issuance of a Letter of Credit and the determination of the Issuing Bank
thereof, the Administrative Agent shall notify each Bank of the proposed
issuance, the identity of the Issuing Bank and the amount of each other
Bank's respective participation therein, determined in accordance with
Section 1.13(a)(ii).
(c) DETERMINATION OF ISSUING BANK. Upon receipt by the
Administrative Agent of a request for issuance pursuant to Section 1.13(b)
with respect to a Letter of Credit, in the event that Indosuez elects to
issue such Letter of Credit, the Administrative Agent shall so notify the
Borrower, and Indosuez shall be the Issuing Bank with respect thereto. In
the event that Indosuez, in its sole discretion, elects not to issue such
Letter of Credit, the Administrative Agent shall promptly so notify the
Borrower, and the Borrower may request any other Bank to issue such Letter
of Credit. Each such Bank so requested to issue such Letter of Credit
shall promptly notify the Borrower and the Administrative Agent whether or
not, in its sole discretion, it has elected to issue such Letter of Credit
and any such Bank that so elects to issue such Letter of Credit shall be
the Issuing Bank with respect thereto. In the event that all other Banks
shall have declined to issue such Letter of Credit, notwithstanding the
prior election of Indosuez not to issue such Letter of Credit, Indosuez
shall be obligated to issue the Letter of Credit requested by the Borrower
and shall be the Issuing Bank with respect to such Letter of Credit;
PROVIDED that Indosuez shall not be obligated to issue any Letter of Credit
for which the initial stated amount is less than $5,000. No Issuing Bank
shall issue any Letter of Credit denominated in a currency other than
Dollars.
(d) PAYMENT OF AMOUNTS DRAWN UNDER LETTERS OF CREDIT. In the event
of any request for drawing under any Letter of Credit by the beneficiary
thereof, the Issuing Bank shall notify the Borrower and the Administrative
Agent on or before the date on which such Issuing Bank intends to honor
such drawing, and the Borrower shall reimburse such Issuing Bank on the day
on which such drawing is honored in an amount in same day funds equal to
the amount of such drawing: PROVIDED that, anything contained in this
Agreement to the contrary notwithstanding, (i) unless the Borrower shall
have notified the Administrative Agent and such Issuing Bank prior to 1:00
p.m. (New York time) on the Business Day of the date of such drawing that
the Borrower intends to reimburse such Issuing Bank for the amount of such
drawing with funds other than the proceeds of Revolving Loans, the Borrower
shall be deemed to have timely given a Notice of Borrowing to the
Administrative Agent requesting the Banks to make Revolving Loans or
Supplemental Revolving Loans, as the case may be, that are Base Rate Loans
on the date on which such drawing is honored in an amount equal to the
amount of such drawing, and (ii) subject to availability under the
Borrowing Base, the Banks shall, on the date of such drawing, make
Revolving Loans or Supplemental Revolving Loans, as the case may be, that
are Base Rate Loans in the amount of such
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drawing, the proceeds of which shall be applied directly by the
Administrative Agent to reimburse such Issuing Bank for the amount of such
drawing; and PROVIDED FURTHER that if for any reason, Revolving Loans or
Supplemental Revolving Loans, as the case may be, are not made to so
reimburse such Issuing Bank in an amount equal to the amount of such
drawing, the Borrower shall reimburse such Issuing Bank, within one
Business Day (which shall be a business day under the laws of jurisdiction
of such Issuing Bank) following the receipt of notice from the
Administrative Agent that such Revolving Loans or Supplemental Revolving
Loans, as the case may be, have not been made, in an amount in same day
funds equal to the excess of the amount of such drawing over the amount of
such Revolving Loans or Supplemental Revolving Loans, as the case may be,
if any, that are so received, plus accrued interest on such amount at the
rate set forth in Section 1.13(f)(i)(A).
(e) PAYMENT BY BANKS. In the event that (i) the Borrower shall fail
to reimburse an Issuing Bank as provided in Section 1.13(d) in an amount
equal to the amount of any drawing honored by such Issuing Bank under a
Letter of Credit issued by it, and (ii) the Revolving Loans are not made in
payment of such reimbursement obligation as provided in Section 1.13(d),
such Issuing Bank shall promptly notify each Bank of the unreimbursed
amount of such drawing and of such Bank's respective participation therein.
Each Bank shall make available to such Issuing Bank an amount equal to its
respective participation in same day funds, at the office of such Issuing
Bank specified in such notice, not later than 1:00 P.M. (New York time) on
the Business Day (which shall be a business day under the laws of the
jurisdiction of such Issuing Bank) after the date notified by such Issuing
Bank. In the event that any Bank fails to make available to such Issuing
Bank the amount of such Bank's participation in such Letter of Credit as
provided in this Section 1.13(e), such Issuing Bank shall be entitled to
recover such amount on demand from such Bank together with interest at the
customary rate set by the Administrative Agent for the correction of errors
among banks for three Business Days and thereafter at the Base Rate. Each
Issuing Bank shall distribute to each other Bank which has paid all amounts
payable by it under this Section 1.13(e) with respect to any Letter of
Credit issued by such Issuing Bank such other Bank's PRO RATA share of all
payments received by such Issuing Bank from the Borrower in reimbursement
of drawings honored by such Issuing Bank under such Letter of Credit when
such payments are received. Nothing in this Section 1.13(e) shall be
deemed to relieve any Bank of its obligation to pay all amounts payable by
it under this Section 1.13(e) with respect to any Letter of Credit issued
by an Issuing Bank or to prejudice any rights that the Borrower or any
other Bank may have against a Bank as a result of any default by such Bank
hereunder and no Bank shall be responsible for the failure of any other
Bank to pay its PRO RATA share payable under this Section 1.13(e).
(f) COMPENSATION.
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(i) the Borrower agrees to pay the following amounts with
respect to all Letters of Credit:
(A) with respect to drawings made under any Letter of
Credit, interest, payable on demand, on the amount paid by such
Issuing Bank in respect of each such drawing from and including
the date of the drawing through the date such amount is
reimbursed by the Borrower (including any such reimbursement out
of the proceeds of Revolving Loans or Supplemental Revolving
Loans, as the case may be, pursuant to Section 1.13(d)) at a rate
which is equal to the interest rate then applicable to Revolving
Loans or Supplemental Revolving Loans, as the case may be, that
are Base Rate Loans for the period from the date of such drawing
to and including the first Business Day after the date of such
drawing and thereafter at a rate equal to 2% PER ANNUM in excess
of the rate of interest otherwise payable under this Agreement
for Revolving Loans or Supplemental Revolving Loans, as the case
may be, that are Base Rate Loans during such period; and
(B) with respect to the amendment or transfer of each
Letter of Credit and each drawing made thereunder, documentary
and processing charges in accordance with such Issuing Bank's
standard schedule for such charges in effect at the time of such
amendment, transfer or drawing, as the case may be.
(ii) the Borrower agrees to pay to the Administrative Agent for
distribution to each Bank in respect of all Letters of Credit
outstanding such Bank's PRO RATA share of a commission equal to 2% PER
ANNUM of the maximum amount available from time to time to be drawn
under such outstanding Letters of Credit, payable in arrears on and
through the last Business Day of each March, June, September and
December commencing March 31, 1997 and calculated on the basis of a
365-day year and the actual number of days elapsed. Upon the
happening and during the continuance of an Event of Default described
in Section 8.01, the commission referred to in the preceding sentence
shall be 4% PER ANNUM.
(iii) the Borrower agrees to pay to each Issuing Bank in respect
of each Letter of Credit issued by each such Issuing Bank on the date
of issuance an amount equal to the greater of (A) 1/2 of 1% of the
maximum amount available at any time to be drawn under such Letter of
Credit or (B) $1,500.
Amounts payable under clauses (i) (A) and (ii) of this Section
1.13(f) shall be paid to the Administrative Agent for the benefit of
the Banks. The Administrative Agent shall promptly distribute to each
Bank its PRO RATA share of such amount. Amounts payable under clauses
(i) (B) and (iii) of this Section
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1.13(f) shall be paid to the Administrative Agent, and thereupon paid
over to the Issuing Bank.
(g) OBLIGATIONS ABSOLUTE. The obligation of the Borrower to
reimburse each Issuing Bank for drawings made under the Letters of Credit
issued by it and the obligations of the Banks under Section 1.13(e) shall
be unconditional and irrevocable and shall be paid strictly in accordance
with the terms of this Agreement under all circumstances including, without
limitation, the following circumstances:
(i) any lack of validity or enforceability of any Letter of
Credit;
(ii) the existence of any claim, set off, defense or other right
that the Borrower or any other Person may have at any time against a
beneficiary or any transferee of any Letter of Credit (or any persons
or entities for whom any such beneficiary or transferee may be
acting), such Issuing Bank, any Bank or any other Person, whether in
connection with this Agreement, the transactions contemplated herein
or any unrelated transaction;
(iii) any draft, demand, certificate or any other document
presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect, if not apparent from the
documents presented;
(iv) payment by such Issuing Bank under any Letter of Credit
against presentation of a demand, draft or certificate or other
document that does not comply with the terms of such Letter of Credit
unless such Issuing Bank shall have acted in bad faith or with willful
misconduct or gross negligence in issuing such payment;
(v) any other circumstance or happening whatsoever that is
similar to any of the foregoing; or
(vi) the fact that a Default or Event of Default shall have
occurred and be continuing.
(h) ADDITIONAL PAYMENTS. If by reason of (a) any change after the
Effective Date in applicable law, regulation, rule, decree or regulatory
requirement or any change in the interpretation or application by an
judicial or regulatory authority of any law, regulation, rule, decree or
regulatory requirement or (b) compliance by an Issuing Bank or any Bank
with any direction, request or requirement (whether or not having the force
of law) of any Governmental Authority or monetary authority including,
without limitation, Regulation D, any reserve, deposit or similar
requirement is or shall be applicable, imposed or modified in respect of
any Letter of Credit issued by such Issuing Bank or participation
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therein purchased by any Bank and the result of the foregoing is to
increase the cost to such Issuing Bank or any Bank of issuing, making or
maintaining any Letter of Credit or of purchasing or maintaining any
participation therein, or to reduce the amount receivable in respect
thereof by such Issuing Bank or any Bank, then and in any such case such
Issuing Bank or such Bank shall, after the additional cost is incurred or
the amount received is reduced, notify the Borrower and the Borrower shall
pay within 10 Business Days after demand such amounts as such Issuing Bank
or such Bank may specify to be necessary to compensate such Issuing Bank or
such Bank for such additional cost or reduced receipt, together with
interest on such amount from the date demanded until payment in full
thereof at a rate PER ANNUM equal at all times to the rate applicable to
Revolving Loans or Supplemental Revolving Loans that are Base Rate Loans
then in effect; PROVIDED that if any Bank fails to give such notice within
90 days after it obtains actual knowledge of such an event, such Bank
shall, with respect to compensation payable pursuant to this Section
1.13(h) in respect of any costs or other amounts resulting from or relating
to such event, only be entitled to payment under this Section 1.13(h) for
such costs or other amounts incurred from and after the date 90 days prior
to the date that such Bank does give such notice; and PROVIDED, FURTHER,
that each Bank agrees that, as promptly as practicable after it becomes
aware of the existence of the foregoing conditions, it will, to the extent
not inconsistent with such Bank's internal policies or any legal or
regulatory restrictions, use reasonable efforts to issue, make or maintain
the affected Letter of Credit or purchase or maintain any participation
therein through another lending office of such Bank if as a result thereof
the additional moneys which would otherwise be required to be paid to
compensate for such additional cost or reduced receipt with respect to such
Letter of Credit pursuant to this Section 1.13(h) would be reduced and if,
as determined by such Bank, in its reasonable discretion, the issuance,
making or maintaining of such Letter of Credit or the purchasing or
maintaining of any participation therein through such other lending office
would not otherwise materially adversely affect such Letter of Credit or
such Bank. Each Bank will furnish to the Borrower a certificate setting
forth in reasonable detail the basis and amount of each request by such
Bank for compensation under this Section 1.13(h). Determinations by any
Bank for purposes of this Section 1.13(h), including of the effect of any
regulatory change pursuant to Section 1.13(h) on its costs of making or
maintaining Letters of Credit (or purchasing or maintaining participation
therein), or on amounts receivable by it in respect of Letters of Credit,
and of the amounts required to compensate such Bank under this Section
1.13(h), shall be made on a reasonable basis. A certificate in reasonable
detail as to the amount of such increased cost or reduced receipt,
submitted to the Borrower and the Administrative Agent by the Issuing Bank
or any Bank, as the case may be, shall, except for demonstrable error, be
final, conclusive and binding for all purposes.
(i) INDEMNIFICATION; NATURE OF ISSUING BANK'S DUTIES. In addition to
amounts payable as elsewhere provided in this Section 1.13, without
duplication, the Borrower hereby agrees to protect, indemnify, pay and save
each Issuing Bank harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and
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expenses (including reasonable attorneys' fees and allocated costs of
internal counsel) which such Issuing Bank may incur or be subject to as a
consequence, direct or indirect, of (i) the issuance of the Letters of
Credit or (ii) the failure of such Issuing Bank to honor a drawing under
any Letter of Credit, in each case as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
Governmental Authority.
As between the Borrower and each Issuing Bank, the Borrower assumes
all risks of the acts and omissions of, or misuse of the Letters of Credit
issued by such Issuing Bank by, the respective beneficiaries of such
Letters of Credit. In furtherance and not in limitation of the foregoing,
such Issuing Bank shall not be responsible: (i) for the form, validity,
sufficiency, accuracy, genuineness or legal effects of any document
submitted by any party in connection with the application for and issuance
of any such Letter of Credit, even if it should in fact prove to be in any
or all respects invalid, insufficient, inaccurate, fraudulent or forged;
(ii) for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any such Letter of Credit or
the rights or benefits thereunder or proceeds thereof, in whole or in part,
that may prove to be invalid or ineffective for any reason; (iii) for
failure of the beneficiary of any such Letter of Credit to comply fully
with conditions required in order to draw upon such Letter of Credit; (iv)
for errors, omissions, interruptions or delays in transmission or delivery
of any messages, by mail, cable, telegraph, telex or otherwise, whether or
not they are in cipher; (v) for errors in the translation or interpretation
of technical terms; (vi) for any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any
such Letter of Credit or of the proceeds thereof; (vii) for the
misapplication by the beneficiary of any such Letter of Credit of the
proceeds of any drawing under such Letter of Credit; (viii) for any
consequences arising from causes beyond the control of such Issuing Bank or
its correspondents, including, without limitation, any act or omission of
any Governmental Authority; and (ix) for any error, neglect, default,
suspension or insolvency of any Issuing Bank's correspondents or any
consequence thereof, PROVIDED, in each case, that the Issuing Bank acts in
good faith. None of the above shall affect, impair, or prevent the vesting
of any of such Issuing Bank's rights or powers hereunder. Any Issuing Bank
shall have the right to transmit the terms of the Letter of Credit without
translating them. If the Letter of Credit provides that payment is to be
made by the Issuing Bank's correspondent, neither the Issuing Bank nor such
correspondent shall be responsible for the failure of any document
specified in the Letter of Credit to come into the Issuing Bank's hands or
for any delay in connection therewith, and the Borrower's obligation to
reimburse the Issuing Bank for payments made or obligations incurred shall
not be affected by such failure or delay in the receipt by the Issuing Bank
of any or all of such documents whether sent to such Bank in one or
multiple mailings. No Issuing Bank shall be liable for any failure by such
Bank or anyone else to pay or accept any draft or other demands for payment
or acceptance under the Letter of Credit resulting from any censorship,
law, control or restriction rightfully or wrongfully exercised by any de
facto or de jure Governmental Authority or from any
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other cause beyond such Bank's control or the control of such Bank's
correspondents, agents or sub-agents or for any loss or damage to the
Borrower or anyone else resulting from any such failure to pay or accept,
all such risks being expressly assumed by the Borrower.
In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by any
Issuing Bank in connection with the Letters of Credit issued by it or the
related certificates, if taken or omitted in good faith, shall not result
in such Issuing Bank incurring any liability to the Borrower. Without
limiting the generality of the foregoing, the Issuing Bank and its
correspondents may, without incurring any responsibility or liability, (i)
act in reliance upon any oral, telephonic, telegraphic, telex, telecopier,
electronic or written request, application (including an application for
issuance of a Letter of Credit) or notice believed in good faith to have
been authorized by the Borrower, whether or not given or signed by an
authorized person, and (ii) receive, accept and pay any drafts or other
documents and instruments (otherwise in order) signed by, or issued to, the
receiver, executor, administrator, liquidator, guardian or conservator of
anyone named in the Letter of Credit as the person by whom drafts and other
documents and instruments are to be made or issued.
Notwithstanding anything to the contrary contained in this Section
1.13(i), the Borrower shall have no obligation to indemnify any Issuing
Bank or any Bank in respect of any liability incurred by such Issuing Bank
or such Bank arising out of the gross negligence, bad faith or willful
misconduct of such Issuing Bank or such Bank or out of the wrongful
dishonor by such Issuing Bank or such Bank of a proper demand for payment
under the Letters of Credit issued by it.
(j) COMPUTATION OF INTEREST. Interest payable pursuant to this
Section 1.13 shall be computed on the basis of a 360 day year and the
actual number of days elapsed.
(k) UNIFORM CUSTOMS AND PRACTICE. This Section 1.13 shall be subject
to the Uniform Customs and Practice for Documentary Credits of the
International Chamber of Commerce as in force on the date of issuance of
each Letter of Credit ("UCP") and the UCP shall in all respects be deemed a
part hereof as fully as if incorporated herein. The provisions of this
Section 1.13 shall, where possible, be construed so as to be consistent
with the UCP; PROVIDED that to the extent the provisions of the UCP are not
consistent with the provisions of this Section 1.13 the provisions of the
UCP shall control. Notwithstanding the provisions of Section 11.08 hereof,
in the event of any conflict between the UCP and Article 5 of the UCC, the
UCP shall govern as to the provisions of this Section 1.13.
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SECTION 2. COMMITMENTS.
2.01 VOLUNTARY REDUCTION OF COMMITMENTS. Upon at least one Business Day's
prior written notice (or telephonic notice promptly confirmed in writing) to the
Administrative Agent at the Agent's Office (which notice the Administrative
Agent shall promptly transmit to each of the Banks), the Borrower shall have the
right, without premium or penalty, to terminate irrevocably the unutilized
portion of any or all of (i) the Total Revolving Loan Commitments, (ii) the
Total Acquisition Term Loan Commitments, and (iii) the Total Supplemental Loan
Commitments, in each case, in part or in whole; PROVIDED, HOWEVER, that (a) any
such termination shall proportionately and permanently reduce the Revolving Loan
Commitment, Acquisition Term Loan Commitment, or Supplemental Loan Commitment,
as applicable, of each of the Banks and (b) any partial reduction of the Total
Revolving Loan Commitments, the Total Acquisition Term Loan Commitments or the
Total Supplemental Loan Commitments pursuant to this Section 2.01 shall, in each
case, be in the amount of at least $500,000 and integral multiples of $100,000
in excess of that amount; PROVIDED, FURTHER, that (A) the Total Revolving Loan
Commitment shall not be reduced to an amount less than the sum of (x) the
aggregate Revolving Loans then outstanding and (y) the aggregate Letters of
Credit Usage related to the Revolving Portion of the Credit Facility, (B) the
Total Acquisition Term Loan Commitment shall not be reduced to an amount less
than the aggregate Acquisition Term Loans then outstanding, and (C) the Total
Supplemental Loan Commitment shall not be reduced to an amount less than the sum
of (I) the aggregate Supplemental Revolving Loans then outstanding, (II) the
aggregate Letters of Credit Usage related to the Supplemental Portion of the
Credit Facility, and (III) the aggregate Supplemental Term Loans then
outstanding.
2.02 ADJUSTMENTS; TERMINATION OF COMMITMENTS, ETC.
(a) The Total Revolving Loan Commitment shall terminate on the
earlier of (i) the Revolving Loan Commitment Termination Date and (ii) the
voluntary reduction by the Borrower pursuant to Section 2.01 of the
Revolving Loan Commitment to zero.
(b) The Total Acquisition Term Loan Commitment shall terminate on the
earlier of (i) on the Acquisition Term Loan Commitment Termination Date and
(ii) the voluntary reduction by the Borrower pursuant to Section 2.01 of
the Acquisition Term Loan Commitment to zero and any amounts not borrowed
with respect to the Acquisition Term Loan on or before such date shall
cease to be available.
(c) The Total Supplemental Revolving Loan Commitment shall terminate
on the earlier of (i) the Supplemental Revolving Loan Commitment
Termination Date, and (ii) the voluntary reduction by the Borrower pursuant
to Section 2.01 of the Total Supplemental Commitments.
(d) The Total Supplemental Term Loan Commitments shall terminate on
the earlier of (i) the Supplemental Term Loan Commitment Termination Date,
and (ii) the
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voluntary reduction by the Borrower pursuant to Section 2.01 of the Total
Supplemental Term Loan Commitments to zero.
(e) Each reduction to or termination of the Total Revolving Loan
Commitment, the Total Acquisition Term Loan Commitment, the Total
Supplemental Revolving Loan Commitment or the Total Supplemental Term Loan
Commitment pursuant to this Section 2.02 shall apply proportionately to the
Revolving Loan Commitment, the Acquisition Term Loan Commitment, the
Supplemental Revolving Loan Commitment or the Supplemental Term Loan
Commitment, as the case may be, of each Bank.
2.03 COMMITMENT FEE. The Borrower agrees to pay the Administrative Agent
a commitment fee (the "COMMITMENT FEE") for the account of each Bank for the
period from and including the Closing Date to but not including the date on
which each of the Total Revolving Loan Commitment, the Total Acquisition Term
Loan Commitment, and the Total Supplemental Loan Commitment have been
terminated, computed at a rate equal to .35% per annum on the daily average
Unutilized Revolver Commitment of such Bank, .35% per annum on the daily average
Unutilized Acquisition Commitment of such Bank, .25% per annum on the daily
average Unutilized Supplemental Commitment of such Bank (for the periods to and
including the last Business Day in December, 1998) and, .50% per annum on the
daily average Unutilized Supplemental Commitment of such Bank (for the periods
from and after January 1, 1999). The Commitment Fee shall be due and payable in
arrears on the last Business Day of each March, June, September and December
commencing March 31, 1998 (for the period from the Closing Date through March
31, 1998), and on the earlier of (x) the Revolving Loan Commitment Termination
Date or (y) the date on which each of the Total Revolving Loan Commitment, the
Total Acquisition Term Loan Commitment and the Total Supplemental Loan
Commitments have been terminated pursuant to the terms of this Agreement (for
the period from the date through which the Commitment Fee has been paid in full
in accordance with this Section 2.03 to and including the Revolving Loan
Commitment Termination Date or the date of such earlier termination, as the case
may be). The calculation of Commitment Fees shall be based on the actual number
of days elapsed over a year of 360 days.
SECTION 3. PAYMENTS.
3.01 SCHEDULED PAYMENTS.
(a) The Borrower shall cause to be paid Scheduled Supplemental Term
Loan Principal Payments on the Supplemental Term Loan in the amounts and at
the times specified in the definition of Scheduled Supplemental Term Loan
Principal Payments set forth in Section 9 until the Supplemental Term Loan
is paid in full. Principal amounts repaid in respect of the Supplemental
Term Loan shall reduce any outstanding Supplemental Term Loan Commitments
and shall not be available for reborrowing.
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(b) The Borrower shall cause to be paid Scheduled Acquisition Term
Loan Principal Payments on the Acquisition Term Loans in the amounts and
at the times specified in the definition of Scheduled Acquisition Term
Loan Principal Payments set forth in Section 9 until the Acquisition Term
Loan are paid in full. Principal amounts repaid in respect of the
Acquisition Term Loans shall reduce any outstanding Acquisition Term Loan
Commitments and shall not be available for reborrowing.
(c) Except for earlier maturity of any Loan due to acceleration
pursuant to the terms of this Agreement, the entire remaining principal
balance, and accrued interest thereon, together with any other amounts then
due and payable hereunder, shall be paid in full (i) with respect to the
Revolving Loans, on the Revolving Loan Maturity Date, (ii) with respect to
the Acquisition Term Loans, on the Acquisition Term Loan Maturity Date,
(iii) with respect to the Supplemental Revolving Loans, on the Supplemental
Revolving Loan Maturity Date and (iv) with respect to Supplemental Term
Loans, on the Supplemental Term Loan Maturity Date.
(d) If, in order to comply with Section 3.01(a), (b) or (c), the
Borrower is required to repay Reserve Adjusted Eurodollar Loans prior to
the end of any applicable Interest Period, the Borrower shall compensate
each Bank for all losses, expenses and liabilities incurred by such Bank in
connection with each such repayment in accordance with Section 1.10(f).
3.02 VOLUNTARY PREPAYMENTS. The Borrower shall have the right to prepay
the Revolving Loans, the Acquisition Term Loans, the Supplemental Revolving
Loans or the Supplemental Term Loans, in whole or in part from time to time,
without premium or penalty, on the following terms and conditions: (a) the
Borrower shall give the Administrative Agent at the Agent's Office written
notice (or telephonic notice promptly confirmed in writing) of its intent to
prepay the Loans, the amount of such prepayment and whether such prepayment is
in respect of the Revolving Loans or Supplemental Revolving Loans, in the case
of Reserve Adjusted Eurodollar Loans, the specific Borrowing or Borrowings
pursuant to which such Reserve Adjusted Eurodollar Loans were made, which notice
shall be given by the Borrower at least one Business Day prior to the date of
such prepayment and which notice shall promptly be transmitted by the
Administrative Agent to each of the Banks; (b) each partial prepayment of a
Borrowing shall be in an aggregate principal amount of at least $100,000 and in
integral multiples of $100,000 in excess of that amount (or, if less, in an
amount equal to the entire remaining principal balance of the Loan or the
Borrowing so repaid); PROVIDED, HOWEVER, that no partial prepayment of Reserve
Adjusted Eurodollar Loans made pursuant to a single Borrowing under the Loan
Facility (or portion thereof) shall reduce the outstanding Loans made pursuant
to such Borrowing to an amount less than the Minimum Borrowing Amount (other
than $0); and (c) Reserve Adjusted Eurodollar Loans may only be prepaid pursuant
to this Section 3.02 on the last day of an Interest Period applicable thereto.
Voluntary prepayments of Loans other than specified prepayments of the Revolving
Loans or Supplemental Revolving Loans shall be applied pro rata (i) first, to
the outstanding principal amount of each of the Acquisition Term
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Loans to reduce all remaining Scheduled Acquisition Term Loan Principal
Payments, in each case on a pro rata basis and in order of maturity, (ii)
second, to the then outstanding principal amount of the Supplemental Term Loans
if any; PROVIDED that any amount so prepaid pursuant to this subclause (ii)
shall permanently reduce the Supplemental Loan Commitments and any amounts so
prepaid shall not be available for reborrowing, (iii) third, to reduce the
outstanding principal amount of the Revolving Loans, in each case on a pro rata
basis, and (iv) fourth, to reduce the outstanding principal amount of the
Supplemental Revolving Loans, in each case on a pro rata basis.
3.03 MANDATORY PREPAYMENTS; REDUCTION OF COMMITMENTS.
(a) The Borrower shall prepay the outstanding principal amount of (x)
the Revolving Loans on any date on which the sum of the aggregate
outstanding principal amount of such Loans (after giving effect to any
other repayments or prepayments on such date) and the then outstanding
Letters of Credit Usage related to the Revolving Portion exceeds the Total
Revolving Loan Commitment, in an amount equal to the amount of such excess,
(y) the Acquisition Term Loans on any date on which the aggregate
outstanding principal amount of such Loans (after giving effect to any
other repayments or prepayments on such date) exceeds the Total Acquisition
Term Loan Commitment, in an amount equal to the amount of such excess or
(z) the Supplemental Term Loans and the Supplemental Revolving Loans, on a
pro rata basis and in order of maturity, on any date on which the aggregate
outstanding principal amount of such Loans (after giving effect to any
other repayments or prepayments on such date), and the then outstanding
Letters of Credit Usage related to the Revolving Portion.
(b) If the sum of (x) the aggregate principal amount of outstanding
Revolving Loans plus (y) the aggregate principal amount of outstanding
Supplemental Revolving Loans, plus (z) the then outstanding Letters of
Credit Usage exceeds the Borrowing Base as set forth in the Borrower's most
recent Borrowing Base Certificate required to be delivered pursuant to
Section 6.01(m) (such amount is referred to as the "EXCESS"), then the
Borrower shall prepay first the Supplemental Revolving Loans on a pro rata
basis, and second, the Revolving Loans, on a pro rata basis in a principal
amount equal to the Excess no later than two Business Days after the
Borrower has delivered, or was required to deliver, such Borrowing Base
Certificate to the Administrative Agent and the Banks.
(c) Subject to the provisions of Section 3.04:
(i) As promptly as practicable, but in any event within five
Business Days of the date of receipt by the Borrower and/or any of its
Subsidiaries, of Net Cash Proceeds (PROVIDED, HOWEVER, that with
respect to any Net Cash Proceeds of the sale of equity securities of
Borrower or any of its Subsidiaries, Section 3.03(e) will govern and
that with respect to any Net Cash Proceeds from any damage to, or
loss, destruction or condemnation of Assets, Section 3.03(f) will
govern), the
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Borrower shall remit to the Administrative Agent an amount equal to
100% of such Net Cash Proceeds, specifying any portion of such
proceeds (such portion, the "REPLACEMENT ASSET AMOUNT") intended by
the Borrower to be used within 120 days of receipt (or such longer
period as may be consented to by the Agent) for replacing productive
assets of a kind then used or usable in the business of the Borrower
and its Subsidiaries (in each case, to the extent permitted by the
Security Documents); PROVIDED, HOWEVER, that if the property sold
constituted Collateral, any such replacement property shall be made
subject to the Lien of the Security Documents.
(ii) The Replacement Asset Amount of such Net Cash Proceeds
shall be deposited in the Reserve Account and the remaining portion,
if any, of such Net Cash Proceeds shall be applied by the
Administrative Agent as provided in Section 3.04(a). During a period
of 120 days from the date such Replacement Asset Amount is deposited
in the Reserve Account, the Administrative Agent shall release amounts
in such Reserve Account from time to time as the Borrower provides
evidence to the Administrative Agent of the purchase of such
replacement assets (whether or not purchased with proceeds of
Revolving Loans or Supplemental Revolving Loans), and after the end of
such 120-day period or upon the occurrence of an Event of Default of
the type specified in Section 8.01 or 8.05 or the taking by the
Administrative Agent of any of the actions set forth in Section 8.10,
the Administrative Agent shall apply all amounts remaining in such
Reserve Account relating to such Replacement Asset Amount, to the
prepayment of the Loans in the manner provided in Section 3.04(a).
(d) Subject to the provisions of Section 3.04, as promptly as
practicable, but in any event within five Business Days of the date of
receipt by the Borrower and/or any of its Subsidiaries of Net Financing
Proceeds after the Effective Date (excluding the proceeds of the Initial
Loans), the Borrower shall prepay the Loans in an amount equal to 100% of
such Net Financing Proceeds, to be applied as provided in Section 3.04(a).
(e) Subject to the provisions of Section 3.04, as promptly as
practicable, but in any event within five Business Days of the date of
receipt by The Borrower and/or any of its Subsidiaries of Net Cash Proceeds
from the sale after the Closing Date of equity securities of the Borrower
or any of its Subsidiaries (other than proceeds from the issuance of
capital stock (i) of the Borrower pursuant to any pension, stock option,
profit sharing or other employee benefit plan or agreement of the Borrower
and/or any of its Subsidiaries in the ordinary course of business or (ii)
by a Subsidiary of the Borrower to another Subsidiary of the Borrower or to
the Borrower), the Borrower shall prepay the Loans in an amount equal to
100% of such proceeds (net of underwriting discounts and commissions and
other costs and expenses directly associated therewith), to be applied as
provided in Section 3.04(a); provided, however, that the Borrower may apply
up to 75%
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of the proceeds of an initial public offering of the common stock of the
Borrower to redeem the Series A Preferred Stock.
(f) Subject to the provisions of Section 3.04:
(i) As promptly as practicable, but in any event within five
Business Days of the date of receipt by the Borrower and/or any of its
Subsidiaries of any proceeds due to damage to, or loss, destruction or
condemnation of Assets (collectively, "LOSS PROCEEDS"), the Borrower
shall remit to the Administrative Agent an amount equal to 100% of
such Loss Proceeds, specifying any portion of such proceeds (such
portion, the "ASSET RESTORATION AMOUNT") intended by the Borrower to
be used within 180 days of receipt of such Loss Proceeds (or such
longer period as may be consented to by the Agent) for rebuilding,
repairing or replacing productive assets of a kind then used or usable
in the business of Holdings and its Subsidiaries (in the case of the
Borrower, to the extent permitted by the Security Documents);
PROVIDED, HOWEVER, that if the property sold constituted Collateral,
any such replacement property shall be made subject to the Lien of the
Security Documents.
(ii) The Asset Restoration Amount of such Loss Proceeds shall be
deposited in the Reserve Account and the remaining portion, if any, of
such Loss Proceeds shall be applied by the Administrative Agent as
provided in Section 3.04(a). During a period of 180 days (or such
longer period as has been consented to by the Administrative Agent)
from the date such Asset Restoration Amount is deposited in the
Reserve Account, the Administrative Agent shall release amounts in
such Reserve Account from time to time as the Borrower provides
evidence to the Administrative Agent of the repair, restoration or
purchase of such replacement assets, which evidence may consist of a
purchase order or other irrevocable commitment to purchase such
replacement assets, (whether or not purchased with proceeds of
Revolving Loans), and after the end of such 180-day period or upon the
occurrence of an Event of Default of the type specified in Section
8.01 or 8.05 or the taking by the Administrative Agent of any of the
actions set forth in Section 8.10, the Administrative Agent shall
apply all amounts remaining in the Reserve Account relating to such
Asset Restoration Amount, if any, in the manner provided in Section
3.04(a).
(g) Subject to the provisions of Section 3.04, as promptly as
practicable, but in any event within five Business Days of the date of
receipt by the Borrower and/or any of its Subsidiaries of any surplus
assets of any Pension Plan returned to the Borrower and/or any of its
Subsidiaries, the Borrower shall prepay the Loans in an amount equal to
100% of such surplus assets, to be applied as provided in Section 3.04(a).
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(h) Subject to the provisions of Section 3.04, as promptly as
practicable, but in any event within five Business Days of the date of
receipt by the Borrower and/or any of its Subsidiaries of any tax refund
which is not promptly applied by the Borrower and/or any of its
Subsidiaries to the payment of future tax liabilities, the Borrower shall
prepay the Loans in an amount equal to 100% of such tax refund, to be
applied as provided in Section 3.04(a).
(i) Subject to the provisions of Section 3.04, as promptly as
practicable, but in any event within 100 days after the last day of each
fiscal year of the Borrower, commencing with the fiscal year ending on or
about June 30, 1998, the Borrower shall prepay the Loans in an amount equal
to 50% of Excess Cash Flow for such fiscal year, to be applied as provided
in Section 3.04(a); PROVIDED, HOWEVER, the Borrower shall prepay the Loans
in an amount equal to 33% of Excess Cash Flow for such year if the Leverage
Ratio on the last day of such fiscal year is no greater than 4.5 and no
less than 4.0; PROVIDED, FURTHER, the Borrower shall have no repayment
obligation under this Section 3.03(i) for any fiscal year where the
Leverage Ratio on the last day of such fiscal year is less than 4.0 .
(j) Subject to the provisions of Section 3.04, simultaneous with the
effectiveness of any designation of an Unrestricted Subsidiary which was
previously a Restricted Subsidiary, the Borrower shall prepay the Loans in
the amount determined in the sole discretion of the Administrative Agent,
as provided in the definition of "Unrestricted Subsidiary."
(k) Notwithstanding anything to the contrary contained in paragraphs
(c) through (i) above, in the event that any prepayment otherwise required
under such paragraphs would aggregate less than $100,000 at any time, such
prepayment shall not be required hereunder but shall be deferred until a
date not later than the fifth Business Day following the date when all such
prepayments required under such paragraphs aggregate $100,000 or more.
(l) If, in order to comply with any of Sections 3.03(a) through (f),
(h) or (i) (including as deferred pursuant to 3.03(j) except where the
amount which causes all prepayments to aggregate $100,000 or more are not
prepayments required under any of such Sections 3.03(a) through (e), (h) or
(i)), the Borrower is required to repay Reserve Adjusted Eurodollar Loans
prior to the end of any applicable Interest Period, (x) if there is no
Default or Event of Default then in existence, the Administrative Agent
shall, immediately upon receipt of funds required to be remitted to the
Administrative Agent pursuant to any such Sections, deposit such funds into
the Prepayment Collateral Account (as defined in Section 3.08 hereof), and
shall immediately notify the Borrower that repayments would be made prior
to the end of an Interest Period and that Breakage Costs would be payable
by the Borrower pursuant to this Agreement in connection therewith and the
Borrower, upon the receipt of any such notice from the Agent, shall
immediately
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deliver written instructions to the Administrative Agent which shall direct
the Administrative Agent either (i) to, at the end of the earliest to
expire Interest Period, apply the entire balance of the Prepayment
Collateral Account to the repayment of the Loans in accordance with Section
3.04(a) or (ii) to proceed with such repayment, in which event the Borrower
shall compensate each Bank for all Breakage Costs incurred by such Bank in
connection with each such repayment in accordance with Section 1.10(f) or
(y) if there is then pending a Default or Event of Default, any such
prepayment shall be immediately applied to the repayment of the Loans and
the Borrower shall compensate each Bank for all Breakage Costs incurred by
such Bank in connection with each such repayment in accordance with Section
1.10(f).
3.04 APPLICATION OF MANDATORY PREPAYMENTS.
(a) Prepayments under Section 3.03 (other than Section 3.03(a) or
(b)) shall be applied without penalty or premium (other than Breakage
Costs, if any, and if so provided in Section 3.03), in the following
manner: (i) first, pro rata to the outstanding principal amount of each of
the Acquisition Term Loans to reduce the remaining Scheduled Acquisition
Term Loan Principal Payments in inverse order of maturity, (ii) second, to
the outstanding principal amount of the Supplemental Term Loans, (provided
that any amount so prepaid shall permanently reduce the Supplemental Loan
Commitments and shall not be available for reborrowing) (iii) third, to
repay the Revolving Loans on a pro rata basis, and (iv) fourth, to repay
the Supplemental Revolving Loans, on a pro rata basis; PROVIDED, HOWEVER,
that prepayments required by Sections 3.03(a) shall be applied solely to
repay Revolving Loans, Acquisition Term Loans, Supplemental Term Loans or
Supplemental Revolving Loans, as applicable, and prepayments required by
Section 3.03(b) shall be applied solely to repay Revolving Loans and
Supplemental Revolving Loans.
(b) With respect to each prepayment of Loans required by Section 3.03
(other than Sections 3.03(a) and (b)), the Borrower shall give the
Administrative Agent one Business Day's notice and may designate the Types
of Loans and the specific Borrowing or Borrowings which are to be prepaid;
PROVIDED, HOWEVER, that (i) if any prepayment of Reserve Adjusted
Eurodollar Loans made pursuant to a single Borrowing shall reduce the
outstanding Loans made pursuant to such Borrowing to an amount less than
the Minimum Borrowing Amount, such Borrowing shall immediately be converted
into Base Rate Loans; and (ii) each prepayment of any Loans made pursuant
to a single Borrowing shall be applied to the prepayment of such Loans on a
pro rata basis. In the absence of a designation by the Borrower, the
Administrative Agent shall, subject to the above, make such designation in
its sole discretion. All prepayments shall include payment of accrued
interest on the principal amount so prepaid, shall be applied to the
payment of interest before application to principal and shall include
amounts payable, if any, and if provided for in Section 3.03(m), under
Section 1.10(f).
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(c) Notwithstanding Sections 3.04(a) and (b), (i) in the absence of a
specific designation from the Borrower, all prepayments to be applied
pursuant to Section 3.04(a) shall be applied first to the prepayment in
full of that portion of any Loan constituting Base Rate Loans before
application of any of such prepayments to the prepayment of Reserve
Adjusted Eurodollar Loans; (ii) if (A) Breakage Costs would otherwise be
imposed by applying such prepayments to any portion of the Acquisition Term
Loan or the Supplemental Term Loan constituting Reserve Adjusted Eurodollar
Rate Loans, and (B) Revolving Loans or Supplemental Revolving Loans
constituting Base Rate Loans in an amount not less than the required
prepayment are then outstanding, such prepayments shall be applied instead
to the prepayment of Revolving Loans and Supplemental Revolving Loans
constituting Base Rate Loans, and the prepayment of Reserve Adjusted
Eurodollar Rate Loans otherwise required under Section 3.04(a) shall be
deferred until the last day of the applicable Interest Period with respect
to each of such Reserve Adjusted Eurodollar Loans; and (iii) the
Administrative Agent may, in its discretion, establish reserves against the
amount of Revolving Loans or Supplemental Revolving Loans, which the
Borrower is otherwise entitled to borrow hereunder in an amount equal to
the amount of any such deferred prepayment and in the event that the
Borrower does not otherwise make such prepayment on the last day of such
Interest Period as provided herein, may cause Revolving Loans or
Supplemental Revolving Loans to be made on the Borrower's behalf and apply
the proceeds thereof to such prepayment.
3.05 REDUCTION OF TOTAL REVOLVING LOAN COMMITMENT, ETC. Each prepayment
made pursuant to Section 3.03 with respect to (i) the Revolving Loans, (ii) if
prior to the Acquisition Term Loan Commitment Termination Date, the Acquisition
Term Loans (iii) if prior to the Supplemental Term Loan Commitment Termination
Date, the Supplemental Term Loans, or (iv) if prior to the Supplemental
Revolving Loan Commitment Termination Date, the Supplemental Revolving Loan, (in
each case, other than any prepayment made pursuant to Section 3.03(a), (b) or
(i)) shall permanently reduce the Total Revolving Loan Commitment, Total
Acquisition Term Loan Commitment or Total Supplemental Loan Commitment, as
applicable, and shall, on a pro rata basis, reduce the applicable Revolving Loan
Commitment, Acquisition Term Loan Commitment or Supplemental Loan Commitment of
each Bank. Principal amounts repaid in respect of the Acquisition Term Loans or
the Supplemental Term Loans shall not be available for reborrowing.
3.06 METHOD AND PLACE OF PAYMENT.
(a) Except as otherwise specifically provided herein, all payments
under this Agreement shall be made to the Agent, for the ratable account of
the Banks entitled thereto, not later than 2:00 P.M. (New York time) on the
date when due and shall be made in immediately available funds in lawful
money of the United States of America to the account specified therefor by
the Administrative Agent or if no account has been so specified at the
Administrative Agent's Office, it being understood that written notice by
the Borrower to the Administrative Agent to make a payment from the funds
in the
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Borrower's account at the Administrative Agent's Office shall constitute
the making of such payment to the extent of such funds held in such
account. The Administrative Agent will thereafter cause to be distributed
on the same day (if payment is actually received by the Administrative
Agent in New York City prior to 2:00 P.M. (New York time) on such day)
funds relating to the payment of principal or interest or fees ratably to
the Banks entitled to receive any such payment in accordance with the terms
of this Agreement. If and to the extent that any such distribution shall
not be so made by the Administrative Agent in full on the same day (if
payment is actually received by the Administrative Agent prior to 2:00 P.M.
(New York time) on such day), the Administrative Agent shall pay to each
Bank its ratable amount thereof and each such Bank shall be entitled to
receive from the Agent, upon demand, interest on such amount at the Federal
Funds Rate for each day from the date such amount is paid to the
Administrative Agent until the date the Administrative Agent pays such
amount to such Bank.
(b) Any payments under this Agreement which are made by the Borrower
later than 2:00 P.M. (New York time) shall be deemed to have been made on
the next succeeding Business Day. Whenever any payment to be made
hereunder shall be stated to be due on a day which is not a Business Day,
the due date thereof shall be extended to the next succeeding Business Day
and, with respect to payments of principal, interest shall be payable
during such extension at the applicable rate in effect immediately prior to
such extension, except that with respect to Reserve Adjusted Eurodollar
Loans, if such next succeeding applicable Business Day is not in the same
month as the date on which such payment would otherwise be due hereunder or
under any Note, the due date with respect thereto shall be the next
preceding applicable Business Day.
3.07 NET PAYMENTS.
(a) Except as provided in Section 3.07(d), all payments by the
Borrower under this Agreement or under any Credit Documents shall be made
without setoff or counterclaim and in such amounts as may be necessary in
order that all such payments (after deduction or withholding for or on
account of any present or future Taxes), shall not be less than the amounts
otherwise specified to be paid under this Agreement and/or any other Credit
Documents. A certificate as to the calculation of any additional amounts
payable to a Bank under this Section 3.07 submitted to the Borrower by such
Bank shall, absent demonstrable error, be final, conclusive and binding for
all purposes upon all parties hereto. With respect to each deduction or
withholding for or on account of any Taxes, the Borrower shall, within 30
days after it is required by law to remit such deduction or withholding to
any relevant taxing authority, furnish to each Bank such certificates,
receipts and other documents as may be required (in the reasonable judgment
of such Bank) to establish any tax credit to which such Bank may be
entitled.
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(b) Without prejudice to (but without duplication of the benefits of)
the provisions of Section 3.07(a), and except as provided in Section
3.07(d), if any Bank, or the Administrative Agent on its behalf, is
required by law to make any payment on account of Taxes on or in relation
to any sum received or receivable under this Agreement and/or any other
Credit Documents by such Bank, or the Administrative Agent on its behalf,
or any liability for Taxes in respect of any such payment is imposed,
levied or assessed against any Bank, or the Administrative Agent on its
behalf, the Borrower will promptly indemnify such person against such Tax
payment or liability, together with any interest, penalties and reasonable
expenses (including counsel fees and expenses) payable or incurred in
connection therewith, including any Taxes of any Bank arising by virtue of
payments under this Section 3.07(b), computed in a manner consistent with
Section 3.07(a). A certificate by such Bank, or the Administrative Agent
on its behalf, as to the calculation and amount of such payments shall,
absent demonstrable error, be final, conclusive and binding upon all
parties hereto for all purposes, provided that such certificate is
delivered to the Borrower no later than 90 days after the earlier of the
date on which such Bank or the Administrative Agent makes payment of such
Taxes or the date on which the applicable Governmental Authority makes
written demand for payment of such Taxes.
(c) (i) Each Bank that is organized under the laws of any
jurisdiction other than the United States or any State thereof (including
the District of Columbia) (a "FOREIGN BANK") agrees to furnish to the
Borrower and the Administrative Agent, prior to the date it receives any
payment under this Agreement or other Credit Documents, two signed copies
of either U.S. Internal Revenue Service Form 4224 or U.S. Internal Revenue
Service Form 1001 or any successor form thereto (wherein such Foreign Bank
validly claims entitlement to a complete exemption from U.S. federal
withholding tax on interest paid by Borrower hereunder). Each Foreign Bank
that is not a bank described in Section 881(c)(3)(A) of the Code and cannot
deliver U.S. Internal Revenue Service Form 1001 entitling it to a complete
exemption from withholding tax or U.S. Internal Revenue Service Form 4224
pursuant to this Section 3.07(c)(i) agrees to furnish to the Borrower and
the Administrative Agent two copies of U.S. Internal Revenue Service Form
W-8, or successor form (wherein such Foreign Bank makes the certifications
necessary to entitle it to a complete exemption from United States
withholding tax on interest paid by the Borrower hereunder).
(ii) In addition, each Foreign Bank that delivers forms pursuant to
Section 3.07(c) agrees to provide subsequently to the Borrower and the
Administrative Agent additional signed copies of such forms, or any
successor forms thereto (wherein such Bank claims entitlement to a complete
exemption from or reduced rate of U.S. federal withholding tax on interest
paid by the Borrower hereunder), as may be reasonably requested in writing
by the Borrower or the Agent. A Foreign Bank shall be required to furnish
a form under this Section 3.07(c)(ii) only if it is entitled to claim an
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exemption from or a reduced rate of withholding tax under applicable law.
A Bank that is not entitled to claim an exemption from or a reduced rate of
withholding under applicable law at the time that a request to provide
forms is received from the Borrower or the Agent, shall so inform the
Borrower and the Administrative Agent in writing.
(d) The Borrower shall not be required to pay any increased amount on
account of Taxes pursuant to Section 3.07(a) or (b) to any Bank or
Administrative Agent (i) to the extent that such Taxes would not have been
payable if the Bank had furnished a form (properly and accurately completed
in all material respects) which it was otherwise required to furnish in
accordance with Section 3.07(c), (ii) if the Bank was not able to furnish a
form (properly and accurately completed in all material respects) which it
was required to furnish in accordance with Section 3.07(c)(i), or (iii) if
the Bank failed to comply with applicable certification, information,
documentation or other reporting requirements concerning the nationality,
residence, identity or connections with the United States of such Bank if
such compliance is required by statute or regulation of the United States
as a precondition to relief or exemption from such Taxes.
(e) With respect to any Taxes imposed on a Bank which are paid or
reimbursed by Borrower in accordance with the provisions of this Section
3.07, each Bank receiving the benefit of such payments of Taxes hereby
agrees to pay to the Borrower any amounts refunded to such Bank (including
any interest thereon) which such Bank reasonably determines to be a refund
in respect of such Taxes.
(f) If any Bank shall be entitled to payments under this Section
3.07, such Bank shall, within a reasonable time after becoming entitled to
such payments, (unless otherwise required by a Governmental Authority or as
a result of any law, rule, regulation, order or similar directive
applicable to such Bank), designate a different lending office from that
initially selected by such Bank to which payments are to be made under this
Agreement or under any other Credit Document, if such designation would
avoid the need for (or materially reduce the amount of) such payments and
would not, in the reasonable opinion of such Bank, be otherwise
disadvantageous to such Bank.
3.08 RESERVE ACCOUNT; PREPAYMENT COLLATERAL ACCOUNT.
(a) The Administrative Agent shall establish and maintain a special
reserve account (the "RESERVE ACCOUNT") for the deposit of amounts
constituting the Replacement Asset Amount of Net Cash Proceeds pursuant to
Section 3.03(c)(ii) and the Asset Restoration Amount of Loss Proceeds
pursuant to Section 3.03(f)(ii), and such Reserve Account shall be subject
to the sole dominion and control of the Administrative Agent and the
Borrower shall have no right of withdrawal from the Reserve Account. Funds
in the Reserve Account shall be invested in Cash Equivalents and interest
earned on such investments shall be remitted to the Borrower not less
frequently than once a month; PROVIDED, HOWEVER, that upon the occurrence
of an Event of Default and the declaration by the Administrative Agent in
accordance with Section 8 that the Loans are immediately
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due and payable, the Administrative Agent shall apply all amounts then on
deposit in the Reserve Account towards the payment of the Obligations in
such order and in such manner as it shall in its discretion determine, and
any excess amount remaining after such payment shall be remitted to the
Borrower.
(b) The Administrative Agent shall establish in its own name as
Administrative Agent and maintain for the benefit of the Banks a special
purpose collateral account (the "PREPAYMENT COLLATERAL ACCOUNT"). The
Administrative Agent shall deposit in the Prepayment Collateral Account
funds which the Borrower shall have requested to be so deposited pursuant
to Section 3.03(k). All funds from time to time on deposit in the
Prepayment Collateral Account shall be under the exclusive control of the
Administrative Agent and shall be invested in Cash Equivalents, and such
Prepayment Collateral Account shall be subject to the sole dominion and
control of the Administrative Agent and the Borrower shall have no right of
withdrawal from the Prepayment Collateral Account. The funds (including
all interest earned from the investment thereof) in the Prepayment
Collateral Account shall be subject to withdrawal solely by the
Administrative Agent (i) for the purpose of effecting payments required
pursuant to Section 3.03 and (ii) upon the occurrence of an Event of
Default and the declaration by the Administrative Agent in accordance with
Section 8 that the Loans are immediately due and payable, for application
to the payment of the Obligations in such order and in such manner as the
Administrative Agent in its discretion shall determine. The Borrower shall
have no legal, equitable or beneficial interest in the Prepayment
Collateral Account, except for its right to ensure that the funds in such
account shall be applied to the prepayment of the Loans as required by this
Agreement.
SECTION 4. CONDITIONS PRECEDENT.
4.01 CONDITIONS PRECEDENT TO INITIAL LOANS. The obligations of the Banks
to make the Initial Loans are subject, at the time of the making of such Loans
(except as otherwise hereinafter indicated), to the satisfaction of the
following conditions:
(a) CREDIT DOCUMENTS.
(i) This Agreement and each other Credit Document (to the extent
not previously executed and delivered) shall (A) have been, on or
before the Closing Date, duly authorized, executed and delivered by
each of the parties signatory thereto and (B) constitute the legal,
valid and binding obligation of each Credit Party, enforceable in
accordance with its terms (subject to bankruptcy and principles of
equity).
(ii) There shall have been delivered to the Administrative Agent
for the account of each of the Banks the Revolving Notes, the
Acquisition Term Notes the Supplemental Term Notes and the
Supplemental Revolving Notes, each duly
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executed by the Borrower in the amount and maturity and as otherwise
provided herein.
(b) OFFICERS' CERTIFICATE. The Agents shall have received a
certificate dated the Closing Date signed by the appropriate officer(s) of
the Borrower on behalf of the Borrower in substantially the form of Exhibit
4.01(b) stating that (i) all of the applicable conditions set forth in this
Section 4.01 (in each case disregarding any reference therein that such
condition be deemed satisfactory by the Agents, the Administrative Agent
and/or the Required Banks) have been either satisfied or waived in writing
by the Agents, and the Required Banks as of such date, (ii) immediately
before and after giving effect to the Initial Loans, all representations
and warranties contained herein or in any other Credit Document (except as
expressly amended hereunder or under another Credit Document) shall be true
and correct in all material respects, (iii) no Default or Event of Default
has occurred or will have occurred after giving effect to the Initial Loans
and (iv) since June 30, 1997 no material adverse change in the business,
assets, prospects, properties or condition (financial or otherwise) of the
Borrower and its Subsidiaries shall have occurred.
(c) OPINIONS OF COUNSEL. The Administrative Agent shall have
received an opinion dated the Closing Date addressed to each of the Banks
from Brownstein Hyatt Farber & Strickland, P.C., counsel to the Credit
Parties in form and substance reasonably acceptable to the Administrative
Agent.
(d) CORPORATE PROCEEDINGS. All corporate and legal proceedings and
all instruments and agreements in connection with the Public Financing, the
execution of this Agreement and the other Credit Documents and all related
transactions shall be reasonably satisfactory in form and substance to the
Agents, and the Administrative Agent shall have received all information
and copies of all certificates, documents and papers, including records of
corporate proceedings and governmental approvals, if any, which the Agents
may have reasonably requested from the Credit Parties or in connection
therewith, such documents and papers where appropriate to be certified by
proper corporate or governmental authorities. Without limiting the
foregoing, the Administrative Agent shall have received from each Credit
Party:
(i) resolutions of the board of directors (or of the board of
directors of the general partner) of each such Person which shall
include, without limitation, (1) resolutions approving such documents
and actions as are contemplated by this Agreement, the Public
Financing and any related transactions to the extent such Person is a
party thereto and (2) resolutions as to the due authorization,
execution and delivery of this Agreement, to the extent such Person is
a party thereto, all such resolutions to be in form and substance
reasonably satisfactory to the Agents; and
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(ii) signature and incumbency certificates of each officer of
each such Credit Party executing instruments, documents or agreements
required to be executed in connection with the transactions
contemplated by this Agreement and the Public Financing.
(e) PUBLIC FINANCING DOCUMENTS. Full, complete and accurate copies
of each of the material Public Financing Documents executed or in effect as
of the Closing Date (including all schedules and exhibits thereto) shall
have been provided to the Administrative Agent. The Public Financing
Documents and any amendments thereto, shall be in form and substance
satisfactory to the Agents; and on the Closing Date all of the conditions
to the Public Financing shall have been satisfied in all material respects
(or waived in writing, such waiver to be reasonably satisfactory to the
Agents) to the reasonable satisfaction of the Agents.
(f) CAPITAL CONTRIBUTION; CAPITALIZATION. As of the Closing Date, the
Borrower (i) shall have received (in connection with the Public Financing)
gross cash proceeds in an aggregate amount of at least $40,000,000 from the
public offering of its Series A Preferred Stock and the related warrants to
purchase Common Stock of the Borrower and gross cash proceeds in an
aggregate amount of at least $85,000,000 from the issuance of high yield
debt, (including capitalized interest), (ii) shall have a retained
investment in the form of the Heller Subordinated Note in the amount of not
less than $7,500,000, and (iii) shall use the proceeds of the Public
Financing to retire the Existing Term A Loans, the Existing Term B Loans,
the Existing Acquisition Term Loans and the Existing Revolving Loans.
(g) CAPITAL STRUCTURE. On the Closing Date, after giving effect to
the Public Financing, (i) Holdings shall have been merged with and into the
Borrower and shall have ceased to exist as a separate entity and (ii) all
of the Capital Stock of each of the Borrower's Restricted Subsidiaries
shall have been assigned and pledged to the Administrative Agent, for the
benefit of the Banks and certificates evidencing such Capital Stock shall
have been delivered to the Administrative Agent, together with executed
stock powers.
(h) ORGANIZATIONAL DOCUMENTATION, ETC. On or prior to the Closing
Date, the Administrative Agent shall have received a true and complete
certified copy of the following documents of each of the Borrower and each
of its Restricted Subsidiaries the provisions of which shall be reasonably
satisfactory to the Agents:
(i) Copies of its certificate of incorporation, or certificate
of limited partnership, as the case may be, which (A) shall be
certified by, and accompanied by a good standing certificate from, the
Secretary of State or similar official of the jurisdiction of its
organization and (B) shall be accompanied by good standing
certificates from each jurisdiction in which it is required to be
qualified to do
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business as a foreign corporation, each to be dated a recent date
prior to the Closing Date;
(ii) Copies of its by-laws or limited partnership agreement as
the case may be, certified as of a recent date prior to the Closing
Date by its corporate secretary or other person serving in a similar
capacity.
(i) CERTAIN FEES; INTEREST ON OUTSTANDING LOANS. All fees and
reasonable costs and expenses (including, without limitation, reasonable
legal fees and expenses) and other compensation payable to the Agents or
the Banks by the Borrower shall have been paid in full, and there shall
have been paid in full all accrued interest and all accrued commitment fees
on the Outstanding Loans and all other fees and expenses (including,
without limitation, reasonable legal fees and expenses) of the Agents or
the Banks, in each case to the extent due and payable and, with respect to
costs and expenses, invoiced or presented on or before the Closing Date.
(j) FINANCIAL STATEMENTS, ETC. On or before the Closing Date, the
Agents shall have received: (i) audited consolidated financial statements
of Holdings and its Subsidiaries for Holdings' fiscal years ended on or
about June 30, 1996 and June 30, 1997; (ii) unaudited income statements,
cash flows and balance sheets for Holdings and its Subsidiaries for the
period July 1, 1997 through October 31, 1997; (iii) a pro forma balance
sheet for the Borrower and its Subsidiaries, as of the Closing Date after
giving effect to the Public Financing and the Initial Loans; and (iv) a
revised annual plan, giving effect to the Public Financing, (by month for
the calendar year commencing on or about June 30, 1997) for each of the
Borrower's and its Subsidiaries' five calendar years commencing on or about
June 30, 1997, in each case, accompanied by a statement by the Borrower
that such projections are based on estimates and assumptions believed by
the Borrower in good faith to be reasonable in light of the conditions
which existed at the time of their preparation as to the future financial
performance of the Borrower, each in form, scope and substance satisfactory
to the Administrative Agent, prepared in accordance with the Borrower's
normal accounting procedures applied on a consistent basis, including (A)
forecasted balance sheets and statements of operations, stockholders'
equity and cash flows of the Borrower and its Subsidiaries for such
periods, (B) the amount of forecasted capital expenditures (including the
amount of such costs to be capitalized, if any) for such periods, and (C)
the Borrower and its Subsidiaries' forecasted compliance with Sections 7.01
through 7.05. Each of the items delivered pursuant to this Section
4.01(j), which are attached as Schedule 4.01(j), shall be satisfactory to
the Agents in their reasonable discretion. Since the time of the
preparation of such financial projections, no fact or facts have come to
the attention of any Credit Party to cause such Person to believe that any
of the estimates and assumptions on which such projections are based are
not reasonable.
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(k) INSURANCE. The insurance coverage set forth on Schedule 5.22
shall be in full force and effect with respect to the Borrower and its
Restricted Subsidiaries and their respective properties.
(l) LITIGATION. Except as set forth on Schedule 4.01(l), there shall
be no litigation pending or threatened by any entity (private or
governmental) involving any Credit Party or any of the properties or assets
of any such Person that could reasonably be expected to restrain, enjoin or
result in the obtaining of a judgment for substantial damages with respect
to the Public Financing or the consummation of the transactions
contemplated by the Public Financing, and there shall be no pending or
threatened litigation involving any Credit Party or any of the properties
or assets of any such Person that could reasonably be expected to have a
material adverse effect on the operations or properties of Borrower or any
of its Subsidiaries or the ability of the Credit Parties to operate the
same or that could, in the Agents' reasonable judgment, reasonably be
expected to have a Material Adverse Effect.
(m) INDEBTEDNESS, ETC. (i) Except as set forth on Schedule 4.01(m),
on or before the Closing Date, each Credit Party shall have received all
necessary consents or waivers or shall have amended, supplemented or
otherwise modified, repaid or defeased its outstanding Indebtedness in a
manner and on terms satisfactory to the Agents such that there exists no
default or potential default (as a result of the consummation of the Public
Financing) with respect to such Indebtedness or under any note, evidence of
indebtedness, capital lease, mortgage, deed of trust, security document or
other agreement relating to such Indebtedness and such indentures, notes,
evidences of indebtedness, capital lease mortgages, deeds of trust or other
agreements relating to such Indebtedness shall not contain (i) any
restriction on the ability of the Borrower or any of its Restricted
Subsidiaries to grant any Lien in favor of the Banks (other than in the
case of Capital Leases, or purchase money debt (excluding Real Property
leases), a Lien on the property financed thereby) or any financial
covenants or tests applicable to the Borrower or any of its Restricted
Subsidiaries.
(ii) The terms and conditions of any Indebtedness of the
Borrower and its Restricted Subsidiaries as of the Closing Date which
remains outstanding after giving effect to the Public Financing and
the making of the Initial Loans, shall, in each case, be reasonably
acceptable to the Agents. The Administrative Agent shall have
received evidence satisfactory to it that the Indebtedness reflected
on Schedule 5.19 as being paid as of the Closing Date is being paid
with the proceeds of the Initial Loans or the Public Financing.
(n) SECURITY DOCUMENTS. In each case, to the extent the same shall
not have been previously delivered to the Administrative Agent, the
Security Documents shall have been duly executed and delivered by each of
the Credit Parties party thereto and there shall have been delivered to the
Administrative Agent: (i) a certificate or certificates
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representing all Capital Stock of each of the Borrower's Restricted
Subsidiaries, together with executed and undated stock powers and/or
assignments in blank; (ii) certified copies of Requests for Information
(Form UCC-11 or the equivalent), or equivalent reports or lien search
reports listing all effective financing statements which name the Borrower
and its Restricted Subsidiaries and which are filed in any jurisdiction in
which any of such Collateral is located and the jurisdiction in which such
Person's principal place of business is located (none of which shall cover
the Collateral covered, or purported to be covered, by the Security
Documents other than Prior Liens and Permitted Encumbrances); and (iii)
evidence of the completion of all recordings and filings (or of the making
of arrangements to file contemporaneously with the making of the Initial
Loans) of each such Security Document and delivery of such other security
and other documents as may be necessary or, in the opinion of the
Administrative Agent, desirable to perfect the Liens created, or purported
or intended to be created, by the Security Documents.
(o) LEASES. All Capital Leases and Operating Leases of the Borrower
and its Restricted Subsidiaries outstanding immediately prior to the
Closing Date shall remain outstanding after giving effect to the Public
Financing and the making of the Initial Loans hereunder.
(p) CONSENTS, ETC. All necessary or required governmental and third
party approvals and consents (including, without limitation, all approvals
and consents required in connection with any Environmental Laws), in
connection with the Public Financing or the transactions contemplated by
this Agreement and the Public Financing Documents and otherwise referred
to herein or therein to be completed on or before the Closing Date are set
forth on Schedule 4.01(p) and shall have been obtained and remain in
effect, and all applicable waiting periods shall have expired without any
action being taken by any competent authority which restrains, prevents or
imposes, in the reasonable judgment of the Agents, material adverse
conditions upon the consummation of the Public Financing. There shall not
exist any judgment or order enjoining or otherwise restraining the making
of the Loans hereunder or the consummation of the Public Financing.
(q) BORROWING BASE; BORROWING BASE CERTIFICATE. The Administrative
Agent and the Banks shall have received and the Required Banks shall be
satisfied in all reasonable respects with a Borrowing Base Certificate
which shall be substantially in the form of Exhibit 6.01(m) and shall be
prepared as of a date prior to the Closing Date that is reasonably
satisfactory to the Agents. Such Borrowing Base Certificate shall indicate
that the Borrowing Base on the Closing Date (before and after giving effect
to the Public Financing) exceeds the amount of the Revolving Loans to be
outstanding as of such date by not less than $[ ].
(r) NO MATERIAL ADVERSE CHANGE. Since June 30, 1997 nothing shall
have occurred or become known to any Credit Party which the Agents shall
have determined
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has or could reasonably be expected to have a Material Adverse Effect or a
material adverse effect on the business or operations of the Borrower and
its Subsidiaries or has resulted or could result in a material adverse
change in the business, assets, prospects, properties or condition
(financial or otherwise) of any Credit Party, in the industry in which the
Borrower competes or in the ability of the Borrower or any of its
Subsidiaries (after giving effect to the Public Financing) as of the
Closing Date to conduct its operations in accordance with the revised
projections furnished to the Agents pursuant to Section 4.01(j). As of the
Closing Date, there shall not have occurred and be continuing a material
disruption of, or material adverse change in, United States financial,
banking or capital markets, as reasonably determined by the Agents in their
sole discretion.
The acceptance of the proceeds of each Borrowing of Initial Loans shall
constitute a representation and warranty by the Borrower to each of the Banks
that all of the applicable conditions specified above have been satisfied or
waived as of that time. All of the certificates, legal opinions and other
documents and papers referred to in this Section 4.01, unless otherwise
specified, shall be delivered to the Administrative Agent at the Agent's Office
(or such other location as may be specified by the Agents) for the account of
each of the Banks and in sufficient counterparts for each of the Banks and shall
be reasonably satisfactory in form and substance to the Agents.
4.02 CONDITIONS PRECEDENT TO ALL LOANS. The obligations of the Banks to
make all Loans (which term shall not include a conversion or continuation of a
Loan), including the Initial Loans, are subject, at the time of the making of
each such Loan, to the satisfaction of the following conditions:
(a) NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time of the
making of each Loan and also after giving effect thereto (and in the case
of the Initial Loans, after giving effect to the Public Financing; and in
the case of any Acquisition Term Loans, after giving effect to the
transactions contemplated to be effected with the proceeds of such Loan)
(i) there shall exist no Default or Event of Default and (ii) all
representations and warranties contained herein and in each of the other
Credit Documents in effect at such time shall be true and correct with the
same effect as though such representations and warranties had been made on
and as of the date of the making of such Loan, unless such representation
and warranty expressly indicates that it is being made as of any other
specific date in which case it shall be true and correct on and as of such
other date.
(b) NO MATERIAL ADVERSE CHANGE, ETC.
(i) Since June 30, 1997, nothing shall have occurred or become
known to any Credit Party which the Required Banks or the
Administrative Agent shall have determined has or could reasonably be
expected to have a Material Adverse Effect.
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(ii) There shall not have been issued or filed any judgment or
order which remains outstanding enjoining or otherwise restraining the
making of any Loans hereunder.
(c) MARGIN RULES. On the date of each Borrowing of Loans, neither
the making of any Loan nor the use of the proceeds thereof will violate the
provisions of Regulation G, U or X of the Board of Governors of the Federal
Reserve System.
(d) BORROWING BASE CERTIFICATE. The Administrative Agent and the
Required Banks shall have received, and the Required Banks shall be
reasonably satisfied (both as to form and substance) with, the Borrowing
Base Certificate last delivered to the Banks.
The acceptance of the proceeds of each Borrowing of Loans, including the
Initial Loans, shall constitute a representation and warranty by each Credit
Party to each of the Banks that all of the applicable conditions specified in
this Section 4.02 have been satisfied or waived (in each case disregarding any
reference therein that such condition be deemed satisfactory by the
Administrative Agent and/or the Required Banks). All of the certificates,
documents and papers referred to in this Section 4.02, unless otherwise
specified, shall be delivered to the Administrative Agent at the Agent's Office
(or such other location as may be specified by the Administrative Agent) for the
account of each of the Banks and in sufficient counterparts for each of the
Banks and shall be reasonably satisfactory in form and substance to the
Administrative Agent.
4.03 ADDITIONAL CONDITIONS PRECEDENT TO ACQUISITION TERM LOANS AND
SUPPLEMENTAL TERM LOANS. The obligations of the Banks to make Acquisition Term
Loans and Supplemental Term Loans (which shall not include a conversion or
continuation of any such Loan) are subject to the satisfaction of the following
additional conditions:
(a) Any such Acquisition Term Loan or Supplemental Term Loan shall be
made solely to effect one or more Permitted Business Acquisitions;
(b) No later than ten Business Days prior to the applicable
Acquisition Term Loan Closing Date or Supplemental Term Loan Closing Date
(except to the extent the Administrative Agent agrees to a shorter period),
the Administrative Agent shall have received (with sufficient copies for
each Bank) each of the following with respect to the consummation of the
Permitted Business Acquisition to be financed with the proceeds of any such
Acquisition Term Loan or Supplemental Term Loan:
(i) audited financial statements of the acquired company for
such company's two most recently completed fiscal years (or if audited
financial statements are unavailable for any such period, unaudited
financial statements for such period not so available which are
accompanied by a report on such financial
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statements by Arthur Anderson or another "Big Six" accounting firm
acceptable to the Administrative Agent);
(ii) a pro forma balance sheet and pro forma consolidated
statements of income and cash flows of the Borrower and its
Restricted Subsidiaries, after giving effect to the consummation of
the proposed Permitted Business Acquisition, as at the end of the
calendar quarter in which such Permitted Business Acquisition is to be
consummated;
(iii) a revised consolidated plan, substantially in the form of
the consolidated plan provided pursuant to Section 4.01(j)(iv) or
otherwise in a form acceptable to the Administrative Agent, for the
then current calendar year and the next four succeeding calendar
years, in each case, giving effect to such Permitted Business
Acquisition, prepared in accordance with the Borrower's normal
accounting procedures (and which will represent management's
reasonable estimate of the projected performance of the Borrower and
its Restricted Subsidiaries during such periods) applied on a
consistent basis, including, without limitation (i) forecasted
consolidated balance sheets, consolidated statements of operations, of
stockholders' equity and of cash flows of the Borrower and its
Restricted Subsidiaries on a consolidated basis for such periods, (ii)
the amount of forecasted capital expenditures for such periods, and
(iii) forecasted compliance with Sections 7.01 through 7.05; PROVIDED,
HOWEVER, that if any such forecast projects a potential failure to
comply with any provision of this Agreement at some future date, such
forecast shall not constitute a Default or Event of Default or
anticipatory or other breach hereof.
(iv) a certificate of the president or chief financial officer
of the Borrower which is substantially in the form of Exhibit
4.03(b)(iv),
(x) certifying to the preparation of the pro forma financial
statements and budgets referenced in subclauses (i) and (ii)
and certifying that, after giving effect to such Permitted
Business Acquisition, no Default or Event of Default shall
exist, and that, on a pro forma basis, the Borrower and its
Restricted Subsidiaries (including any Subsidiary of the
Borrower to be acquired in the contemplated Permitted
Business Acquisition), will be in compliance with the
covenants set forth in Sections 7.01 through 7.05,
inclusive, as of the end of the calendar quarter in which
such Acquisition is to be consummated and setting forth the
calculations required to establish such pro forma compliance
and appending a spreadsheet showing any adjustments to the
actual EBITDA of the Permitted Business Acquisition made in
the preparation of such pro forma financial statements and
calculations;
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(y) setting forth, to the reasonable satisfaction of the
Administrative Agent, the material terms and conditions of
such Acquisition; and
(z) certifying that the conditions set forth in each of Sections
4.02 and 4.03 (other than the completion of filings and
recordings to be performed upon the applicable Acquisition
Term Loan Closing Date or Supplemental Term Loan Closing
Date, as the case may be) have been satisfied with respect
to such proposed Acquisition Term Loan Borrowing or
Supplemental Term Loan Borrower, as the case may be.
(c) Since June 30, 1997, nothing shall have occurred or become known
to any Credit Party which the Required Banks or the Administrative Agent
shall have determined has or could reasonably be expected to have a
Material Adverse Effect or has or could reasonably be expected to result in
a material adverse change in the industry in which the Borrower competes.
(d) The terms and conditions of such Acquisition and the related
documents shall be reasonably acceptable to the Administrative Agent;
(e) On or before the applicable Acquisition Term Loan Closing Date or
Supplemental Term Loan Closing Date, as the case may be, the Borrower shall
have complied, in all material respects, with the provisions of Section
6.14 as to any property acquired or to be acquired in connection with any
such Permitted Business Acquisition, except for any such provisions with
which compliance is waived by the Administrative Agent, including, without
limitation, that the Borrower and its Restricted Subsidiaries (including
any Subsidiary so acquired) shall execute and deliver to the Administrative
Agent any Additional Security Documents (or Subsidiary Guarantees) required
to provide the Administrative Agent for the benefit of the Banks with a
valid, perfected security interest in any Collateral to be acquired in such
Permitted Business Acquisition; and
(f) Without limiting the foregoing clause (d), with respect to any
Real Property (whether fee title or leasehold) in which an interest is
acquired in connection with any such Permitted Business Acquisition
(including any such interest held by any Subsidiary of the Borrower
acquired in such acquisition), the applicable conditions described below
shall be satisfied on or before the Acquisition Term Loan Closing Date or
Supplemental Term Loan Closing Date, as the case may be, provided, however,
that the following requirements shall not apply to (i) any Permitted
Business acquisition which includes Real Property in which the Borrower's
or any Restricted Subsidiary's interest individually is, in the
Administrative Agent's reasonable opinion, worth less than $300,000 and in
the aggregate worth less than $1,000,000 or (ii) to any acquisition of a
company involved solely in the business of growing, harvesting and selling
Christmas
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trees, so long as the amount of Borrowings related to such acquisitions of
Christmas tree companies consummated after the Closing Date do not exceed
$5,000,000 in the aggregate:
(x) with respect to Permitted Business Acquisitions which include
Real Property which, in the Administrative Agent's reasonable opinion,
individually is worth less than $300,000 but in the aggregate is worth
$1,000,000 or more (but less than $3,000,000), the Administrative
Agent may require that Real Property interests be subject to the
requirements of subclauses (i), (ii) and (iv) of clause (z) below;
(y) with respect to Permitted Business Acquisitions which include
Real Property which individually is worth $300,000 or more, for each
such parcel the Borrower's or any Restricted Subsidiary's interest is
worth less than $600,000, the requirements set forth in subclauses
(i)-(iv) of clause (z) below must be fulfilled (provided that no
as-built survey or related title insurance policy endorsements
dependent thereon will be required) and, for each parcel of Real
Property the Borrower's or any Restricted Subsidiary's interest is
worth $600,000 or more, all the requirements set forth in clause (z)
below must be fulfilled; and
(z) with respect to acquisitions which include Real Property
which individually the Borrower's or any Restricted Subsidiary's
interest is worth less than $300,000 but in the aggregate the
Borrower's or any Restricted Subsidiary's interest is worth $3,000,000
or more, the Administrative Agent may require that Real Property
interests be subject to some or all of the requirements described
below:
(i) The Administrative Agent, for the benefit of the Banks,
shall be granted a first mortgage or deed of trust (or
leasehold mortgage or deed of trust) on all of the
interests in such Real Property by the Person holding
such acquired interest, subject to no prior Liens except
for Permitted Encumbrances.
(ii) Any leasehold mortgages or deeds of trust granted
pursuant to the foregoing subclause (i) must be consented
to by any owners of such Real Property pursuant to an
estoppel and consent agreement in form and substance
satisfactory to the Administrative Agent.
(iii) There shall be issued a lender's title insurance policy
as to each mortgage or deed of trust granted pursuant to
the foregoing subclause (i), with no exceptions
(including fee mortgages encumbering leasehold interests
in Real Property) which are not reasonably acceptable to
the Administrative Agent, and, unless the
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Administrative Agent shall otherwise elect, as-built
surveys sufficient to remove the survey exception from
all title insurance policies shall be delivered to the
Administrative Agent.
(iv) A Phase I environmental report with respect to each
parcel of such Real Property satisfactory to the
Administrative Agent (and upon which the Banks shall be
entitled to rely) shall be delivered to the
Administrative Agent.
(v) Evidence reasonably acceptable to the Administrative
Agent shall be presented that the intended use by the
Borrower and its Subsidiaries of each of such Real
Properties complies with all zoning and land use laws,
and that all necessary permits and approvals for the
operation of such properties in such manner have been
obtained and are in full force and effect.
(g) There shall be delivered to the Administrative Agent (in each
case, with sufficient copies for each Bank) copies of the following
documents related to any Permitted Business Acquisition to be consummated
with the proceeds of an Acquisition Term Loan, (i) the term sheet for such
Acquisition, upon execution thereof by the parties thereto, and (ii) upon
consummation of such Acquisition, a complete set of the documents effecting
such Acquisition, together with all schedules and exhibits (including,
without limitation the acquisition agreement and any Seller Notes issued in
connection therewith).
(h) The Administrative Agent shall have received, if so requested by
the Administrative Agent, an opinion dated the applicable Acquisition Term
Loan Closing Date or Supplemental Term Loan Closing Date, as the case may
be, addressed to each of the Banks from Brownstein Hyatt Farber &
Strickland, P.C., in form and substance reasonably acceptable to the
Administrative Agent.
(i) Any fees or expenses of the Agents or the Banks which are then
due and payable, whether due in connection with such Acquisition Term Loan
Borrowing or otherwise, shall have been paid in full prior to, or
simultaneously with, the applicable Acquisition Term Loan Closing.
SECTION 5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. In order to induce
the Agents and the Banks to enter into this Agreement and to make the Loans
provided for herein, the Borrower makes the following representations and
warranties to, and agreements with, the Agents and the Banks, all of which shall
survive the execution and delivery of this Agreement and the making of the Loans
(with the execution and delivery of this Agreement and the making of each Loan
thereafter being deemed to constitute a representation and warranty that the
matters specified in this Section 5 are true and correct in all material
respects both before and after giving effect to the Public Financing and the
related transactions and as of the date of each such Loan
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unless such representation and warranty expressly indicates that it is being
made as of any specific date).
5.01 STATUS. Each Credit Party is a duly organized and validly existing
corporation or limited partnership, as the case may be, in good standing under
the laws of the jurisdiction of its organization. After giving effect to the
Public Financing, Holdings shall have merged with and into the Borrower, and all
of its right, title and interest in any assets as of such date shall thereupon
be held directly by the Borrower. Each Credit Party has all corporate power and
authority, and has obtained all requisite governmental licenses, authorizations,
consents and approvals (including, without limitation, those required by
Environmental Laws), to own and operate its property and assets and to transact
the business in which it is engaged and presently proposes to engage, except for
those governmental licenses, authorizations, consents or approvals the failure
of which to be so obtained would not have a Material Adverse Effect; and is duly
qualified and authorized to do business and is in good standing in all
jurisdictions where it is required to be so qualified, except where the failure
to be so qualified could not reasonably be expected to have a Material Adverse
Effect.
5.02 POWER AND AUTHORITY; BUSINESS. Each Credit Party had or has, as
applicable, the requisite corporate power and authority to execute, deliver and
carry out the terms and provisions of the Transaction Documents and Public
Financing Documents to which it is a party and has taken all necessary corporate
action to authorize the execution, delivery and performance of the Transaction
Documents and Public Financing Documents to which it is a party. Each Credit
Party has duly executed and delivered each Transaction Document and each Public
Financing Documents to which it is a party and each such Document constitutes
the legal, valid and binding obligation of such Credit Party and is enforceable
against such Credit Party in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws now or hereafter in
effect relating to the rights of creditors generally or by general principles of
equity or the discretion of the court before which any proceeding therefor may
be brought.
5.03 NO VIOLATION. Neither the execution, delivery or performance by any
Credit Party of the Credit Documents to which it is a party nor compliance with
the terms and provisions thereof nor the consummation of the transactions
contemplated therein (a) will contravene any applicable provision (or any
provision to be applicable following the Public Financing) of any law, statute,
rule, regulation, order, writ, injunction or decree of any court or Governmental
Authority; (b) conflicts or will conflict or be inconsistent with, or results or
will result in any breach or violation of any of the terms, covenants,
conditions or provisions of, or constitutes or will constitute a default under,
or (other than pursuant to the Security Documents) results or will result in the
creation or imposition of (or the obligation to create or impose) any Lien upon
any of the property or assets of any Credit Party pursuant to the terms of, any
indenture, mortgage, deed of trust or other material instrument or agreement to
which any Credit Party is a party or by which it or any of its property or
assets is bound (or will be bound after giving effect to the Public Financing)
or to which it may be subject or any law, statute, rule, regulation, order,
writ,
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injunction or decree of any court or Governmental Authority referred to in
clause (a) above; or (c) will violate any provision of the certificate of
incorporation, certificate of formation, certificate of limited partnership,
by-laws, limited liability company agreement of any Credit Party, except in the
case of any of the foregoing clauses (a) through (c) where such contravention,
conflict, inconsistency, breach, default, creation, imposition, obligation or
violation does not have a Material Adverse Effect. Neither the execution,
delivery or performance of any Document, nor the consummation of the Public
Financing nor the terms of the financing in connection therewith conflicted,
conflicts or will conflict or be inconsistent with, or results or will result in
any breach or violation of any of the terms, covenants, conditions or provisions
of, or constitutes or will constitute a default under, or results or will result
in the creation or imposition of (or the obligation to create or impose) any
Lien (except pursuant to the Security Documents) upon any of the property or
assets of any Credit Party pursuant to the terms of, any indenture, mortgage,
deed of trust, instrument or agreement relating to Indebtedness for borrowed
money or the equivalent thereof or other material agreement to which any Credit
Party is a party or by which it or any of its property or assets is bound or to
which it may be subject or any law, statute, rule, regulation, order, writ,
injunction or decree of any court or Governmental Authority referred to in
clause (a) above, except, in each case, where such conflict, inconsistency,
breach, default, creation, imposition or obligation could not reasonably be
expected to have a Material Adverse Effect.
5.04 LITIGATION. There are no actions, judgments, suits, investigations
or proceedings by any administrative or other public authority or Governmental
Authority or other Person pending or, to the best knowledge of the Borrower,
threatened with respect to any Credit Party or any of its assets (both before
and after giving effect to the Public Financing) that (a) challenges the
consummation of the Public Financing or the validity of any of the Public
Financing Documents or the transactions contemplated thereby, including the
making of any Loans, or (b) taken individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect.
5.05 USE OF PROCEEDS.
(a) Not more than [$_______________] of the proceeds of the Revolving
Loans shall be used by the Borrower on the Closing Date to pay fees and
expenses related to the Public Financing and the remaining proceeds of the
Revolving Loans and the Supplemental Revolving Loans shall be used to
finance the ongoing capital requirements of the Borrower and its
Subsidiaries and for general corporate purposes.
(b) All of the proceeds of the Acquisition Term Loans and the
Supplemental Term Loans shall be used by the Borrower to provide all or a
portion of the consideration for Permitted Business Acquisitions, to pay
existing Indebtedness encumbering property acquired in such transactions
(including existing Indebtedness of any Restricted Subsidiary of the
Borrower so acquired), and to pay related fees and expenses.
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(c) Neither the making of any Loan hereunder nor the use of the
proceeds thereof shall violate or be inconsistent with the provisions of
Regulation G, U or X of the Board of Governors of the Federal Reserve
System.
5.06 GOVERNMENTAL APPROVALS, ETC. No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption or other action by or notice to, any third party or any foreign or
domestic, administrative or public body or Governmental Authority, or by any
subdivision thereof (except for (a) such orders, consents, approvals, licenses,
authorizations or validations which, if not obtained or made, would not have a
Material Adverse Effect or which have previously been obtained or made and (b)
filings to perfect security interests granted pursuant to the Security
Documents) is necessary or required to authorize or is required in connection
with (i) the execution, delivery and performance of any Credit Document or the
transactions contemplated thereby or (ii) the legality, validity, binding effect
or enforceability of any Credit Document. As of the Closing Date, there shall
not exist any judgment, order, injunction or other restraint issued or filed
with respect to the transactions contemplated by the Credit Documents or the
Public Financing Documents or Credit Documents, including the making of Loans or
the performance by any Credit Party of its obligations under any Public
Financing Documents or Credit Documents. At the time of the making of the
Initial Loans, there does not exist any judgment, order, injunction or other
restraint issued or filed with respect to the transactions contemplated by the
Public Financing Documents, including the consummation of the Public Financing,
the making of Loans or the performance by any Credit Party of its obligations in
connection with the Public Financing.
5.07 INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT. Neither
the Borrower nor any of its Restricted Subsidiaries was, prior to the Closing
Date, is, or will be after giving effect to the transactions contemplated by the
Public Financing, (a) an "investment company" or a company "controlled" by an
"investment company," in each case within the meaning of the Investment Company
Act of 1940, as amended; or (b) a "holding company," a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," in each case within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
5.08 TRUE AND COMPLETE DISCLOSURE. All factual information (taken as a
whole) heretofore or contemporaneously furnished in writing by or on behalf of
any Credit Party to any Bank and either (a) contained in any Credit Document or
(b) required to be furnished pursuant to Section 4.01, is, and as of the Closing
Date will be, and all other such factual information (taken as a whole) which
has been or hereafter will be furnished in writing by or on behalf of any Credit
Party to the Administrative Agent or any Bank pursuant to Section 6.01 or 4.03
is or will be, true and accurate in all material respects on the date as of
which such information is dated or certified and is not and will not be
incomplete by omitting to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; PROVIDED, HOWEVER, that it is understood that the
projections and pro forma financial information contained in such materials are
based on good faith estimates and assumptions
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believed by such Credit Party to be reasonable at the time made, but that actual
results may vary from the projections.
5.09 FINANCIAL CONDITION; FINANCIAL STATEMENTS; PROJECTIONS.
(a) No Credit Party entered into the arrangements contemplated by the
Original Credit Agreement, the Existing Credit Agreement, the other
Transaction Documents this Agreement or by the Public Financing Documents,
or did intend or intends to make any transfer or incur any obligations
hereunder or thereunder, with actual intent to hinder, delay or defraud
either then existing, present or future creditors. On and as of the
Effective Date, the Closing Date (and as of each Acquisition Term Loan
Closing Date and each Supplemental Term Loan Closing Date), on a pro forma
basis after giving effect to (i) as applicable, the Public Financing (and
the transactions to be consummated with the proceeds of any such
Acquisition Term Loan or Supplemental Term Loan), (ii) the incurrence of
all Indebtedness in connection therewith, (iii) the creation of all Liens
created or to be created in connection therewith and (iv) the granting of
all guarantees granted by any Credit Party in connection therewith, (A) no
Credit Party expected or expects that final judgments against it in actions
for money damages with respect to pending or threatened litigation will be
rendered at a time when, or in an amount such that, it will be unable to
satisfy any such judgments promptly in accordance with their terms (taking
into account the maximum reasonable amount of such judgments in any such
actions, the earliest reasonable time at which such judgments might be
rendered and the cash available to such Credit Party, after taking into
account all other anticipated uses of the cash of such Credit Party
(including the payments on or in respect of debts (including its Contingent
Obligations)); (B) no Credit Party incurred, will have incurred or intends
to, or believes that it will, incur debts beyond its ability to pay such
debts as such debts mature (taking into account the timing and amounts of
cash to be received by such Credit Party from any source, and of amounts to
be payable on or in respect of debts of such Credit Party and the amounts
referred to in the preceding clause (A)); (C) each Credit Party, after
taking into account all other anticipated uses of the cash of such Person,
anticipates being able to pay all amounts on or in respect of debts of such
Person when such amounts are required to be paid; and (D) each Credit Party
will have sufficient capital with which to conduct its present and proposed
business and the property of such Credit Party will not constitute
unreasonably small capital with which to conduct its present or proposed
business. For purposes of this Section 5.09, "debt" means any liability on
a claim, and "claim" means a (1) right to payment whether or not such a
right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or
unsecured; or (2) right to an equitable remedy for breach of performance if
such breach gives rise to a payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured,
unmatured, disputed, undisputed, secured or unsecured.
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(b) The Borrower has heretofore delivered to the Banks the financial
statements attached hereto as Schedule 4.01(j). All such financial
statements were prepared in accordance with GAAP consistently applied.
Such financial statements (other than the pro forma balance sheets) present
fairly, in all material respects, the financial position of the Borrower
and its Subsidiaries (or where applicable, Holdings and its Subsidiaries)
on a consolidated basis as of the date and for the periods covered thereby,
and such pro forma balance sheet presents fairly, in all material respects,
the pro forma financial position of the Borrower and its Subsidiaries as of
the Closing Date, based on the assumptions stated therein, and before and
after giving effect to the transactions described therein.
(c) There have heretofore been delivered to the Banks the pro forma
income projections for the Borrower and its Subsidiaries, pro forma balance
sheet projections for the Borrower and its Subsidiaries and pro forma cash
flow projections for the Borrower and its Subsidiaries for the five
calendar years commencing June 30, 1997, inclusive, referred to in Section
4.01(j) including the financial statements delivered as of the Closing
Date, and, in connection with any Acquisition Term Loan, the proforma
financial statements referred to in Section 4.03 (the "PROJECTED FINANCIAL
STATEMENTS"), which give effect to the applicable Permitted Business
Acquisitions and all Indebtedness and Liens incurred or created in
connection therewith. The Projected Financial Statements are based on
estimates and projections which are believed by the Borrower and its
Restricted Subsidiaries to be reasonable in light of the conditions which
existed at the time of their preparation as to the future financial
performance of the Borrower and its Subsidiaries.
(d) As of the Closing Date, except as fully reflected or reserved
against in the financial statements (including the pro forma balance sheet
as of the Closing Date) described in Section 5.09(b), there were not and
will not be any liabilities or obligations with respect to the Borrower and
its Subsidiaries of any nature whatsoever, other than deferred purchase
price payments to be made pursuant to the Asset Purchase Agreement dated as
of July 31, 1997 among Holdings, Color Spot Christmas Trees, Inc. and
Cracon Inc. (whether absolute, accrued, contingent or otherwise and whether
or not due, other than for such as have been incurred by the Borrower and
its Subsidiaries in connection with the Public Financing and other than
trade payables incurred in the ordinary course of business since the
respective dates of such financial statements) which, either individually
or in aggregate, were or will be material to such Persons. No Credit Party
knows of any basis for the assertion against the Borrower or any of its
Subsidiaries of any liability or obligation of any nature whatsoever that
is not fully reflected in the financial statements described in
Section 5.09(b) or the Public Financing Documents or the schedules or
exhibits thereto (other than trade payables incurred in the ordinary course
of business) since the respective dates of such financial statements which,
either individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.
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5.10 SECURITY INTERESTS. With the exception of the parcels of Real
Property at the locations set forth on Schedule 5.10A, upon the execution,
delivery and filing or recording in all appropriate registries or offices of the
Security Documents, the Security Documents create or will create, in favor of
the Administrative Agent for the benefit of the Banks, as security for the
obligations purported to be secured thereby, a valid and enforceable perfected
security interest in and Lien upon all of the Collateral, which security
interest and Lien shall be superior to and prior to the rights of all third
persons and subject to no Liens except the Prior Liens and Permitted
Encumbrances applicable to such Collateral. Set forth on Schedule 5.10B is a
true list of all Liens (other than Liens in favor of the Agent and Liens
included in clause (a), (e) and (f) of the definitions of Permitted
Encumbrances) (i) on the property of the Borrower and its Restricted
Subsidiaries after giving effect to the Public Financing (collectively, the
"PRIOR LIENS"). The respective pledgor or assignor, as the case may be, has
(or, on and after the time it executes the respective Security Document, will
have) good and marketable title to the Collateral covered by such Security
Document, free and clear of all Liens other than Liens permitted under the
applicable Security Document. No filings or recordings are required in order to
perfect the security interests created under any Security Document except for
filings or recordings in the registries and offices set forth in Schedule 5.10C
(including as supplemented from time to time pursuant to Section 6.01(n)).
5.11 TAX RETURNS AND PAYMENTS. Except for the extension, to March 31,
1997, of the filing deadline for the tax returns due September 15, 1996 for the
Borrower's fiscal year ended June 30, 1996, each of the Borrower and its
Subsidiaries has filed all tax returns required to be filed by it (which are
true and correct in all material respects) and has paid all taxes and
assessments due and payable, other than (a) those not yet delinquent and (b)
those contested in good faith and for which adequate reserves have been
established, except, solely with respect to tax returns and taxes and
assessments required to be filed or paid by or on behalf of any such Person
relating to periods prior to the Closing Date, for any failure which,
individually or in the aggregate, would not have a Material Adverse Effect.
Each of the Borrower and its Subsidiaries has paid, or has provided adequate
reserves (in accordance with GAAP) for the payment of, all federal, state, local
and foreign income taxes (including, without limitation, franchise taxes based
upon income) applicable for all prior fiscal years and for the current fiscal
year to the date hereof except, solely with respect to tax returns and taxes and
assessments required to be filed or paid by or on behalf of any such Person
relating to the period prior to the Closing Date, for any failures which,
individually or in the aggregate, would not have a Material Adverse Effect.
Neither the Borrower nor any of its Subsidiaries know of any proposed tax
assessment against any such Person that could reasonably be expected to have a
Material Adverse Effect which is not being actively contested in good faith by
such Person to the extent affected thereby in good faith and by appropriate
proceedings; PROVIDED, HOWEVER, that such reserves or other appropriate
provisions, if any, as shall be required in conformity with GAAP shall have been
made or provided therefor.
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5.12 ERISA. Neither the Borrower nor its Restricted Subsidiaries nor any
ERISA Affiliate of any such Person has, for a period commencing six years prior
to the Closing Date, established, maintained, participated in or been obligated
to contribute to any Plan.
5.13 CAPITAL STOCK; SUBSIDIARIES, ETC.
(a) From and after the consummation of the Public Financing, all of
the outstanding Capital Stock of the Borrower and its Restricted
Subsidiaries shall be validly issued, fully paid and nonassessable. Except
as set forth in the Stockholders Agreement, there are no preemptive rights
on the part of any holder of any class of securities or equity interests of
the Borrower and its Restricted Subsidiaries.
(b) LSGR Holdings, Inc., a direct, Wholly-Owned Subsidiary of the
Borrower, holds 99% of the partnership interests in Lone Star Growers,
L.P., as the sole limited partner, and Lone Star, Inc., a direct,
Wholly-Owned Subsidiary of the Borrower, holds the remaining 1% of the
partnership interests in Lone Star Growers, L.P., as the sole general
partner.
(c) Schedule 5.13 (including as supplemented from time to time
pursuant to Section 6.01(n)) lists each Subsidiary of the Borrower and sets
forth the jurisdiction of incorporation (or of formation) of each such
Subsidiary. There are no Restricted Subsidiaries of the Borrower which are
not directly or indirectly Wholly Owned Subsidiaries. Each Restricted
Subsidiary of the Borrower has guaranteed the Borrower's obligations
hereunder and the Borrower and each such Restricted Subsidiary has pledged
all of its property to secure the same, pursuant to a Subsidiary Guarantee
and related Security Documents.
5.14 PROPRIETARY RIGHTS. The Borrower and each of its Restricted
Subsidiaries owns or possesses adequate patents, patent applications,
copyrights, licenses, permits, trademarks, trademark applications, service
marks, service mark applications, trade names, trade secrets and know how or
rights thereto (collectively, "INTELLECTUAL PROPERTY"), necessary to conduct its
business as presently conducted and as proposed to be conducted. No claim is
pending or, to the best knowledge of the Borrower and each such Restricted
Subsidiary, threatened to the effect that the Borrower or any of its Restricted
Subsidiaries infringes upon the asserted rights of any other Person under any
Intellectual Property, and to the best knowledge of the Borrower or any of its
Restricted Subsidiaries, there is no basis for any such claim (whether or not
pending or threatened), in each case where such claim could reasonably be
expected to have a Material Adverse Effect. No claim is pending or, to the best
knowledge of the Borrower or any of its Restricted Subsidiaries threatened to
the effect that the rights of the Borrower or any of its Restricted Subsidiaries
with respect to any such Intellectual Property owned by the Borrower or any of
its Restricted Subsidiaries are invalid or unenforceable by such Person, and, to
the best knowledge of the Borrower or any of its Restricted Subsidiaries, there
is no basis for any such
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claim (whether or not pending or threatened), in each case where such claim
could reasonably be expected to have a Material Adverse Effect.
5.15 COMPLIANCE WITH LAWS, ETC. The Borrower and its Restricted
Subsidiaries are each in compliance in all material respects with all applicable
laws and regulations, including, without limitation, all laws relating to equal
employment opportunity and employee safety (but excluding, for purposes of this
Section 5.15, Environmental Laws), in all jurisdictions in which it is presently
doing business, and the Borrower will, and will cause its Subsidiaries to,
comply in all material respects with all such laws and regulations which may be
imposed in the future in jurisdictions in which it or any of its Restricted
Subsidiaries may then be doing business, other than such laws and regulations
the noncompliance with which could not reasonably be expected to have a Material
Adverse Effect.
5.16 PROPERTIES. The Borrower and its Restricted Subsidiaries each has
good and marketable title to, and beneficial ownership of, all the properties
owned by it, including, after the Closing Date, all property reflected in the
most recent balance sheet referred to in Section 5.09(b), free and clear of all
Liens, other than Prior Liens and Permitted Encumbrances. Schedule 5.16 lists
the addresses and locations of all Real Property owned and leased by the
Borrower and each such Restricted Subsidiary as of the Closing Date. Except as
set forth on Schedule 5.16 (including as supplemented from time to time pursuant
to Section 6.01(n)) the Borrower and its Restricted Subsidiaries own or lease no
other Real Property. Each of the Borrower and its Restricted Subsidiaries holds
all material licenses, certificates of occupancy or operation, water rights and
similar certificates and clearances of municipal and other authorities necessary
to own and operate its Real Property in the manner and for the purposes
currently operated by such party which if not obtained or maintained would have
a material adverse effect upon the value of such Real Property. With respect to
the leases of Real Property reflected on Schedule 5.16, the Borrower or the
applicable Restricted Subsidiary of the Borrower is in compliance with all
material provisions of each such lease. With respect to all leases of Real
Property by each of the Borrower and its Restricted Subsidiaries, no event has
occurred which (with the giving of notice or the passage of time or both), would
impair any right of such Person to exercise and obtain the benefit of any
options contained in any material lease; there is no material default or basis
for acceleration, repossession or termination by the landlord under any lease,
nor has any event occurred which (with the giving of notice or the passage of
time or both) would constitute a default or result in or permit the
repossession, acceleration of any obligation under, or termination of, any
material lease by the landlord.
5.17 SECURITIES.
(a) Except as set forth in Schedule 5.17 (including as supplemented
from time to time pursuant to Section 6.01(n)), there is not any existing
Capital Stock of any Subsidiary of the Borrower.
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(b) All Capital Stock of the Borrower's Restricted Subsidiaries is
pledged to the Administrative Agent for the benefit of the Banks, and all
certificates evidencing such Capital Stock has been delivered to the
Administrative Agent. All such Capital Stock is and shall be at all times
duly authorized, validly issued, fully paid and nonassessable.
5.18 COLLECTIVE BARGAINING AGREEMENTS; LABOR MATTERS. None of the
Borrower nor any of its Restricted Subsidiaries is a party to any collective
bargaining or similar agreement. No such Person has experienced any strike,
labor dispute, slowdown or work stoppage due to labor disagreements which could
reasonably be expected to have a Material Adverse Effect, and to the best
knowledge of each such Person, there is no such strike, dispute, slowdown or
work stoppage threatened against any such Person.
5.19 INDEBTEDNESS OUTSTANDING. Schedule 5.19 lists and describes all
Indebtedness of the Borrower and its Restricted Subsidiaries that will be
outstanding immediately after the Closing Date, and all Indebtedness of each
such Person that will be repaid, defeased, transferred or otherwise terminated
on the Closing Date.
5.20 ENVIRONMENTAL PROTECTION. Except as set forth on Schedule 5.20
(including in any of the environmental reports listed on said Schedule), except
to the extent that any items set forth (or in said reports) individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect:
(a) Each of the Borrower and its Restricted Subsidiaries has obtained
all material permits, licenses and other authorizations which are required
with respect to the operation of its business, and the use, operation and
ownership of its properties (including the Real Property) and assets under
any Environmental Law (collectively, the "ENVIRONMENTAL AUTHORIZATIONS")
and each such Environmental Authorization is in full force and effect.
(b) Each of the Borrower and its Restricted Subsidiaries, and each of
the properties (including the Real Property) and assets used in its
business, is in compliance in all material respects with all terms and
conditions of the Environmental Authorizations and is also in compliance in
all respects (including, without limitation, compliance in all respects
with standards, schedules and timetables therein) with, and not subject to
liability under, any Environmental Law applicable to it or its business,
assets, operations and Real Property, if any, including without limitation
those arising under the Resource Conservation and Recovery Act of 1976, as
amended, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986 ("CERCLA"), the Federal Water Pollution Control
Act, as amended, the Federal Clean Air Act, as amended, and the Toxic
Substances Control Act, as amended, and all corresponding equivalent state
laws, and there are no circumstances of a nature which may prevent or
interfere with such material compliance in the future. None of the
Borrower nor its Restricted Subsidiaries has been notified by any
Governmental Authority or has any basis to believe that any such
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Environmental Authorizations will be modified, suspended or revoked or
cannot be renewed or otherwise maintained in the ordinary course of
business. In the last five years, to the best knowledge of each such
Person, none of the Borrower nor any of its Restricted Subsidiaries has
received any communication, whether from a Governmental Authority, citizen
group, employee or otherwise, that alleges that the Borrower or any of its
Restricted Subsidiaries or any of the properties or assets used in their
respective businesses (including the Real Properties) is not in compliance
in all material respects with Environmental Laws.
(c) There is no Environmental Notice that (i) is pending or, to the
best knowledge of the Borrower and its Restricted Subsidiaries, threatened
against any such Person or (ii) is pending or, to the best knowledge of
each such Person, threatened against any Person whose liability for such
Environmental Notice may have been retained or assumed by, or could
reasonably be imputed or attributed by law or contract to, any such Person.
(d) To the best knowledge of each of the Borrower and its Restricted
Subsidiaries, there are no past or present actions, activities,
circumstances, conditions, events or incidents arising out of, based upon,
resulting from or relating to the operation, ownership or use of any
properties or assets (including the Real Properties) currently or formerly
owned, operated, leased or used by any of the Borrower and its Restricted
Subsidiaries (or any predecessor in interest of any of them), including,
without limitation, the emission, discharge, disposal or other release of
any Hazardous Materials in or into the Environment that could reasonably be
expected to form the basis of any Environmental Notice against or with
respect to any such Person, or against any person or entity whose liability
for any Environmental Notice may have been retained or assumed by, or could
be imputed by law or contract to, any such Person.
(e) None of the Borrower nor any of its Restricted Subsidiaries (i)
has received written notice that it has been identified as a potentially
responsible party under CERCLA or any comparable state, local or foreign
law or (ii) has received any notification that any Hazardous Materials that
it or any of its predecessors in interest has used, generated, stored,
treated, handled, transported or disposed of, or arranged for transport for
disposal or treatment of, or arranged for disposal or treatment of, has
been found at any site at which any governmental agency or private party is
conducting or plans to conduct a remedial investigation or other action
pursuant to any Environmental Law.
(f) Without in any way limiting the generality of the foregoing, to
the best knowledge of each of the Borrower and its Restricted Subsidiaries,
(i) there are, and have been, no underground storage tanks or related
piping located on, at or under property (including the Real Properties)
owned, operated, leased or used by any such Person (or any predecessor in
interest of any of them), (ii) there are, and have been, no polychlorinated
biphenyls used or stored by any such Person located on, at or under
property (including the Real Properties) owned, operated, leased or used by
any such
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Person (iii) there are, and have been, no properties (including the Real
Properties) owned, operated, managed, leased or used by any such Person (or
any predecessor in interest of any of them) at which Hazardous Materials
generated, used, owned, managed, stored or controlled by any such Person
(or any predecessor in interest of any of them) may have been disposed or
otherwise released into the Environment except such disposals or other
releases which were in compliance with Environmental Laws and Environmental
Authorizations and (iv) there is no friable asbestos contained in or
forming part of any building, building component, structure or office space
owned, operated, leased or used by any such Person.
(g) To the best knowledge of each of the Borrower and its Restricted
Subsidiaries, no Lien has been recorded under any Environmental Law with
respect to any properties, assets or facilities (including the Real
Property) owned, operated, managed, leased, used or controlled by any such
Person.
(h) Each of the Borrower and its Restricted Subsidiaries shall have
made all notifications, registrations and filings in all material respects
in accordance with all applicable State and Local Real Property Disclosure
Requirements, including, without limitation, the use of forms provided by
state or local agencies, where such forms exist, whether to the
Administrative Agent or to, or with, the state or local agency, provided
that where such notification, registration or filing was made to, or with a
state or local agency, a copy of such notification, registration or filing
shall be provided to the Administrative Agent prior to the Closing Date.
5.21 ENVIRONMENTAL INVESTIGATIONS. All material environmental
investigations, assessments, studies, audits or reviews conducted of which any
of the Borrower and its Restricted Subsidiaries has knowledge in relation to the
current or prior business of any such Person or any Real Property or facility
now or previously owned, operated, used, controlled or leased by any such
Person, including, without limitation, those relating to compliance with or
liability under any Environmental Law, have been delivered to the Administrative
Agent.
5.22 INSURANCE. Schedule 5.22 lists all insurance policies maintained by
each of the Borrower and its Restricted Subsidiaries. All of such insurance is
in full force and effect as of the Closing Date and, at all times after the
Closing Date, such insurance, or renewal or replacement policies substantially
equivalent in coverage and amount, shall be in full force and effect.
5.23 GOVERNMENTAL REGULATION. None of the Borrower nor any of its
Restricted Subsidiaries is subject to any federal or state statute or regulation
limiting its ability to incur indebtedness for money borrowed or guarantee such
indebtedness as contemplated by the Transaction Documents, other than
Regulation X.
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5.24 ABSENCE OF EVENTS OF DEFAULT. No Default or Event of Default has
occurred and is continuing.
5.25 PERFORMANCE OF AGREEMENTS. None of the Borrower nor any of its
Restricted Subsidiaries is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
contractual obligation of such Person which, singly or in the aggregate, could
reasonably be expected to have a Material Adverse Effect, and no condition
exists which, with the giving of notice or the lapse of time or both, would
constitute such a default.
5.26 SECURITIES ACTIVITIES. Neither the Borrower nor any of its
Restricted Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying any margin stock.
SECTION 6. AFFIRMATIVE COVENANTS. The Borrower covenants and agrees that
on the Closing Date and thereafter until (a) this Agreement has ceased to be in
effect, (b) the Commitments have terminated and (c) the Loans, together with
interest, fees and all other Obligations incurred hereunder then due and
payable, have been paid in full (except as otherwise agreed or consented to, or
waived, in writing by the Required Banks):
6.01 INFORMATION COVENANTS. The Borrower will furnish or cause to be
furnished to each Bank:
(a) As soon as available, and in any event within 90 days after the
close of each fiscal year of the Borrower the audited consolidated balance
sheet of the Borrower and its Subsidiaries as at the end of such fiscal
year and the related audited consolidated statements of income, of cash
flows and of stockholders' equity for such fiscal year, setting forth
comparative consolidated figures for the preceding fiscal year and a report
on such consolidated balance sheets and financial statements by Arthur
Andersen or another "Big Six" accounting firm that is reasonably
satisfactory to the Administrative Agent, which report shall not be
qualified as to the scope of audit or as to the status of the Borrower and
its Subsidiaries as a going concern and shall state that such consolidated
financial statements present fairly, in all material respects, the
consolidated financial position of the Borrower and its Subsidiaries as at
the dates indicated and the results of their operations and their cash
flows for the periods indicated in conformity with GAAP, and that the
examination by such accountants was conducted in accordance with generally
accepted auditing standards.
(b) As soon as practicable, and in any event within 30 days after the
end of each month, commencing with January 1998, (i) the unaudited
consolidated balance sheet of the Borrower and its Subsidiaries as at the
end of such month and (ii) the related unaudited consolidated statements of
income and cash flows of the Borrower and its Subsidiaries, each in the
form customarily prepared by management for such month and for the period
from the beginning of the then current calendar year to the end of such
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month, setting forth in comparative form the corresponding periods of the
prior calendar year (including a comparison of such monthly financial
results against the budgets required to be submitted pursuant to Section
6.01(d) (such comparisons of actual results to budget to commence with the
financial results of the month of January 1997), together with a brief
narrative discussion and analysis prepared by management describing the
results of operations of the Borrower and its Subsidiaries for such month.
(c) As soon as available, and in any event within 90 days after the
close of each fiscal year of the any Unrestricted Subsidiary the audited
consolidated and consolidating balance sheets of such Unrestricted
Subsidiary and its Subsidiaries as at the end of such fiscal year and the
related audited consolidated and consolidating statements of income, of
cash flows and of stockholders' equity for such fiscal year, setting forth
comparative consolidated figures for the preceding fiscal year and a report
on such consolidated and consolidating balance sheets and financial
statements by Arthur Andersen or another "Big Six" accounting firm that is
reasonably satisfactory to the Administrative Agent, which report shall not
be qualified as to the scope of audit or as to the status of such
Unrestricted Subsidiary and its Subsidiaries as a going concern and shall
state that such consolidated and consolidating financial statements present
fairly, in all material respects, the consolidated and consolidating
financial position of such Unrestricted Subsidiary and its Subsidiaries as
at the dates indicated and the results of their operations and their cash
flows for the periods indicated in conformity with GAAP, and that the
examination by such accountants was conducted in accordance with generally
accepted auditing standards.
(d) As soon as practicable, and in any event within 30 days after the
end of each month, commencing with November 1997, (i) unaudited
consolidated balance sheets of any Unrestricted Subsidiaries and its
Subsidiaries as at the end of such month and (ii) the related unaudited
consolidated statements of income and cash flows of such Unrestricted
Subsidiary and its Subsidiaries, each in the form customarily prepared by
management for such month and for the period from the beginning of the then
current calendar year.
(e) Together with each delivery of consolidated financial statements
of the Borrower and its Subsidiaries pursuant to Section 6.01(a), a written
statement by the independent public accountants giving the report thereon
(i) stating that their audit examination has included a review of the terms
of Sections 7.01 through 7.05, inclusive, and the definitions related
thereto as they relate to accounting matters but without having conducted
any special auditing procedures in connection therewith; (ii) stating
whether, in connection with their audit examination, any condition or event
which constitutes a Default or Event of Default has come to their
attention, and if such a condition or event has come to their attention,
specifying the nature and period of existence thereof; PROVIDED, HOWEVER,
that such accountants shall not be liable by reason of any failure to
obtain knowledge of any such Default or Event of Default that would not be
disclosed in the course of their audit examination; and (iii) stating that
based on their audit
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examination nothing has come to their attention which causes them to
believe that as of the end of such fiscal year of the Borrower there
existed a Default or an Event of Default related to the breach of any
covenant set forth in Sections 7.01 through 7.05, inclusive, as they relate
to accounting matters and if such a condition or event has come to their
attention, specifying the nature and period of existence thereof and what
action the applicable Credit Party has taken, is taking and proposes to
take with respect thereto.
(f) Prior to the commencement of each calendar year, annual budgets
of the Borrower and its Subsidiaries in reasonable detail for each month of
such calendar year, as customarily prepared by management for its internal
use, setting forth, with appropriate discussion, the principal assumptions
upon which such budgets are based.
(g) At the time of the delivery of the financial statements provided
for in Sections 6.01(a) and (b), a certificate of the chief financial
officer, controller, chief accounting officer or other Authorized Officer
of the Borrower to the effect that no Default or Event of Default exists,
or, if any Default or Event of Default does exist, specifying the nature
and extent thereof, which certificate shall, with respect to the financial
statements provided for in Section 6.01(b), at the time of delivery of such
statements for the fiscal months ended nearest to March 31, June 30,
September 30 and December 31, beginning with the fiscal month ended nearest
to December 31, 1997, be accompanied by a Compliance Certificate, in a form
reasonably acceptable to the Agent, setting forth the calculations required
to establish whether the Borrower and its Subsidiaries were in compliance
with the covenants in this Agreement (including without limitation the
covenants set forth in Sections 7.01 through 7.05, inclusive) as at the end
of such fiscal period.
(h) At the time of the delivery of the financial statements provided
for in Sections 6.01(a), (b), (c) and (d), unaudited consolidated financial
statements of the Borrower and its Restricted Subsidiaries certified by the
chief financial officer, controller, chief accounting officer or other
Authorized Officer of the Borrower to the effect that such financial
statements were prepared in accordance with GAAP and fairly reflect the
financial condition of the Borrower and the Restricted Subsidiaries at the
dates thereof and the results of operations for the periods covered thereby
(subject only to normal year-end audit adjustments).
(i) Promptly upon receipt thereof, a copy of each annual "management
letter" submitted to the Borrower the Borrower by its independent
accountants in connection with any annual audit made by them of the books
of the Borrower or any of its Subsidiaries.
(j) Promptly upon becoming available, copies of all consolidated
financial statements, reports, notices and proxy statements sent or made
available generally by the Borrower or any of its Subsidiaries to the
security holders (other than to the Borrower or
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another of its Subsidiaries) of such Person, of all regular and periodic
reports and all registration statements and prospectuses, if any, filed by
the Borrower or any of its Subsidiaries with any securities exchange or
with the SEC and of all press releases and other statements made available
generally by the Borrower or any of its Subsidiaries to the public
concerning material developments in the business of the Borrower and its
Subsidiaries.
(k) Promptly upon any Senior Officer obtaining actual knowledge (i)
of any condition or event which constitutes a Default or Event of Default,
or that any Bank has given any written notice or taken any other action
with respect to a claimed Default or Event of Default under this Agreement,
(ii) that any Person has given any written notice to the Borrower or any of
its Subsidiaries or taken any other action with respect to a claimed
default or event or condition of the type referred to in Section 8.04, or
(iii) of a material adverse change in the business, operations, properties,
assets, nature of assets, condition (financial or otherwise) or prospects
of the Borrower and its Subsidiaries taken as a whole, an Officers'
Certificate specifying the nature and period of existence of any such
condition or event, or specifying the notice given or action taken by such
holder or Person and the nature of such claimed Default, Event of Default,
event or condition, or material adverse change, and what action the
applicable Credit Party has taken, is taking and proposes to take with
respect thereto.
(l) (i) Promptly upon any Senior Officer obtaining actual knowledge
of the institution of, or written threat of, any action, suit, proceeding,
governmental investigation or arbitration against or affecting the Borrower
or any of its Subsidiaries or any property of the Borrower or any of its
Subsidiaries not previously disclosed to the Banks, which action, suit,
proceeding, governmental investigation or arbitration seeks (or in the case
of multiple actions, suits, proceedings, governmental investigations or
arbitrations arising out of the same general allegations or circumstances
which seek) recovery from the Borrower or any of its Subsidiaries
aggregating $1,000,000 or more (exclusive of claims covered by insurance
policies of the Borrower or any of its Subsidiaries unless the insurers of
such claims have disclaimed coverage or reserved the right to disclaim
coverage on such claims), the Borrower shall give notice thereof to the
Banks and provide such other information as may be reasonably available to
enable the Banks and their counsel to evaluate such matters; (ii) as soon
as practicable and in any event within 45 days after the end of each fiscal
quarter, the Borrower shall provide a report to the Banks covering the
institution of, or written threat of, any action, suit, proceeding,
governmental investigation or arbitration (not previously reported) against
or affecting the Borrower or any of its Subsidiaries or any property of the
Borrower or any of its Subsidiaries not previously disclosed to the Banks,
which action, suit, proceedings, governmental investigation or arbitration
seeks (or in the case of multiple actions, suits, proceedings, governmental
investigations or arbitrations arising out of the same general allegations
or circumstances which seek) recovery from the Borrower or any of its
Subsidiaries aggregating $1,000,000 or more (exclusive of claims covered by
insurance
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policies of the Borrower or any of its Subsidiaries unless the insurers of
such claims have disclaimed coverage or reserved the right to disclaim
coverage on such claims), and shall provide such other information at such
time as may be reasonably available to enable the Banks and their counsel
to evaluate such matters; (iii) in addition to the requirements set forth
in clauses (i) and (ii) of this Section 6.01(i), the Borrower upon request
shall promptly give notice of the status of any action, suit, proceeding,
governmental investigation or arbitration covered by a report delivered to
the Banks pursuant to clause (i) or (ii) above to the Banks and provide
such other information as may be reasonably available to it to enable the
Banks and their counsel to evaluate such matters; (iv) promptly upon any
officer of the Borrower or any Subsidiary obtaining actual knowledge of any
dispute in respect of or the institution of, or written threat of, any
action, suit, proceeding, governmental investigation or arbitration in
respect of any lease of Real Property or other material contract of the
Borrower or any of its Subsidiaries (in the case of such other material
contract, to the extent that the dispute, action, suit, proceeding,
investigation or arbitration could, if resolved in a manner unfavorable to
the Credit Party thereto, reasonably be anticipated to have a Material
Adverse Effect), such Person shall give notice thereof to the Banks and
shall provide to the Banks such other information as may be reasonably
available to enable the Banks and their counsel to evaluate such matters;
and (v) promptly upon any Senior Officer obtaining knowledge of, or written
threat of, any action, suit, proceeding, governmental investigation or
arbitration in respect of any lease of Real Property or other material
contract of the Borrower or any of its Subsidiaries (in the case of such
other material contract, to the extent that the action, suit, proceeding,
investigation or arbitration could, if resolved in a manner unfavorable to
the Credit Party thereto, reasonably be anticipated to have a Material
Adverse Effect), the Borrower shall give notice thereof to the Banks and
shall provide such other information as may be reasonably available to
enable the Banks and their counsel to evaluate such matters.
(m) Within 90 days of the last day of each calendar year of the
Borrower, a summary report outlining all changes to the material insurance
coverage maintained from the date of the previous such report by the
Borrower or any of its Subsidiaries.
(n) To the extent reasonably requested by the Administrative Agent,
as soon as practicable and in any event within ten Business Days of the
later of such request and the making of any such amendment or waiver,
copies of amendments or waivers with respect to Indebtedness of the
Borrower or any of its Restricted Subsidiaries.
(o) On or prior to the Closing Date and within 90 days after the
commencement of each fiscal year (to the extent there has been a change
since the list provided the prior fiscal year), a complete and accurate
list of the Senior Officers and directors of each Credit Party, which list
shall include any officers authorized to execute any certificates, notices,
reports or other documents provided to the Administrative Agent or the
Banks hereunder or under any other Credit Document, and within 30 days of
any change in
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personnel affecting the accuracy of such list, a notice specifying such
change in personnel.
(p) Within twenty days after the last Business Day of each fiscal
month, a borrowing base certificate in the form of Exhibit 6.01(p) (each, a
"BORROWING BASE CERTIFICATE") detailing the Borrower's Eligible Accounts
Receivable and Eligible Inventory as of the last day of such fiscal month,
certified as complete and correct on behalf of the Borrower by a Senior
Officer or other Authorized Officer. In addition, each Borrowing Base
Certificate shall have attached to it such additional schedules and/or
other information as the Administrative Agent may reasonably request. If
the Borrower fails to deliver any such Borrowing Base Certificate within
thirty days after the end of any such fiscal month, then the Borrower's
Borrowing Base shall be deemed to be $0 until such time as the Borrower
shall deliver such required Borrowing Base Certificate.
(q) Within 25 days after the last Business Day of each month, or upon
the consummation of any Permitted Business Acquisition, a supplement to
each of Schedules 5.10B, 5.13, 5.16 and 5.17 showing any changes in the
information set forth in such Schedule not previously furnished to the
Banks in writing, and within 25 days after the last Business Day of each
calendar year, an amendment to each such Schedule; PROVIDED that the
Borrower shall only be required to provide a supplement (or amendment) with
respect to any such Schedule where there has been a change in the
information set forth in such Schedule not previously furnished to the
Banks in writing.
(r) With reasonable promptness, such other information and data with
respect to the Borrower or any of its Subsidiaries or any other similar
entity in which the Borrower or any of its Subsidiaries has an investment,
as from time to time may be reasonably requested by any Bank and may be
reasonably available to the Borrower.
6.02 BOOKS, RECORDS AND INSPECTIONS. The Borrower will, and will cause
each of its Restricted Subsidiaries to, keep true books of records and accounts
in which full and correct entries will be made of all its business transactions,
and will reflect in its financial statements adequate accruals and
appropriations to reserves, all in accordance with GAAP. The Borrower will, and
will cause each of its Restricted Subsidiaries to, permit, upon reasonable prior
notice to the chief executive officer or chief financial officer of the
Borrower, officers and designated representatives of the Administrative Agent or
any Bank to visit and inspect any of the properties or assets (including the
conduct, at the Borrower's cost, of an annual field audit of the Borrowing Base)
of the Borrower or any of its Restricted Subsidiaries in whosesoever possession,
and to examine the books of account of the Borrower or any of its Restricted
Subsidiaries and discuss the affairs, finances and accounts of the Borrower or
any of its Restricted Subsidiaries with, and be advised as to the same by, its
and their chief executive officer, chief financial officer and independent
accountants (in the presence of such officers), all at such reasonable times
during normal business hours and intervals and to such reasonable extent as the
Administrative Agent or any Bank may reasonably request. Notwithstanding
anything to the contrary contained in this
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Section 6.02, any field audit conducted pursuant to this Section 6.02 may be
conducted by a third party auditor commissioned by the Administrative Agent or
the Banks.
6.03 MAINTENANCE OF PROPERTY; INSURANCE.
(a) The Borrower will, and will cause each of its Restricted
Subsidiaries to, maintain or cause to be maintained in good repair, working
order and condition (subject to normal wear and tear) all properties used
in its businesses (including, without limitation, any Real Property,
whether owned or leased) and from time to time will make or cause to be
made all appropriate repairs, renewals and replacements thereof and will
maintain and renew as necessary all licenses, permits and other clearances
necessary to use and occupy such properties of the Borrower and its
Restricted Subsidiaries. The Borrower will, and will cause each of its
Restricted Subsidiaries to, comply with all material provisions of each
lease of Real Property in which any such Person is the lessee.
(b) Subject to the provisions of Section 6.03(c), Borrower and its
Restricted Subsidiaries will maintain or cause to be maintained, with
financially sound and reputable insurers, insurance with respect to its
properties and business against loss or damage of the kinds customarily
insured against by corporations of established reputation engaged in the
same or similar businesses and similarly situated, of such types and in
such amounts as are customarily carried under similar circumstances by such
other corporations to the extent that such types and such amounts of
insurance are available at commercially reasonable rates. The Borrower or
its Restricted Subsidiaries, as applicable, will furnish to each Bank, upon
reasonable request, information as to the insurance carried, and will not
cancel any such insurance without the consent of the Required Banks, which
consent shall not be unreasonably withheld.
(c) Without limiting Section 6.03(b), the Borrower and its Restricted
Subsidiaries, as applicable, shall maintain, or cause to be maintained, in
full force the insurance coverages specified in the Security Documents.
6.04 PAYMENT OF TAXES. The Borrower will pay and discharge, and will cause
each of its Subsidiaries to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any properties belonging to it, prior to the date on which penalties attach
thereto, and all lawful claims which, if unpaid, might become a Lien or charge
upon any properties of the Borrower or any of its Subsidiaries or cause a
failure or forfeiture of title thereto; PROVIDED, HOWEVER, that neither the
Borrower nor any of its Subsidiaries shall be required to pay any such tax,
assessment, charge, levy or claim that is being contested in good faith and by
proper proceedings promptly instituted and diligently conducted if it has
maintained adequate reserves with respect thereto in accordance with GAAP or if
the same shall have been bonded.
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6.05 CORPORATE FRANCHISES. The Borrower will do or cause to be done, and
will cause each of its Subsidiaries to do or cause to be done, all things
necessary to preserve and keep in full force and effect its corporate existence,
rights and authority, EXCEPT that any Wholly Owned Subsidiary of the Borrower
that is a Restricted Subsidiary may merge with and into the Borrower or into
another Wholly Owned Subsidiary of the Borrower that is a Restricted Subsidiary.
6.06 COMPLIANCE WITH STATUTES, ETC. The Borrower will, and will cause
each of its Restricted Subsidiaries to, comply with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
Governmental Authorities, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including all applicable laws),
except where such noncompliance would not have a Material Adverse Effect.
6.07 ERISA. The Borrower will furnish to the Administrative Agent, who
will distribute to each of the Banks:
(a) promptly upon any Credit Party's knowing or having reason to know
of the occurrence of any (i) Termination Event, or (ii) "prohibited
transaction," within the meaning of Section 406 of ERISA or Section 4975 of
the Code, in connection with any Pension Plan or any trust created
thereunder, which in the case of all such events described in clause (i) or
(ii) results or could reasonably be expected to result in a liability of
any Credit Party or its ERISA Affiliates in the aggregate in excess of
$250,000, a written notice specifying the nature thereof, what action such
Credit Party or its ERISA Affiliates have taken, are taking or propose to
take with respect thereto, and, when known, any action taken or threatened
by the Internal Revenue Service, Department of Labor, PBGC or Multiemployer
Plan with respect thereto.
(b) with reasonable promptness, copies of (i) all notices received by
any Credit Party or any of its ERISA Affiliates of PBGC's intent to
terminate any Title IV Plan or to have a trustee appointed to administer
any Title IV Plan, the notice of which event is required pursuant to
Section 6.07(a); (ii) upon the request of the Administrative Agent, each
Schedule B (Actuarial Information) to the annual report (Form 5500 Series)
filed by any Credit Party or any of its ERISA Affiliates with the Internal
Revenue Service with respect to each Pension Plan for which Schedule B is
required; (iii) upon the request of the Administrative Agent, the most
recent actuarial valuation report for each Title IV Plan; and (iv) all
notices received by any Credit Party or any of its ERISA Affiliates from a
Multiemployer Plan concerning the imposition or amount of withdrawal
liability pursuant to Section 4202 of ERISA, the notice of which event is
required pursuant to Section 6.07(a).
6.08 PERFORMANCE OF OBLIGATIONS. The Borrower will, and will cause each
of its Restricted Subsidiaries to, perform in all material respects all of its
obligations under the terms of each mortgage, indenture, security agreement,
other debt instrument and material contract by
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which it is bound or to which it is a party, except where such nonperformance
could not reasonably be expected to have a Material Adverse Effect.
6.09 FISCAL YEAR; FISCAL QUARTERS. Each of The Borrower and its
Subsidiaries as of the Closing Date will, for financial reporting purposes have
(a) its fiscal year end on or about June 30, and (b) its fiscal quarters end on
or about September 30, December 31, March 31 and June 30. Neither the Borrower
nor any of its Subsidiaries shall change their respective fiscal years from that
set forth above, with respect to the Borrower and such Subsidiaries, and from
that currently maintained by any Subsidiary subsequently acquired by the
Borrower without the prior written consent of the Required Banks, except that
any such subsequently acquired Subsidiary may change its fiscal year to end on
or about June 30, with fiscal quarters to end on or about September 30, December
31, March 31 and June 30, without such prior written consent.
6.10 USE OF PROCEEDS. All proceeds of the Loans shall be used as provided
in Section 5.05.
6.11 INTEREST RATE PROTECTION.
(a) The Borrower shall, commencing no later than 30 days after the
first to occur of (x) the date on which the outstanding principal balance
of the Acquisition Term Loans equals $25 million or (y) the Acquisition
Term Loan Commitment Termination Date, enter into Interest Rate Agreements
reasonably acceptable to the Administrative Agent for a term ending no
earlier than three years after the Acquisition Term Loan Commitment
Termination Date, in respect of no less than 50% of the Acquisition Term
Loans outstanding from time to time.
(b) The Borrower shall, commencing no later than 30 days after the
first to occur of (x) the date on which the outstanding principal balance
of the Supplemental Term Loans equals $15 million or (y) the Supplemental
Term Loan Commitment Termination Date, enter into Interest Rate Agreements
reasonably acceptable to the Administrative Agent for a term ending no
earlier than three years after the Supplemental Term Loan Termination Date,
in respect of no less than 50% of the Supplemental Term Loans outstanding
from time to time.
6.12 NO FURTHER NEGATIVE PLEDGES, ETC. Except with respect to
prohibitions against other encumbrances on specific property encumbered to
secure payment of particular Indebtedness permitted hereunder (which
Indebtedness relates solely to the acquisition or improvement of such specific
property), neither the Borrower nor any of its Restricted Subsidiaries shall
enter into any agreement prohibiting or restricting, in any manner (directly or
indirectly and including by way of covenant, representation or warranty or event
of default), the creation or assumption of any Lien upon its properties or
assets, whether now owned or hereafter acquired (other than in connection with
the Security Documents). Neither the Borrower nor any of its Restricted
Subsidiaries shall create, or permit to be created, any restriction in the
charter or bylaws of any
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Restricted Subsidiary of the Borrower restricting the payment of dividends to
the Borrower or any Wholly Owned Subsidiary of the Borrower.
6.13 BANK MEETING. The Borrower will participate in a meeting of the
Banks once during each calendar year (the first such meeting to take place prior
to June 30, 1998) to be held at a location and a time selected by the
Administrative Agent and reasonably acceptable to the Borrower, unless the
Required Banks determine in their sole discretion that such meeting is
unnecessary and so inform the Administrative Agent and the Borrower.
6.14 ADDITIONAL COLLATERAL; FURTHER ASSURANCES.
(a) Promptly, and in any event within 30 days after the Borrower or
any of its Restricted Subsidiaries acquires any asset or property,
including any Real Property, which is not covered by the existing Security
Documents, including, without limitation, any Capital Stock of any
Restricted Subsidiary (the "ADDITIONAL COLLATERAL"), the Borrower will
cause any newly acquired Restricted Subsidiary to execute a Subsidiary
Guaranty, and the Borrower will, and will cause each of its Restricted
Subsidiaries to, grant to the Administrative Agent, for the benefit of the
Banks, security interests and mortgages in such asset or property, EXCEPT
that, with respect to any asset or property acquired in a Permitted
Business Acquisition, including any Restricted Subsidiary so acquired, such
actions shall be required to be performed on or before the applicable
Permitted Business Acquisition Closing Date (except as otherwise assented
to by the Administrative Agent). Such security interests and mortgages
shall be granted pursuant to documentation substantially the same as the
Security Documents (the "ADDITIONAL SECURITY DOCUMENTS") reasonably
satisfactory in form and substance to the Administrative Agent, including,
without limitation, and if deemed desirable by the Administrative Agent,
opinions of local counsel in any jurisdictions in which such asset or
property is located, and shall constitute valid and enforceable perfected
security interests superior to and prior to the rights of all third Persons
and subject to no other Liens except Permitted Encumbrances at the time of
perfection thereof. The Additional Security Documents or other instruments
related thereto shall be duly recorded or filed in such manner and in such
places as are required by law to establish, perfect, preserve and protect
the Liens in favor of the Administrative Agent for the benefit of the Banks
required to be granted pursuant to the Additional Security Documents and
all taxes, fees and other charges payable in connection therewith shall
have been paid in full.
(b) The Borrower will, and will cause each of its Restricted
Subsidiaries to, at its own expense, make, execute, endorse, acknowledge,
file and/or deliver to the Administrative Agent from time to time such
vouchers, invoices, schedules, confirmatory assignments, conveyances,
financing statements, transfer endorsements, powers of attorney,
certificates, real property surveys, reports and other assurances or
instruments and take such further steps relating to the Collateral covered
by any of the Security Documents or the Additional Security Documents as
the Administrative Agent may
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reasonably require. Furthermore, the Borrower shall cause to be delivered
to the Administrative Agent such opinions of counsel, title insurance and
other related documents as may be requested by the Administrative Agent to
assure themselves that this Section 6.14 has been compiled with.
(c) At the request of the Administrative Agent or the Required Banks,
the Borrower shall provide to the Administrative Agent appraisals
satisfying applicable requirements of FIRREA in respect of the Real
Property of the Borrower and its Restricted Subsidiaries, if any,
constituting Collateral, from time to time, in form and substance
reasonably satisfactory to the Administrative Agent.
(d) The Borrower agrees that each action required by this Section
6.14 shall be completed as soon as possible, but if such Collateral has
been newly acquired by the Borrower or its Restricted Subsidiaries or is
Collateral held by any newly acquired Restricted Subsidiary of the
Borrower, in no event later than 30 days after the date of the acquisition
of such Collateral; PROVIDED that with respect to any Collateral acquired
in a Permitted Business Acquisition, each action required by this Section
6.14 with respect to such Collateral (including property of, or Capital
Stock of, any newly acquired Restricted Subsidiary) shall be taken no later
than the closing of such Permitted Business Acquisition, unless otherwise
consented to by the Administrative Agent.
(e) Following the Closing Date, the Borrower will, and will cause
each of its Restricted Subsidiaries to, perform any and all acts and
execute any and all documents (including, without limitation, the
execution, amendment or modification of any financing statement and
continuation statement) for filing in any appropriate jurisdiction under
the provisions of the UCC, local law or any statute, rule or regulation of
any applicable jurisdiction which are necessary in order to maintain or
confirm in favor of the Administrative Agent for the ratable benefit of the
Banks a valid and perfected Lien on the Collateral and any Additional
Collateral, subject to no Liens except for Prior Liens and Permitted
Encumbrances. The Borrower shall, as promptly as practicable after the
filing of any such financing statements, deliver to the Administrative
Agent acknowledgment copies of, or copies of lien search reports confirming
the filing of, financing statements duly filed under the UCC of all
jurisdictions as may be necessary or, in the reasonable opinion of the
Administrative Agent, desirable to perfect the Lien created, or purported
or intended to be created, by each Security Document.
(f) The Borrower shall use its best efforts and shall cause each of
its Restricted Subsidiaries to use their best efforts, to obtain an
executed Landlord Certification and Waiver with respect to each lease of
Real Property entered into by Credit Party after the Closing Date; PROVIDED
that, the Borrower shall not be required to take actions or incur costs
which are commercially unreasonable with respect to such leases of Real
Property which, in the reasonable judgement of the Administrative Agent,
are not material to the
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business of the Borrower and its Restricted Subsidiaries taken as a whole,
in order to obtain such Landlord Certification and Waivers.
6.15 ENVIRONMENTAL EVENTS.
(a) The Borrower will, and will cause each of its Restricted
Subsidiaries to, comply with any and all Environmental Laws, other than
noncompliance which could not reasonably be expected to result in liability
under Environmental Laws which would have a Material Adverse Effect;
PROVIDED that the Borrower will, and will cause each of its Restricted
Subsidiaries to, comply with any and all Environmental Laws, to the extent
any noncompliance would (x) constitute or create a default under any lease
of Real Property as to which a Credit Party is a tenant which would entitle
the lessor of such Real Property to terminate said lease or (y) materially
diminish the value of any Real Property owned by any Credit Party.
(b) The Borrower will, and will cause each of its Restricted
Subsidiaries to, promptly give notice to the Administrative Agent upon
becoming aware thereof (i) of any violation of any Environmental Law, (ii)
any Environmental Notice or (iii) any release or threatened release of any
Hazardous Material at, on, into, under or from any Real Property or any
facility or equipment thereat in excess of reportable or allowable
standards or levels under any Environmental Law, or in a manner and/or
amount which could reasonably be expected to either (x) result in liability
under any Environmental Law, in each case, in excess of $500,000
individually or in the aggregate with any other liability under any
Environmental Laws (other than any such events disclosed in Schedule 5.21
or referred to in the reports listed on said Schedule) or (y) materially
interfere with the continued operation of the Real Property which is the
site or subject of the violation, notice or release.
(c) The Borrower will, and will cause each of its Restricted
Subsidiaries to, promptly provide the Administrative Agent with copies of
any notice, submittal or documentation provided by the Borrower or any of
its Restricted Subsidiaries to any Governmental Authority or third party
under any Environmental Law if the matter which is the subject of the
notice, submittal or other documentation could reasonably be expected to
have a Material Adverse Effect. Such notice, submittal or documentation
shall be provided to the Administrative Agent promptly and, in any event,
within ten Business Days after such material is provided to the
Governmental Authority or third party.
(d) In the event of the presence of Hazardous Materials on any Real
Property which is in violation of, or which could reasonably be expected to
result in liability under, any Environmental Laws, in each case, to the
extent such violation, or liability, could reasonably be expected to (x)
have a Material Adverse Effect, or (y) entitle the lessor of any Real
Property with respect to which a Credit Party is the tenant to terminate
the
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subject lease, or (z) materially diminish the value of any Real Property
owned by any Credit Party, then, in each case, the Borrower or any of its
Restricted Subsidiaries, upon discovery thereof, shall take appropriate
steps to initiate and expeditiously complete all response, corrective and
other action required under any Environmental Laws to mitigate and
eliminate any such liability.
6.16 The Borrower shall and shall cause each of the Unrestricted
Subsidiaries to maintain compliance with each of the Unrestricted Subsidiary
Conditions.
SECTION 7. NEGATIVE COVENANTS. The Borrower hereby covenants and agrees
that as of the Closing Date and thereafter until (a) this Agreement has ceased
to be in effect, (b) the Commitments have terminated and (c) the Loans (together
with interest, fees and all other Obligations incurred hereunder) then due and
payable have been paid in full (except as otherwise agreed or consented to, or
waived, in writing by the Required Banks):
7.01 CAPITAL EXPENDITURES. The Borrower will not, and will not permit any
of its Restricted Subsidiaries to, make Consolidated Capital Expenditures for
any purpose, in excess of the amount specified in the table below for each of
the calendar years specified in such table:
YEAR ENDING AMOUNT
December 31, 1997. . . . . . . . . $10.4 million
December 31, 1998. . . . . . . . . $13.5 million
December 31, 1999. . . . . . . . . $11.5 million
December 31, 2000. . . . . . . . . $11.5 million
December 31, 2001. . . . . . . . . $11.5 million
December 31, 2002. . . . . . . . . $11.5 million
December 31, 2003. . . . . . . . . $11.5 million
December 31, 2004. . . . . . . . . $11.5 million
; PROVIDED, HOWEVER, that for purposes of this Section 7.01, the aggregate
amount of Capitalized Lease Obligations incurred by the Borrower and its
Restricted Subsidiaries, on a consolidated basis, shall be included in the
calculation of Consolidated Capital Expenditures in the year in which such
Capitalized Lease Obligations were incurred; PROVIDED, FURTHER, that if the
Borrower and its Restricted Subsidiaries make Consolidated Capital Expenditures
in any calendar year in an amount less than the amount set forth above for such
period (such unused portion the "CARRYOVER AMOUNT"), the Borrower and its
Restricted Subsidiaries may make Consolidated Capital Expenditures in the
immediately succeeding calendar year in an amount not to exceed the sum of (i)
the amount set forth above for such calendar year and (ii) the Carryover Amount;
PROVIDED, FURTHER, that (i) the Carryover Amount calculated for any calendar
year may only be used during the immediately succeeding calendar year and will
not be added to the amount of Consolidated Capital Expenditure availability for
such succeeding calendar year for purposes of calculating the Carryover Amount
for such calendar year, and (ii) the Capital Expenditures for a
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given calendar year shall be counted, first, against the amount set forth above
for such calendar year and, second, against the Carryover Amount and PROVIDED,
FURTHER, that after the consummation of any Permitted Business Acquisition, the
amounts set forth in the table above for any periods ending after such Permitted
Business Acquisition shall be increased by an amount equal to 30% of the
projected EBITDA of the acquired company included in the pro forma consolidated
plan for the then current calendar year delivered to the Administrative Agent
pursuant to Section 4.03(b)(iii).
7.02 TOTAL INTEREST COVERAGE RATIO. The Borrower will not permit the ratio
of (a) Consolidated EBITDA of the Borrower for any Test Period ended on or about
a date specified in the table below to (b) Consolidated Interest Expense of the
Borrower for any Test Period ended on or about a date specified in the table
below (provided, however in the case of periods ending on March 31, June 30, or
September 30 of 1998, the Consolidated Interest Expense of the Borrower shall be
annualized based on the most recently completed three month, six month or nine
month period, respectively), to be less than the ratio set forth opposite such
date in such table:
TEST PERIOD ENDING RATIO
------------------ -----
March 31, 1998 . . . . . . . . . . . . . . . . 2.00 to 1.00
. . . . . . . . . . . . . . . . . . 2.00 to 1.00
June 30, 1998. . . . . . . . . . . . . . . . . 2.00 to 1.00
September 30, 1998 . . . . . . . . . . . . . . 2.00 to 1.00
December 31, 1998. . . . . . . . . . . . . . . 2.00 to 1.00
March 31, 1999 . . . . . . . . . . . . . . . . 2.15 to 1.00
June 30, 1999. . . . . . . . . . . . . . . . . 2.15 to 1.00
September 30, 1999 . . . . . . . . . . . . . . 2.25 to 1.00
December 31, 1999. . . . . . . . . . . . . . . 2.25 to 1.00
March 31, 2000 . . . . . . . . . . . . . . . . 2.25 to 1.00
June 30, 2000. . . . . . . . . . . . . . . . . 2.25 to 1.00
September 30, 2000 . . . . . . . . . . . . . . 2.50 to 1.00
December 31, 2000. . . . . . . . . . . . . . . 2.50 to 1.00
March 31, 2001 . . . . . . . . . . . . . . . . 2.50 to 1.00
June 30, 2001. . . . . . . . . . . . . . . . . 2.50 to 1.00
September 30, 2001 . . . . . . . . . . . . . . 2.75 to 1.00
December 31, 2001. . . . . . . . . . . . . . . 2.75 to 1.00
March 31, 2002 . . . . . . . . . . . . . . . . 2.75 to 1.00
June 30, 2002. . . . . . . . . . . . . . . . . 2.75 to 1.00
September 30, 2002 . . . . . . . . . . . . . . 3.00 to 1.00
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December 31, 2002. . . . . . . . . . . . . . . 3.00 to 1.00
March 31, 2003 . . . . . . . . . . . . . . . . 3.00 to 1.00
June 30, 2003. . . . . . . . . . . . . . . . . 3.00 to 1.00
September 30, 2003 . . . . . . . . . . . . . . 3.25 to 1.00
December 31, 2003. . . . . . . . . . . . . . . 3.25 to 1.00
March 31, 2004 . . . . . . . . . . . . . . . . 3.25 to 1.00
June 30, 2004. . . . . . . . . . . . . . . . . 3.25 to 1.00
September 30, 2004 . . . . . . . . . . . . . . 3.50 to 1.00
December 31, 2004. . . . . . . . . . . . . . . 3.50 to 1.00
; PROVIDED that, for purposes of this Section 7.02, Consolidated EBITDA for a
given Test Period (x) shall mean Consolidated EBITDA for the twelve month period
ended on the last day of such Test Period and (y) shall also include the EBITDA
(with appropriate adjustments) derived from any business which was acquired by
the Borrower and its Restricted Subsidiaries during such twelve-month period and
which is consolidated with the Borrower and its Restricted Subsidiaries as of
the last day of such Test Period, for the portion of such twelve month period
before the business was so acquired; and PROVIDED further that, for purposes of
clause (b) of this Section 7.02, Consolidated Interest Expense shall include
only cash interest expense paid during the applicable period.
7.03 FIXED CHARGE COVERAGE RATIO. The Borrower will not permit the ratio
of (a) Consolidated EBITDAC for any Test Period ending on or about the date
specified in the table below MINUS taxes paid in cash during such Test Period to
(b) the sum of (i) Consolidated Interest Expense (which for purposes of this
clause (b) shall mean only cash interest expense paid during such period) of the
Borrower for such period PLUS (ii) the amount of cash payments on account of
principal of Indebtedness PLUS (iii) payments on account of noncompetition or
consulting arrangements made by the Borrower and its Restricted Subsidiaries, on
a consolidated basis, during such period to be less than the ratio specified
opposite such date:
TEST PERIOD ENDING RATIO
------------------ -----
March 31, 1998 . . . . . . . . . . . . . . 1.10 to 1.00
June 30, 1998. . . . . . . . . . . . . . . 1.10 to 1.00
September 30, 1998 . . . . . . . . . . . . 1.10 to 1.00
December 31, 1998. . . . . . . . . . . . . 1.10 to 1.00
March 31, 1999 . . . . . . . . . . . . . . 1.10 to 1.00
June 30, 1999. . . . . . . . . . . . . . . 1.10 to 1.00
September 30, 1999 . . . . . . . . . . . . 1.10 to 1.00
December 31, 1999. . . . . . . . . . . . . 1.10 to 1.00
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March 31, 2000 . . . . . . . . . . . . . . 1.10 to 1.00
June 30, 2000. . . . . . . . . . . . . . . 1.10 to 1.00
September 30, 2000 . . . . . . . . . . . . 1.10 to 1.00
December 31, 2000. . . . . . . . . . . . . 1.10 to 1.00
March 31, 2001 . . . . . . . . . . . . . . 1.10 to 1.00
June 30, 2001. . . . . . . . . . . . . . . 1.10 to 1.00
September 30, 2001 . . . . . . . . . . . . 1.10 to 1.00
December 31, 2001. . . . . . . . . . . . . 1.10 to 1.00
March 31, 2002 . . . . . . . . . . . . . . 1.10 to 1.00
June 30, 2002. . . . . . . . . . . . . . . 1.10 to 1.00
September 30, 2002 . . . . . . . . . . . . 1.10 to 1.00
December 31, 2002. . . . . . . . . . . . . 1.10 to 1.00
March 31, 2003 . . . . . . . . . . . . . . 1.10 to 1.00
June 30, 2003. . . . . . . . . . . . . . . 1.10 to 1.00
September 30, 2003 . . . . . . . . . . . . 1.10 to 1.00
December 31, 2003. . . . . . . . . . . . . 1.10 to 1.00
March 31, 2004 . . . . . . . . . . . . . . 1.10 to 1.00
June 30, 2004. . . . . . . . . . . . . . . 1.10 to 1.00
September 30, 2004 . . . . . . . . . . . . 1.10 to 1.00
December 31, 2004. . . . . . . . . . . . . 1.10 to 1.00
7.04 LEVERAGE RATIO. The Borrower will not permit the Leverage Ratio on
or about the date specified in the table below to be greater than the ratio
specified opposite such date in such table:
TEST PERIOD ENDING RATIO
------------------ -----
March 31, 1998 . . . . . . . . . . . . . . 5.50 to 1.00
June 30, 1998. . . . . . . . . . . . . . . 5.50 to 1.00
September 30, 1998 . . . . . . . . . . . . 5.50 to 1.00
December 31, 1998. . . . . . . . . . . . . 5.50 to 1.00
March 31, 1999 . . . . . . . . . . . . . . 5.50 to 1.00
June 30, 1999. . . . . . . . . . . . . . . 5.50 to 1.00
September 30, 1999 . . . . . . . . . . . . 5.25 to 1.00
December 31, 1999. . . . . . . . . . . . . 5.25 to 1.00
March 31, 2000 . . . . . . . . . . . . . . 5.00 to 1.00
June 30, 2000. . . . . . . . . . . . . . . 5.00 to 1.00
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September 30, 2000 . . . . . . . . . . . . 4.75 to 1.00
December 31, 2000. . . . . . . . . . . . . 4.75 to 1.00
March 31, 2001 . . . . . . . . . . . . . . 4.50 to 1.00
June 30, 2001. . . . . . . . . . . . . . . 4.50 to 1.00
September 30, 2001 . . . . . . . . . . . . 4.25 to 1.00
December 31, 2001. . . . . . . . . . . . . 4.25 to 1.00
March 31, 2002 . . . . . . . . . . . . . . 4.00 to 1.00
June 30, 2002. . . . . . . . . . . . . . . 4.00 to 1.00
September 30, 2002 . . . . . . . . . . . . 3.75 to 1.00
December 31, 2002. . . . . . . . . . . . . 3.75 to 1.00
March 31, 2003 . . . . . . . . . . . . . . 3.50 to 1.00
June 30, 2003. . . . . . . . . . . . . . . 3.50 to 1.00
September 30, 2003 . . . . . . . . . . . . 3.25 to 1.00
December 31, 2003. . . . . . . . . . . . . 3.25 to 1.00
March 31, 2004 . . . . . . . . . . . . . . 3.00 to 1.00
June 30, 2004. . . . . . . . . . . . . . . 3.00 to 1.00
September 30, 2004 . . . . . . . . . . . . 2.75 to 1.00
December 31, 2004. . . . . . . . . . . . . 2.75 to 1.00
; PROVIDED that, for purposes of this Section 7.04, for a given date set forth
above, (x) Consolidated Indebtedness shall not include any such Indebtedness as
to which the interest on such Indebtedness is not cash-pay (but is, rather,
pay-in-kind or capitalized), EXCEPT that, if cash interest is paid on any such
non cash-pay Indebtedness during the fiscal quarter ended on such date,
Consolidated Indebtedness shall include the non cash-pay Indebtedness on which
such cash interest was paid, and (y) the component of Consolidated Indebtedness
consisting of Revolving Loans shall equal (i) the sum of the balance of the
Revolving Loans as of the last day of each fiscal month during the twelve fiscal
month period ending on such date DIVIDED by (ii) twelve; and PROVIDED further
that, for purposes of this Section 7.04, Consolidated EBITDA for a given Test
Period (x) shall mean Consolidated EBITDA for the twelve month period ended on
the last day of such Test Period and (y) shall also include the EBITDA (with
appropriate adjustments) derived from any business which was acquired by the
Borrower and its Restricted Subsidiaries during such twelve-month period and
which is consolidated with the Borrower and its Restricted Subsidiaries as of
the last day of such Test Period, for the portion of such twelve month period
before the business was so acquired.
7.05 CONSOLIDATED NET WORTH. Consolidated Net Worth determined as of
the dates specified in the table below shall equal or exceed the amount
specified in such table opposite such dates:
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DETERMINATION DATE AMOUNT
------------------ ------
December 31, 1998. . . . . . . . . . . . . $ 45,000,000
December 31, 1999. . . . . . . . . . . . . $ 50,000,000
December 31, 2000. . . . . . . . . . . . . $ 55,000,000
December 31, 2001. . . . . . . . . . . . . $ 70,000,000
December 31, 2002. . . . . . . . . . . . . $ 85,000,000
December 31, 2003. . . . . . . . . . . . . $105,000,000
December 31, 2004. . . . . . . . . . . . . $130,000,000
7.06 LIENS. The Borrower will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
permit or suffer to exist any Lien upon or with respect to any item constituting
Collateral, whether now owned or hereafter acquired, except for the Lien of the
Security Document relating thereto, Prior Liens applicable thereto and Permitted
Encumbrances. The Borrower will not, and will not permit any of its Restricted
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of the Borrower or any of its Restricted
Subsidiaries, whether now owned or hereafter acquired, or sell any such property
or assets subject to an understanding or agreement, contingent or otherwise, to
repurchase such property or assets or assign any right to receive income, or
file or permit the filing of any financing statement under the UCC or any other
similar notice of Lien under any similar recording or notice statute, except the
following, which are herein collectively referred to as "PERMITTED
ENCUMBRANCES":
(a) Liens for taxes, assessments or governmental charges or claims
not yet delinquent or Liens for taxes, assessments or governmental charges
or claims being contested in good faith and by appropriate proceedings for
which adequate reserves, as may be required by GAAP, have been established
or as to which bonds have been posted with the applicable authority in the
amounts required by applicable law;
(b) Liens in respect of property or assets of the Borrower or any of
its Restricted Subsidiaries imposed by law (i) which were incurred in the
ordinary course of business, such as carriers', warehousemen's and
mechanics' Liens and other similar Liens arising in the ordinary course of
business, and (A) which do not in the aggregate materially detract from the
value of the property or assets of the Borrower and its Restricted
Subsidiaries, taken as a whole, or materially impair the use thereof in the
operation of the business of the Borrower or any of its Restricted
Subsidiaries or (B) which are being contested in good faith by appropriate
proceedings promptly instituted, which proceedings have the effect of
preventing the forfeiture or sale of the property or asset subject to such
Lien or (ii) which do not relate to material liabilities of the Borrower
and its Restricted Subsidiaries and do not in the aggregate materially
detract from the value of the property and assets of the Borrower and its
Restricted Subsidiaries taken as a whole and do not create a default under
any lease of Real Property;
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(c) Liens in connection with any attachment or judgment (including
judgment or appeal bonds) not in excess of $1,000,000 in the aggregate
(exclusive of any amount adequately covered by insurance as to which the
insurance company has acknowledged coverage) unless the attachment or
judgment it secures shall, within 60 days after the entry thereof, not have
been discharged or execution thereof not stayed pending appeal, or shall
not have been discharged within 30 days after the expiration of any such
stay;
(d) Liens (other than any Lien imposed by ERISA) incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, or
to secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations incurred in the
ordinary course of business (exclusive of obligations in respect of the
payment for borrowed money or the equivalent);
(e) Easements, rights of way, restrictions, minor defects or
irregularities in title not interfering in any material respect with the
business of the Borrower or any of its Restricted Subsidiaries, in each
case incurred in the ordinary course of business and which do not
materially impair for its intended purposes the Real Property to which it
relates;
(f) Zoning and building bylaws and ordinances, municipal bylaws and
regulations, and restrictive covenants, which do not materially interfere
with the use of the subject property by the Borrower or any of its
Restricted Subsidiaries as such property is used as of the Closing Date
(or, with respect to property acquired after the Closing Date, as such
property is used as of the acquisition date of such property);
(g) Liens securing Indebtedness of any Restricted Subsidiary of the
Borrower owing to the Borrower or any Wholly Owned Subsidiary of the
Borrower that is a Restricted Subsidiary;
(h) Liens upon real or tangible personal property acquired or
constructed by the Borrower or its Restricted Subsidiaries after the date
hereof or on such property or equity securities of a Person at the time
such Person becomes a Restricted Subsidiary of the Borrower or any of its
Restricted Subsidiaries; PROVIDED, HOWEVER, that (A) any such Lien is
created solely for the purpose of securing Indebtedness representing, or
incurred to finance, the cost of the item of property subject thereto or
such Liens existed on the date such property or securities were acquired
and were not incurred as a result of or in anticipation of such
acquisition, (B) the principal amount of the Indebtedness secured by such
Lien does not exceed when incurred 100% of the fair value (as determined in
good faith by the board of directors of the Borrower or the Borrower) of
the property at the time it was so acquired or constructed, (C) the
Indebtedness secured by the Lien is not created more than 180 days after
the later of the acquisition, completion of construction,
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repair, improvement, addition or commencement of full operation of the
property subject to the Lien, (D) such Lien does not extend to or cover any
other property other than such item of property, (E) the incurrence of such
Indebtedness secured by such Lien is permitted by Section 7.07 and (F) such
Lien is not in violation of any lease of any Real Property of any Credit
Party; and
(i) Liens on any property existing as of the date hereof securing
Existing Debt and any refinancing, extension, renewal or rearrangement
thereof provided that such Lien does not extend to or cover any other
property other than items of property encumbered as of the date hereof.
7.07 INDEBTEDNESS. The Borrower will not, and will not permit any of its
Restricted Subsidiaries to, contract, create, incur, assume, guarantee, acquire
or become liable for (contingently or otherwise) or suffer to exist any
Indebtedness, except:
(a) Indebtedness incurred pursuant to the Credit Documents;
(b) Indebtedness incurred pursuant to the Heller Subordinated Note;
(c) Indebtedness incurred pursuant to the Seller Note issued pursuant
to the Stock Purchase Agreement dated as of September 3, 1997 among the
Borrower, Oda Nursery, Inc. and the former shareholders of Oda Nursery,
Inc.
(d) Indebtedness incurred pursuant to the Senior Subordinated Notes.
(e) Indebtedness not in excess of $6,000,000 in aggregate principal
amount at any one time outstanding, incurred pursuant to any note issued to
sellers as part of the consideration for a Permitted Business Acquisition
(any such note, a "SELLER NOTE"), provided that any such Seller Note shall
satisfy the following conditions: (i) it shall be unsecured, (ii) it shall
not pay interest prior to maturity, other than interest which is
paid-in-kind (except that up to $600,000 of cash interest may be paid on
Seller Notes annually, subject to there being, at the time of any such
payment of cash interest, no payment Default hereunder, and subject to
restrictions imposed on such payment pursuant to clause (iii) hereof), and
(iii) it shall contain subordination and related provisions which are
acceptable in form and substance to the Administrative Agent, including,
without limitation, that there shall be no payments made with respect to
such Seller Notes (other than the payment of interest, in-kind) while there
is any payment Default or, subject to such conditions as are acceptable to
the Administrative Agent, upon such other Defaults as are acceptable to the
Administrative Agent, and there shall be no right of acceleration on such
Seller Notes on account of such nonpayment.
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(f) Indebtedness arising under noncompetition or consulting
arrangements entered into in connection with Permitted Business
Acquisitions, not to exceed $6,000,000 in the aggregate at any one time
outstanding.
(g) Existing Debt and any refinancing, extension, rearrangement,
renewal or replacement thereof; PROVIDED, HOWEVER, that any such
refinancing, extension, renewal, rearrangement or replacement of Existing
Debt shall be on terms which, both taken as a whole and specifically as
such terms relate to the identity of the obligors, repayments of principal,
covenants, events of default and security in property of the debtor, are in
each event no less favorable to the Borrower than the correlative terms of
the Existing Debt;
(h) Interest Rate Agreements entered into pursuant to Section 6.11 or
for other bona fide hedging purposes;
(i) Indebtedness (other than Indebtedness permitted by Section
7.07(l)) not exceeding $4,000,000 in aggregate principal amount outstanding
at any time to finance the cost of the acquisition of personal tangible
property (including Capital Leases, but excluding Indebtedness incurred to
finance Permitted Business Acquisitions), and any refinancing, extension,
renewal, rearrangement or replacement; PROVIDED, HOWEVER, that such
Indebtedness (or the refinancing thereof) shall not exceed when incurred
100% of the fair value of such property when so acquired; and PROVIDED,
FURTHER, that such Indebtedness (or the refinancing thereof) is not secured
by any Lien other than a Lien referred to in Section 7.06(h);
(j) other unsecured Indebtedness not exceeding $2,500,000 in the
aggregate at any time outstanding;
(k) Indebtedness of the Borrower to any of its Wholly Owned
Subsidiaries (which is a Restricted Subsidiary) or of any Restricted
Subsidiary of the Borrower to the Borrower or another Wholly Owned
Restricted Subsidiary of the Borrower (but only so long as such
Indebtedness is held by the Borrower or a Wholly Owned Subsidiary (which is
a Restricted Subsidiary) of the Borrower) to the extent such Indebtedness
is permitted as an Investment by the Person owed such Indebtedness by the
provisions of Section 7.08; and
(l) Indebtedness of any entity, or secured by any personal tangible
property, acquired in a Permitted Business Acquisition, so long as such
Indebtedness is (i) not incurred in contemplation of such Permitted
Business Acquisition, (ii) not in excess of $1,000,000 in the aggregate at
any one time outstanding and (iii) not secured by any Lien other than a
Lien referred to in Section 7.06(h).
7.08 INVESTMENTS. The Borrower will not, and will not permit any of its
Restricted Subsidiaries to, have outstanding or make any Investments except:
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(a) Investments consisting of Cash and Cash Equivalents;
(b) Investments consisting of receivables owing to them and advances
to customers and suppliers, in each case if created, acquired or made in
the ordinary course of business and payable or dischargeable in accordance
with customary trade terms;
(c) Investments received in connection with the bankruptcy or
reorganization of suppliers and customers or in settlement of delinquent
obligations of, and other disputes with, customers and suppliers arising in
the ordinary course of business;
(d) Investments made in Wholly Owned Subsidiaries (that are
Restricted Subsidiaries) of the Borrower or any Person which, as a result
of such Investment, becomes a Wholly Owned Subsidiary (and a Restricted
Subsidiary) of the Borrower (including any such Investment which
constitutes a Permitted Business Acquisition); PROVIDED, HOWEVER, that such
Wholly Owned Subsidiary is engaged in a business related to that of the
Borrower and its Restricted Subsidiaries in compliance with Section 7.17;
(e) Investments consisting of loans or advances made by the Borrower
to its officers, directors and employees in the ordinary course of business
not to exceed $100,000 in the aggregate outstanding at any time (excluding
any such loans or advances made as of the closing date of the Existing
Credit Agreement pursuant to the Put/Call Option Agreement);
(f) Investments made as a result of the receipt of non-cash proceeds
from any Asset Sale made pursuant to and in compliance with Section 7.11;
(g) Investments in Interest Rate Agreements permitted under Section
7.07(h);
(h) Investments in addition to those permitted above not exceeding
$1,000,000 in the aggregate at any time outstanding; and
(i) An Investment made with the consent of the Administrative Agent
in an Unrestricted Subsidiary at the time that such Subsidiary is
determined to be an Unrestricted Subsidiary.
7.09 PREPAYMENTS OF INDEBTEDNESS. The Borrower will not, and will not
permit any of its Restricted Subsidiaries to, make (or give any notice in
respect of) any voluntary or optional payment or prepayment or redemption or
acquisition for value of Indebtedness (including, without limitation, by way of
depositing with any trustee with respect thereto money or securities before such
Indebtedness is due for the purpose of paying such Indebtedness when due) or
exchange of any such Indebtedness, other than the Loans.
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7.10 DIVIDENDS, ETC. The Borrower will not, and will not permit any of its
Restricted Subsidiaries to, declare or pay any dividends or return any capital
to its stockholders (in their capacity as such) or authorize or make any other
distribution, payment or delivery of property or cash to its stockholders (in
their capacity as such), or redeem, retire, purchase or otherwise acquire,
directly or indirectly, for any consideration, any shares of any class of its
capital stock now or hereafter outstanding (or any warrants for or options or
stock appreciation rights in respect of any of such shares), or make any loans
or advances to Affiliates, or set aside any funds for any of the foregoing
purposes, or permit any of its Restricted Subsidiaries to purchase or otherwise
acquire for consideration any shares of any class of the capital stock of the
Borrower or any of its Restricted Subsidiaries, as the case may be, now or
hereafter outstanding (or any options or warrants or stock appreciation rights
issued by such Person with respect to its capital stock) (all of the foregoing,
"DIVIDENDS"), PROVIDED, HOWEVER, that (a) any direct or indirect Wholly Owned
Subsidiary of the Borrower may pay cash Dividends to its parent corporation if
such parent corporation is the Borrower or is both a Wholly Owned Subsidiary and
a Restricted Subsidiary of the Borrower; (b) the Borrower or any of its
Restricted Subsidiaries may make payments to Affiliates pursuant to and in
compliance with Section 7.19; (c) after , 2003, the
Borrower may pay Dividends to holders of its Series A Preferred Stock required
by the Certificate of Designation of such Series A Preferred Stock as in effect
on the Closing Date and the Borrower may pay non-cash dividends in the form of
payment-in-kind preferred stock to holders of its Series A Preferred Stock at
any time; (d) the Borrower may make payments from the Put/Call Funds to
Management Stockholders to redeem their "Option Shares" (as defined in the
Put/Call Option Agreement), in accordance with the Put/Call Option Agreement,
provided that any such redemption is effected prior to January 31, 1998; and (e)
upon the death, disability or termination of employment of Management
Stockholders, the Borrower may repurchase from such Management Stockholders
their Capital Stock of the Borrower in an amount not exceeding $250,000 per
year or $1,500,000 in the aggregate; provided in each case that no Default or
Event of Default which has not been cured or waived is in existence, or would
result from such payment.
7.11 DISPOSITION OF ASSETS. The Borrower will not, and will not permit
any of its Restricted Subsidiaries to, dispose of all or any part of its
interest in any asset except that the Borrower and its Restricted Subsidiaries
may sell or otherwise dispose of assets to any Person other than an Affiliate so
long as such sales or other dispositions are (a) approved by the Required Banks;
(b) for at least the fair market value of such assets and the aggregate amount
of such asset sales is less than $2,500,000 in any 12-month period and, in any
such case, the Borrower or such Restricted Subsidiary complies with the
mandatory prepayment provisions and Commitment reduction provisions herein and,
in the case of Collateral, so long as the conditions to the release of
Collateral described herein and in the applicable Security Documents are met;
(c) of inventory in the ordinary course of business; (d) (i) of equipment that
has become worn out, obsolete or damaged or otherwise unsuitable or no longer
needed for use in connection with the business of the Borrower or any of its
Restricted Subsidiaries or should be replaced, as the case may be, in each case
as determined in good faith by the board of directors of the Borrower or its
Restricted Subsidiary, as the case may be; (ii) for at least the fair value of
such equipment,
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as determined in good faith by the board of directors of the Borrower or its
Restricted Subsidiaries; and (iii) the proceeds of the sales of such equipment
are used within 120 days of such sales (or such longer period as may be
consented to by the Administrative Agent) to (A) purchase equipment used in
substantially similar lines of business or (B) repay Loans pursuant to Section
3.03 and until so applied are held in the Reserve Account; or (e) of assets as
to which the likely amount of net sales proceeds that would be realized upon a
sale of such assets is such that a sale of such assets is not, in the reasonable
judgment of the Borrower, economically practicable but such other disposition is
otherwise of commercial value to the Borrower; PROVIDED, HOWEVER, that in no
case shall sales or other dispositions pursuant to this clause (e) be of assets
of a fair market value at the time of such sale which is in excess of an
aggregate of $750,000 in any calendar year, and in the case of Collateral, so
long as the conditions to the release of Collateral described herein and in the
applicable Security Documents are met; PROVIDED, HOWEVER, that notwithstanding
the foregoing, the Borrower will not, and will not permit any of its Restricted
Subsidiaries to, sell, with or without recourse, or discount (other than in
connection with trade discounts in the ordinary course of business consistent
with past practice) or otherwise sell for less than the face value thereof,
notes or accounts receivable owed to it by its third-party customers or
suppliers.
The consideration received by the Borrower and its Restricted Subsidiaries
from each sale of assets permitted by this Section 7.11, other than with respect
to such sales involving consideration of not more than $500,000 in the aggregate
in any calendar year, shall be received in whole within 15 days of such sale and
at least 70% of the consideration from each sale shall consist of Cash or Cash
Equivalents. Any non-Cash proceeds received from the sale of assets
constituting Collateral shall be pledged pursuant to and in accordance with the
applicable Security Documents and shall constitute Collateral.
7.12 CONTINGENT OBLIGATIONS. The Borrower will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, create or become
or be liable with respect to any Contingent Obligation except:
(a) guarantees resulting from endorsement of instruments for deposit
or collection in the ordinary course of business;
(b) Interest Rate Agreements permitted under Section 7.07(h);
(c) obligations arising as a direct consequence of the
Recapitalization;
(d) obligations with respect to the Indebtedness permitted to be
incurred under Section 7.07;
(e) other Contingent Obligations not to exceed $750,000 outstanding
at any one time; and
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(f) Contingent Obligations in respect of the repurchase or redemption
of Capital Stock of the Borrower held by Management Stockholders, upon the
termination of such shareholders' employment, which meet the specifications
of Section 7.10.
7.13 MERGER AND CONSOLIDATIONS. The Borrower will not, and will not permit
any of its Restricted Subsidiaries to, merge or consolidate with or into any
other entity; PROVIDED, HOWEVER, that Holdings may merge with and into the
Borrower on the Closing Date and any Restricted Subsidiary of the Borrower or
any Person acquired in a Permitted Business Acquisition may be merged or
consolidated with or into (a) the Borrower, if the Borrower is the continuing or
surviving corporation or (b) any Restricted Subsidiary of the Borrower, if (i)
the continuing or surviving corporation is both a Wholly Owned Subsidiary and a
Restricted Subsidiary of the Borrower and (ii) the continuing or surviving
corporation is, or immediately thereafter becomes, party to a Subsidiary
Guarantee and a Security Agreement and all related documentation necessary for
the perfection of the liens and security interests created thereunder.
7.14 AMENDMENTS TO ORGANIZATIONAL DOCUMENTS. Without the prior written
consent of the Administrative Agent, the Borrower will not, and will not permit
any of its Restricted Subsidiaries to, amend, modify or change any of the terms
or provisions of its certificate of incorporation (including, without
limitation, by the filing of any certificate of designation), by-laws or
agreement of limited partnership, in each case to the extent such amendment,
modification or change is adverse to the Banks as Banks hereunder, provided,
however, the Borrower may amend and restate its certificate of incorporation on
the Closing Date in the form attached hereto as Exhibit 7.14.
7.15 ERISA. At no time shall the actuarial present value of unfunded
liabilities for post-employment health care benefits of the Borrower, any of its
Restricted Subsidiaries or any ERISA Affiliate of any of them, whether or not
provided under a Plan, calculated in a manner consistent with Statement No. 106
of the Financial Accounting Standards Board, exceed $750,000 in aggregate.
7.16 NO NON-WHOLLY OWNED SUBSIDIARIES. Neither the Borrower nor any of
its Restricted Subsidiaries shall have, create or suffer to exist any Subsidiary
of any of them which is not a Wholly Owned Subsidiary, including, without
limitation, any such Restricted Subsidiary acquired in a Permitted Business
Acquisition.
7.17 CHANGES IN BUSINESS. Other than asset dispositions permitted under
Section 7.11, the Borrower will not, and will not permit any of its Restricted
Subsidiaries to, materially alter its business from that conducted by it at the
Closing Date.
7.18 AMENDMENTS OR WAIVERS OF CERTAIN DOCUMENTS. After the Closing Date,
the Borrower will not, and will not permit any of its Restricted Subsidiaries
to, amend, terminate or otherwise change the terms of any of the leases of Real
Property referred to on Schedule 5.16 without, with respect to any amendment,
termination or change which is adverse to the Banks as
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Banks hereunder, the prior written consent of the Administrative Agent. The
Borrower will not, and will not permit any of its Restricted Subsidiaries to,
amend or otherwise change the terms of any Existing Debt (excluding such
Indebtedness arising under Capital Leases), except as otherwise permitted under
this Section 7.
7.19 TRANSACTIONS WITH AFFILIATES. The Borrower will not, and will not
permit any of its Restricted Subsidiaries to, enter into any transaction or
series of transactions, whether or not in the ordinary course of business, with
any holder of 5% or more of any class of equity interests of the Borrower or
with any Affiliate of the Borrower other than on terms and conditions
substantially as favorable to the Borrower or such Restricted Subsidiary as
would be obtainable by the Borrower or such Subsidiary at the time in a
comparable arm's-length transaction with a Person other than a holder of 5% or
more of any class of equity interests of the Borrower or an Affiliate of the
Borrower; PROVIDED, HOWEVER, that the foregoing restrictions shall not apply to
(a) transactions between the Borrower and any of its Wholly Owned Subsidiaries
(that are Restricted Subsidiaries) and between Wholly Owned Subsidiaries of the
Borrower (that are Restricted Subsidiaries) permitted by the other provisions of
this Agreement, (b) loans or advances made by the Borrower to its officers,
directors and employees permitted under Section 7.08(e), (c) the payment of fees
to Indosuez and its respective Affiliates for financial services,
such fees not to exceed the usual and customary fees for similar services, (d)
the issuance of Capital Stock of the Borrower pursuant to any pension, stock
option, profit sharing or other employee benefit plan or agreement of the
Borrower or its Restricted Subsidiaries in the ordinary course of business, (e)
a payment to KCSN or its Affiliates on or about the Closing Date for management
services pursuant to the termination of the Management Agreement, not to exceed
$2,000,000, (f) the continuation and renewal of the leases referred to on
Schedule 5.16, (g) distributions with respect to the Heller Subordinated Note
permitted under Section 7.23 and the Heller Subordination Agreement, (h) the
redemption of Capital Stock of the Borrower held by Management Stockholders or
the Senior Managers subject to the conditions described in Section 7.10 and (i)
transactions between the Borrower and holders of the Borrower's Series A
Preferred Stock permitted by the other provisions of this Agreement.
7.20 CAPITAL STRUCTURE. The Borrower shall not permit any of its
Restricted Subsidiaries to issue, sell, assign, pledge or otherwise encumber or
dispose of any of its Capital Stock (including partnership interests or other
securities or warrants, rights or options to acquire capital stock, partnership
interests or other securities), without first providing prior written notice
thereof to the Administrative Agent and making arrangements satisfactory to the
Administrative Agent to ensure that any such Capital Stock will be deposited
with the Administrative Agent, and that the Administrative Agent will have a
valid first priority perfected security interest in such Capital Stock.
7.21 SALE AND LEASE-BACKS. The Borrower will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, become or thereafter
remain liable as lessee or as guarantor or other surety with respect to the
lessee's obligations under any lease, whether an Operating Lease or a Capital
Lease, of any property (whether real or personal or mixed) whether
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now owned or hereafter acquired, (a) which the Borrower or any of its Restricted
Subsidiaries has sold or transferred or is to sell or transfer to any other
Person or (b) which the Borrower or any such Restricted Subsidiary intends to
use for substantially the same purpose as any other property which has been or
is to be sold or transferred by the Borrower or any such Restricted Subsidiary
to any Person in connection with such lease, if in the case of clause (a) or (b)
above, such sale and such lease are part of the same transaction or a series of
related transactions or such sale and such lease occur within one year of each
other or are with the same other Person.
7.22 CLEAN-DOWN PERIOD. During the Clean-down Period for each fiscal year
of the Borrower, the aggregate unpaid principal amount of outstanding Revolving
Loans and Supplemental Revolving Loans, plus outstanding Letters of Credit Usage
(which are not cash collateralized in a manner satisfactory to the
Administrative Agent) shall not exceed the Clean-down Amount.
7.23 CERTAIN PAYMENTS. The Borrower and its Restricted Subsidiaries shall
make no payments or distributions with respect to (i) the Heller Subordinated
Notes, except as permitted under the Heller Subordination Agreement or (ii) the
Senior Subordinated Notes, except as permitted under the subordination
provisions of such Senior Subordinated Notes. Without limiting the foregoing,
on or after December 31, 1998, the Borrower shall be permitted to pay interest
in cash on the Heller Subordinated Notes to the holders thereof (the "HELLER
SUBORDINATED LENDERS") in an amount equal to any scheduled semi-annual interest
payment on the Subordinated Notes if (A) at the time of making such payment
there is not in existence, nor will there occur after giving effect to such
payment, a Default or Event of Default; (B) after giving pro forma effect to
such cash payment as if such payment was made during the relevant Test Period
(i) the ratio of (w) total Consolidated Indebtedness of the Borrower and its
Restricted Subsidiaries (including the outstanding balance under any noncompete
or consulting arrangements) immediately prior to such payment to (x)
Consolidated EBITDA of the Borrower and its Restricted Subsidiaries is not more
than 3.25:1.0 (PROVIDED, that, for purpose of the foregoing clause (i), the
calculations shall be performed in accordance with the provisos to Section 7.04)
and Consolidated Indebtedness shall include the outstanding balance (including
capitalized interest) of the Heller Subordinated Notes; and (ii) the ratio of
(y) Consolidated EBITDA of the Borrower and its Restricted Subsidiaries to (z)
Consolidated Interest Expense (which, for the purposes of this Section 7.23,
shall include only cash interest expense) of the Borrower and its Restricted
Subsidiaries is not less than 3.0:1.0; (C) during the period two weeks before
the scheduled interest payment date on the Heller Subordinated Notes for which
the Borrower has proposed a cash interest payment there shall be $2.5 million of
availability for additional Borrowings of a Revolving Loan or Supplemental
Revolving Loan pursuant to Section 1.01; and (D) the Borrower shall have
delivered to the Administrative Agent an Officers' Certificate (i) setting forth
the calculation of the financial ratios required by clause (B) above and (ii)
stating that, based on the annual budgets or forecasts currently in effect and
provided pursuant to Section 4.01(j) or 4.03 hereof and after giving effect to
the amount of any interest payment permitted by this Section 7.23, such persons
do not expect that a Default or an Event of
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Default shall occur in the then current fiscal quarter or the next succeeding
fiscal quarter, in each case, of the Borrower and its Subsidiaries.
SECTION 8. EVENTS OF DEFAULT. Each of the events specified in Sections
8.01 through 8.09, inclusive, is referred to as an "EVENT OF DEFAULT":
8.01 PAYMENTS. The Borrower shall (a) default in the payment when due of
any principal of the Loans, (b) default in the payment when due of any interest
on the Loans, and such default shall continue for two or more Business Days or
(c) fail to pay any other amounts owing hereunder or under any other Credit
Document, and such failure shall continue for five Business Days after the
Borrower's receipt of written notice thereof.
8.02 REPRESENTATIONS, ETC. Any representation, warranty or statement made
or deemed made by operation of Sections 4.01, 4.02 or 4.03 by any Credit Party
herein or in any other Credit Document or in any written statement or
certificate delivered or required to be delivered pursuant hereto or thereto
shall prove to be untrue in any material respect on the date as of which made or
deemed made by operation of Sections 4.01, 4.02 or 4.03.
8.03 COVENANTS.
(a) Any Credit Party shall default in the due performance or
observance by it of any term, covenant or agreement contained in Sections
6.11, 6.12 or Section 7; or
(b) any Credit Party shall default in the due performance or
observance by it of any other term, covenant or agreement contained in this
Agreement, any other Credit Document or any Security Document (except as
otherwise provided in this Section 8) and such default shall continue
unremedied after (i) the expiry of any specified grace period relative to
such default or, (ii) where no grace period is specified, 30 days (or, in
the case of Section 6.16(d), ten Business Days) after the date of such
default.
8.04 DEFAULT UNDER OTHER AGREEMENTS.
(a) Any Credit Party shall (i) default in any payment with respect
to any Indebtedness (other than Obligations) having a principal amount of
$750,000 or more individually or $1,500,000 or more in the aggregate, for
all such Persons, beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness was created, or (ii)
default in the observance or performance of any agreement or condition
relating to any such Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event
shall occur or condition exist, the effect of which default or other event
or condition is to cause, or, except for any such default or other event or
condition as to such Indebtedness arising under Capital Leases, to permit
(with or without notice, lapse of time or both) the holder or holders of
such Indebtedness (or a trustee or agent on behalf of such holder or
holders)
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to cause any such Indebtedness to become due (whether by acceleration,
redemption, etc.) prior to its stated maturity;
(b) any such Indebtedness of any Credit Party shall be declared to be
due and payable, or required to be prepaid or redeemed other than by a
regularly scheduled or required prepayment, prior to the stated maturity
thereof; or
(c) Any Credit Party shall default in the performance or observance
of any obligation under any lease reflected on Schedule 5.16 (excluding
those leases which the Borrower has designated on Schedule 5.16 as not
material, and the Administrative Agent has agreed with such designation),
and such default results in the termination of such lease.
8.05 BANKRUPTCY, ETC. Any Credit Party shall commence a voluntary case
concerning itself under Title 11 of the United States Code entitled
"Bankruptcy," as now or hereafter in effect, or any successor thereto (the
"BANKRUPTCY CODE"); or an involuntary case is commenced against any Credit Party
and the petition is not controverted within 20 days, or is not dismissed within
60 days, after commencement of the case; or a custodian (as defined in the
Bankruptcy Code) is appointed for, or takes charge of, all or substantially all
of the property of any Credit Party; or any Credit Party commences any other
proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to any Credit Party; or
there is commenced against any Credit Party any such proceeding which remains
undismissed for a period of 60 consecutive days; or any Credit Party is
adjudicated insolvent or bankrupt; or any order of relief or other order
approving any such case or proceeding is entered; or any Credit Party suffers
any appointment of any custodian or the like for it or any substantial part of
its property to continue undischarged or unstayed for a period of 60 days; or
any Credit Party makes a general assignment for the benefit of creditors; or any
corporate action is taken by any Credit Party for the purpose of effecting any
of the foregoing.
8.06 SECURITY DOCUMENTS; GUARANTEES.
(a) Any Security Document shall cease to be in full force and effect,
or shall cease to give the Administrative Agent the Liens, rights, powers,
and privileges purported to be created thereby, in favor of the
Administrative Agent, superior to and prior to the rights of all third
Persons and subject, in each case, to no Liens other than Permitted
Encumbrances, Prior Liens and Liens expressly permitted by the applicable
Security Document, or any judgment creditor having a Lien against any
material item of Collateral shall commence legal action to foreclose such
Lien or otherwise exercise its remedies against any material item of
Collateral, or the Administrative Agent shall cease to hold, for the
benefit of the Banks, 100% of the Borrower's Restricted Subsidiaries
Capital Stock.
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(b) Any Subsidiary Guarantee, or any provisions thereof shall cease
to be in full force and effect in all material respects, or any guarantor
thereunder or any Person acting by or on behalf of such guarantor shall
deny or disaffirm such guarantor's obligations under such guarantee or
shall default in the due performance or observance of any term, covenant or
agreement on its part to be performed or observed pursuant to such
guarantee.
8.07 SUBORDINATION. (a) The terms of the Heller Subordination Agreement,
the subordination provisions of the Senior Subordinated Notes, or of the
subordination as to any Seller Note shall cease, for any reason, to be in full
force and effect for the benefit of the Banks, or any Credit Party or the holder
of the Heller Subordinated Notes or any Seller Note or the trustee or holders of
the Senior Subordinated Notes shall so assert or shall otherwise assert that the
Obligations are not senior to the Heller Subordinated Notes, the Senior
Subordinated Notes or any Seller Note, as the case may be.
(b) An event described in Section 2.2(a) of the Heller Subordinated Notes,
as requiring mandatory redemption of the Heller Subordinated Notes,
shall occur.
(c) An event described in the indenture governing the Senior Subordinated
Notes which requires redemption of any position of the Senior
Subordinated Notes, shall occur.
8.08 JUDGMENTS. One or more judgments or decrees shall be entered against
any Credit Party involving a liability of $750,000 or more in the case of any
one such judgment or decree and $1,500,000 in the aggregate for all such
judgments or decrees for the Borrower and its Restricted Subsidiaries (in either
case in excess of the amount covered by insurance as to which the insurance
company has acknowledged coverage) and any such judgments or decrees shall not
have been vacated, discharged, stayed or bonded pending appeal for a period of
60 consecutive days from the entry thereof.
8.09 OWNERSHIP.
(a) KCSN, together with any other Person controlled by or under
common control with Kohlberg & Company, LLC, shall,
collectively, cease to have and to exercise the right to
elect or designate directors entitled to cast a majority of
the votes of the Borrower's board of directors; or
(b) Any Person or group of related Persons for purposes of
Section 13(d) of the Securities Exchange Act of 1933 (other
than KCSN, taken together with any other Person controlled
by or under common control with Kohlberg & Company, LLC)
shall own and/or control (x) a percentage of the issued and
outstanding capital stock of the Borrower entitled (without
regard to the occurrence of any contingency) to vote for the
election of
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directors which is equal to or greater than the amount of
such securities held by KCSN, taken together with any other
Person controlled by or under common control with Kohlberg &
Company, LLC, or (y) more of the issued and outstanding
capital stock of the Borrower (taking into consideration
both voting and nonvoting capital stock) than KCSN, taken
together with any other Person controlled by or under common
control with Kohlberg & Company, LLC; or
(c) KCSN shall cease to be controlled by Kohlberg & Company,
LLC.
8.10 CERTAIN ACTIONS FOLLOWING AN EVENT OF DEFAULT. Upon the occurrence
and during the continuance of any Event of Default, the Administrative Agent
may, and, upon the written request of the Required Banks shall, by written
notice to the Borrower (which shall be deemed notice to each other Credit
Party), take any or all of the following actions, without prejudice to the
rights of the Administrative Agent or any Bank to enforce its claims against the
Borrower or any other Credit Party, except as otherwise specifically provided
for in this Agreement (PROVIDED, HOWEVER, that upon an Event of Default
specified in Section 8.05 the actions provided for in clauses (a) and (b) below
shall occur automatically without the giving of any notice):
(a) declare the Total Revolving Loan Commitments and the Supplemental
Revolving Loan Commitments terminated (and, if prior to the Acquisition
Term Loan Commitment Termination Date and for the Supplemental Term Loan
Commitment Termination Date, declare the Acquisition Term Loan Commitments
and/or the Supplemental Term Loan Commitments, as applicable, terminated),
whereupon the Revolving Loan Commitment the Supplemental Loan Commitment
(and, if applicable, the Acquisition Term Loan Commitment) of each Bank
shall forthwith terminate immediately and any accrued and unpaid Commitment
Fee shall forthwith become due and payable without any other notice of any
kind;
(b) declare the principal of and accrued interest in respect of all
Loans and all Obligations owing hereunder and thereunder to be, whereupon
the same shall become, forthwith due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived
by each Credit Party; and/or
(c) enforce, as Administrative Agent (or direct the Administrative
Agent to enforce), any or all of the remedies created pursuant to the
Security Documents. If an Event of Default is cured or waived in
accordance with the terms of this Agreement, it ceases (and, if waived,
pursuant to the terms, and to the extent, of such waiver).
SECTION 9. DEFINITIONS. Certain capitalized terms are used in this
Agreement with the specific meanings set forth or referred to below in this
Section 9. Capitalized terms defined in this Agreement in the singular or
plural form include the plural and singular form, respectively.
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"ACCOUNT" means all of the "accounts" of the Borrower and its Restricted
Subsidiaries (as that term is defined in Section 9-106 of the Uniform Commercial
Code as in effect in the State of New York) whether or not such Account has been
earned by performance, whether now existing or existing in the future,
including, without limitation, all (a) accounts receivable, including, without
limitation, all accounts created by or arising from the sale of goods or
rendition of services by the Borrower and its Restricted Subsidiaries; (b)
unpaid seller's rights (including rescission, replevin, reclamation and stopping
in transit) relating to the foregoing or arising therefrom; (c) rights to any
goods represented by any of the foregoing, including returned or repossessed
goods; (d) reserves and credit balances held by the Borrower and its Restricted
Subsidiaries with respect to any such accounts receivable or any account debtor;
(e) guarantees or collateral for any of the foregoing; and (f) insurance
policies or rights relating to any of the foregoing.
"ACQUISITION PORTION" means, at any time, the portion of the Loan Facility
evidenced by the Total Acquisition Term Loan Commitment.
"ACQUISITION TERM LOAN" is defined in Section 1.01(b).
"ACQUISITION TERM LOAN CLOSING DATE" is defined in Section 1.01(b).
"ACQUISITION TERM LOAN COMMITMENT" means, with respect to each Bank, the
amount set forth below such Bank's name on Exhibit A hereto directly below the
column entitled "Acquisition Term Loan", as same may be reduced from time to
time pursuant to Sections 2.01, 3.03 and/or 8.
"ACQUISITION TERM LOAN COMMITMENT TERMINATION DATE" means the last Business
Day of December, 1999.
"ACQUISITION TERM LOAN MATURITY DATE" means the last Business Day of
December, 2004.
"ACQUISITION TERM NOTE" is defined in Section 1.05(a)(ii).
"ADDITIONAL SECURITY DOCUMENTS" is defined in Section 6.14(a).
"AFFILIATE" means, with respect to any Person, any other Person directly or
indirectly controlling (including but not limited to all directors and executive
officers of such Person), controlled by, or under direct or indirect common
control with such Person; PROVIDED, HOWEVER, that none of Indosuez, IBJS, BKOB,
nor any Affiliate of Indosuez, or BKOB shall be deemed to be an Affiliate of any
Credit Party. A Person shall be deemed to control a corporation for the
purposes of this definition if such Person possesses, directly or indirectly,
the power (a) to vote 10% or more of the securities having ordinary voting power
for the election of directors of such corporation or (b) to direct or cause the
direction of the management and policies of such corporation, whether through
the ownership of voting securities, by contract or otherwise.
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"ADMINISTRATIVE AGENT" is defined in the preamble to this Agreement and
shall include any successor Administrative Agent appointed in accordance
herewith in its capacity as Administrative Agent for the Banks.
"AGENTS" is defined in the preamble to this Agreement.
"AGENT'S OFFICE" shall mean the office of the Administrative Agent located
at 1211 Avenue of the Americas, 7th Floor, New York, New York 10036, or such
other office as the Administrative Agent may hereafter designate in writing as
such to the other parties hereto.
"AGREEMENT" shall mean the Original Credit Agreement, as amended and
restated by the Existing Credit Agreement and hereby, including as the same may
after its execution be amended, supplemented or otherwise modified from time to
time in accordance with the terms hereof.
"ASSET RESTORATION AMOUNT" is defined in Section 3.03(f)(i).
"ASSET SALE" means the sale, transfer or other disposition, to the extent
consummated after the Closing Date, by the Borrower or any of its Restricted
Subsidiaries to any Person other than the Borrower or any of its Wholly Owned
Subsidiaries (which are Restricted Subsidiaries) of any asset of the Borrower or
such Subsidiary, except for (a) transactions included in the definition of the
Public Financing or (b) the issuance of equity securities under any stock option
or other benefit plan available to the employees or directors of the Borrower or
any of its Subsidiaries.
"ASSETS" means all of the assets of the Borrower and its Restricted
Subsidiaries from time to time.
"ASSIGNMENT AGREEMENT" is defined in Section 11.04(c).
"AUTHORIZED OFFICER" shall mean any senior officer of the Borrower or the
Borrower, as applicable, designated as such in writing to the Administrative
Agent by the Borrower.
"BANK" is defined in the preamble to this Agreement and in Section 11.04.
"BANKRUPTCY CODE" is defined in Section 8.05.
"BASE RATE" means the higher of (a) 1/2% per annum in excess of the Federal
Funds Rate and (b) the rate which the Administrative Agent announces from time
to time as its prime commercial lending rate, as in effect from time to time;
PROVIDED, HOWEVER, that (i) the rate the Administrative Agent announces as its
prime commercial lending rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged to any customer and (ii) the
Administrative Agent may make commercial loans or other loans at rates of
interest at, above or below the rate it announces as its prime lending rate.
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"BASE RATE LOAN" means each Loan bearing interest at the rate provided in
Section 1.08(a).
"BASE RATE MARGIN" means, with respect to any Revolving Loan, any
Acquisition Term Loan, any Supplemental Term Loan or and Supplemental
Revolving Loan, with respect to interest payable in any quarter, the rate
set forth in the table below opposite the Leverage Ratio of the Borrower as
determined on the last day of such quarter; provided, however the Base Rate
Margin applicable in any quarter shall equal 1.25% unless the Borrower has
delivered at least 10 Business Days prior to the end of such quarter a
certificate of the Borrower's president or chief financial officer to the
Administrative Agent certifying the Leverage Ratio for such quarter:
LEVERAGE RATIO BASE RATE MARGIN
-------------- ----------------
GREATER THAN 5.00x 1.25%
4.15x - 5.00x 1.00%
4.01x - 4.50x 0.75%
3.51x - 4.00x 0.50%
3.01x - 3.50x 0.25%
2.51x - 3.00x 0.00%
2.01x - 2.50x 0.00%
LESS THAN 2.01x 0.00%
"BKOB" is defined in the preamble to this Agreement.
"BORROWER" is defined in the preamble to this Agreement.
"BORROWING" means the incurrence pursuant to a Notice of Borrowing and
under the Loan Facility of one Type of Loan by the Borrower from all of the
Banks on a pro rata basis on a given date (or resulting from conversions on a
given date), having, in the case of Reserve Adjusted Eurodollar Loans, the same
Interest Period.
"BORROWING BASE" means, at any date of determination, an amount equal to
the sum of (x) 85% of Eligible Accounts Receivable PLUS (y) 55% of Eligible
Inventory, in each case as shown on the most recent Borrowing Base Certificate
delivered prior to such date of determination; PROVIDED that during any
Clean-down Period, the Borrowing Base shall be the lesser of (x) the amount
derived from the foregoing calculation and (y) the Clean-down Amount.
"BORROWING BASE CERTIFICATE" is defined in Section 6.01(m).
"BREAKAGE COSTS" is defined in Section 1.10(f).
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"BUSINESS DAY" means (a) for all purposes other than as covered by clause
(b) below, any day excluding Saturday, Sunday and any day which shall be in the
City of New York or the State of California a legal holiday or a day on which
banking institutions are authorized by law or other governmental actions to
close and (b) with respect to all notices and determinations in connection with,
and payments of principal and interest on, Reserve Adjusted Eurodollar Loans,
any day which is a Business Day described in clause (a) and which is also a day
for trading by and between banks in U.S. dollar deposits in the interbank
Eurodollar market.
"CAPITAL LEASE" of any Person means any lease of any property (whether
real, personal or mixed) by that Person as lessee which, in conformity with
GAAP, is, or is required to be, accounted for as a capital lease on the balance
sheet of that Person, together with any renewals of such leases (or entry into
new leases) on substantially similar terms.
"CAPITAL STOCK" means any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants or options to purchase, or securities convertible into,
any of the foregoing.
"CAPITALIZED LEASE OBLIGATIONS" of any Person means all obligations under
Capital Leases of such Person or any of its Subsidiaries in each case taken at
the amount thereof accounted for as liabilities in accordance with GAAP.
"CARRYOVER AMOUNT" is defined in Section 7.01.
"CASH" means Dollars in money, currency or a credit balance in a Deposit
Account.
"CASH EQUIVALENTS" means (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (PROVIDED that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than three years from the date of acquisition; (b) marketable direct obligations
issued by any State of the United States of America or any local government or
other political subdivision thereof rated (at the time of acquisition of such
security) at least AA by S&P or the equivalent thereof by Moody's having
maturities of not more than one year from the date of acquisition; (c) U.S.
dollar denominated time deposits, certificates of deposit and bankers'
acceptances of (i) any Bank, (ii) any domestic commercial bank of recognized
standing having capital and surplus in excess of $10,000,000,000 or (iii) any
bank whose short-term commercial paper rating (at the time of acquisition of
such security) by S&P is at least A-1 or the equivalent thereof or by Moody's
is at least P-1 or the equivalent thereof (any such bank, an "APPROVED BANK"),
in each case with maturities of not more than six months from the date of
acquisition; (d) commercial paper and variable or fixed rate notes issued by any
Bank or Approved Bank or by the parent company of any Bank or Approved Bank and
commercial paper and variable rate notes issued by, or guaranteed by, any
industrial or financial company with a short-term
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commercial paper rating (at the time of acquisition of such security) of at
least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent
thereof by Moody's, or guaranteed by any industrial company with a long-term
unsecured debt rating (at the time of acquisition of such security) of at least
AA or the equivalent thereof by S&P or the equivalent thereof by Moody's and in
each case maturing within one year after the date of acquisition; (e) repurchase
agreements with any Bank or any primary dealer maturing within one year from the
date of acquisition that are fully collateralized by investment instruments that
would otherwise be Cash Equivalents; PROVIDED that the terms of such repurchase
agreements comply with the guidelines set forth in the Federal Financial
Institutions Examination Council Supervisory Policy -- Repurchase Agreements of
Depository Institutions With Securities Dealers and Others, as adopted by the
Comptroller of the Currency on October 31, 1985; and (f) investments in money
market mutual funds, all of the assets of which are invested in securities and
instruments of the types set forth in clauses (a) through (d) above.
"CERCLA" is defined in Section 5.21(b).
"CLEAN-DOWN AMOUNT" means $15,000,000.
"CLEAN-DOWN PERIOD" means, for each fiscal year of the Borrower, the 30
consecutive calendar day period designated by the Borrower for such fiscal year,
falling within the 90 day period commencing on July 1 of that year and ending on
September 30 of that year.
"CLOSING DATE" means the date on which the Initial Loans are made and the
Public Financing is consummated.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COLLATERAL" means all assets of the Borrower and/or its Restricted
Subsidiaries from time to time (excluding the Put/Call Funds) and any other
assets which are required to be subjected to Liens and security interests in
favor of the Administrative Agent, for the benefit of the Banks, as collateral
security for the payment or performance of any of the Obligations, including the
assets described as collateral security in the Security Documents and any
Subsidiary Guarantee.
"COMMERCIAL LETTER OF CREDIT" means any letter of credit or similar
instrument issued for the account of the Borrower for the benefit of the
Borrower or any of its Restricted Subsidiaries, for the purpose of providing the
primary payment mechanism in connection with the purchase of any materials,
goods or services by the Borrower or any of its Restricted Subsidiaries in the
ordinary course of business of the Borrower or such Restricted Subsidiaries.
"COMMITMENTS" means, with respect to each Bank, the Revolving Loan
Commitment, the Acquisition Term Loan Commitment and the Supplemental Loan
Commitment of such Bank.
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"COMMITMENT FEE" is defined in Section 2.03.
"COMPLIANCE CERTIFICATE" means a certificate issued pursuant to Section
6.01(e) signed by a chief financial officer, controller, chief accounting
officer or other Authorized Officer of the Borrower.
"CONSOLIDATED AMORTIZATION EXPENSE" for any Person means, for any period,
the consolidated amortization expense of such Person for such period (including
amortization of any step-up in value of inventory or other assets as may be
required by purchase accounting), determined on a consolidated basis for such
Person and its Restricted Subsidiaries in conformity with GAAP.
"CONSOLIDATED CAPITAL EXPENDITURES" of any Person means, for any period,
the aggregate gross increase during that period, in the property, plant or
equipment reflected in the consolidated balance sheet of such Person and its
consolidated Restricted Subsidiaries, in conformity with GAAP, but excluding
expenditures made in connection with the replacement, substitution or
restoration of assets (a) to the extent financed from insurance proceeds paid on
account of the loss of or damage to the assets being replaced or restored or
from indemnity payments, received under the Recapitalization Documents or from
any Replacement Asset Amount or Asset Restoration Amount, (b) with awards of
compensation arising from the taking by eminent domain or condemnation of the
assets being replaced or (c) with regard to equipment that is purchased
substantially simultaneously with the trade-in of existing equipment, fixed
assets or improvements, the credit granted by the seller of such equipment for
the trade-in of such equipment, fixed assets or improvements; PROVIDED, HOWEVER,
that Consolidated Capital Expenditures shall exclude the purchase price paid in
connection with the acquisition of any other Person in a Permitted Business
Acquisition financed, in whole or in part, with the proceeds of an Acquisition
Term Loan (including through the purchase of all of the capital stock or other
ownership interests of such Person or through merger or consolidation) to the
extent allocable to property, plant and equipment.
"CONSOLIDATED CURRENT ASSETS" means, with respect to any Person as at any
date of determination, the total assets of such Person and its consolidated
Restricted Subsidiaries which may properly be classified as current assets on a
consolidated balance sheet of such Person and its Restricted Subsidiaries in
accordance with GAAP.
"CONSOLIDATED CURRENT LIABILITIES" means, with respect to any Person as at
any date of determination, the total liabilities of such Person and its
consolidated Restricted Subsidiaries which may properly be classified as current
liabilities (other than the current portion of any Loans or any Existing Debt)
on a consolidated balance sheet of such Person and its consolidated Restricted
Subsidiaries in accordance with GAAP.
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"CONSOLIDATED DEPRECIATION EXPENSE" for any Person means, for any period,
the consolidated depreciation expense of such Person for such period, determined
on a consolidated basis for such Person and its consolidated Restricted
Subsidiaries in conformity with GAAP.
"CONSOLIDATED EBITDA" for any Person means, without duplication, for any
period, the sum of the amounts for such period of
(i) Consolidated Net Income,
(ii) Consolidated Tax Expense,
(iii) Consolidated Interest Expense,
(iv) Consolidated Depreciation Expense,
(v) Consolidated Amortization Expense,
(vi) other non-cash expenses incurred during such period,
(vii) any expenses or charges related to the termination of the
Management Agreement, and
(viii) any write-off of deferred financing costs in connection with
this Second Amended and Restated Credit Agreement.
"CONSOLIDATED EBITDAC" for any Person means, for any period, Consolidated
EBITDA minus Consolidated Capital Expenditures (other than Expansion Capital
Expenditures).
"CONSOLIDATED INDEBTEDNESS" for any Person means, at any time for the
determination thereof, the principal amount of all Indebtedness of such Person
and its consolidated Restricted Subsidiaries, determined on a consolidated basis
in accordance with GAAP.
"CONSOLIDATED INTEREST EXPENSE" for any Person means, for any period, the
sum of (a) total interest expense (including that attributable to Capital Leases
in accordance with GAAP) and (b) total dividends paid on any preferred stock, in
each case of such Person and its Restricted Subsidiaries on a consolidated basis
with respect to all outstanding Indebtedness and preferred stock of such Person
and its Restricted Subsidiaries, including, without limitation, all commissions,
discounts and other fees and charges of a similar nature owed with respect to
letters of credit and bankers' acceptance financing, but excluding, however, any
amortization of deferred financing costs, all as determined on a consolidated
basis for such Person and its consolidated Restricted Subsidiaries in accordance
with GAAP. For purposes of clause (b) above, dividend requirements shall be
increased to an amount representing the pretax earnings
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that would be required to cover such dividend requirements; accordingly, the
increased amount shall be equal to such dividend requirements multiplied by a
fraction, the numerator of which is such dividend requirement and the
denominator of which is one MINUS the applicable actual combined federal, state,
local and foreign income tax rate of such Person and its subsidiaries (expressed
as a decimal), on a consolidated basis, for the calendar year immediately
preceding the date of the transaction giving rise to the need to calculate
Consolidated Interest Expense.
"CONSOLIDATED NET INCOME" for any Person means, for any period, the net
income (or loss) of such Person and its Restricted Subsidiaries on a
consolidated basis for such period taken as a single accounting period
determined on a consolidated basis for such Person and its consolidated
Restricted Subsidiaries in conformity with GAAP; PROVIDED, HOWEVER, that there
shall be excluded (a) the income (or loss) of any other Person (other than
consolidated Restricted Subsidiaries of such Person) in which any third Person
(other than such Person or any of its consolidated Restricted Subsidiaries) has
a joint interest, except to the extent of the amount of dividends or other
distributions actually received by such Person or any of its consolidated
Restricted Subsidiaries from such other Person during such period, and (b) the
income of any consolidated Restricted Subsidiary of such Person to the extent
that the declaration or payment of dividends or similar distributions by that
consolidated Restricted Subsidiary of that income is not at the time permitted
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
consolidated Restricted Subsidiary.
"CONSOLIDATED NET WORTH" means, at any date of determination, the total of
stockholders' equity of the Borrower and its Restricted Subsidiaries determined
in accordance with GAAP on a consolidated basis.
"CONSOLIDATED TAX EXPENSE" for any Person means, for any period, the
consolidated tax expense of such Person for such period, determined on a
consolidated basis for such Person and its consolidated Restricted Subsidiaries
in conformity with GAAP.
"CONTINGENT OBLIGATIONS" means, as to any Person, without duplication, any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("PRIMARY OBLIGATIONS") of
any other Person (the "PRIMARY OBLIGOR") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (a) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (b) to advance or
supply funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (d) otherwise to assure or hold
harmless the owner of such primary obligation against loss in respect thereof;
PROVIDED, HOWEVER, that the term Contingent Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business.
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The amount of any Contingent Obligation shall be deemed to be an amount equal to
the maximum amount that such Person may be obligated to expend pursuant to the
terms of such Contingent Obligation or, if such Contingent Obligation is not so
limited, the stated or determinable amount of the primary obligation in respect
of which such Contingent Obligation is made or, if not stated or determinable,
the maximum reasonably anticipated liability in respect thereof (assuming such
Person is required to perform thereunder) as determined by such Person in good
faith.
"CREDIT DOCUMENTS" means (a) the Original Credit Agreement, as amended and
restated by the Existing Credit Agreement and by this Agreement, (b) each Note,
(c) each Security Document, (d) any Subsidiary Guarantee and (e) any other
agreement, document or instrument between the Administrative Agent and the
Borrower or any other Credit Party or between or among the Agent, the Banks and
the Borrower or any other Credit Party, which amends, supplements or modifies
this Agreement, the Notes, any Security Document or any Subsidiary Guarantee or
which is stated to be a Credit Document.
"CREDIT PARTY" means each of the Borrower and each Restricted Subsidiary of
the Borrower.
"DEFAULT" means any event, act or condition which with notice or lapse of
time, or both, would constitute an Event of Default.
"DEPOSIT ACCOUNT" means a demand, time, savings, passbook or like account
with a bank, savings and loan association, credit union or like organization,
other than an account evidenced by a negotiable certificate of deposit.
"DIVIDENDS" is defined in Section 7.10.
"DOLLARS" means United States dollars.
"EFFECTIVE DATE" means December 31, 1996, such being the date of the
Original Credit Agreement and the making of the initial Loans thereunder.
"ELIGIBLE ACCOUNTS RECEIVABLE" means, as at any applicable date of
determination, the aggregate face amount of Borrower's and its Restricted
Subsidiaries' Accounts included in clause (a) of the definition of Account
hereunder, without duplication, MINUS (i) (without duplication) the aggregate
amount of all reserves, limits and deductions with respect to such Accounts
required by paragraphs (a) through (q) below and (ii) the aggregate amount of
all returns, discounts, claims, credits, charges (including warehouseman's
charges) and allowances of any nature with respect to such Accounts (whether
issued, owing, granted or outstanding). Unless otherwise approved in writing by
the Administrative Agent in its sole discretion, no individual Account shall be
deemed to be an Eligible Account Receivable if:
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(a) the Borrower or its Restricted Subsidiary does not have
legal and valid title to the Account or the account has been written
off as uncollectible; or
(b) the Account is not the valid, binding and legally
enforceable obligation of the account debtor subject, as to
enforceability, only to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws at the time in effect
affecting the enforceability of creditors' rights generally and (ii)
judicial discretion in connection with the remedy of specific
performance and other equitable remedies; or
(c) the Account arises out of a sale made by the Borrower or a
Restricted Subsidiary to an Affiliate of the Borrower (other than a
Person that is an Affiliate solely by virtue of being under common
control with the Borrower); or
(d) the Account or any portion thereof is unpaid more than 90
days after the original invoice date; or
(e) other than Accounts of Home Depot, the Account, when
aggregated with all other Accounts of the same account debtor (or any
Affiliate thereof), exceeds 30% in face value of all Accounts of the
Borrower then outstanding, to the extent of such excess; or
(f) (i) the Account is subject to any claim on the part of the
account debtor disputing liability under such Account in whole or in
part, to the extent of the amount of such dispute or (ii) the Account
otherwise is or is reasonably likely to become subject to any right of
setoff or any counterclaim, claim or defense by the account debtor, to
the extent of the amount of such setoff or counterclaim, claim or
defense or (iii) the account debtor for such Account is also a
creditor of the Borrower, to the extent of the amount owed by the
Borrower to the account debtor; or
(g) the account debtor has commenced a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or
made an assignment for the benefit of creditors or if a decree or
order for relief has been entered by a court having jurisdiction in
the premises in respect of the account debtor in an involuntary case
under the federal bankruptcy laws, as now constituted or hereafter
amended, or if any other petition or other application for relief
under the federal bankruptcy laws has been filed by or against the
account debtor, or if the account debtor has failed, suspended
business, ceased to be solvent, or consented to or suffered a
receiver, trustee, liquidator or custodian to be appointed for it or
for all or a significant portion of its assets or affairs; or
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(h) the Administrative Agent does not have a valid and perfected
first priority security interest in such Account; or
(i) the sale to the account debtor for such Account is on a
consignment, bill-and-hold, sale on approval, guaranteed sale or
sale-and-return basis or pursuant to any written agreement providing
for repurchase or return other than return arrangements in the
ordinary course of business consistent with the past business
practices of Borrower; or
(j) it is from an account debtor (or any Affiliate thereof) and
25% or more, in face amount, of other Accounts from either such
account debtor or any Affiliate thereof are due or unpaid for more
than 90 days after the original invoice date; or
(k) 25% or more, in face amount, of other Accounts from the same
account debtor are not deemed Eligible Accounts Receivable hereunder;
or
(l) the amount debtor is a foreign Governmental Authority;
(m) the Account is an Account a security interest in which would
be subject to the Federal Assignment of Claims Act of 1940, as amended
(31 U.S.C. Section 3727 et seq.), unless (i) such Account, together
with all other Eligible Accounts a security interest in which would be
subject to such Act, does not exceed 2% in face value of all Eligible
Accounts of the Borrower and its Restricted Subsidiaries then
outstanding, or (ii) Borrower has assigned the Account to the
Administrative Agent in compliance with the provisions of such Act; or
(n) the sale is to an account debtor outside the United States
or Canada or incorporated in or primarily doing business in any
jurisdiction located outside the United States or Canada, unless (i)
the obligations with respect to such Account are secured by the
issuance of a letter of credit by a bank reasonably acceptable to the
Agent, guarantee or acceptance terms, (PROVIDED, HOWEVER, that
obligations so secured shall not exceed 5% in face value of all
Eligible Accounts of Borrower and its Restricted Subsidiaries then
outstanding) or (ii) such Account is otherwise approved by and
acceptable to the Administrative Agent; or
(o) the Administrative Agent determines in good faith, and in
accordance with its internal credit policies and reasonable commercial
banking practices that (i) collection of the Account is insecure or
(ii) the Account may not be paid by reason of the account debtor's
financial inability to pay; PROVIDED, HOWEVER, that any Account
referred to in this clause (o) shall not become ineligible until the
Administrative Agent shall have given the Borrower five Business Days'
advance notice of such determination; or
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(p) the goods giving rise to such Account have not been shipped
and delivered to and accepted by the account debtor or the services
giving rise to such Account have not been performed by the Borrower
and accepted by the account debtor or the Account otherwise does not
represent a final sale; or
(q) the Account does not comply in all material respects with
all applicable legal requirements, including, where applicable, the
Federal Consumer Credit Protection Act, the Federal Truth in Lending
Act and Regulation Z of the Board of Governors of the Federal Reserve
System, in each case as amended.
In addition to the foregoing, Eligible Accounts Receivable shall
include such Accounts as the Borrower shall request and that the
Administrative Agent approves in advance, in writing and in its sole
discretion (or if the aggregate face amount to be approved exceeds
$1,300,000 at any one time, the approval of the Required Banks has been
obtained in writing).
"ELIGIBLE ASSIGNEE" means (a) a commercial bank organized under the laws of
the United States, or any State thereof, and having total assets in excess of
$1,000,000,000; (b) a savings and loan association or savings bank organized
under the laws of the United States, or any State thereof, and having total
assets in excess of $1,000,000,000; (c) a finance company, insurance company,
investment company or other financial institution organized under the laws of
the United States, or any State thereof, that is engaged in purchasing or
otherwise investing in commercial loans in the ordinary course of business,
having total assets in excess of $100,000,000; or (d) an entity managed by a
Bank or Affiliate of a Bank; PROVIDED, HOWEVER, that the original Commitment
held by such entity is at least $10,000,000.
"ELIGIBLE INVENTORY" means the total of:
(a) the gross amount of Inventory of the Borrower and its Restricted
Subsidiaries, valued at the lower of cost (on a FIFO basis) or market,
which (i) is owned solely by the Borrower or any of its Restricted
Subsidiaries and with respect to which the Borrower or such Restricted
Subsidiary has good, valid and marketable title; (ii) is stored on property
that is owned or leased by (A) the Borrower or any of its Restricted
Subsidiaries or (B) a warehouseman that has contracted with the Borrower or
any of its Restricted Subsidiaries to store Inventory on such
warehouseman's property (PROVIDED, HOWEVER, that, with respect to Inventory
stored on property owned or leased by a warehouseman, the Borrower or such
Restricted Subsidiary shall have delivered to the Administrative Agent
acknowledgment agreements executed by such warehouseman); (iii) is subject
to a valid, enforceable and first priority Lien in favor of the
Administrative Agent (subject, with respect to Eligible Inventory stored at
sites described in clause (ii)(B) above, to Liens for normal and customary
warehouseman charges); (iv) is located in the United States; and (v) is
not, in the reasonable judgment of the Administrative Agent, obsolete or
slow moving in relation to customary industry practice, and which
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otherwise conforms to the requirements for eligibility contained in clauses
(i) through (iv) above; MINUS (without duplication);
(b) the amount of any goods returned or rejected by the customers of
the Borrower or any of its Restricted Subsidiaries and goods in transit to
third parties (other than to agents or warehousemen of the Borrower or any
of its Restricted Subsidiaries that comply with clause (a)(ii)(B) above);
MINUS (without duplication); and
(c) the amount of any reserves for spoilage, special order goods and
market value declines in accordance with GAAP.
In addition to the foregoing, Eligible Inventory shall include such items of the
Inventory of the Borrower and its Restricted Subsidiaries as the Borrower shall
request and the Administrative Agent (or if the aggregate amount to be approved
exceeds $1,300,000 at any one time, the Required Banks) shall approve in
advance, in writing and in its (their) sole discretion.
"ENVIRONMENT" means any surface water, ground water, drinking water supply,
land surface or subsurface strata or ambient air and includes, without
limitation, any indoor location.
"ENVIRONMENTAL AUTHORIZATIONS" is defined in Section 5.21.
"ENVIRONMENTAL LAWS" means the common law and all federal, state, local and
foreign laws or regulations, codes, orders, decrees, judgments or injunctions
issued, promulgated, approved or entered thereunder, now or hereafter in effect,
relating to pollution or protection of public or employee health or safety or
the Environment, including, without limitation, laws relating to (a) emissions,
discharges, releases or threatened releases of Hazardous Materials into the
Environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata), (b) the manufacture, processing,
distribution, use, generation, treatment, storage, disposal, transport or
handling of Hazardous Materials, and (c) underground and aboveground storage
tanks, and related piping, and emissions, discharges, releases or threatened
releases therefrom.
"ENVIRONMENTAL NOTICE" means any written notice or claim by any
Governmental Authority or other third party alleging liability (including,
without limitation, potential liability for investigatory costs, cleanup costs,
governmental costs, compliance costs or harm, injuries or damages to any person,
property or natural resources, or any fines or penalties) arising out of, based
upon, resulting from or relating to any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time. Section references to ERISA are to ERISA as in
effect at the date of this Agreement and any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
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"ERISA AFFILIATE" of a Person means any entity, whether or not
incorporated, which is under common control or would be considered a single
employer with such Person within the meaning of Section 414(b) or (c) of the
Code and regulations promulgated under those Sections or within the meaning of
Section 4001(b) of ERISA and regulations promulgated under that Section.
"EURODOLLAR RATE" means with respect to each Interest Period for a Reserve
Adjusted Eurodollar Loan, (a) the arithmetic average (rounded to the nearest
1/100 of 1%) of the offered quotation to first-class banks in the interbank
Eurodollar market by each of the Reference Banks for dollar deposits of amounts
in same day funds comparable to the outstanding principal amount of the Reserve
Adjusted Eurodollar Loan for which an interest rate is then being determined
with maturities comparable to the Interest Period to be applicable to such
Eurodollar Loan, determined as of 10:00 A.M. (New York time) on the date which
is two Business Days prior to the commencement of such Interest Period divided
(and rounded upward to the next whole multiple of 1/16 of 1%) DIVIDED BY (b) a
percentage equal to 100% minus the then stated maximum rate of all reserve
requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) applicable to any member bank of the
Federal Reserve System in respect of Eurocurrency liabilities as defined in
Regulation D (or any successor category of liabilities under Regulation D);
PROVIDED, HOWEVER, that if any Reference Bank fails to provide the
Administrative Agent with its aforesaid rate, then the Eurodollar Rate shall be
determined based on the rate or rates provided to the Administrative Agent by
the remaining Reference Banks.
"EURODOLLAR RATE MARGIN" means, with respect to any Revolving Loan,
Acquisition Loan, Supplemental Term Loan or any Supplemental Revolving Loan,
with respect to any Interest Period, the rate set forth in the table below
opposite the Leverage Ratio of the Borrower as determined on the last day of
such Interest Period:
LEVERAGE RATIO EURODOLLAR RATE MARGIN
-------------- ----------------------
GREATER THAN 5.00x 2.75%
4.15x - 5.00x 2.50%
4.01x - 4.50x 2.25%
3.51x - 4.00x 2.00%
3.01x - 3.50x 1.75%
2.51x - 3.00x 1.50%
2.01x - 2.50x 1.25%
LESS THAN 2.01x 1.00%
"EVENT OF DEFAULT" is defined in Section 8.
"EXCESS" is defined in Section 3.03(b).
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"EXCESS CASH FLOW" means, without duplication, for any Person for any
period for which such amount is being determined, (a) Consolidated Net Income,
MINUS (b) any amount which is both (i) included in Consolidated Net Income and
(ii) required to be applied to the prepayment of the Loans pursuant to Section
3.03, PLUS (minus) (c) the amount of depreciation, depletion, amortization of
intangibles, deferred taxes and other non-cash expenses (revenues) which,
pursuant to GAAP, were deducted (added) in determining such Consolidated Net
Income of such Person, MINUS (d) additions to working capital for such period
(I.E., the increase or decrease in Consolidated Current Assets of such Person
from the beginning to (excluding Cash or Cash Equivalents which are either Net
Cash Proceeds or Net Financing Proceeds required to be applied to the prepayment
of the Loans pursuant to Section 3.03(d) during such period) of such Person
minus the increase or plus the decrease in Consolidated Current Liabilities),
MINUS (e) cash expenditures in respect of Consolidated Capital Expenditures that
are made during such period, MINUS (f) Scheduled Acquisition Term Loan Principal
Payments, Scheduled Supplemental Term Loan Principal Payments, and voluntary
prepayments of Loans not subject to reborrowing made during such period, MINUS
(g) cash payments to Management Stockholders to repurchase capital stock
pursuant to Section 7.10, MINUS (h) principal payments on Indebtedness permitted
under Section 7.07. For purposes of the foregoing and without duplication,
Consolidated Net Income will exclude (A) all net losses on the sale of capital
assets or out of the ordinary course of business and (B) all write-downs of
capital assets.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXISTING ACQUISITION TERM LOANS" is defined in the recitals to this
Agreement.
"EXISTING ACQUISITION TERM NOTEs" means the Acquisition Term Notes
issued pursuant to the Existing Credit Agreement and dated the Effective Date,
to be canceled upon issuance of the Acquisition Term Notes to be issued
hereunder as of the Closing Date.
"EXISTING CREDIT AGREEMENT" is defined in the preamble of this
Agreement.
"EXISTING DEBT" means Indebtedness of Borrower and its Subsidiaries
set forth on Schedule 5.19.
"EXISTING LEASES" means the Leases of the Borrower and its
Subsidiaries set forth on Schedule 5.16.
"EXISTING LOANS" means the Existing Term A Loans, the Existing Term B
Loans, the Existing Acquisition Term Loans and the Existing Revolving Loans,
all of which are to be refinanced and replaced with the proceeds of the Initial
Loans hereunder.
"EXISTING NOTE" means each Existing Term A Note, Existing Term B Note,
Existing Revolving Note and Existing Acquisition Term Note.
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"EXISTING REVOLVING LOANS" is defined in the recitals to this
Agreement.
"EXISTING REVOLVING NOTEs" means the Revolving Notes issued pursuant
to the Existing Credit Agreement and dated the Effective Date, to be canceled
upon issuance of the Revolving Notes to be issued hereunder as of the Closing
Date.
"EXISTING TERM A LOANS" is defined in the recitals to this Agreement.
"EXISTING TERM B LOANS" is defined in the recitals to this Agreement.
"EXISTING TERM A NOTEs" means the Term A Notes issued pursuant to the
Existing Credit Agreement and dated the Effective Date, to be canceled upon
payment therefor on the Closing Date.
"EXISTING TERM B NOTEs" means the Term B Notes issued pursuant to the
Existing Credit Agreement and dated the Effective Date, to be canceled upon
payment therefor on the Closing Date.
"EXPANSION CAPITAL EXPENDITURES" means up to $7.5 million of
Consolidated Capital Expenditures incurred during the period from July 31, 1997
to and including January 31, 1998 in connection with the existing properties and
buildings located in the Texas cities of Huntsville, Houston, Waco, Waller and
Walnut Springs.
"FEDERAL FUNDS RATE" means on any one day the weighted average of the
rate on overnight Federal funds transactions with members of the Federal Reserve
System only arranged by Federal funds brokers as published as of such day by the
Federal Reserve Bank of New York, or if not so published, the rate then used by
first-class banks in extending
overnight loans to other first-class banks.
"FINANCING PROCEEDS" means the Cash or Cash Equivalents (other than
Net Cash Proceeds or proceeds of any sale, transfer or other disposition of
assets specifically excluded from the definition of "Asset Sale" by the
exceptions contained therein) received by the Borrower or any of its Restricted
Subsidiaries, directly or indirectly, from any financing transaction of whatever
kind or nature, including without limitation from any incurrence of Indebtedness
from any mortgage or pledge of an asset or interest therein (including any
transaction which is the substantial equivalent of a mortgage or pledge), from
any lease to a third party and a pledge of the lease payments due thereunder to
secure Indebtedness, from any joint venture arrangement, from any exchange of
assets and a sale of the assets received in such exchange, or any other similar
arrangement or technique whereby a Credit Party obtains Cash in respect of an
asset, net of direct costs associated therewith. Financing Proceeds shall not
include any amounts with respect to (a) any Borrowings of Revolving Loans,
Acquisition Term Loans, Supplemental Revolving Loans or Supplemental Term Loans,
(b) the incurrence or refinancing of Indebtedness permitted by Sections 7.07(g)
and (h) effected in accordance with
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the applicable provisions of such Sections and (c) transactions between any of
the Borrower and its Wholly Owned Subsidiaries that are Restricted Subsidiaries.
"FIRREA" means the Financial Institutions Reform, Recovery &
Enforcement Act of 1989, as amended from time to time, and any successor
statute.
"FOREIGN BANK" is defined in Section 3.07(c).
"GAAP" means generally accepted accounting principles in the United
States of America observed in the preparation of the audited financial
statements of the Borrower for its fiscal year ended June 30, 1997 and delivered
pursuant to Section 4.01(j), consistently applied.
"GOVERNMENTAL AUTHORITY" means any federal, state, local, foreign or
other governmental or administrative (including self-regulatory) body,
instrumentality, department or agency or any court, tribunal, administrative
hearing body, arbitration panel, commission, or other similar dispute-resolving
panel or body including, without limitation, those governing the regulation and
protection of the Environment, whether now or hereafter in existence, or any
officer or official thereof.
"HAZARDOUS MATERIALS" means all pollutants, contaminants or chemical,
industrial, hazardous or toxic materials, substances, constituents or wastes,
including, without limitation, asbestos, or asbestos-containing materials,
polychlorinated biphenyls and petroleum, oil, or petroleum or oil products,
derivatives or constituents, including, without limitation, crude oil or any
fraction thereof, or any other material, waste, chemical, substance or
constituent subject to regulation under any Environmental Law.
"HELLER SUBORDINATED LENDERS" is defined in Section 7.23.
"HOLDINGS" is defined in the preamble to this Agreement.
"IBJS" is defined in the preamble to this Agreement.
"INDEBTEDNESS" of any Person means, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) the deferred purchase price
of assets or services which in accordance with GAAP would be shown on the
liability side of the balance sheet of such Person, (c) the undrawn amount of
all letters of credit issued for the account of such Person and, without
duplication, all unreimbursed drafts drawn thereunder, (d) all Indebtedness of a
second Person secured by any Lien on any property owned by such first Person,
whether or not such Indebtedness has been assumed by such first Person, (e) all
Capitalized Lease Obligations of such Person, (f) all obligations of such Person
to pay a specified purchase price for goods or services whether or not delivered
or accepted, i.e., take-or-pay and similar obligations, (g) all Obligations of
such Person under Interest Rate Agreements and (h) all Contingent Obligations of
such Person; PROVIDED, HOWEVER, that Indebtedness shall not include trade
payables, accrued
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expenses, accrued dividends and accrued income taxes, in each case arising in
the ordinary course of business.
"INDOSUEZ" is defined in the preamble to this Agreement.
"INFORMATION" is defined in Section 11.04(e).
"INITIAL BANK" means a Bank that is an original signatory to this
Agreement.
"INITIAL BORROWERS" is defined in the preamble to this Agreement.
"INITIAL DATE" means, in the case of each Bank party hereto on the
Closing Date, the Closing Date, and in the case of each other Bank, the
effective date of the Assignment Agreement pursuant to which it became a Bank
hereunder.
"INITIAL LOANS" means the Loans made on the Closing Date.
"INITIAL REVOLVING LOANS" means the initial Revolving Loans made on
the Closing Date in an aggregate amount not to exceed $[ ] used to
make payments as set forth in Section 1.01(a).
"INTELLECTUAL PROPERTY" is defined in Section 5.14.
"INTEREST PERIOD" means, with respect to any Reserve Adjusted
Eurodollar Loan, the interest period applicable thereto, as determined pursuant
to Section 1.09.
"INTEREST RATE AGREEMENT" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement, interest rate
futures contract, interest rate option contract or other similar agreement or
arrangement to which any Credit Party is a party, designed to protect the
Borrower or any of its Restricted Subsidiaries against fluctuations in interest
rates.
"INTEREST RATE DETERMINATION DATE" means, with respect to a Reserve
Adjusted Eurodollar Loan, the date for calculating the Eurodollar Rate for
purposes of determining the interest rate in respect of an Interest Period, and
for each such Borrowing the date which is two Business Days prior to the
commencement of the Interest Period for such Borrowing.
"INVENTORY" means all of the inventory of the Borrower and its
Restricted Subsidiaries (on a consolidated basis), including, without
limitation, (a) all finished goods, raw materials, work in process and packaging
materials produced, used or consumed in the business of the Borrower and its
Restricted Subsidiaries, whether finished or unfinished, held for sale or
furnished or to be furnished under contracts of service, and (b) all finished
goods returned or repossessed by the Borrower or any of its Restricted
Subsidiaries.
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"INVESTMENT" means with respect to any Person (a) any share of Capital
Stock, partnership interest, evidence of Indebtedness or other security issued
by any other Person, (b) any loan, advance, extension of credit to, or
contribution to the capital of, any other Person, (c) the acquisition of the
stock or assets of a business or (d) any other investment; PROVIDED, HOWEVER,
that the term "Investment" shall not include (i) fixed assets or inventory
acquired in the ordinary course of business and payable in accordance with
customary trade terms, (ii) advances to employees for travel expenses, drawing
accounts and similar expenditures, (iii) stock or other securities acquired in
connection with the satisfaction or enforcement of Indebtedness or claims due or
owing to any Person or as security for any such Indebtedness or claim, (iv) any
investment or purchase made through the issuance of common stock of the Borrower
or (v) demand deposits in banks or trust companies. The amount of an Investment
outstanding at any time shall be determined in accordance with GAAP; PROVIDED,
HOWEVER, that no Investment shall be increased as a result of an increase in the
undistributed retained earnings of the Person in whom an Investment was made or
decreased as a result of equity in the losses of any such Person.
"KCSN" is defined in the preamble to this Agreement.
"LANDLORD CERTIFICATION AND WAIVER" means, with respect to any Real
Property leased by the Borrower or any of its Restricted Subsidiaries, a
statement executed by the landlord of such Real Property, in form and substance
satisfactory to the Administrative Agent, providing the Administrative Agent
with, among other things, (i) the right to take and perfect a mortgage or other
assignment of the applicable Credit Party's interest in the lease as collateral
security for the Obligations, (ii) the right to cure defaults and perform under
the lease in the event of a failure to perform by such Credit Party, (iii) the
right to foreclose or otherwise realize upon said security interest in the lease
and to assign the Credit Party's rights in the lease to a third party in
connection with such foreclosure or other realization and (iv) the right to take
upon such foreclosure or other realization any property of the Credit Party
located on the leased Real Property (which right shall be superior to that of
the lessor).
"LEASE" means any lease, sublease, franchise agreement, license,
occupancy or concession agreement.
"LETTER OF CREDIT" or "LETTERS OF CREDIT" means, (i) Standby Letter or
Letters of Credit and (ii) Commercial Letter or Letters of Credit, in each case,
issued or to be issued by Issuing Banks for the account of Borrower pursuant to
Section 1.13.
"LETTER OF CREDIT CASH COLLATERAL" shall have the meaning provided in
Section 1.13(a)(iv).
"LETTER OF CREDIT CASH COLLATERAL ACCOUNT" shall have the meaning
provided in Section 1.13(a)(iv).
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"LETTER OF CREDIT PARTICIPATION" shall have the meaning provided in
Section 1.13(a)(ii).
"LETTERS OF CREDIT USAGE" means, as at any date of determination, the
sum of (i) the maximum aggregate amount that is or at any time thereafter may
become available to be drawn under all Letters of Credit then outstanding plus
(ii) the aggregate amount of all drawings under Letters of Credit honored by all
Issuing Banks and not theretofore reimbursed by Borrower.
"LEVERAGE RATIO" means, as of any date of determination, the ratio of
(a) the Consolidated Indebtedness (including the outstanding balance under any
noncompete or consulting arrangements) of the Borrower and its Restricted
Subsidiaries as of the last day of each calendar quarter ending on or about any
date of determination to (b) the Consolidated EBITDA of the Borrower and its
Restricted Subsidiaries for the Test Period ending on or about such date,
"LIEN" means any mortgage, pledge, security interest, encumbrance,
lien, claim, hypothecation, assignment for security or charge of any kind
(including any agreement to give any of the foregoing, any conditional sale or
other title retention agreement or any lease in the nature thereof).
"LOAN" means each Revolving Loan, Acquisition Term Loan, Supplemental
Revolving Loan and Supplemental Term Loan.
"LOAN FACILITY" means the credit facility evidenced by the Total
Revolving Loan Commitment, the Total Acquisition Term Loan Commitment and the
Total Supplemental Loan Commitment..
"LOSS PROCEEDS" is defined in Section 3.03(f).
"MANAGEMENT AGREEMENT" means the Fee Agreement dated as of December
31, 1996 between the Borrower and Kohlberg & Company, LLC., as amended.
"MANAGEMENT STOCKHOLDERS" means, collectively, Michael F. Vukelich,
Jerry L. Halamuda, Gary E. Mariani, Gene Malcolm, Steven J. Bookspan, Michael T.
Neenan, Robert F. Strange, Jim Tsurudome, Richard George, Gary Crook, Dave
Grimshaw, John Negrete, Dennis Bahen, and other individuals from time to time
party to the Stockholders Agreement.
"MATERIAL ADVERSE EFFECT" means, (a) with respect to the Borrower and
its Restricted Subsidiaries, any material adverse effect (whether occurring
before or after giving effect to the Public Financing and the financing thereof
and the other transactions contemplated hereby and by the other Transaction
Documents) with respect to the operations, business, properties, assets,
liabilities (contingent or otherwise), financial condition or prospects of the
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Borrower and its Restricted Subsidiaries, taken as a whole, or (b) any fact or
circumstance (whether or not the result thereof would be covered by insurance)
as to which singly or in the aggregate there is a reasonable likelihood of (i) a
material adverse change described in clause (a) with respect to the Borrower and
its Restricted Subsidiaries, taken as a whole, or (ii) the inability of any
Credit Party to perform in any material respect its Obligations hereunder or
under any of the other Transaction Documents or the inability of the Banks to
enforce in any material respect their rights purported to be granted hereunder
or under any of the other Transaction Documents or the Obligations (including
realizing on the Collateral).
"MINIMUM BORROWING AMOUNT" means $100,000.
"MOODY'S" means Moody's Investors Service, Inc.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA with respect to which the Borrower or any of its
ERISA Affiliates is or has been required to contribute.
"NET CASH PROCEEDS" means with respect to any Asset Sale, the
aggregate payments of Cash or Cash Equivalents received by the Borrower and/or
any of its Restricted Subsidiaries, as the case may be, from such Asset Sale,
net of direct expenses of sale, net of taxes (including income taxes and
transfer taxes) and net of repayment of Indebtedness or Capitalized Leases in
each case secured by a Lien on the asset subject to such Asset Sale; PROVIDED,
HOWEVER, that with respect to taxes, expenses shall only include taxes to the
extent that taxes are payable in cash with respect to the current year after
taking into account any reduction in consolidated tax liability due to available
tax credits or deductions and any tax sharing arrangements; and PROVIDED,
FURTHER, that Net Cash Proceeds shall not include any amounts or items included
in the definition of Financing Proceeds or Net Financing Proceeds.
"NET FINANCING PROCEEDS" means Financing Proceeds, net of direct
expenses of the transaction and net of taxes (including income taxes) currently
paid or payable in cash with respect to the current year after taking into
account any reduction in consolidated tax liability due to available tax credits
or deductions and any tax sharing arrangements as a result of the transaction
generating such Financing Proceeds.
"NOTE" means each Revolving Note, Acquisition Term Note, Supplemental
Revolving Note and Supplemental Term Note.
"NOTICE OF ACQUISITION LOAN BORROWING" is defined in Section 1.03.
"NOTICE OF BORROWING" is defined in Section 1.03.
"NOTICE OF REVOLVING LOAN BORROWING" is defined in Section 1.03.
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"NOTICE OF CONVERSION/CONTINUATION" is defined in Section 1.06.
"OBLIGATIONS" means all amounts, direct or indirect, contingent or
absolute, of every type or description, and at any time existing, owing to the
Administrative Agent or any Bank pursuant to the terms of this Agreement or any
other Credit Document or secured by any of the Security Documents, including,
without limitation, interest accruing subsequent to the filing of a petition
initiating any proceeding in bankruptcy, insolvency or like proceeding of any
Credit Party, whether or not such interest is an allowed claim enforceable
against the debtor in a bankruptcy case under the Bankruptcy Code.
"OFFICERS' CERTIFICATE" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its Chairman of the Board
(if an officer), Chief Executive Officer, its President or one of its Vice
Presidents, its Chief Financial Officer or its Treasurer (in such Person's
capacity as an officer and not individually); PROVIDED, HOWEVER, that every
Officers' Certificate with respect to compliance with a condition precedent to
the making of any Loan hereunder shall include (a) a statement that the officers
making or giving such Officers' Certificate have read such condition and any
definitions or other provisions contained in this Agreement relating thereto,
(b) a statement that, in the opinion of the signers, they have made or have
caused to be made such examination or investigation as is necessary to enable
them to express an informed opinion as to whether or not such condition has been
complied with, and (c) a statement as to whether, in the opinion of the signers,
such condition has been complied with.
"OPERATING LEASE" of any Person shall mean any lease (including,
without limitation, leases which may be terminated by the lessee at any time) of
any property (whether real, personal or mixed) by such Person as lessee which is
not a Capital Lease.
"ORIGINAL CREDIT AGREEMENT" is defined in the preamble to this
Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"PENSION PLAN" means any pension plan as defined in Section 3(2) of
ERISA (other than a Multiemployer Plan) which is or has been maintained by or to
which contributions are or have been made by the Borrower or any of its ERISA
Affiliates.
"PERMITTED BUSINESS ACQUISITION" means an acquisition by the Borrower
or its Restricted Subsidiaries of assets or property used or useful in the
Borrower's business which is proposed to be financed with the proceeds of an
Acquisition Term Loan Borrowing or a Supplemental Term Loan Borrowing.
"PERMITTED ENCUMBRANCES" is defined in Section 7.06.
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"PERSON" means any individual, partnership, joint venture, limited
liability company, firm, corporation, association, trust or other enterprise or
any government or political subdivision or any agency, department or
instrumentality thereof.
"PLAN" means, at any time, any pension benefit plan subject to Title
IV of ERISA.
"PORTION" means the Revolving Portion, the Acquisition Term Portion or
the Supplemental Portion.
"PREPAYMENT COLLATERAL ACCOUNT" is defined in Section 3.08(b).
"PRIOR LIENS" is defined in Section 5.10.
"PROJECTED FINANCIAL STATEMENTS" is defined in Section 5.09(c).
"PUBLIC FINANCING" means the proposed offering of up to $40 million of
PIK preferred stock of the Borrower and the public offering of up to $85 million
of Senior Subordinated Notes.
"PUBLIC FINANCING DOCUMENTS" means the registration statements,
prospectuses, underwriting agreements, certificates, notes, agreements and
documents prepared or entered into by the Company with respect to the Public
Financing.
"PUT/CALL FUNDS" means the aggregate $________ set aside by the
Borrower to redeem "Option Shares" (as defined in the Put/Call Option Agreement)
pursuant to the Put/Call Option Agreement.
"PUT/CALL OPTION AGREEMENT" means the Put/Call Option Agreement dated
as of December 31, 1996 among Holdings, KCSN and the Management Stockholders.
"REAL PROPERTY" means all right, title and interest of the Borrower or
any of its Restricted Subsidiaries (including, without limitation, any leasehold
estate) in and to a parcel of real property owned or leased (or, with respect to
representations, warranties and covenants relating to compliance with
Environmental Laws, operated) by the Borrower or any of its Restricted
Subsidiaries together with, in each case, all improvements and appurtenant
fixtures, equipment, personal property, easements and other property and rights
incidental to the ownership or lease (or operation, as applicable) thereof, in
each case, from time to time after the Closing Date.
"RECAPITALIZATION" means the recapitalization of Holdings whereby a
controlling interest in Holdings was acquired by KCSN pursuant to the
Recapitalization Agreement.
"RECAPITALIZATION AGREEMENT" is defined in the recitals to this
Agreement.
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"REFERENCE BANKS" means Indosuez, Citibank, N.A. and The Chase
Manhattan Bank, N.A.
"REGISTER" is defined in Section 11.04(c).
"REGULATIONS D, G, T, U AND X" means Regulations D, G, T, U and X (or
any one or more of them specified) of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor to all or a
portion thereof establishing margin requirements.
"REPLACEMENT ASSET AMOUNT" is defined in Section 3.03(c)(i).
"REQUIRED BANKS" means at any time Banks holding at least 51% of the
sum of the (x) Total Commitments and (y) outstanding Loans; PROVIDED, HOWEVER
that in the event there is only one Bank, "Required Banks" shall mean such Bank;
and PROVIDED, FURTHER that for the purposes of Section 4, the requirement that
any document, agreement, certificate or other writing is to be satisfactory to
the Required Banks shall be satisfied if (a) such document, agreement,
certificate or other writing was delivered in its final form to the Banks prior
to the Closing Date (or if amended or modified thereafter, the Administrative
Agent shall have reasonably determined such amendment or modification not to be
material), (b) such document, agreement, certificate or other writing is
satisfactory to the Administrative Agent and (c) Banks holding more than 51% of
the Total Commitments held by Banks have not objected in writing to such
document, agreement, certificate or other writing to the Administrative Agent
prior to the Closing Date.
"RESERVE ACCOUNT" is defined in Section 3.08(a).
"RESERVE ADJUSTED EURODOLLAR LOAN" means any Loan bearing interest at
a rate determined by reference to the Eurodollar Rate in accordance with the
provisions of Section 1.08(b).
"RESTRICTED SUBSIDIARY" means any Subsidiary of the Borrower or of the
Borrower's Subsidiaries which is not an Unrestricted Subsidiary.
"REVOLVING LOAN" is defined in Section 1.01(a).
"REVOLVING LOAN COMMITMENT" means, with respect to each Bank, the
amount set forth below such Bank's name on Schedule A hereto directly below the
column entitled "Revolving Loan", as same may be reduced from time to time
pursuant to Sections 2.01, 3.03 and/or 8.
"REVOLVING LOAN COMMITMENT TERMINATION DATE" means the Business Day
immediately preceding the Revolving Loan Maturity Date.
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"REVOLVING LOAN MATURITY DATE" means the last Business Day of
December, 2002.
"REVOLVING NOTE" is defined in Section 1.05(a)(i).
"REVOLVING PORTION" means, at any time, the portion of the Loan
Facility evidenced by the Total Revolving Loan Commitment.
"S&P" means Standard & Poor's Corporation.
"SCHEDULED ACQUISITION TERM LOAN PRINCIPAL PAYMENTS" means, with respect to
the principal payments on the Acquisition Term Loan to be made on the last
Business Day of each calendar quarter specified in the table below, in each
case, for each such date, in the Dollar amount which is the product of (x) the
percentage specified opposite such date in such table, and (y) the greater of
(a) the total outstanding principal amount of all of the Acquisition Term Loans
as of the close of business on the Acquisition Term Loan Commitment Termination
Date (after giving effect to any Borrowings under the Acquisition Term Loans on
such date) and (b) the Total Acquisition Loan Commitment on the date, if any,
that aggregate Unutilized Acquisition Commitments equals zero:
Percentage to Obtain
Acquisition Term Loan
Period Principal Payment
------ ---------------------
The earlier of the date the aggregate
Unutilized Acquisition Commitments equals
zero and the Acquisition Term Loan Commitment
Termination Date, through December 31, 2002 0.250%
and, with respect to the principal payments on the Acquisition Term Loan to be
made on the last Business Day of each calendar quarter specified in the table
below, in each case, for each such date, in the Dollar amount which is the
product of (x) the ratio specified opposite such date in such table, and (y) the
total outstanding principal amount of all of the Acquisition Term Loans as of
such date:
Period Ratio
------ -----
January 1, 2003 through the last Business
day of December, 2004 1/8
"SCHEDULED SUPPLEMENTAL TERM LOAN PRINCIPAL PAYMENTS" means, with respect
to the principal payments on the Supplemental Term Loan to be made on the last
Business Day of each calendar quarter specified in the table below, in each
case, for each such date, in the Dollar
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amount which is the product of (x) the percentage specified opposite such date
in such table, and (y) the greater of (a) the total outstanding principal amount
of all of the Supplemental Term Loans as of the close of business on the
Supplemental Term Loan Commitment Termination Date (after giving effect to any
Borrowings under the Supplemental Term Loans on such date) and (b) the Total
Supplemental Loan Commitment on the date, if any, that aggregate Unutilized
Supplemental Commitments equals zero:
Percentage to Obtain
Supplemental Term Loan
Period Principal Payment
------ -----------------------
The earlier of the date the aggregate
Unutilized Supplemental Commitments equals
zero and the Supplemental Term Loan Commitment
Termination Date, through December 31, 2002 0.250%
and, with respect to the principal payments on the Supplemental Term Loan to be
made on the last Business Day of each calendar quarter specified in the table
below, in each case, for each such date, in the Dollar amount which is the
product of (x) the ratio specified opposite such date in such table, and (y)
the total outstanding principal amount of all of the Supplemental Term Loans as
of such date:
Period Ratio
- ------ -----
January 1, 2003 through the last Business
Day of December, 2004 1/8
"SEC" means the Securities and Exchange Commission or any successor
thereto.
"SECURITIES" means any stock, shares, partnership interests,
membership interests, voting trust certificates, bonds, debentures, options,
warrants, notes, or other evidences of indebtedness, secured or unsecured,
convertible, subordinated or otherwise, or in general any instruments commonly
known as "securities" or any certificates of interest, shares or participation
in temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY AGREEMENTS" means, collectively, the Security Agreements
executed by the Borrower and any Subsidiary of the Borrower pursuant to Section
6.14, each substantially in
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the form of Exhibit 9A, except for such changes therein as shall have been
approved by the Administrative Agent as the same may after its execution be
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof and hereof.
"SECURITY DOCUMENTS" means each of the Security Agreements, the
Landlord Certification and Waivers, any mortgages, deeds of trust or leasehold
mortgages granting a security interest in favor of the Administrative Agent (or
other agent for the Banks) in any Real Property of any Credit Party, the
Trademark Security Agreement and any other documents (including UCC financing
statements) utilized to pledge or perfect a security interest in any other
property or assets of whatever kind or nature as Collateral for the Obligations.
"SELLER NOTE" is defined in Section 7.07(e).
"SELLERS" is defined in the preamble to this Agreement.
"SENIOR MANAGERS" means, collectively, Michael F. Vukelich and Jerry
L. Halamuda.
"SENIOR OFFICER" means any of the chief executive officer, president,
chief financial officer, controller, chief accounting officer, chief operating
officer, treasurer or any vice president of the Borrower.
"SENIOR SUBORDINATED LENDERS" means the holders of the Senior
Subordinated Notes.
"SENIOR SUBORDINATED NOTES" means, up to $85 million in aggregate
principal amount of Senior Subordinated Notes due 2007 of the Borrower issued in
the Public Financing.
"SPECIFIED COLLATERAL PERFECTION ACTIONS" is defined in Section 6.18
of the Original Credit Agreement.
"STANDBY LETTER OF CREDIT" means any standby letter of credit or
similar instrument issued for the purpose of supporting (i) workers'
compensation liabilities of the Borrower or any of its Subsidiaries, (ii) the
obligations of third-party insurers of the Borrower or any of its Subsidiaries
arising by virtue of the laws of any jurisdiction requiring third-party insurers
to obtain such letters of credit, or (iii) performance, payment, deposit or
surety obligations of the Borrower or any of its Subsidiaries, including with
respect to the obligations of Borrower to third party vendors, if required by
law or governmental rule or regulation or in accordance with custom and practice
in the industry.
"STATE AND LOCAL REAL PROPERTY DISCLOSURE REQUIREMENTS" means any
state or local laws requiring notification of the buyer of real property, or
notification, registration, or filing to or with any state or local agency,
prior to the sale of any real property or transfer of
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control of an establishment, of the actual or threatened presence or release
into the environment, or the use, disposal, or handling of Hazardous Materials
on, at, under, or near the real property to be sold or the establishment for
which control is to be transferred.
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement dated as of
December 31, 1996 among Holdings, KCSN, Heller and the Management Stockholders,
as amended as of the Effective Date.
"SUBJECT SECURITIES" has the meaning provided in the Stock Repurchase
Agreement.
"SUBSIDIARY" of any Person means and includes (a) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (b) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries has more than a 50% equity interest at the time.
"SUBSIDIARY GUARANTEE" means the guarantee of the Borrower's
Obligations hereunder to be executed by each Restricted Subsidiary of the
Borrower, in the form attached hereto as Exhibit 9B.
"SUPPLEMENTAL LOAN COMMITMENT" means, with respect to each Bank, the
amount set forth below such Bank's name on Schedule A hereto directly below the
column entitled "Supplemental Loan", as same may be reduced from time to time
pursuant to Sections 2.01, 3.03 and/or 8.
"SUPPLEMENTAL PORTION" means, at any time, the portion of the Loan
Facility evidenced by the Total Supplemental Loan Commitment.
"SUPPLEMENTAL REVOLVING LOAN" is defined in Section 1.01(c).
"SUPPLEMENTAL REVOLVING LOAN COMMITMENT" means, as of any date, with
respect to each Bank, such Bank's Supplemental Loan Commitment, less (i) the
aggregate principal amount of Supplemental Term Loans then outstanding.
"SUPPLEMENTAL REVOLVING LOAN COMMITMENT TERMINATION DATE" means the
Business Day immediately preceding the Supplemental Revolving Loan Maturity
Date.
"SUPPLEMENTAL REVOLVING LOAN MATURITY DATE" means the last Business
Day of December, 2002
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"SUPPLEMENTAL REVOLVING NOTE" is defined in Section 1.05(a)(iii).
"SUPPLEMENTAL TERM LOAN" is defined in Section 1.01(c).
"SUPPLEMENTAL TERM LOAN CLOSING DATE" is defined in Section 1.01(d).
"SUPPLEMENTAL TERM LOAN COMMITMENT" means, as of any date, with
respect to each Bank, such Bank's Supplemental Loan Commitment, less (i) the
aggregate principal amount of Supplemental Revolving Loans then outstanding and
(ii) the then outstanding Letters of Credit Usage related to the Supplemental
Portion of the Credit Facility.
"SUPPLEMENTAL TERM LOAN COMMITMENT TERMINATION DATE" means the last
Business Day of December, 2001.
"SUPPLEMENTAL TERM LOAN MATURITY DATE" means the last Business Day of
December, 2004.
"SUPPLEMENTAL TERM NOTE" is defined in Section 1.05(a)(iv).
"TARGET" is defined in the preamble to this Agreement.
"TAXES" means all taxes, levies, imposts, duties or other charges of
whatsoever nature imposed by any Governmental Authority, together with interest,
penalties and expenses payable or incurred in connection therewith, except that
such term shall not refer to any of the following:
(a) any taxes imposed by the United States or any political
subdivision thereof on the effectively connected net income of any Bank or
any franchise taxes imposed by any such jurisdiction;
(b) taxes imposed on the net income of, or franchise taxes imposed
upon, any Bank by the jurisdiction under the laws of which such Bank is
organized or by any political subdivision thereof;
(c) taxes imposed on the net income of such Bank's lending office,
and franchise taxes imposed on it, by the jurisdiction of such Bank's
lending office, or any political subdivision thereof;
(d) any taxes imposed on any Bank by Section 884(a) of the Code (and
any successor statute to Section 884(a)); and
(e) any United States withholding tax payable with respect to any
payments to such Bank under the laws (including, without limitation, any
treaty, ruling, judicial or administrative determination or regulation) in
effect on the Initial Date or as a result of
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the Bank's having voluntarily changed the jurisdiction of its lending
office from a jurisdiction in which payments made to such Bank are exempt
from United States withholding tax to a jurisdiction in which such payments
are not so exempt; PROVIDED, HOWEVER, that the term "Taxes" shall include
any United States withholding tax payable or increased as a result of any
change in any law, treaty, ruling, judicial or administrative determination
or regulation occurring after the Initial Date.
"TERMINATION EVENT" means (a) a "reportable event" described in
Section 4043 of ERISA or in the regulations thereunder (excluding events for
which the requirement for notice of such reportable event has been waived by the
PBGC) with respect to a Title IV Plan, or (b) the withdrawal of the Borrower or
any of its ERISA Affiliates from a Title IV Plan during a plan year in which it
was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, or (c)
the filing of a notice of intent to terminate a Title IV Plan or the treatment
of a Title IV Plan amendment as a termination under Section 4041 of ERISA, or
(d) the institution of proceedings by the PBGC to terminate a Title IV Plan or
to appoint a trustee to administer a Title IV Plan, or (e) any other event or
condition which might constitute reasonable and probable grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Title IV Plan, or (f) the complete or partial withdrawal (within
the meaning of Sections 4203 and 4205, respectively, of ERISA) of the Borrower
or any of its ERISA Affiliates from a Multiemployer Plan, or (g) the insolvency
or reorganization (within the meaning of Sections 4245 and 4241, respectively,
of ERISA) or termination of any Multiemployer Plan.
"TEST PERIOD" means, for any specified date, the shorter of (x) the
four consecutive complete calendar quarters last ended or (y) the period of all
complete calendar quarters since the Effective Date.
"TITLE IV PLAN" means any plan (other than a Multiemployer Plan)
described in Section 4021(a) of ERISA, and not excluded under Section 4021(b) of
ERISA, which is or has been maintained by, or to which contributions are or have
been made by, Borrower or any of its ERISA Affiliates.
"TOTAL ACQUISITION TERM LOAN COMMITMENT" means the sum of the
Acquisition Term Loan Commitments of each of the Banks.
"TOTAL ACQUISITION UTILIZATION" means, at any date of determination,
the sum of the aggregate principal amount of all Acquisition Term Loans then
outstanding.
"TOTAL COMMITMENTS" means the sum of (a) the Total Revolving Loan
Commitments, (b) Total Acquisition Term Loan Commitments and (c) the Total
Supplemental Loan Commitment.
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"TOTAL REVOLVER UTILIZATION" means, at any date of determination, the
sum of the aggregate principal amount of all Revolving Loans then outstanding
and all outstanding Letters of Credit issued under the Revolving Portion.
"TOTAL REVOLVING LOAN COMMITMENT" means the sum of the Revolving Loan
Commitments of each of the Banks.
"TOTAL SUPPLEMENTAL LOAN COMMITMENT" means the sum of the Supplemental
Loan Commitments of each of the Banks.
"TOTAL SUPPLEMENTAL REVOLVING LOAN COMMITMENT" means the sum of the
Supplemental Revolving Loan Commitments of each by the Banks.
"TOTAL SUPPLEMENTAL TERM LOAN COMMITMENT" means the sum of the
Supplemental Revolving Loan Commitments of each of the Banks.
"TOTAL SUPPLEMENTAL UTILIZATION" means, at any date of determination,
the sum of the aggregate principal amount of all Supplemental Revolving Loans,
all Supplemental Term Loans then outstanding and all outstanding Letters of
Credit issued under the Supplemental Portion.
"TRADEMARK SECURITY AGREEMENT" means the trademark security agreement
substantially in the form of Exhibit 10C.
"TYPE" of Loan means a Base Rate Loan or Reserve Adjusted Eurodollar
Loan.
"UCC" means the Uniform Commercial Code as in effect in the State of
New York.
"UCP" is defined in Section 1.13(k).
"UNRESTRICTED SUBSIDIARY" of any Person means any Subsidiary of such Person
that at the time of determination shall have been and shall continue to be
designated an Unrestricted Subsidiary. The Board of Directors of the Borrower
may, with the consent of the Administrative Agent, designate any Subsidiary
(including any newly acquired or newly formed Subsidiary) which meets the
Unrestricted Subsidiary Conditions to be an Unrestricted Subsidiary; provided,
however, (x) the Administrative Agent may require that all or any portion of the
outstanding Revolving Loans, Acquisition Term Loans, Supplemental Revolving
Loans or Supplemental Term Loans be repaid in accordance with Section 3.03(j)
and/or that any or all of the Total Revolving Loan Commitment, Total Acquisition
Term Loan Commitment or Total Supplemental Loan Commitment be reduced by an
amount determined in the sole discretion of the Administrative Agent in view of
the reduction in revenue producing assets held by the Borrower and its
Restricted Subsidiaries and the corresponding
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reduction in Collateral caused by the designation of such Unrestricted
Subsidiary.
"UNRESTRICTED SUBSIDIARY CONDITIONS" means the following:
1. the relevant Unrestricted Subsidiary holds regular meetings of its
shareholder(s) and directors, keeps minutes of those meetings, elects
officers and observes all the formalities necessary to reflect its
status as a separate independent corporation;
2. the day to day affairs of the relevant Unrestricted Subsidiary are
administered by its officers, subject to the direction of its
directors;
3. the directors, management group and employees of the relevant
Unrestricted Subsidiary are different from the directors and
management group of the Borrower and its Restricted Subsidiaries;
4. the relevant Unrestricted Subsidiary maintains a separate bank account
and separate books from the Borrower and its Restricted Subsidiaries;
5. the relevant Unrestricted Subsidiary maintains its own billing and
receivables processes separate from those of the Borrower and its
Restricted Subsidiaries;
6. the relevant Unrestricted Subsidiary has its own financial reporting
system separate from the Borrower and its Restricted Subsidiaries and
its financial statements do not include the assets or liabilities of
the Borrower or its Restricted Subsidiaries;
7. the creditors of the relevant Unrestricted Subsidiary do not extend
credit to the Unrestricted Subsidiary on the basis of the financial
condition of the Borrower and/or its Restricted Subsidiaries and any
credit extended to such Unrestricted Subsidiary is based solely on the
assets and liabilities of the Unrestricted Subsidiary;
8. none of the Borrower or any of its Restricted Subsidiaries guarantee
or provide collateral for any obligation of the Unrestricted
Subsidiary and the Unrestricted Subsidiary does not guarantee or
provide collateral for any obligation of the Borrower or any of its
Restricted Subsidiaries;
9. the relevant Unrestricted Subsidiary has its own headquarters separate
from that of the Borrower and its Restricted Subsidiaries;
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10. there are no loans, advances or other indebtedness between the
Unrestricted Subsidiary and any of the Borrower or its Restricted
Subsidiaries;
11. the Unrestricted Subsidiary maintains a separate business from the
Borrower and its Restricted Subsidiaries and its assets and
liabilities are segregated from those of the Borrower and its
Restricted Subsidiaries; and
12. the Unrestricted Subsidiary is either a separate taxable entity from
the Borrower and its Restricted Subsidiaries (for local, state,
federal and all other purposes) or shall have entered into a tax
sharing agreement with the Borrower and its Restricted Subsidiaries in
a form satisfactory to the Administrative Agent.
"UNUTILIZED ACQUISITION COMMITMENT" for any Bank at any time, means on
and after the Closing Date, the amount by which the sum of Acquisition Term Loan
Commitment of such Bank exceeds its portion of the Total Acquisition
Utilization.
"UNUTILIZED REVOLVER COMMITMENT" for any Bank at any time means, on
and after the Closing Date, the amount by which the sum of the Revolving Loan
Commitment of such Bank exceeds its portion of the Total Revolver Utilization.
"UNUTILIZED SUPPLEMENTAL COMMITMENT" for any Bank at any time means,
on and after the Closing Date, the amount by which the Supplemental Loan
Commitment of such Bank exceeds the portion of the Total Supplemental
Utilization.
"WHOLLY OWNED SUBSIDIARY" of any Person shall mean any Subsidiary of
such Person to the extent all of the capital stock or other ownership interests
in such Subsidiary, other than directors' or nominees' qualifying shares, is
owned directly or indirectly by such Person.
"WRITTEN" or "IN WRITING" means any form of written communication or a
communication by means of telex, telecopier device, telegraph or cable.
SECTION 10. THE AGENT.
10.01 APPOINTMENT. Each Bank hereby irrevocably designates and appoints
Indosuez as Administrative Agent, IBJS as Syndication Agent, and BKOB as
Documentation Agent of such Bank to act as specified herein and in the other
Credit Documents and each such Bank hereby irrevocably authorizes the Agents to
take such action on its behalf under the provisions of this Agreement and the
other Credit Documents and to exercise such powers and perform such duties as
are expressly delegated to the Agents by the terms of this Agreement and the
other Credit Documents, together with such other powers as are reasonably
incidental thereto. The Agents agrees to act as such upon the express
conditions contained in this Section 10. Notwithstanding any provision to the
contrary elsewhere in this Agreement, the Agents shall not
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have any duties or responsibilities, except those expressly set forth herein
or in the other Credit Documents, or any fiduciary relationship with any Bank,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or otherwise exist against either
Agent. The provisions of this Section 10 are solely for the benefit of the
Agents and the Banks, and no Credit Party shall have any rights as a third party
beneficiary of any of the provisions hereof. In performing its functions and
duties under this Agreement, each Agent shall act solely as an Agent of the
Banks and does not assume and shall not be deemed to have assumed any obligation
or relationship of agency or trust with or for any Credit Party.
10.02 DELEGATION OF DUTIES. The Agents may each execute any of its duties
under this Agreement or any other Credit Document by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Neither Agent shall not be responsible for
the negligence or misconduct of any agents or attorneys-in-fact selected by it
with reasonable care except to the extent otherwise required by Section 10.03.
10.03 EXCULPATORY PROVISIONS. Neither Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates shall be (a)
liable for any action lawfully taken or omitted to be taken by it or such Person
under or in connection with this Agreement (except for its or such Person's own
gross negligence or willful misconduct) or (b) responsible in any manner to any
of the Banks for any recitals, statements, representations or warranties by any
of the Credit Parties or their respective officers contained in this Agreement,
any other Transaction Document or any Public Financing Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by each Agent under or in connection with, this Agreement or any
other Transaction Document or any Public Financing Document or for any failure
of any of the Credit Parties or their respective officers to perform its
obligations hereunder or thereunder. The Administrative Agent shall not be
under any obligation to any Bank to ascertain or to inquire as to the observance
or performance of any of the agreements contained in, or conditions of, this
Agreement, or to inspect the properties, books or records of any Credit Party.
Neither Agent shall be responsible to any Bank for the effectiveness,
genuineness, validity, enforceability, collectibility or sufficiency of this
Agreement or any Credit Document or for any representations, warranties,
recitals or statements made herein or therein or made in any written or oral
statement or in any financial or other statements, instruments, reports,
certificates or any other documents in connection herewith or therewith
furnished or made by such Agent to the Banks or by or on behalf of any Credit
Party to such Agent or any Bank or be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions, covenants
or agreements contained herein or therein or as to the use of the proceeds of
the Loans or of the existence or possible existence of any Default or Event of
Default.
10.04 RELIANCE BY THE AGENT. Each Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and to have been signed, sent or made by
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the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Credit Parties), independent
accountants and other experts selected by the Administrative Agent. Each Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Credit Document unless it shall first receive such advice
or concurrence of the Required Banks as it deems appropriate or it shall first
be indemnified to its satisfaction by the Banks against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. Each Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement and the other Credit
Documents in accordance with a request of the Required Banks (or to the extent
specifically provided in Section 11.11, all the Banks), and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Banks.
10.05 NOTICE OF DEFAULT. Neither Agent shall be deemed to have knowledge
of the occurrence of any Default or Event of Default, other than a default in
the payment of principal or interest on the Loans hereunder unless it has
received notice from a Bank or any Credit Party referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default". In the event that the Administrative Agent receives such a
notice, the Agent shall give prompt notice thereof to the Banks. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Banks;
PROVIDED, HOWEVER, that, unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Banks.
10.06 NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER BANKS. Each Bank
expressly acknowledges that neither Agent nor any officers, directors,
employees, agents, attorneys-in-fact or affiliates of such Agent have made any
representations or warranties to it and that no act by such Agent hereinafter
taken, including any review of the affairs of any Credit Party, shall be deemed
to constitute any representation or warranty by such Agent to any Bank. Each
Bank represents to each Agent that it has, independently and without reliance
upon such Agent or any other Bank, and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the business, assets, operations, property, financial and other conditions,
prospects and creditworthiness of the Credit Parties and made its own decision
to make its Loans hereunder and enter into this Agreement and the other
agreements contemplated hereby. Each Bank also represents that it will,
independently and without reliance upon either Agent or any other Bank, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement, and to make such investigation
as it deems necessary to inform itself as to the business, assets, operations,
property, financial and other conditions, prospects and creditworthiness of the
Credit Parties. Except for notices, reports and other documents expressly
required to be furnished to the Banks by the Administrative Agent hereunder,
neither Agent shall have any duty or responsibility to provide any Bank with any
credit or other information concerning the business, operations, assets,
property, financial and
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other conditions, prospects or creditworthiness of any Credit Party which may
come into the possession of either such Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates.
10.07 INDEMNIFICATION. The Banks agree to indemnify each Agent in its
capacity as such or in any other representative capacity under any other Credit
Document ratably according to the sum of their aggregate Commitments and Loans,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, reasonable expenses or
disbursements of any kind whatsoever which may at any time (including, without
limitation, at any time following the payment of the Obligations) be imposed on,
incurred by or asserted against either Agent in its capacity as such, in any way
relating to or arising out of this Agreement or any other Credit Document, or
any documents contemplated by or referred to herein or the transactions
contemplated hereby or any action taken or omitted to be taken by either or both
of the Agents under or in connection with any of the foregoing, but only to the
extent that any of the foregoing is not paid by any Credit Party; PROVIDED,
HOWEVER, that no Bank shall be liable to either Agent for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from any
such Agent's gross negligence or willful misconduct. If any indemnity furnished
to either Agent for any purpose shall, in the opinion of such Agent, be
insufficient or become impaired, either Agent may call for additional indemnity
and cease, or not commence, to do the acts indemnified against until such
additional indemnity is furnished. The agreements in this Section 10.07 shall
survive the payment of all Obligations.
10.08 THE AGENTS IN THEIR INDIVIDUAL CAPACITIES. The Agents and their
respective Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with any Credit Party and any Affiliate of any
Credit Party as though such Agent were not an Agent hereunder. With respect to
the Loans made by it and all Obligations owing to it, such Agent shall have the
same rights and powers under this Agreement as any Bank and may exercise the
same as though it were not an Agent, and the terms "Bank" and "Banks" shall
include each Agent in its individual capacity.
10.09 SUCCESSOR AGENT. Upon the acceptance of any appointment as an
Administrative Agent hereunder by a successor Administrative Agent, the term
"Administrative Agent" shall include such successor Administrative Agent
effective upon its appointment, and the resigning Administrative Agent's rights,
powers and duties as Administrative Agent shall be terminated, without any other
or further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement. After the retiring Administrative Agent's
resignation hereunder as Administrative Agent, the provisions of this Section 10
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent under this Agreement.
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10.10 RESIGNATION, TRANSFER BY AGENT.
(a) The Administrative Agent may resign from the performance of all
its functions and duties hereunder at any time by giving 30 Business Days'
prior written notice to the Borrower and the Banks. Such resignation shall
take effect upon the acceptance by a successor Administrative Agent of
appointment pursuant to Sections 10.10(b) and (c) or as otherwise provided
below.
(b) Upon any such notice of resignation of the Administrative Agent,
the Required Banks shall appoint a successor Administrative Agent
acceptable to the Borrower and which shall be an incorporated bank or trust
company or other qualified financial institution with operations in the
United States and total assets of at least $5 billion.
(c) If a successor Administrative Agent shall not have been so
appointed within said 30 Business Day period, the resigning Administrative
Agent with the consent of the Borrower shall then appoint a successor
Administrative Agent (which shall be an incorporated bank or trust company
or other qualified financial institution with operations in the United
States and total assets of at least $5 billion) who shall serve as a
successor Administrative Agent until such time, if any, as the Required
Banks appoint a successor Administrative Agent as provided above.
(d) If no successor Administrative Agent has been appointed pursuant
to Section 10.10(b) or (c) by the 30th Business Day after the date such
notice of resignation was given by the resigning Administrative Agent, such
Administrative Agent's resignation shall become effective and the Required
Banks shall thereafter perform all the duties of Administrative Agent
hereunder until such time, if any, as the Required Banks appoint a
successor Administrative Agent as provided above.
(e) Notwithstanding anything to the contrary contained in this
Section 10, Indosuez, as Administrative Agent, may transfer its rights and
obligations to perform all of its functions and duties hereunder to its
parent company or to any Affiliate of it or its parent company.
10.11 SYNDICATION AGENT AND DOCUMENTATION AGENT. The Syndication Agent
and Documentation Agent, in such capacity, shall have no obligations, duties or
responsibilities, and shall incur no liabilities, under this Agreement or any
other Credit Document.
SECTION 11. MISCELLANEOUS.
11.01 PAYMENT OF EXPENSES, ETC. The Borrower agrees to: (a) whether or
not the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Agents in connection with the
negotiation, preparation, execution, syndication
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and delivery of the Credit Documents and the documents and instruments referred
to therein (in accordance with the terms of the letter agreement between the
Borrower and Indosuez dated September 29, 1997), other than any expenses of
Indosuez incurred after the Closing Date solely in its capacity as one of the
Banks hereunder, and any amendment, waiver or consent relating thereto
(including, without limitation, the reasonable fees and disbursements of Ropes &
Gray and local counsel to Indosuez) and of each of the Banks after the
occurrence and during the continuation of an Event of Default in connection with
the enforcement of the Credit Documents and the documents and instruments
referred to therein (including, without limitation, the reasonable fees and
disbursements of counsel for each of the Banks) with prior notice to the
Borrower of the engagement of any counsel, and hold each of the Banks harmless
from and against any and all reasonable fees and expenses of any appraisers or
any consultants or other advisors reasonably engaged by the Administrative
Agent; (b) pay and hold each of the Banks harmless from and against any and all
present and future stamp and other similar taxes with respect to the foregoing
matters and save each of the Banks harmless from and against any and all
liabilities with respect to or resulting from any delay or omission (other than
to the extent attributable to such Bank) to pay such taxes; and (c) indemnify
each Agent and each Bank, its officers, directors, employees, representatives
and agents from and hold each of them harmless against any and all losses,
liabilities, claims, damages or expenses (including, without limitation, any and
all losses, liabilities, claims, damages or expenses arising under Environmental
Laws except with regard to any losses, costs, damages or expenses under
Environmental Laws, excluding such losses, costs, damages or expenses arising
from or relating to acts or omissions occurring after the Administrative Agent
or any Bank takes possession of, uses, operates, manages, controls or sells any
Real Property provided, however, that such exception shall apply only to the
extent such losses, costs, damages or expenses arise solely from the gross
negligence, bad faith or willful misconduct of the applicable Administrative
Agent or any Bank or of the agents of such Administrative Agent or any Bank)
incurred by any of them as a result of, or arising out of, or in any way related
to, or by reason of, any investigation, litigation or other proceeding (whether
or not any Bank is a party thereto) related to the entering into and/or
performance of any Credit Document or the use of the proceeds of any Loans
hereunder or the consummation of any other transactions contemplated in any
Credit Document, including, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such investigation,
litigation or other proceeding (but excluding any such losses, liabilities,
claims, damages or expenses to the extent incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified).
11.02 RIGHT OF SETOFF. In addition to any rights now or hereafter granted
under applicable law or otherwise, and not by way of limitation of any such
rights, upon the occurrence and during the continuance of an Event of Default,
each Bank is hereby authorized at any time or from time to time, without
presentment, demand, protest or other notice of any kind to any Credit Party or
to any other Person, any such notice being hereby expressly waived, to set off
and to appropriate and apply any and all deposits (general or special) and any
other Indebtedness at any time held or owing by such Bank (including, without
limitation, by branches and agencies of such Bank wherever located) to or for
the credit or the account of any
=
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Credit Party against and on account of the Obligations and liabilities of such
Credit Party to such Bank under this Agreement or under any of the other Credit
Documents, including, without limitation, all interests in Obligations of such
Credit Party purchased by such Bank pursuant to Section 11.06(b), and all other
claims of any nature or description arising out of or connected with this
Agreement or any other Credit Document, irrespective of whether or not such Bank
shall have made any demand hereunder and although said Obligations, liabilities
or claims, or any of them, shall be contingent or unmatured. Notwithstanding
the foregoing, the Banks shall have no right of setoff as to the Put/Call Funds
and shall not seek to enjoin payments from the Put/Call Funds made pursuant to
the Put/Call Option Agreement or otherwise prevent the Borrower from honoring
its obligations thereunder; PROVIDED that nothing in the foregoing shall be
construed to prevent the Administrative Agent from exercising remedies against
the Borrower and the Borrower generally available under this Agreement or
applicable law, including, without limitation the commencement of a case under
the Bankruptcy Code relative to any Credit Party.
11.03 NOTICES. Except as otherwise expressly provided herein, all notices
and other communications provided for hereunder shall be in writing (including
telegraphic, telex, telecopier or cable communication) and hand delivered,
telegraphed, telexed, telecopied, cabled or delivered:
(a) If to the Borrower, to it at:
3478 Buskirk Avenue, Suite 260
Pleasant Hill CA 94523
Attention: President
with a copy to each of the following:
Brownstein Hyatt Farber & Strickland, PC
410 Seventeenth Street
22nd Floor
Denver, CO 80202-4437
Attention: Steven Siegel, Esq.
Fax: (303) 623-1956
and
Kohlberg & Company, LLC
111 Radio Circle
Mt. Kisco, NY 10549
Attention: Samuel Frieder
Fax: (914) 241-7476
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(b) if to any Bank, to it at its address specified on Schedule 11.03;
(c) or, at such other address as shall be designated by any party in
a written notice to the other parties hereto.
All such notices and communications shall, when hand delivered,
telegraphed, telexed, telecopied, or cabled or sent by overnight courier, be
effective the following Business Day when delivered to the telegraph company,
cable company or overnight courier, as the case may be, or when transmission is
confirmed, if by telex or telecopier, except that notices and communications to
the Administrative Agent shall not be effective until received by the
Administrative Agent.
11.04 BENEFIT OF AGREEMENT.
(a) This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto, all future holders of the Notes,
and their respective successors and assigns; PROVIDED, HOWEVER, that the
Borrower shall not assign or transfer any of its interests hereunder
without the prior written consent of the Banks; and PROVIDED, FURTHER, that
the rights of each Bank to transfer, assign or grant participation in its
rights and/or obligations hereunder shall be limited as set forth below in
this Section 11.04; and PROVIDED, FURTHER, that nothing in this Section
11.04 shall prevent or prohibit any Bank from (i) pledging its Loans
hereunder to a Federal Reserve Bank in support of borrowings made by such
Bank from such Federal Reserve Bank and (ii) granting participation in or
assignments of such Bank's Loans, Notes and/or Commitments hereunder to its
parent company and/or to any Affiliate of such Bank that is at least 50%
owned by such Bank or its parent company.
(b) Each Bank shall have the right to transfer, assign or grant
participation in all or any part of its remaining Loans, Notes and/or
Revolving Loan Commitments hereunder on the basis set forth below in this
Section 11.04. Subject to Section 11.04(e), each Bank may furnish any
information concerning the Borrower or any Subsidiary in the possession of
such Bank from time to time to assignees and participants (including
prospective assignees and participants).
(c) Each Bank, with the written consent of the Administrative Agent,
which consent shall not be unreasonably withheld may assign pursuant to an
Assignment Agreement substantially in the form of Exhibit 11.04(c) hereto
(the "ASSIGNMENT AGREEMENT") all or a portion of its Loans, Notes,
Revolving Loan Commitments, Acquisition Term Loan Commitments and/or
Supplemental Loan Commitments hereunder pursuant to this Section 11.04(c)
to one or more Eligible Assignees; PROVIDED, HOWEVER, that any assignment
pursuant to this Section 11.04(c)(i) shall be in a minimum aggregate
amount, for all Loans and Commitments assigned, of $10,000,000, and (ii)
shall not result in the Borrower incurring any obligation to pay additional
amounts as of
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the time of such assignment pursuant to Section 1.10(e), 1.11 or 3.05. Any
assignment pursuant to this Section 11.04(c) will become effective five
Business Days after the Administrative Agent's receipt of (i) a written
notice in the form of Exhibit 11.04(c) executed by the assigning Bank and
the Eligible Assignee, and (ii) a processing and recordation fee of $2,500
from the assigning Bank in connection with the Administrative Agent's
recording of such sale, assignment, transfer or negotiation; PROVIDED,
HOWEVER, that such fee shall only be payable if the assignment is between a
Bank and an Eligible Assignee that is not a Bank prior to the assignment.
Such assignment shall be recorded by the Administrative Agent in the
Register. The Borrower shall issue new Notes to the assignee Bank or
Eligible Assignee, as the case may be, in conformity with Section 1.05 and
the assignor shall return the old Notes to the Borrower. Upon the
effectiveness of any assignment in accordance with this Section 11.04(c),
the assignee, if not a Bank, will become a "Bank" for all purposes of this
Agreement and the other Credit Documents and, to the extent of such
assignment, the assigning Bank shall be relieved of its obligations
hereunder with respect to the Commitments being assigned. The
Administrative Agent shall maintain at its address specified in Exhibit
11.03 a copy of each Assignment Agreement delivered to and accepted by it
and a register in which it shall record the names and addresses of the
Banks and the Commitments of, and principal amount of the Loans owing to,
each Bank from time to time (the "REGISTER"). The entries in the Register
shall be conclusive and binding for all purposes, absent demonstrable
error, and the Borrower, the Administrative Agent and the Banks may treat
each Person whose name is recorded in the Register as a Bank hereunder for
all purposes of this Agreement. The Register shall be available for
inspection by the Borrower, the Administrative Agent or any Bank at any
reasonable time and from time to time upon reasonable prior notice.
(d) Each Bank may transfer, grant or assign participation in all or
any part of such Bank's Loans, Notes and/or Commitments hereunder pursuant
to this Section 11.04(d) to any Person; PROVIDED, HOWEVER, that (i) such
Bank shall remain a "Bank" for all purposes of this Agreement and the
transferee of such participation shall not constitute a Bank hereunder and
(ii) no participant under any such participation shall have rights to
approve any amendment to or waiver of this Agreement or any other Credit
Document except to the extent such amendment or waiver would (A) change the
scheduled final maturity date of any of the Loans, Notes, Revolving Loan
Commitments, Acquisition Term Loan Commitments or Supplemental Loan
Commitments in which such participant is participating or (B) reduce the
principal amount, interest rate or fees applicable to any of the Loans,
Notes or Revolving Loan Commitments in which such participant is
participating or postpone the payment of any interest or fees or (C)
release all or substantially all of the Collateral and PROVIDED, FURTHER,
that any participation pursuant to this Section 11.04(d) shall not result
in the Borrower paying additional amounts as of the time of such
participation pursuant to Section 1.10(e), 1.11 or 3.05. In the case of
any such participation, the participant shall not have any rights under
this Agreement or any of the other Credit Documents (the participant's
rights against the
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granting Bank in respect of such participation to be those set forth in the
agreement with such Bank creating such participation) and all amounts
payable by the Borrower hereunder shall be determined as if such Bank had
not sold such participation; PROVIDED, HOWEVER, that such participant shall
be considered to be a "Bank" for purposes of Sections 11.02 and 11.06(b).
(e) The Agents and the Banks agree to keep confidential (and to cause
their respective officers, directors, employees, agents, representatives
and counsel to keep confidential) all information, materials and documents
furnished by any Credit Party to the Agents or any Bank (the
"INFORMATION"). Notwithstanding the foregoing the Agents and each Bank
shall be permitted to disclose Information (i) to such of its officers,
directors, employees, agents, representatives and counsel as need to know
such Information in connection with its participation in any of the
transactions contemplated hereby or the administration of this Agreement;
(ii) to the extent required by applicable laws and regulations or by any
subpoena or similar legal process, or requested by any governmental agency
or authority; (iii) to the extent such Information (A) becomes publicly
available other than as a result of a breach of this Agreement or any other
confidentiality agreement with respect thereto, (B) becomes available to
such Agent or such Bank on a non-confidential basis from a source other
than the Borrower or its Subsidiaries, officers, directors, employees,
agents or representatives or (C) was available to such Agent or such Bank
on a non-confidential basis prior to its disclosure to the Agent or such
Bank by the Borrower or any of its Subsidiaries; (iv) to the extent the
Borrower or any of its Subsidiaries shall have consented to such disclosure
in writing; (v) in connection with the sale of any Collateral pursuant to
the provisions of any of the Security Documents; (vi) in connection with
any litigation or claim concerning enforcement of the Obligations or
arising under this Agreement or any Credit Document or any related
agreement; or (vii) pursuant to Section 11.04(b); PROVIDED, HOWEVER, that
prior to any such disclosure under Section 11.04(b), each prospective
Eligible Assignee or participant shall enter into a written agreement with
the assigning or selling Bank to preserve the confidentiality of any
Information to the extent set forth in this Section 11.04(e).
(f) If the Borrower shall: (i) as a result of the requirements of
Section 1.01(b) or 1.11 of this Agreement, be required to pay to any Bank
the additional amounts referred to in such Sections at any time when all of
the Banks have not requested payment of such amounts; (ii) as a result of
the requirements of Section 3.07, be required to pay any Bank the Taxes
referred to in Section 3.07, or (iii) as a result of the failure of any
Bank to make available to the Administrative Agent such Bank's ratable
portion of any Borrowing, be required to repay to the Administrative Agent
such corresponding amount pursuant to Section 1.04(b), then, in each such
case, (A) the Borrower shall be entitled to designate an Eligible Assignee
to replace such Bank, (B) such Bank shall execute and deliver to such
Eligible Assignee an Assignment Agreement with respect to such Bank's
entire interest under this Agreement and the Notes, and (C) upon the
execution by such
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Eligible Assignee of such Assignment Agreement and compliance with the
requirements of Section 11.04(c), such Eligible Assignee shall succeed to
all of such Bank's rights and duties under this Agreement; PROVIDED,
HOWEVER, that notwithstanding anything to the contrary in this Agreement,
the Borrower shall be responsible to pay any and all out-of-pocket expenses
of any Bank replaced by the Borrower pursuant to this Section 11.04(f) or
of the Administrative Agent incurred by such Bank or by the Administrative
Agent, in either case incurred in connection with the Borrower's
replacement of any Bank pursuant to this Section 11.04(f).
11.05 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of
the Administrative Agent or any Bank in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of dealing between
any Credit Party and any Administrative Agent or any Bank shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power, or
privilege hereunder or under any other Credit Document preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which any Administrative
Agent or any Bank would otherwise have. No notice to or demand on any Credit
Party in any case shall entitle any Credit Party to any other or further notice
or demand in similar or other circumstances or constitute a waiver of the rights
of any Administrative Agent or the Banks to any other or further action in any
circumstances without notice or demand.
11.06 PAYMENTS PRO RATA.
(a) The Administrative Agent agrees that promptly after its receipt
of each payment from or on behalf of any Credit Party in respect of any
Obligations of such Credit Party, it shall distribute such payment to the
Banks pro rata based upon their respective shares, if any, of the
Obligations with respect to which such payment was received and in
accordance with the provisions hereof as to the application of prepayments.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by
the exercise of the right of setoff or banker's lien, by counterclaim or
cross action, by the enforcement of any right under the Credit Documents,
or otherwise) which is applicable to the payment of the principal of, or
interest on, the Loans, of a sum which with respect to the related sum or
sums received by other Banks is in a greater proportion than the total of
such Obligations then owed and due to such Bank bears to the total of such
Obligations then owed and due to all of the Banks immediately prior to such
receipt, then such Bank receiving such excess payment shall purchase for
cash without recourse or warranty from the other Banks an interest in the
Obligations of the respective Credit Party to such Banks in such amount as
shall result in a proportional participation by all of the Banks in such
amount; PROVIDED, HOWEVER, that if all or any portion of such excess amount
is
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thereafter recovered from such Bank, such purchase shall be rescinded and
the purchase price restored to the extent of such recovery, but without
interest.
11.07 CALCULATIONS; COMPUTATIONS. Unless otherwise indicated, all
computations of interest and fees hereunder shall be made on the actual number
of days elapsed over a year of 365 days; PROVIDED, HOWEVER, that all
computations of Reserve Adjusted Eurodollar Loans and Commitment Fees shall be
made on the actual number of days elapsed over a year of 360 days.
11.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; SERVICE OF
PROCESS.
(a) This Agreement and the rights and obligations of the parties
hereunder shall be construed and enforced in accordance with and be
governed by the laws of the State of New York applicable to contracts made
and to be performed wholly therein, without giving effect to principles of
conflicts of law. Any legal action or proceeding with respect to this
Agreement or any other Credit Document may be brought in the courts of the
State of New York or the United States for the Southern District of New
York, and, by execution and delivery of this Agreement, each Credit Party
hereby irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the non-exclusive jurisdiction of the
aforesaid courts. Each Credit Party designates and appoints CT Corporation
System, with an address at 1633 Broadway, New York, New York 10019 and such
other persons as may hereafter be selected by the Credit Parties and shall
irrevocably agree in writing to so serve, as their administrative agent to
receive on their behalf, service of all process in any such proceedings in
any such court, such service being hereby acknowledged by each Credit Party
to be effective and binding service in every respect. A copy of such
process so served shall be mailed by registered mail to any Credit Parties
at the address provided for the Borrower in Section 11.03 of this Agreement
except that unless otherwise provided by applicable law, any failure to
mail such copy shall not affect the validity of service of process. If any
agent appointed by the Credit Parties refuses to accept service, the Credit
Parties hereby agree that service upon them by mail shall constitute
sufficient notice. Nothing herein shall affect the right to serve process
in any other manner permitted by law or shall limit the right of the
Administrative Agent to bring proceedings against any Credit Party in the
courts of any other jurisdiction.
(b) Each party hereto hereby irrevocably waives any objection which
it may now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Agreement
or any other Credit Document brought in the courts referred to in Section
11.08(a) and hereby further irrevocably waives and agrees not to plead or
claim in any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.
11.09 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and
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delivered shall be deemed an original, but all of which shall together
constitute one and the same instrument. A set of counterparts executed by all
the parties hereto shall be lodged with the Borrower and the Administrative
Agent.
11.10 HEADINGS DESCRIPTIVE. The headings of the several Sections and
Subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
11.11 AMENDMENT OR WAIVER. Neither this Agreement nor any other Credit
Document nor any terms hereof or thereof may be changed, waived, discharged or
terminated unless such change, waiver, discharge or termination is in writing
signed by the Required Banks; PROVIDED, HOWEVER, that no such change, waiver,
discharge or termination shall, without the consent of each affected Bank and
the Administrative Agent, (a) extend the scheduled final maturity date of any
Loan, or any portion thereof, or reduce the rate or extend the time of payment
of interest thereon or fees or reduce the principal amount thereof, or increase
the Commitments of any Bank over the amount thereof then in effect (it being
understood that a waiver of any Default or Event of Default or of a mandatory
reduction in the Total Commitment shall not constitute a change in the terms of
any Commitment of any Bank), (b) release all or substantially all of the
Collateral (except as expressly permitted by the Credit Documents), (c) amend,
modify or waive any provision of this Section, or Section 1.10, 1.11, 3.05, 8,
10.07, 11.01, 11.02, 11.04, 11.06, 11.07 or 11.12, (d) reduce any percentage
specified in, or otherwise modify, the definition of Required Banks or (e)
consent to the assignment or transfer by any Credit Party of any of its rights
and obligations under this Agreement. No provision of Section 11 may be amended
without the consent of the Administrative Agent.
11.12 SURVIVAL. All indemnities set forth herein including, without
limitation, in Section 1.11, 3.05, 9.07 or 11.01 shall survive the execution and
delivery of this Agreement and the making of the Loans, the repayment of the
Obligations and the termination of the Total Commitments.
11.13 DOMICILE OF LOANS. Each Bank may transfer and carry its Loans at,
to or for the account of any branch office, subsidiary or Affiliate of such
Bank; PROVIDED, HOWEVER, that any such transfer shall not result in the Borrower
paying additional amounts as of the time of such transfer pursuant to any
provision of any Credit Document.
11.14 WAIVER OF JURY TRIAL. Each of the parties to this Agreement hereby
irrevocably waives all rights to a trial by jury in any action, proceeding or
counterclaim arising out of or relating to this Agreement or the other Credit
Documents or the transactions contemplated hereby or thereby.
11.15 INDEPENDENCE OF COVENANTS. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitation of,
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another covenant shall not avoid the occurrence of a Default or an Event of
Default if such action is taken or condition exists.
11.16 REINSTATEMENT. If, at any time, all or part of any payment of the
Obligations made by the Borrower is rescinded or otherwise must be returned by
any Bank or the Administrative Agent for any reason whatsoever (including the
insolvency, bankruptcy or reorganization of the Borrower), this Agreement shall
be reinstated as to the Obligations which were satisfied by the payment to be
rescinded or returned, all as though such payment had not been made.
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[Amended and Restated Credit Agreement]
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Agreement to be duly executed and delivered as of the date first above
written.
COLOR SPOT NURSERIES, INC.
By:_______________________________
Name:
Title:
CREDIT AGRICOLE INDOSUEZ
(formerly Banque Indosuez,
New York Branch)
as a Bank and as Administrative Agent
By:_______________________________
Name:
Title:
By:_______________________________
Name:
Title:
IBJ SCHRODER BANK & TRUST COMPANY,
as a Bank and as Syndication Agent
By:_______________________________
Name:
Title:
BANKBOSTON, N.A.
as a Bank and as Documentation Agent
By:_______________________________
Name:
Title:
FIRST SOURCE FINANCIAL LLP,
an Illinois registered limited liability
partnership
By: First Source Financial, Inc., its
manager
By:___________________________
Name:
Title:
<PAGE>
CREDITANSTALT-BANKVEREIN
By____________________________
Name:
Title:
By_____________________________
Name:
Title:
THE ING CAPITAL SENIOR SECURED
HIGH INCOME FUND, L.P.
By ING Capital Advisors, Inc.
as Investment Advisor
By:___________________________
Name:
Title:
COMMERCIAL LOAN FUNDING
TRUST I
By: Lehman Commercial Paper, Inc.,
not in its individual capacity
but as Administrative Agent
By:_______________________________
Name:
Title:
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ING HIGH INCOME PRINCIPAL PRESERVATION
OFFERING, L.P.
By: ING Capital Advisers, Inc.,
its Investment Advisor
By:___________________________
Name:
Title:
Total Revolving Loan Commitment: $40,000,000
Total Acquisition Term Loan Commitment: $75,000,000
Total Supplemental Loan Commitment: $35,000,000
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SCHEDULE A
List Of Banks
-------------
Credit Agricole Indosuez
IBJ Schroder Bank & Trust Co.
BankBoston, N.A.
Assignee Banks
--------------
First Source Financial, LLP
Creditanstalt-Bankverein
The ING Capital Senior Secured High Income Fund, L.P.
Indosuez Capital Funding II, Limited
Indosuez Capital Funding III, Limited
Commercial Loan Funding Trust I
ING High Income Principal Preservation Offering, L.P.
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SCHEDULE 11.03
Bank Addresses
--------------
Credit Agricole Indosuez
1211 Avenue of the Americas - 7th Floor
New York, New York 10036
IBJ Schroder Bank & Trust Co.
One State Street
New York, NY 10004
BankBoston, N.A.
